Avoid Chinese Joint-Venture Partners in China

King Ahab Redivivus

Corruption is endemic in China.  A recent article in the Sydney Morning Herald provides a vivid reminder of how bad things are.  An Australian businessman, Matthew Ng has been sentenced to 13 years in a Guangzhou jail.  Clearly he must be a low-life of a pretty bad order.

Actually, no.  He appears a decent, upstanding husband, father, and businessman.  His real crime is that he and his company were commercially successful.
 

Ng was chief executive of a successful London-listed travel company called Et-China. He was detained in November last year after he and other shareholders had contracted to sell the company to a Swiss firm for about $US100 million.

It turns out Et-China had a local joint-venture partner,  Guangzhou Lingnan.  Whilst in jail, Ng was made an offer which apparently no-one thought he could refuse.  Accept a lower “give-away” price from Guangzhou Lingnan, or face years in jail, even (at the time) the death penalty.  Here is the kicker: “Guangzhou Lingnan is the largest company owned by the Guangzhou municipal government.”

The local political bosses–who, of course, control the police and the law courts–effectively took Et-China out and stole it from Matthew Ng and his co-owners.  They must have wanted the whole $US100m for themselves. Funny, that.  

The blatant political subversion of the courts to rank injustice and theft was on display during the court case.

The Australian consul-general and Australian journalists were also absent, as authorities had told lawyers and the Australian government that yesterday’s hearing were merely procedural.  ”It’s particularly shocking because we were not even informed that there would be a verdict before hand,” Ng’s lawyer in court yesterday, Chen Yong, said. ”I don’t want to comment on the Chinese judicial system.” . . .

”It is very unfair, I don’t think there is any human rights here,” Ms Chow said. ”His defence case was not considered by the judge. She read everything from the prosecution case.” Before Ng’s detention, the company’s chairman Zheng had been detained under the Communist Party’s secretive and extrajudicial interrogation and isolation procedure known as shuanggui.

The company chief financial officer, Yang, was also detained under shuanggui. She was sentenced to 4½ years in jail, commuted to 3½.

The Guangzhou court was of the kangaroo kind; the trial was a trumped up, show trial.  Pillage was the objective.

Maybe Guangzhou is a rogue area, with unusually corrupt local government.  But, maybe not.

Observers close to the case also speculate on whether it demonstrates a growing loss of central authority over local governments and other official agencies.

 It used to be said that a critical key to conducting business successfully in China is to engage a local joint-venture partner.  It is becoming clear that this path is fraught with danger, if the business becomes a commercial success.  It only increases the likelihood that the business will become an object of envy and greed and will be stolen by judicial perversions.

King Ahab is alive and well in Guangzhou–and, one fears–throughout China. 

No Doubt About This

Kings Shall Come to Your Rising

When the (Chinese) Communists took power in 1949 there were perhaps 2 million Christians in China. At the time, not only Marxists but even American liberal church leaders dismissed these as mainly “rice” Christians–people who put up with missionary efforts only in exchange for handouts. Fifty years later we have discovered that these Chinese rice Christians were so “insincere” that they endured decades of draconian repression, during which their numbers doubled again and again–there might be as many as 100 million Christians in China today! Moreover, conversion to Christianity is concentrated not among the peasants and the poor but among the best-education, most modern Chinese.

There are many reasons people embrace Christianity, including its capacity to sustain a deeply emotional and existentially satisfying faith. http://rcm.amazon.com/e/cm?t=jtertullian&o=1&p=8&l=bpl&asins=0812972333&fc1=000000&IS2=1&lt1=_blank&m=amazon&lc1=0000FF&bc1=000000&bg1=FFFFFF&f=ifrBut another significant factor is its appeal to reason and the fact that it is so inseparably linked to the rise of Western civilization. For many non-Europeans, becoming a Christian is intrinsic to becoming modern Thus it is quite plausible that Christianity remains an essential element in the globalization of modernity. Consider this recent statement by one of China’s leading scholars:

“One of the things we were asked to look into was what accounted for the success, in fact, the pre-eminence of the West all over the world. We studied everything we could from the historical, political, economic, and cultural perspective. At first, we thought it was because you had more powerful guns than we had. Then we thought it was because you had the best political system. Next we focused on your economic system. But in the past twenty years, we have realized that the heart of your culture is your religion: Christianity. That is why the West is so powerful. The Christian moral foundation of social and cultural life was what made possible the emergence of capitalism and then the successful transition to democratic politics. We don’t have any doubt about this”

Neither do I.

Rodney Stark, The Victory of Reason, p.234f.

It’s Official

China’s Christian Explosion

[The article reprinted below is from the May edition of the OMF Newsletter.  The growth of the Christian church and the spread of the Gospel in China is now being officially acknowledged in government circles.  This brings some risks.  It also begs the question which many Western Christians have been asking for some years.  Since the West is turning away from the Lord, and the lights are going out on Western Christendom, will Asia in general, and China in particular, become the new Christendom of the next one thousand years of our Lord’s reign?]

For many years leaders of China’s State-controlled church would cautiously tell foreign visitors that the number of Chinese Protestants, although growing, was still only “a tiny minority” of the population.

>Fast Following

>Despotism and Universal Avarice

Despotic states produce universal avarice. When rules concentrate on exacting the maximum amount from those they control, their subjects become notably avaricious too, and respond by consuming, hoarding, and hiding the fruits of their labor, and by failing to produce nearly as much as they might. And even when some people do manage to be productive, chances are that in the end their efforts will merely enrich their rulers. The result is a standard of living far below the society’s potential productive capacities.

Late in the tenth century, an iron industry began to develop in parts of northern China. By 1018, it has been estimated, the smelters were producing more than thirty-five thousand tons a year, an incredible achievement for the time, and sixty years later they may have been producing more than a hundred thousand tons. This was not a government operation. Private individuals had seized the opportunity presented by a strong demand for iron and the supplies of easily mined ore and coal. . . . Soon these new Chinese iron industrialists were reaping huge profits and reinvesting heavily in the expansion of their smelters and foundries. Production continued to rise rapidly. The availability of large supplies of iron soon led to the introduction of iron agricultural tools, which in turn rapidly increased food production. . . . But then it all stopped as suddenly as it had begun. By the end of the eleventh century, only tiny amounts of iron were produced, and soon after that the smelters and foundries were abandoned ruins. What had happened?

Eventually, Mandarins at the imperial court had noticed that some commoners were getting rich by manufacturing and were hiring peasant laborers at high wages. They deemed such activities to be threats to Confucian values and social tranquillity. Commoners must know their place; only the elite should be wealthy. So, they declared a state monopoly on iron and seized everything. And that was that. As Winwood Reade summed up, the reason for China’s many centuries of economic and social stagnation is plain: “property is insecure. In this one phrase the whole history of Asia is contained.” Rodney Stark, The Victory of Reason, p.71f.

Ah, yes. Clearly we can see the stupidity of the Chinese. But the same folly is present in our day. Property is fundamentally insecure, made subject to the rapacious extractions of government, through taxation, to maintain socialist ideals of equality and harmony. Consequently, the whole society is avaricious; our economic culture is one of under-production and over-consumption. Sure, historically the Chinese acted stupidly under the regime of Confucian “ideals”. But we are fast followers, showing that we have learned nothing. Our soft-despotism is just as destructive, just as deadly, just as avaricious.

>Chinese Chutzpah

>A Child Too Far

“Chutzpah” is brazen effrontery. The classic illustration is of a man who murdered his parents, then threw himself on the mercy of the court, pleading that he was an orphan.

China has shamed itself and lost face in New Zealand with and act of chutzpah as ludicrous as the account above. According to Stuff,

China has demanded New Zealand give special compensation to Chinese families who lost their children in the Christchurch earthquake. Seven Chinese nationals have been named as dead while 24 are missing, all from the CTV building-based language school.

Is the demand based upon race? Or upon China’s long held view that it is earth’s Middle Kingdom and that we in the outer regions are barbarians? Not at all. The Chinese ambassador has been demanding extra compensation because of the “special circumstances” of the bereaved Chinese parents.

An embassy official coordinating the disaster relief centre, Cheng Lee, told Radio New Zealand that China’s situation was unusual due to the fact that by law families there could only have one child per family.

“There is a very notable difference in terms of the family situation between the Chinese family members and other foreign family members,” he said. “You can expect how lonely, how desperate they are, not only from losing loved ones, but losing almost entirely their source of economic assistance after retirement.”

To be sure the suffering of parents losing an only child would be extreme. Coupled with the fact that in China, one’s only child is one’s retirement plan, the suffering is not just emotional–it is also financial. All this we can understand. Just as we can understand how the man who murdered his parents might suffer as an orphan.

Whilst the immediate cause of suffering for these bereaved parents has been the earthquake in Christchurch, the ultimate cause is a deliberate benighted policy of the Chinese government. The “one child policy”, we believe, is already resulting in untold damage and will wreak destruction to Chinese society in the long term. It is an overt act of rebellion against the Living God which will be judged by the nation reaping its fearsome consequences.

Before too long Chinese parents who have suffered adverse consequences as a result of losing their only legally permitted child are going to rise up against their government and demand redress. Maybe that’s the real reason the Chinese Ambassador has been pushing so hard for extra compensation from the New Zealand government. Anything to nip potential unrest in the bud.

In the meantime, the Chinese government has just lost face and shamed itself in New Zealand. Chutzpah is what it is.

>The Seditious Nature of Humour

>The Power of Irony: You Cannot be Persecuted for What Was Unsaid

Years ago we watched a programme on the gradual emergence of political opposition in Czechoslovakia whilst it was still under the boot of Soviet Russia. The protagonist was arguing that opposition was nurtured in the night clubs of Prague by comedians–stand up comedians.  It was the kind of activity which escaped the attention of the censors and remained underground.  Holding the Soviet Union up to ridicule encouraged a far more critical attitude towards one’s own repressive government.

One of the comedians involved recounted the following joke he had told in the night clubs: 

A Soviet commissar was racing home late one afternoon only to realise that he had forgotten to pick up some meat and bread from the elite commissar’s GUM that lunchtime, as he had promised his wife he would do.  He decided to stop off at the neighbourhood food shop.  Alighting with his aides and bodyguards, he was confronted by a long queue stretching down the pavement, fifty metres from the shop entrance.  After waiting patiently in the line for thirty seconds, he murmured some instructions to his chief bodyguard.  The guard stood out from the line a bellowed, “Hands up all those that are Jews.”  About a quarter of the queue put up their hands.  “Jews, go home,” he shouted.  The Jews trudged off. 
But the line was still slow moving, and the Commissar was getting cold.  He spoke with his bodyguard again, and the chief once again stood out from the line and bellowed, “Hands up all those who are not Party members.”  About ninety-five percent of the people in the queue put up their hands.  “Non-Party members, go home,” shouted the guard.  This put the Commissar right up near the store entrance.  Ten minutes later he got in.  There was nothing on the shelves.  “We sold out hours ago,” said the frightened storekeeper.
The angry Commissar stalked back to his limo.  “See,” he said to his secretary, “it’s what I have always told you.  The Jews always get the best deal.” 

This is a profoundly subversive joke which operates at a number of different levels.  At all levels of the joke, the regime is exposed,  mocked and pilloried.  And it worked because it was so close to actual reality.

A recent article in Foreign Policy argues that subversive humour is emerging, particularly via the Internet.  We suspect that, as in Eastern Europe, such humour will prove a powerful force in eventually breaking down the authoritarianism of the Chinese Government.  It is probably even more devastating in China because the loss of face is a matter of shame–which brings an extra bite to seditious jokes.  And China provides no lack of opportunities for mockery.  The Middle Kingdom is a satirist’s dream.

Irony Is Good!

How Mao killed Chinese humor … and how the Internet is slowly bringing it back again.

BY ERIC ABRAHAMSEN | JANUARY 12, 2011

“Socialism is great!” Was there ever a statement riper for ironic mockery than this erstwhile catchphrase of the infant Chinese republic? How could a thinking people accept this and a host of other bald statements at face value, without so much as a raised eyebrow or a silently murmured really? And why, 60 years later, when the Chinese government calls the Dalai Lama a “devil with a human face,” do none of its citizens seem to feel the urge to giggle?

Irony, put simply, is a gap between words and their meaning, a space across which speaker and listener exchange a knowing wink. For this knowingness to be mutual, a web of common experiences and beliefs must exist, within which language adopts deeper echoes and associations. In China, however, the Communist Party has made quite clear that there is no commonality but that of the party and its people, and certainly no shared language beyond that handed down by national leaders. The Chinese government has spent decades ensuring that public discourse has remained “public” only in the sense of “government owned.” . . .

But it was really the Internet that salvaged Chinese humor, . . .  In the late 1990s, the Internet was still entirely uncensored (it would remain that way as late as 2004 or 2005), and it became, at last, a public space for writers and thinkers, who had been stifled by the government-controlled mainstream media, to explore new kinds of voices. . . .

These days, more sophisticated and ubiquitous Internet controls have meant less humor and criticism aimed at central government and top leaders, but a proliferation of mockery of lower-profile targets: the figures of authority and power that exist at all levels of society, from the classroom to the office. Reports of official corruption or abuses of power are regularly seized upon, creating memes that echo around the web. When a drunk driver killed a student in Baoding city last October, the driver’s only defense was to proclaim, “My father is Li Gang” — the deputy director of the local Public Security Bureau. The web erupted in rage and derision, creating poems, music videos, and innumerable mocking variations on the phrase, which now, in its Chinese form, gets 32,400,000 hits on Google. . . .

Han Han, a writer who may be one of the widest-read Internet personalities in the world, is one proof. . . . In 2009, a group of river boatmen, with the backing of local cadres, retrieved the bodies of students who had accidentally drowned in the river and then refused to hand the bodies over to the students’ parents without an exorbitant fee. Han Han’s recommendation was that all Chinese citizens carry the body-recovery fee on their persons at all times: “If you or a friend should fall in the water, you can hold the cash up above your head — that’s the only way these half-official body-recovery teams will bother fishing you out.”. . . 

But most traditional media continue to move in earnest lockstep with the government line. Irony still seems to fall flat in a culture where one-dimensional discourse is promoted from the earliest days of school on up into the professional world. Starting in middle school, all Chinese students are still required to take “political thought” classes, later developing into versions of Marxist-Leninism, Mao Zedong Thought, and Deng Xiaoping Theory that are re-taught every year until the end of higher education.

The same formulations are repeated year in and year out, unleavened by reflection or analysis, and the result is a kind of mental numbness: the ability to set two potentially related thoughts side by side, without ever connecting the two. Japan’s World War II invasion and occupation of northern China is continually rehashed in the media, yet the blindingly obvious correlations to the Chinese presence in Xinjiang and Tibet are never drawn.

Truly nuanced, self-aware social discussion may still be in the future — “It could take two or three generations,” Wang Xiaofeng told me — but among educated Chinese the government’s baldest self-contradictions no longer pass unremarked. When Wen Jiabao spoke about free speech and constitutionality in a September interview with CNN, his comments were subsequently censored in the Chinese media. China’s online cognoscenti crowed over the absurdity.

The government is lumbering around to face this new challenge. The first rule of censorship is still “Don’t talk about censorship”; and it would be fatal for the government to address popular sarcasm and irony directly, because so much of its own identity is written in language that would not sustain scrutiny. But its awareness is apparent through what is forbidden: “My father is Li Gang” has made the list of “sensitive” phrases.

No matter how swiftly authorities stamp out new criticism, however, it’s too late. The brute removal of undesirable language from public discourse only works when ideas do not exist independent of language, but it is precisely irony that allows silence to speak as loudly as words. Wang Xiaofeng may be right in saying it will take another generation before any voices will be raised in direct challenge, but the government should be worried. Even now, each online report of disaster, failure, corruption, or injustice is met with a newly repurposed old Maoist catchphrase, perhaps angry or resigned, but above all, ironically knowing: “Our thanks to the nation.”

Subversive humour was making the rounds in Czech night clubs in the sixties.  It took a generation before the Wall came down.  We suspect that subversive humour and irony in China will make a similar contribution–and in thirty years time we will all be repeating the new conventional wisdom, “Of course China had to dismember its authoritarian government.  The internal contradictions were tearing it apart.”

>Civilised Middle Kingdom?

>Wretched, Shameful, and Beneath Contempt

Yahoo News carries a report of a forced abortion in China (the tip of the iceberg, we expect). The Chinese government is stands indicted of being a man-flesh eating demon from the ancient world, rather than the civilized Middle Kingdom.

Chinese woman forced to abort 8-month-old fetus
By ALEXA OLESEN, Associated Press Writer Alexa Olesen, Associated Press Writer Thu Oct 21, 6:45 am ET

BEIJING – A pregnant woman in south China was detained, beaten and forced to have an abortion just a month before her due date because the baby would have violated the country’s one-child limit, her husband said Thursday.

Construction worker Luo Yanquan said his wife was taken kicking and screaming from their home by more than a dozen people on Oct. 10 and detained in a clinic for three days by family planning officials, then taken to a hospital and injected with a drug that killed her baby.

Family planning officials told the couple they weren’t allowed to have the child because they already have a 9-year-old daughter, Luo said.

For the last 30 years, China has limited most urban couples to just one child in a bid to curb population growth and conserve its limited resources. China has the world’s largest population, with more than 1.3 billion people. Couples that flout the rules face hefty fines, seizure of their property and loss of their jobs.

The case is an extreme example of the coercive measures Chinese officials sometimes use to comply with the strict family planning regulations. Though illegal, police and judicial authorities often look the other way when forced abortion cases are reported and the heavily censored state media shy away from such news.

But in recent years, victims have begun to speak out about their ordeals with the help of the Internet and text messaging. Aiding them are social campaigners and lawyers who have documented cases of forced late-term abortions. Similar abuses have been reported in Hebei and Shandong provinces and in the Guangxi region.

An official with the Siming district family planning commission, which oversees Luo’s neighborhood, confirmed there was a record of Luo’s wife, Xiao Aiying, undergoing an abortion recently but said the procedure was voluntary and that she was about six months instead of eight months pregnant at the time. Like many Chinese bureaucrats, he refused to give his name.

China bans forced abortions, but doesn’t prohibit or clearly define late-term abortion.

The Siming official said Xiao’s husband had approved the abortion, a claim Luo denied.

“I never signed anything. No one in our family did,” he said by telephone from Xiamen. “I called the police but they said family planning issues weren’t their responsibility. I want to sue, but lawyers I’ve asked here say they can’t help me and the media won’t report on our case.”

Luo set up a blog last week to let people know what had happened to his wife, and satellite broadcaster Al-Jazeera posted a report about the couple’s case on its website Wednesday.

Photos on the blog show a pained-looking, and clearly pregnant, Xiao sitting on a hospital bed after the injection but before the baby was stillborn 40 hours later. Other images show a large purple bruise on her arm and scratches on her leg, which Luo said were caused when family planning officials hit and kicked her as she struggled to get away.

Ordinary Chinese reacted with anger and disgust to Luo’s online account, posting comments that called the family planning officials cruel and inhuman.

Xiao delivered the dead baby on Oct. 14 but remains hospitalized and may require emergency surgery to remove pieces of placenta still in her uterus, Luo said. The couple, both 36, were not informed of the sex of the aborted baby, Luo said.

A man who answered the phone at the obstetrics ward of the Siming No. 1 Hospital confirmed that Xiao was still a patient there. He refused to provide more details or give his name.

Telephone calls to the press office of the National Population and Family Planning Commission in Beijing rang unanswered Thursday.

>The Iron Triangle, Part II

>Centrally Planned “Creative” Destruction

In Part I of “The Iron Triangle” we interacted with Ethan Devine’s, The Japan Syndrome, published recently in Foreign Policy. Devine traces the artificial boom of the Japanese economy and its subsequent bust–and long, lingering decline since. Japan is now a no-growth economy, with a burgeoning government debt that bodes an eventual second implosion.

But what of China? Well, China, which has now replaced Japan as the second-largest economy, has been following the Japanese prescription of export-led economic development.

The funny thing is that China borrowed much of its economic model from Japan: producing low-cost exports to fund investment at home while aggravating trading partners. At times, it seems like only the names have changed. Where Detroit automakers once denounced Honda and Toyota for dumping cheap, fuel-efficient sedans on American housewives, Treasury secretaries now wring their hands about the undervalued renminbi while China’s trade surpluses yawn.

Then Devine issues a sober warning:

As pleasurable as it must be for China’s leaders to have beaten Japan at its own game, the joke might soon be on them. In fact, they would do well to veer off of Japan’s development path promptly. Sure, Japan’s export boom funded stellar growth for four decades. But its undervalued currency eventually helped blow one of the largest bubbles in history, the bursting of which still hobbles Japan today. Japan’s famously dismal demographics didn’t help, but China’s aren’t much better. Beijing’s one-child policy, introduced in 1979, has worked its way up the population pyramid such that China’s supply of rural workers ages 20 to 29 will halve by 2030. Worse yet, China is much larger than Japan — which means that the global consequences of a crash would be far greater. For the moment, Beijing is riding high, but China’s sustained success depends on understanding where Japan went so badly wrong.

Once again the pattern is repeating itself. Centrally planned economies do not work: they create painful bubbles. It happened in Japan. It is happening in China. When government arrogate to themselves powers beyond that ordained for them by God, disaster inevitably results. How long will modern man insist on being so stubborn and stupid? is fast becoming an apt question.

Bulging foreign exchange reserves don’t only irritate trading partners; they also stoke inflation pressures at home. Inflation is dangerous in a still-poor country where much of the population cannot tolerate higher prices for basic essentials, but it is a natural consequence of an undervalued currency. When Chinese exporters give their dollars to the Chinese central bank (PBOC), the renminbi they receive in exchange increase the domestic money supply and cause inflation. Official inflation statistics are rising, but they only tell part of the story. Massive liquidity in the system has caused a number of mini-bubbles such as garlic’s hundredfold price increase over the last two years.

Giving exporters four renminbi per dollar instead of six would be the quickest fix, but China prefers “sterilization” instead of currency appreciation. In sterilization, the central bank issues bonds to soak up the extra renminbi. The catch is that China’s dollar reserves earn dollar interest rates, so if the PBOC pays a higher rate on its own bonds, it pays out more interest than it earns. To keep from hemorrhaging money, the PBOC must keep China’s interest rates close to U.S. rates. But U.S. rates are far too low for China, particularly with food prices rising and assets looking bubbly. The government has tried targeted policies such as price controls on certain foodstuffs and restricted lending to asset speculators, but the inflationary pressures are so great that this piecemeal policy resembles a game of whack-a-mole. (Emphasis, ours)

China’s economy is starting to look remarkably like Japan’s in the late nineties: bridges, bridges everywhere, rusting in the sun, whilst the domestic population suffers.

Although there is no doubt that this new growth strategy created tens of millions of jobs and a glistening national infrastructure, the attendant imbalances have created problems. Huang notes that by suppressing personal consumption and small-scale entrepreneurial activity in favor of state-owned enterprises and select multinationals, China’s 1990s growth did not sufficiently benefit its citizens. “The story of the 1990s is one of substantial urban biases, huge investments in state-allied businesses, courting FDI [foreign direct investment] by restricting indigenous capitalists, and subsidizing the cosmetically impressive urban boom by taxing the poorest segments of the population.”

Chinese authorities appear to have realised they, like Houston, have a problem. But, as in Japan, it it strains credulity to think that Communist Party central planning will solve it. The solutions lie in less planning, more freedom, and a willingness to embrace (relative) chaos that inevitably occurs when people and businesses are given freedom to do what they want to do. No more permits in order to blow one’s nose.

To be sure, the government appears to be making an effort.

Using the full suite of policy tools available to a command economy, the government has removed tax incentives for some exports and added new ones for research and development while directing banks to curb lending and utilities to raise power prices for certain heavy industries. At the same time, new pension schemes, health-care coverage, and even a budding tolerance for collective bargaining with underpaid workers are intended to boost consumption. Although the Chinese authorities have long frowned on labor unrest, they have looked the other way at a recent spate of strikes and demands for higher wages. In fact, in some cases, local authorities have done the collective bargaining for their citizens by mandating higher minimum wages. Higher wages are easy political sells, but several initiatives even centrally plan creative destruction.

One of the more ambitious initiatives appeared on the website of China’s Ministry of Industry and Information Technology one Sunday afternoon this August. The ministry lists 2,087 steel, cement, and other factories that must be closed by Sept. 30 of this year. . . . Chinese authorities have been known to dynamite inefficient factories to be absolutely certain they are closed for good — not simply fired back up again by conspiring local authorities and businesses once the heavies return to Beijing.

But the problems are immense. Firstly, the service sector, which is what needs to grow rapidly, necessitates the flourishing of entrepreneurial freedom.

Dynamic service sectors are not generally compatible with central planning because service economies are naturally discombobulated. Technocrats can calculate where a new bridge or airport will have the greatest positive impact and then build that bridge or airport — but it is much harder to dictate from on high the creation of the next Facebook or to manifest a thriving small business sector.

Then there is the issue of the aging population.

While none of these reforms is easy, China’s ticking demographic clock makes them urgent. China’s one-child policy produced a large demographic dividend in the 1980s and 1990s as those of working age had fewer dependants to support. Starting in 2015, however, China will suffer the inverse — a growing number of aged relying on a shrinking pool of young workers.

Anyone want to go long on China? Be very, very cautious. Central planning creates bubbles, and bubbles burst. And when the China bubble bursts, it is likely to be a doozy.

>The Iron Triangle, Part I

>A Thirteen Year “Recession”, and Counting

Every so often an article appears on global-economics which demands serious reflection. Ethan Devine’s recent piece in Foreign Policy, entitled The Japan Syndrome is one. The article is really about China and its economic and socio-political prospects, but it is written against the backdrop of Japan. If Devine is correct, then, the implications for New Zealand are material. One implication is that we would be foolish to put all our eggs in the Asian basket. Yet that is precisely what successive New Zealand governments appear to be doing.

Will we ever learn? Very unlikely. Politicians, as a species, believe their own press. They believe they really can make a difference when it comes to the economy. The naivety of our Prime Minister thinking that he could make a positive difference to our tourism industry is a case in point. Power and hubris are a heady narcotic. (Now to be fair, as we have often pointed out, the same naivety runs throughout the nation: the voters also overwhelming believe “yes, we can” is not only possible, but the sole authentic mode of government. “In government we trust” is the dominant idolatry and ideology of our age.) But we digress.

We will break down Devine’s article into two posts. First, his recapitulation of recent Japanese economic history. Japan, in the eighties, was touted as the economic miracle and powerhouse for the entire world. In fact, right throughout this time, it was a glass-house economy, artificially propped up, skewed, unsustainable, and doomed to implode. As a result, Japan has had to endure one of the longest recessions recorded in human history. Today, Japan’s gross domestic product is lower than it was thirteen years ago! What went wrong?

Firstly, Japan since the Second World War has been a centrally planned economy. Japan has a dominant religious commitment to social harmony, or wa. Now, this cultural value, based on a pagan cosmology, can be quite helpful when it comes to things like crime. Ordinary, run-of-the-mill Japanese do not like crime or criminals because it disturbs wa–a very bad thing. A cultural taboo. A no no. But when the values and principles of wa are applied to economics and economic systems there is an inevitable veering towards central planning and control by elites and oligopolies. The creative destruction of personal capital deployed and invested by sovereign citizens is an anathema and offensive. It is un-Japanese.   

Dithering was par for the course in a system designed to maintain the status quo. Although technically a democracy, the extent of Japan’s central planning has at times matched China’s. Japan has been centrally planned since it was ruled by Gen. Douglas MacArthur, eventually morphing into an informal alliance between bureaucrats, business leaders, and elected officials known as the “iron triangle.” Difficult reforms were not in the triumvirate’s best interest. Bankruptcies and unemployment are never palatable, but they are intolerable for a ruling class whose legitimacy depends on engineering social harmony.

We note, in passing, that the Japanese value of universal wa is anti-Christian.  In Christian cosmology, diversity is as ultimate as unity; the one equally ultimate with the many.  Therefore, diversity and difference, is as ultimate as unity and oneness.Note, also in passing, how New Zealand, with its own form of paganism,  has tried to replicate the wa of Japanese central planning. We have our own iron triangle of elected officials, bureaucrats, and business leaders trying to direct and steer our economy in preferred directions (value added production, export-led recoveries, high-tech industries, the knowledge economy). The result? Bubbles, bubbles everywhere, bursting as we speak.

This leads to Devine’s second point. Central planning of economies usually leads to huge bubbles that burst spectacularly. So it has been in the case of Japan. The central plan called for exports, exports, exports. To be in wa with exporting, the Japanese currency had to be kept low.

Sure, Japan’s export boom funded stellar growth for four decades. But its undervalued currency eventually helped blow one of the largest bubbles in history, the bursting of which still hobbles Japan today. . . .

Post-World War II Japan pioneered Asia’s export-driven growth model, sextupling GDP from 1950 to 1970 and pulling more people out of poverty more quickly than any country except modern China. Japan achieved this remarkable growth with a weak yen — which supported exports and discouraged imports — and high savings rates, which funded massive investments in infrastructure and manufacturing capacity.

But, in national economics, as in physics for every action there is an equal and opposite reaction–well, being a dismal science, and wonderfully messy, never exactly equal nor opposite, but a reaction nonetheless. Japan’s export led miracle economy generated the opposite reaction of killing the domestic (consumption, service) economy.

An unfortunate side effect of export- and investment-driven growth is that it strangles the consumer. But that’s kind of the point: The entire exercise depends on suppressing consumers as their cheap labor fuels exports. In Japan’s case, the same undervalued yen that supported exports sapped consumers’ purchasing power while yields on their savings were kept artificially low to fund cheap loans to corporations and government. And the shrunken share of economic spoils that did end up in the hands of consumers had no outlet but the heavily protected domestic market with its hopelessly inefficient and shockingly overpriced goods and services. When American humorist Dave Barry traveled to Japan in 1991, he was stunned to find department stores selling $75 melons.

Eventually the “iron triangle” worked out that they had to re-balance the economy and get that little old Japanese housewife spending.

In plain English, the Japanese were consuming relatively little while investing heavily in steel plants and skyscrapers, which didn’t leave much for fish or tourism. Belatedly, Tokyo realized that a balanced economy must also have consumption and that coating the country with factories and infrastructure wouldn’t do the trick. Japan tried to rebalance slowly through the 1970s and early 1980s: The yen was allowed to strengthen a bit each year, and consumption ticked up to 54 percent of GDP, while investment shrank to 28 percent by 1985.

But, this re-balancing act failed to work. Why? Because the internal consumption economy was so anaemic it could not cope. As exporters found the going more tough with a higher yen, they attempted to re-orientate their production and sales to the Japanese market, only to discover that a solid, efficient, productive service-sector economy did not exist. Distribution chains were hopelessly clogged with too many people. In a fast food restaurant, for example, it was not uncommon to find ten people on the forecourt, welcoming, greeting, bowing, ushering, smiling. Hopelessly inefficient

In the event, export-oriented industries did not adapt to a domestically led economy because the domestic economy was not fit to lead. Conceived as a tranquil oasis for the Japanese to enjoy their exporters’ hard-fought gains in peace, domestic Japan frowned on competition. Former Japanese Vice Finance Minister Eisuke Sakakibara termed this the “dual economy,” in which world-class exporters existed alongside domestic companies that were “very tightly regulated with a lot of subsidies from the government, which makes them extremely uncompetitive.” As a result, productivity in Japan’s service sector lagged manufacturing badly. Having nowhere better to go, the Bank of Japan’s loose money found its way into stocks and real estate instead of funding innovation.

Japanese companies large and small punted in stock and property markets, generating huge paper profits that masked their inefficient domestic businesses. The Nikkei nearly quadrupled from 1985 to 1990, and land values in many areas did the same, leaving ample opportunity for companies to pad profits with stock and real estate investments. But when the bust came five years later, domestic companies were as inefficient as ever, only now also stuffed with debt and bad investments. And they had company.

Who could ever forget the $US35,000 annual golf course memberships? Now, there is a bubble!

But wa has prevented the necessary housecleaning, the essential creative destruction that lets the bubble burst properly, so that the economy can be re-aligned and begin to grow in a more sustainable mode. Instead, Japan’s internal economy has gone from bad to worse–hence the shrinking GDP. (Again, in passing, we should note that we in New Zealand have another variant of wa–which, we remind ourselves is a thoroughly pagan idea–in that here pseudo-harmony is maintained by state welfare and entitlement payments. This, more than anything else, impedes the economy from cleansing itself and starting on a better footing. It perpetuates the hopelessly outmoded unproductive inefficiency of both our domestic and export economies. )

The bubble’s burst knocked Japan down, but torpor in the name of wa has kept it from getting back up. From one of the fastest-growing economies in the world, Japanese GDP has grown at less than 1 percent per year since 1991, and GDP today is lower than it was in 1997. Exports, though, barely missed a beat after the Plaza Accord: Despite the stronger yen, net exports actually increased in 1986 and are a bigger part of the economy today than they were in 1985. But without a functioning domestic economy, Japan cannot prosper, so it doesn’t. Persistent overcapacity restrains private investment and consumption is the last thing on most consumers’ minds, so Japan runs on exports and government spending. After 20 years of almost continuous fiscal stimulus, Japan has little to show other than mounting government debt, now nearly 200 percent of GDP.

And so, the Japanese economic miracle is fading into a wasteland. Is it not significant that no-one talks about Japan as New Zealand’s cargo-cult partner to deliver us economic prosperity any longer? Yet in the eighties and nineties we were told repeatedly that in Japan lay our economic salvation. Now, a new saviour has appeared. We have seen his star in the East. His name is China.

In Part II, we will review Devine’s argument that China’s economic future is looking eerily like Japan.

>Evil Before Our Eyes, Glory From On High

>To the Ends of the Earth

The Associated Press has carried a story which is horrifying, to say the least. It is a story of man’s inhumanity to man, of evil, of what happens when sin is left unchecked, and when men set themselves up as the only and final reference point. Yet it is also a story of God’s love and grace to the world, mediated through His people. 

It concerns the Chinese and North Koreans trafficking in women. There is a shortage of women in China, due to the benighted One-Child policy causing abortion of girl babies (since women are less likely to be able to support their parents in old age–and remember the Chinese get only one shot at this, since they are officially allowed only one child). Chinese men are now buying North Korean women as chattel-wives.

Young female refugees from North Korea are increasingly becoming a commodity in China, where they are sold to farmers for up to 1,500 dollars a head, according to a Seoul campaigner.

The human trafficking is far from new but has become more prevalent as prices soar amid a shortage of Chinese women in the countryside, said Reverend Chun Ki-Won, head of the Durihana Association. Young female refugees from North Korea are increasingly becoming a commodity in China, where they are sold to farmers for up to 1,500 dollars a head, according to a Seoul campaigner. The human trafficking is far from new but has become more prevalent as prices soar amid a shortage of Chinese women in the countryside, said Reverend Chun Ki-Won, head of the Durihana Association, which offers aid to refugees, which offers aid to refugees.

Chinese bribe the border guards, who let the North Korean women in. A large number of them are then on-sold to Chinese men looking for a “wife”.

About 20-30 percent are destined for marriage and are resold to another broker for about 2,000 yuan. They are then sold to farmers, normally for 5,000-10,000 yuan, but the trafficking does not necessarily end there.

If the customer does not like his wife, he can resell her and add about 2,000 yuan to the original price. Some women are sold seven or eight times, Chun said.

The women rarely know what is in store for them, Chun said. “Most of the time, they are just told they will get a good job in China and will be able to earn a lot of money.”

Of course, the women cannot complain or they risk being sent back to North Korea where punishment and even death awaits them. Any children coming from such marriages are not recognised by the Chinese government. This leaves the child a refugee in the country of its birth.

Children fathered by Chinese men and North Korean women are the biggest problem, Chun said.

“The Chinese government does not recognise children whose mother is not registered. If the mother runs away or is taken back to North Korea, the children are left with nothing — no nationality, no parents and no identity.”

The children can be officially registered if the father pays a fine but most cannot afford this.

Some North Korean women are put to work in internet chat rooms for sexual voyeurism. Some South Koreans try to contact them, befriend them, and help rescue them by putting them in contact with missions such as Durihana.

We thank God for Durihana and similar Christian ministries. In the face of such terrible inhumanity and depravity, we see again the wonder and glory of Christ’s redeeming work.

Post Script: a history of the Durihana mission can be read here.

>The Rise and Decline of China?

>Can The Regime Survive?

The future emergence or economic success of China is a fascinating debate. One the one hand there are those who look to China’s insatiable drive for raw materials and resources as it rushes to modernise its economy and infrastructure. Just in the past few days, for example, The Daily Mail reported that Chinas first quarter GDP growth rate came in at 11.9 percent.

On the other hand, there are those who argue that statistics from China are “official” and therefore cannot be relied upon. Far more seriously, however, are arguments pointing to the endemic corruption, bribery, illegality, and dishonesty within China. Others argue that the Chinese government has essentially lost control of the country–it has just not realised it yet.

In this vein, the World Affairs Journal recently published an article by Gordon Change, entitled The Party’s Over: China’s Endgame. Chang is author of a book entitled The Coming Collapse of China. http://rcm.amazon.com/e/cm?t=jtertullian&o=1&p=8&l=bpl&asins=0812977564&fc1=000000&IS2=1&lt1=_blank&m=amazon&lc1=0000FF&bc1=000000&bg1=FFFFFF&f=ifr Below is a synopsis of his article. The dominant narrative in the West of China as the emerging global powerhouse, overtaking all other countries within fifteen or so years, is based upon a simple extrapolation of the growth and development statistics of the past twenty years. This represents a very shaky foundation.

The Chinese economy has benefited from the reduction in trade barriers over the past twenty-five years. Consequently, its economic growth has been export led. Without export growth, its economic growth is fragile.

As we saw in the Great Depression, the exporting countries had the hardest time adjusting to deteriorating economic conditions. That is proving to be the case now as well. China’s exports fell 16.0 percent last year, and forecasts show a weak export sector for at least the remainder of this year. As a result of declining exports and other factors, Beijing presided over the world’s fastest slowing economy. China’s economy, in fact, grew by about 15 percent in 2007, but fell to negative growth at the end of 2008.

To cope with this reverse, and ever living in dread of popular uprisings, the Beijing government responded by a massive injection of liquidity into the financial system. Chang argues that this is a “sugar high”–quick acting, but soon exhausted.

Government-mandated lending pushed unneeded funds into the Chinese stock markets, which caused an abnormal jump in prices; similar funds also flooded into the coffers of casinos in Macau, which had been languishing before the stimulus program. Predictions that Beijing’s plan might trigger the biggest wave of corruption in Chinese history now seem correct. And forced lending will undoubtedly create a mountain of bad loans because banks are shoveling funds to “beauty-show projects” that have little economic viability.

The Chinese economy needs greater diversification and less (almost exclusive) reliance upon exports. It needs, for example, greater consumption. But–and here lies the rub–internal consumption can only develop if people are free to make their own purchase decisions, and enterprise is free to meet local demands. Chinese government authoritarian economic planning remains acutely uncomfortable with freeing up the market.

The price of institutionalized Communist Party decisionmaking has been the diminution of the organization’s ability to govern. Why? China’s system is now weeding out the Mao Zedongs and even the Deng Xiaopings in order to prevent the rise of charismatic leaders, particularly someone like a Chinese Gorbachev. The individuals surviving this vetting, not surprisingly, lack the dynamism and ability of their bloodthirsty but imaginative predecessors. As the current leadership works to keep the lid on, small problems grow into big ones and big ones become gigantic. None of these problems has threatened the existence of the regime because increases in economic output in recent years have masked dislocations. But as the economy begins to contract, these problems may become too big to ignore—and perhaps too big to solve.

A taste of growing living standards creates enormous tensions that can result in an authoritarian regime being torn down.

Worse yet, even if the Communist Party could solve each of these specific problems in short order, it would still face one insurmountable challenge. The economic growth and progress of the last three decades, which makes so many observers believe in the inevitability of China’s rise, is actually a dagger pointed at the heart of the country’s one-party state.

Change, in general, is tough for reforming regimes. As Tocqueville noted, it was rising prosperity that created dissatisfaction in eighteenth-century France and paved the way for revolution. These same trends played out more recently in Thailand, South Korea, and Chinese-dominated Taiwan. And they are at work right now in China itself.

Senior Beijing officials now face the dilemma of all reform-minded authoritarians: the economic progress that legitimates their leadership endangers their continued control. As Samuel Huntington taught us, sustained modernization is the enemy of one-party systems. Revolutions occur under many conditions, but especially when political institutions do not keep up with the social forces unleashed by economic change.

There is now a growing civil unrest in China. The number of protests and strikes is rising. Chang reckons there are now 120,000 civil protests and disturbances a year in China, possibly more.

Expressions of discontent are expected in destitute places like Guizhou or Gansu or Ningxia, but now they are beginning to appear in prosperous cities like Beijing, Shenzhen, and Shanghai. One of the country’s most popular heroes—executed in November 2008—was a drifter who entered a police compound in Shanghai and killed six officers and wounded four others on the eighty-seventh anniversary of the founding of the party. In a development that did not make the evening news inside or outside the country, middle-class Chinese outside his trial chanted, “Down with the Communist Party!” and carried banners emblazoned with “Long Live the Killer.” Clearly, the country’s ruling organization has lost legitimacy, even among the relatively well-to-do in the important coastal cities.

The response of the regime, thus far, has been to attempt more and more crackdowns and controls–such as greater censorship of the internet. But the attempt is failing. Technology has provided a means for people across China to express dissent–and when it gets to the stage that dissenters think “the people” are with them, revolution is no longer out of the question.

Unfortunately for the Communist Party, this new restiveness comes as technology and instant communications are changing society. News travels fast in the modern Chinese state. During the first six months of last year, China’s citizens sent 382 billion text messages. No other country has more cell phone subscribers (there are 703 million of them) or Internet users (384 million, at last count). Cyber China, the most vibrant part of the most exciting nation on the planet, reflects the growing inquisitiveness of Chinese citizens about their society. Political dissent is sizzling on the Web—and readily available, at least most of the time. It is on the Internet that officials criticize their own government for corruption and businessmen post tracts on democracy.

Beijing has been more successful than any other government in creating a Big Brother–style Internet—with the help of American technology—but it is fighting a battle in which it will never be able to claim final victory. To consolidate his hold on the country, Mao divided up the Chinese people into small units and isolated each unit from the others. Now, in a modernizing nation, citizens are putting themselves back together with cell phones and laptops. On the Internet and in other forums, the Chinese people today are having national conversations for the first time since the Beijing Spring of 1989. Because so many share common grievances, demonstrations can erupt and engulf the one-party state.

There is now a widespread disaffection and cynicism about the Chinese Government. Since all governments exist by the consent of the governed, even if only tacit, scepticism by Chinese people towards their own government presages widespread civil unrest.

As the acceptability of protest grows in China, the popularity of the Chinese government slides. “I don’t know anyone who believes in the party anymore,” one Shanghai resident said to me a few years ago. The strength of the Communist Party has been eroded by widespread disenchantment, occasional crises, continual restructuring, and the enervating effect of the passage of time. Although it is big, it is also corrupt, reviled, and often ineffective. In some parts of the countryside it no longer operates, having been replaced by clans and gangs with loose ties to officials. It’s doubtful the party even commands the loyalty of its own members. Many cadres are opportunistic careerists and many, for good or ill, disregard orders from the center. “Now, no Communist official is loyal to or will sacrifice for the party,” said democracy activist Peng Ming, just after he was released by the regime. “When I was in jail, the prison warden and guards were very respectful to me. Even when I criticized them, they would not criticize me back. Why? They said, ‘This regime will not last long. Who knows you won’t be our next leader? If we mistreat you now, you will come after us when you come to power.’”

Chang concludes with an intriguing anecdote:

Ultimately, rows of stern-faced Chinese soldiers goose-stepping through the center of Beijing on National Day tell us little about the government’s hold over the people. True, the one-party state is at high tide, but in the last thirty years, the country’s seemingly endless prosperity has fundamentally changed its people. The full extent of this change became clear to me in June 2008. I was in a dingy walk-up in my dad’s hometown, Rugao. It’s a backwater town in Jiangsu Province. I was trying to talk to a group of residents, some young and a few elderly, about the Olympics. Nobody wanted to discuss the Games, which were dismissed as just another government-staged event. All they wanted to hear was news from the American campaign trail. They wanted to hear about John McCain and Barack Obama. They wanted to hear about the workings of democracy.

>Irony Indeed

>God Moves in a Mysterious Way, His Wonders to Perform

Forty years ago some Westerners were involved in trying to smuggle Bibles into China. Christians going there on business or other reasons would sometimes take a few extra Bibles in their luggage and try to make contact with Chinese Christians, leaving the Bibles with them.

Such activity now seems bizarre. Really? You mean people actually did that? Well, yes they did. But times change. How they change.

In May, 2008 a new publishing facility was opened in Nanjing. It is run by Amity Printing Company and it prints Bibles. Only Bibles. It is the largest printing and publishing company of Bibles in the world. It has made Nanjing the Bible printing capital of the world.

Amity has the capacity to produce 12 million Bibles a year, or 23 every minute. The vast majority of these Bibles go to Christians and Christian churches in mainland China.

According to an article in Time in December 2007, published shortly before the new Amity facility opened, the Bible is now China’s new bestseller.

About 80% of the Bibles Amity produces are for domestic use, with the remainder going to Christians in Africa, Central Europe and other Asian nations. A poll early this year by East China Normal University in Shanghai of 4,500 Chinese found that 31.4% considered themselves religious, a proportion that suggests 300 million Chinese believers; of the religious respondents, Christians represented 12%, or 40 million nationwide. Demand has grown to the point that the foundation plans to open a new, 515,000-square-foot (48,000 sq. m.) printing plant next year, which will allow Amity to turn out more than a million books a month. It’s thought to be one of the largest Bible production facilities in the world.

To all intents and purposes, the Bible is now freely available in China; most copies and editions are being published by an officially sanctioned organization: Amity.

Under Chinese law, the Bibles Amity prints can be distributed only through officially sanctioned churches. But in recent years it has become easier for house churches to procure Bibles, often buying them through registered churches. Some Bibles are even appearing in bookstores, despite lacking the registration numbers required of any printed work. Jean-Paul Wiest, an expert on Chinese Catholicism who teaches at the Beijing Center, says his students have no problems getting religious materials. “Bibles are very widely available,” he says.

As the ancient prophet said, they shall come to Zion from the ends of the earth.

>Fighting Bribery

>Would Zero Koha Notes Work Here?

We posted recently upon the endemic corruption that exists in China, where “fragrant grease” is required to get official approval for virtually any economic activity. Corruption is not isolated to China. India is also notoriously corrupt and lower level public servants have made the bribe an art form.

A rather quixotic idea is apparently helping break down the institution of bribery: zero rupee bank notes. An anti-corruption Non Government Organization, called 5th Pillar has started issuing the notes. The idea is that the poor and defenceless can use these false banknotes as a protest against officials who will not do their jobs until someone pays them money–which, of course, is officially illegal.

The concept is explained as follows:

The zero currency note in your country’s currency is a tool to help you achieve the goal of zero corruption. The note is a way for any human being to say NO to corruption without the fear of facing an encounter with persons in authority.

Next time someone asks you for a bribe, just take your country’s zero currency note and hand it to them. This will let the other person know that you refuse to give or take any money in order to perform services required by law or to give or take money to do something illegal.

Strange as it may seem, apparently these protest bank notes have an effect. Vijay Anand, 5th Pillar’s president recently explained how it works.

According to Anand, the idea was first conceived by an Indian physics professor at the University of Maryland, who, in his travels around India, realized how widespread bribery was and wanted to do something about it. He came up with the idea of printing zero-denomination notes and handing them out to officials whenever he was asked for kickbacks as a way to show his resistance. Anand took this idea further: to print them en masse, widely publicize them, and give them out to the Indian people. He thought these notes would be a way to get people to show their disapproval of public service delivery dependent on bribes. The notes did just that. The first batch of 25,000 notes were met with such demand that 5th Pillar has ended up distributing one million zero-rupee notes to date since it began this initiative. Along the way, the organization has collected many stories from people using them to successfully resist engaging in bribery.

One such story was our earlier case about the old lady and her troubles with the Revenue Department official over a land title. Fed up with requests for bribes and equipped with a zero rupee note, the old lady handed the note to the official. He was stunned. Remarkably, the official stood up from his seat, offered her a chair, offered her tea and gave her the title she had been seeking for the last year and a half to obtain without success. Had the zero rupee note reached the old lady sooner, her granddaughter could have started college on schedule and avoided the consequence of delaying her education for two years. In another experience, a corrupt official in a district in Tamil Nadu was so frightened on seeing the zero rupee note that he returned all the bribe money he had collected for establishing a new electricity connection back to the no longer compliant citizen.

Anand explained that a number of factors contribute to the success of the zero rupee notes in fighting corruption in India. First, bribery is a crime in India punishable with jail time. Corrupt officials seldom encounter resistance by ordinary people that they become scared when people have the courage to show their zero rupee notes, effectively making a strong statement condemning bribery. In addition, officials want to keep their jobs and are fearful about setting off disciplinary proceedings, not to mention risking going to jail. More importantly, Anand believes that the success of the notes lies in the willingness of the people to use them. People are willing to stand up against the practice that has become so commonplace because they are no longer afraid: first, they have nothing to lose, and secondly, they know that this initiative is being backed up by an organization—that is, they are not alone in this fight.

This last point—people knowing that they are not alone in the fight—seems to be the biggest hurdle when it comes to transforming norms vis-à-vis corruption. For people to speak up against corruption that has become institutionalized within society, they must know that there are others who are just as fed up and frustrated with the system. Once they realize that they are not alone, they also realize that this battle is not unbeatable. Then, a path opens up—a path that can pave the way for relatively simple ideas like the zero rupee notes to turn into a powerful social statement against petty corruption.

We could do with some of these notes in New Zealand. We could call them zero Koha Banknotes. Imagine how a certain now convicted and imprisoned Cabinet Minister might have been cut off at the pass if a particular Thai tiler had handed him a Koha Note, instead of working on his houses for “free”. And it could have saved one Owen Glenn an enormous amount of money if he had paid Winston Peters his simony money in zero Koha Notes. Not to mention his large donation to the Labour Party in zero Koha Notes. His gong would not have cost him real coin, then. Not to mention those smelly immigration deals in exchange for “donations” to a certain political party.

Oh, but hold on. We are getting confused. All those shady deals had to do with bribing officials and politicians to do wrong, not with getting them to follow the law. Zero Koha Notes would not have worked at all. It strikes us that New Zealand’s corruption is more like the Chinese than the Indian variety. In India, public officials require bribes to persuade them to do their jobs. In China, officials receive bribes in order to bend, if not break the law. And so, it seems, is the case in New Zealand.

>Sidelining of Europe

>Copenhagen and the Demise of Green Utopia . . .
. . . With sad lessons for little ol’ NZ

Benny Peiser, director of the Global Warming Policy Foundation and the editor of the climate policy network CCNet. has written a piece arguing that Copenhagen’s failure represents the beginning of the end of climate hysteria. It also marks the end of Western dominance in geo-politics.

He makes the following points:

1. Copenhagen was never going to succeed. The hope was hype; it was credible only to the credulous.

The failure of the climate summit was not only predictable – it was inevitable. There was no way out from the cul-de-sac into which the international community has manoeuvred itself. The global deadlock simply reflects the contrasting, and in the final analysis irreconcilable interests of the West and the rest of the world. The result is likely to be an indefinite moratorium on international climate legislation. After Copenhagen, the chances for a binding successor of the Kyoto Protocol are as good as zero.

2. Europe has been sidelined in a global sense.

The extent of the debacle and the shift in the balance of geopolitical power was demonstrated by the fact that the final accord was made without the participation of the European Union. The exclusion of Europe is a remarkable symbol of the EU’s growing loss of influence, a green bureaucracy that was not even asked whether they agreed with the non-binding declaration of China, India and the USA. Although the Copenhagen conference was held in a European capital, the negotiations and the final result of the conference were totally outside European involvement.

The failed climate summit caused a tectonic shift in international relations and left behind a new political landscape. After Copenhagen, green Europe looks rather antiquated and the rest of the world looks totally different. The principles on which Europe’s climate policies were founded and which formed the basis of the Kyoto Protocol have lost their power while the EU itself lost authority and influence.

3. India and China’s persistent “no” was powerful. We might also add that the West had no bargaining chips. Once China could have been levered by the promise of entry into the WTO; India by promises of military support in the face of a Pakistani threat. But the West, severely indebted to the East, held no bargaining chips.

. . . there is little doubt that China and India are the big winners of the Copenhagen climate poker. The two emerging superpowers managed to win new strategic allies, even among Western nations. China’s and India’s strategy to align themselves with other developing countries in opposition to protectionist threats by the U.S. and the EU proved itself as very successful. In the end, their persistent No even forced the Obama administration to join the anti-green alliance.

The Asian-American Accord connotes a categorical No to legally binding emission targets. This means that a concrete timescale for the curtailing of global CO2 emissions, not to mention the reduction of the CO2 emissions, has been kicked into the long grass. The green dream of industrial de-carbonisation has been postponed indefinitely.

4. Europe has not yet realised the extent of its diminution. It continues to speak as if Mexico in 2010 will reach a binding agreement. (One could add our own Prime Minister’s voice to this Greek chorus.)

Despite the manifest fiasco, considerable resistance to admit defeat and to accept the new reality still exists in many European capitals. Thus, we hear the usual post-conference mantra: but at the next climate conference we will be successful. The decisions which were postponed in Copenhagen will be agreed to at the next summit Mexico later this year.

This green rhetoric has no basis in reality. It’s a green fata morgana. After all, the rejection by the developing world to commit to legally binding emission targets is not a tactical negotiation ploy. The categorical NO is absolute and non-negotiable. Due to the evident lack of realistic energy substitutes, developing countries have no choice but to continue to rely on the cheapest form of energy, i.e. fossil fuels – for the foreseeable future.

5. Eventually, European countries will back away from climate politics and policies.

The Copenhagen fiasco will undoubtedly trigger a rethinking of the European climate policy. Especially East European member states – but probably also the Italian and German governments – will be demanding a drastic reassessment of unilateral climate targets which are turning into an economic liability and a political risk. They are already putting a heavy burden on European economies as well as driving ever higher the costs for energy, industrial output and the general public. . . .

Even in the Western world, the general climate hysteria shows a marked cooling. If recent opinion polls are to be believed, the obsession with climate change, which was a common feature during much of the 1980s and 90s no longer exists. In its place, climate fatigue is spreading. The novelty of climate change and the habitual alarms have lost their original shock value. Instead, the public seems to be warming to the idea of gradual and inevitable climate change.

5. Unilateral Green policies are now becoming a political liability.

International climate politics face a profound crisis. Green taxes and climate levies in whatever form and shape have become political liabilities. Revolts among eastern European countries, in Australia and even among Obama’s Blue Dog Democrats are forcing law-makers to renounce support for unilateral climate policies. In the UK, the party-political consensus on climate change is unlikely to survive the general elections as both Labour and the Tories are confronted by a growing public backlash against green taxes and rising fuel bills.

On the assumption that Australia shows a marked swing towards Tony Abbott in the next election–and Abbott has already made rejection of “cap and trade” the signature issue of this year’s election–New Zealand will be left in a pickle. We have unilaterally committed to stabbing ourselves in the back with our reckless “cap and trade” legislation. When will the government repeal the legislation?

We are not holding our breath. Our Prime Minister shows signs of substituting the stubbornness of ideology with the stubbornness of, well, stubbornness. “Because I said so,” is becoming the signature and hallmark of John Key as Prime Minister. Beneath the cheery demeanour may well lurk a growing cancer of arrogance. Power doth corrupt so quickly.

It is interesting that John Key’s Prime Ministership has become marked so far not by what he has done, but by what he has refused to do–to the point of recklessness. His refusals have been damaging to all.

His stubborn refusal to amend the anti-smacking legislation has left him in the ridiculous and dangerous position of endorsing “modest” lawbreaking for every household in the country.

His stubborn refusal to scrap or at least suspend the Emissions Trading Scheme has substantially weakened the country economically–when we are already in hock up to our eyeballs. And let us never forget that insisting on an ETS being in place was to give New Zealand street cred in Copenhagen. Now there is an oxymoron of gargantuan proportions.

John Key will take years to wipe the thick layers of egg now plastered all over the face of his “because I said so–I know best” government.

>A Mountain of Fragrant Grease

>How the Chinese System Works

Bribery has been part of Chinese society for centuries. The Chinese government has publicly condemned corrupt behaviour, and vowed to stamp it out. The vow and the stamping are hollow. The practice is so intrinsic to China that that it is difficult to see how “top down” governmental programmes to outlaw bribery, graft, and fragrant grease are going to succeed now or in the foreseeable future. It could be argued that China is one great, vast, decentralised mafia.

In a recent piece in the Sydney Morning Herald, China expert, John Garnaut profiled some research by Graeme Smith of the University of Technology in Sydney. Smith has spent considerable time focusing upon one county in Anhui province, tracing where the money flows.

Smith has spent four years getting to know everyone he can in Benghai (a pseudonym for the actual county Smith researched) and working out exactly how the money flows. He has now mapped the internal logic of Chinese corruption in Political Machinations in a Rural County, in The China Journal.

The first thing to note is that the average Chinese citizen does not view the practice of fragrant grease as morally wrong. It is just what needs to be done in order to get ahead or make things happen.

The perpetrators of corruption are rarely morally good or bad. Rather, they are playing by the unwritten rules of a system that makes them utterly dependent on the patronage of those higher up the tree – and oblivious to the needs of those below.

The object is to send money up the tree (the state run bureaucracy) to win favour, to make sure government and state money comes back down.

One reason Benghai County is doing well is that it has opened embassies in seven cities for the purpose of cultivating higher officials. ”What do you think these offices do? Hand out brochures? The money goes up, and then the money comes down,” a Benghai business source told Smith. Despite its relative wealth, or perhaps because of it, Benghai convinced Beijing to reinstate it on China’s ”impoverished county” list, which led to two major international aid projects and additional national infrastructure projects. Once the money comes down, a huge and rapidly growing bureaucracy divides it up in places like Sauna City.

Within Benghai county, the Communist Party secretary is king. He has the final say in all personnel decisions and the interpretation of central government policy. He runs the bureaucracy like a giant franchise system.

The 12 members of his standing committee vie for his favour rather than hold him to account. Below them are the party departments and government bureaus, whose rank and status are determined mainly by the amount of money flowing through them from above.

In order to get jobs within the vast state bureaucracy and to secure contracts and funding and permits for business activity, one must have the right connections, and make the right moves. Family links are often critically important; but bare nepotism has to be overlaid with money and payments.

The Organisation Department is on top. Smith says all the township party secretaries paid money for their posts, as did the heads of 80 per cent of government bureaus. Lower officials pay lower sums to ”show their appreciation”. . . . Job applications in Benghai are not simple commercial transactions. Candidates must also be capable and have good family or personal connections. Paying in the right manner to the right person is an art in itself.

“To avoid potential charges of bribery, there are games of mahjong between the spouses of the relevant actors where the applicant’s wife has a deliberate bad run of luck,” writes Smith. “Department store cards arrive in red packets; overpriced tea is purchased from a retailer recommended by the contact; useful intermediaries are banqueted; and trust-building visits to saunas or massage parlours smooth the deal.”

There is a ”shadow state” of personal secretaries, chauffeurs and relatives to mediate the deal-making process. One driver has now earned himself three investment properties.

When a business deal involving state approvals and funding, the pressure to “spread the wealth” around amongst one’s friends and extended family is immense.

The status of bureaus shift with government policy. Each new grant from Beijing is an opportunity to open a new bureau or add graduates, retired soldiers and relatives to the payroll of an existing one. ”The pressure from the friends and relatives of county government staff is particularly acute,” writes Smith.

The fortunes of each institution can usually be measured by the number of shiny new government cars parked outside. The most impressive office in Benghai was set up to supervise an expansion of a hydroelectric dam, which provided a sudden windfall from construction kickbacks. The hospital is also a lucrative business, with cadres making their money from fee-paying patients and pharmaceutical kickbacks.

Surrounding each bureau is a cartel of relatives and friends supplying goods and services at a healthy surcharge. ”A cut of around 20 per cent will be taken by the gatekeeper who purchases goods or services from these firms, either up front as cash, or later as a gift,” writes Smith. Occasionally, however, an official gets overly greedy or the winds of political favour blow the wrong way, and someone must be sacrificed.

A deputy secretary was recently placed under house arrest for receiving more than 2 million yuan in construction kickbacks. The real sums involved were thought to be much larger. There was no open court trial and the bribe-paying businessmen were left alone, ensuring the other officials who were implicated would not be publicly exposed

The vast corrupt system works so long as people get what they want; it will crumble only when the majority of people refuse to pay or partake–and that will require a complete change of religious and social world-view from the bottom up.

The logic of Chinese corruption requires that the 95 per cent of citizens who ultimately foot the bill do not complain too loudly. That’s where the propaganda department, the public security bureau and the petitions office come into play.

My guess is that the sorry state of governance in Benghai is more or less replicated across China’s 1600 rural counties. Equivalent systems operate in urban areas, although usually in less blatant form. The patronage networks extend well into the Politburo.

Corruption and nepotism might well be the party’s single greatest public relations problem. But it is also an effective strategy for keeping cadres, bureaucrats, soldiers and business people unswervingly deferential to those above them.

New Zealand has signed a free trade agreement with China. It is almost inevitable that the culturally endemic Chinese practice of fragrant grease will insinuate itself into the practices of NZ firms doing business in China and trading in that country. No doubt some very public corporate scandals will eventually surface. It would be smart for any NZ business operating within, or trading with China, to face this issue up front, determining from the outset how the problem is likely to present itself, and what counter-measures the company will adopt. Smith’s research will be very valuable in this regard.

As China becomes increasingly christianised systemic corruption will fade away. For the moment, however, neither rules nor regulations, politburo fulminations nor propaganda campaigns, nor occasional public scape goats will make any dent in the problem. It is too vast, too ingrained.

But in the end, Christians will end up preferring to do business with other Christians naturally, because it will be easier and less expensive. Non-Christians will end up preferring to do business with Christian corporations because of the “above board” nature of transactions. In the end bottom-up rectitude and widespread integrity will boil down the use of fragrant grease. At that time Government proscriptions against bribery and corruption will end up with street credibility and will consequently have traction.

In the meantime, the fulminations of the Politburo remain cavernously hollow.

>The Techtonic Plates Shift in Geo-politics

>Things Have Changed and We Are Responsible

We have posted several articles on the emergence of China as a leading, if not increasingly dominant global political power.

China recently executed a British citizen convicted of drug trafficking. It is claimed that he suffered from a bi-polar mental disorder and so was an easy mark for recruitment as a drug mule. The British government has reacted angrily to the execution. China abrasively told the UK government to “pull its head in”.

Chinese stridency–previously uncharacteristic–reflects how rapidly the balances of global political power have shifted. Consider the following report from Christopher Bodeen, published in the NZ Herald.

Beijing’s insistence in carrying out the death sentence reflects both the communist government’s traditional distrust of foreign interference and its newfound power to resist Western pressure.

“We express our strong dissatisfaction and opposition to the British accusation,” Foreign Ministry spokeswoman Jiang Yu told reporters at a regularly scheduled news conference. “We urge the British side to correct its wrongdoing to avoid causing damages to bilateral relations.”

Note carefully the tone and frame of this response by the Chinese Foreign ministry. The implication is clear–if Britain does not shut up, it will be the worse for them. Not for China.

What is now dawning on the West (far too late, of course) is that they have little or no leverage any longer over China.

But with its rising global economic and political clout, China appears increasingly willing to ignore Western complaints over its justice system and human rights record. And as it relies more and more on China’s cooperation to solve global problems – from the recession to climate change – the West has few ways to exert pressure on Beijing.

China’s leaders “feel freer than their recent predecessors to disregard world pressures,” said Jerome Cohen, an expert on China’s legal system at New York University School of Law.

Whereas in the past, the West may have held out its approval as a carrot for China to improve its record on human rights, analyst Kerry Brown said now countries like Britain are now the ones eager to maintain good relations.

“There is a feeling that we have very limited leverage on China. We have to pick our territory where we can have an impact,” said Brown, a China expert at the Chatham House think tank. “It’s becoming more complicated by the day.”

Clearly a new age has dawned–at least in a global geo-political sense. The Scriptures say that the borrower becomes the lender’s slave. The twin debts racked up now for decades in the UK, the US, and Europe of balance of payments deficits and fiscal deficits are a direct outcome of the politics of consumption, of using other peoples’ money to sustain an unsupported living standard. This has meant, in a nutshell, that China has funded the sybaritic self-indulgence of the West. With the “developed” world deeply in hock to China, the latter is now making it clear that the West must now learn to dance to China’s tune, not the reverse.

Moreover, the West has manufactured a pseudo-global crisis: man caused global warming. The unintended consequence of this has been a self-imposed monastic-like restriction upon economic growth and energy exploitation in the West. The self-imposed nonsense of needing to reduce emissions of carbon-dioxide has resulted in the self-abnegation of the West before China. The West is now little more than a mendicant friar pleading for a little consideration.

The point is that there was nothing inevitable about this development: it has been entirely self-caused. When the electorates in the West decided that it was OK for their governments to borrow and steal to sustain a standard of living to which they were not entitled, the outcome was inevitable. It was all going to collapse. It was just a matter of time.

The once mighty West is well on its way to becoming little more than a whimpering lap dog. Unbelief has no-one to blame but itself. When a nation decides to break the Covenant of Grace, the fall of the curses of that Covenant becomes inevitable. The only real long-term hope is that men and women throughout the West turn back to the God of the fathers, humbling themselves before Him.

>Fallout Continues

>I Was There. I Saw It

We posted yesterday on how Copenhagen demonstrated the rising independence and geo-political power of China. Now a “fly on the wall” article in the Guardian by Mark Lynas has been published–demonstrating just how disdainful and dismissive China actually has been of the US and the West.

Now some of the this probably reflects hyped up conspiracy theorising. Moreover, as we read this it will pay to keep in mind the ferociously tribal commitment of Lynas and the Guardian to Warmist propaganda. Nonetheless we do not doubt the general thrust of his description of the matter.

Copenhagen was a disaster. That much is agreed. But the truth about what actually happened is in danger of being lost amid the spin and inevitable mutual recriminations. The truth is this: China wrecked the talks, intentionally humiliated Barack Obama, and insisted on an awful “deal” so western leaders would walk away carrying the blame. How do I know this? Because I was in the room and saw it happen.

Clearly, Lynas believes that China had a strategy to rort the conflab before it actually took place. This is a damning indictment of China acting not in good faith, but with a degree of duplicity.

He goes on to whack environmental groups who swallowed the Chinese perspective and drone-like blamed the West for the talks’ failures.

China’s strategy was simple: block the open negotiations for two weeks, and then ensure that the closed-door deal made it look as if the west had failed the world’s poor once again. And sure enough, the aid agencies, civil society movements and environmental groups all took the bait. The failure was “the inevitable result of rich countries refusing adequately and fairly to shoulder their overwhelming responsibility”, said Christian Aid. “Rich countries have bullied developing nations,” fumed Friends of the Earth International.

We think this is a bit over the top and too byzantine to be credible. The environmental groups did not swallow China’s line: they already are deeply imprisoned in a Marxist world view which wants redistribution by fiat actions of a world government, period. If the talks in Copenhagen were to fail, the environmental groups had already predetermined decades ago that they would regard it as the fault of exploitative rich nations.

But, it is the sub-text of Lynsas’s article that is much more credible. China was a “law unto itself” at the talks. Obama’s “new” approach to US foreign policy–multi-lateralism–was brushed aside like a pesky fruit fly.

Here’s what actually went on late last Friday night, as heads of state from two dozen countries met behind closed doors. Obama was at the table for several hours, sitting between Gordon Brown and the Ethiopian prime minister, Meles Zenawi. The Danish prime minister chaired, and on his right sat Ban Ki-moon, secretary-general of the UN. Probably only about 50 or 60 people, including the heads of state, were in the room. I was attached to one of the delegations, whose head of state was also present for most of the time.

What I saw was profoundly shocking. The Chinese premier, Wen Jinbao, did not deign to attend the meetings personally, instead sending a second-tier official in the country’s foreign ministry to sit opposite Obama himself. The diplomatic snub was obvious and brutal, as was the practical implication: several times during the session, the world’s most powerful heads of state were forced to wait around as the Chinese delegate went off to make telephone calls to his “superiors”.

China was clearly telling the rest of the world to go take a running jump–ever so politely, ever so subtly, of course. But a running jump nonetheless.

China, backed at times by India, then proceeded to take out all the numbers that mattered. A 2020 peaking year in global emissions, essential to restrain temperatures to 2C, was removed and replaced by woolly language suggesting that emissions should peak “as soon as possible”. The long-term target, of global 50% cuts by 2050, was also excised. No one else, perhaps with the exceptions of India and Saudi Arabia, wanted this to happen. I am certain that had the Chinese not been in the room, we would have left Copenhagen with a deal that had environmentalists popping champagne corks popping in every corner of the world.

How has China been able to put itself in such a strong position? It is not in debt to the rest of the world; rather the rest of the developed world is indebted to China. That matters–far more profoundly than most in the West would ever understand. To the average pollie and man-in-the-street in the West, debt is just a pen-stroke, nothing less, nothing more. Money and wealth is free. A rude awakening draws nigh!

Moreover, most Western leaders had eviscerated themselves into positions of weakness because they had foolishly refused to be responsibly sceptical about global warming propaganda. They had to a man virtually become true believers thinking that the situation for the globe was desperate. The desperate do not make good negotiators–ever. They are easily manipulable.

And so it happened. The Western leaders had so wound up their political constituencies on the urgent and real dangers facing mankind–so as to justify the extraordinary imposts of rules, regulations, and taxes upon a gullible electorate–that when it came to negotiation they were totally enervated. If they went back home with nothing, they would have to tell their constituencies that they had effectively destroyed mankind. Such monumental failure would be political suicide. Or, they would have to spin the failure a different way, suggesting that climate change is not such a problem after all. That too would represent political suicide. The upshot is that China was able easily to control the complete panoply of Western leaders and their governments.

This does not mean China is not serious about global warming. It is strong in both the wind and solar industries. But China’s growth, and growing global political and economic dominance, is based largely on cheap coal. China knows it is becoming an uncontested superpower; indeed its newfound muscular confidence was on striking display in Copenhagen. Its coal-based economy doubles every decade, and its power increases commensurately. Its leadership will not alter this magic formula unless they absolutely have to.

This may come as a bit of a shock to the elites in the West. China is not western. Imagine that! It is resolutely focused upon one thing above all else–its own economic development. It is the only way it can stop the Chinese people revolting against their government. It is in a chute, going faster and faster. It cannot stop. It cannot get off. Develop or the nation will be consumed in a furious conflagration of internal revolution. Ever realistic, ever pragmatic the Chinese government views the West with its fanaticism over global warming as either mad or puerile. Either way, it is going to have nothing to do with it.

Copenhagen was much worse than just another bad deal, because it illustrated a profound shift in global geopolitics. This is fast becoming China’s century, yet its leadership has displayed that multilateral environmental governance is not only not a priority, but is viewed as a hindrance to the new superpower’s freedom of action. I left Copenhagen more despondent than I have felt in a long time. After all the hope and all the hype, the mobilisation of thousands, a wave of optimism crashed against the rock of global power politics, fell back, and drained away.

Better get used to it, you silly billy. China is not going to be swayed in the same way as a Gordon Brown, or an Obama, or a Kevin Rudd or an Angela Merkel can be so easily manipulated–by fatuous appeals to guilt and pity. Such things are only (temporarily) effective in a culture which has elevated demand rights into a religion. For our money, China’s real-politick is a refreshing and salutary change.

We suspect that in time it will be so far reaching globally that it will see the end of the United Nations. Now that would be something worth celebrating. The world would be a much safer place if nations and governments stopped trying to poke their noses into the affairs of other countries, but instead concentrated upon their duties and responsibilities toward those whom they govern. Like China, for instance.

>Geo-political Shifts

>A New Power is Rising in the East

It is safe to say that the overwhelming view of Copenhagen is that it was distinctly underwhelming. From the Climate Change zealots to the opportunistic conspiratorial capitalists, the consensus is that it was a failure. In the end, it was much ado about nothing. Jonah Hull, blogging in Al Jazeera gives us a sense of this:

Mid-afternoon on Saturday December 19 and Yvo de Boer, the UN’s chief climate negotiator, has just uttered the words that perhaps best describe the nature of the deal here.

Asked what it means that the Copenhagen Accord has been ‘taken note’ of by the parties, he replied: “‘Taken note’ means that it has been recognised by the parties without anyone actually having to subscribe to it.”

That is the shape of success at Copenhagen.

Hailed as an “essential beginning” by UN secretary general Ban Ki-Moon, the accord is little more than a guideline for future talks. It commits no single party to any single firm action. There are no precise targets, no accountable promises, no deadlines.

Certainly, it is success clawed from the jaws of defeat. But it is an expedient success that will be trumpeted by a few as far more than it is.

In reality, this conference simply could not afford to be deemed a failure. The global momentum to recognise and act against climate change – however long that action may be in coming – stood to be lost or irretrievably damaged.

Copenhagen could not be allowed to fail. Therefore, the political spinmeisters would have called it a significant step forward if all the delegates had stood on their heads for twenty minutes, chanting Kumbaya. But the reality is that its declarations were nothing more than a gesture, and a hollow one at that.

Nevertheless, substantial change occurred–changes that will shape the world for decades, even centuries to come. No, we are not referring to the delicious divine irony which saw He who sits in the heavens laugh at the conspiracies of kings and rulers to re-establish the Tower of Babel and a united, one-world government. (Psalm 2:1–4) All Christians understood the significance of a massive snow storm unleashed upon the West–that is, Europe and North America–just when Copenhagen had reached the zenith of its gaseous windbagging.

Yes, it is true that we had to smile seeing the mighty President of the United States, who had strutted forth on to the stage at Copenhagen, assuring the world (with a unfortunate turn of phrase) that he had come to Copenhagen “to act”, only to beat a hasty retreat, fearing that he might not be able to return to Washington if he did not arrive before the worst of the snowstorm hit.

And, yes, the inconvenience and frustration of Eurostar commuters notwithstanding, we had to smile at seeing the mighty trains using the Chunnel grind to a halt in that blizzard, because it appears they had been engineered inadequately for such cold weather–the coldest, we are told, in living memory–at least the living memory of the design engineers, even as President Martinet Sarkosy was irritably stamping his feet at the failure of the world to listen to his hectoring jeremiads about global warming.

These things were ironic and deliciously so. Christians joined with the Lord of heaven and earth in laughing at the arrogant hubris of the men of straw, the hollow men. But Copenhagen was also a harbinger of things to come. The global balances of power are shifting to the east and the south of the globe and Copenhagen proved a demonstration of the case.

It emerged soon after the debacle that the West regarded China as the bete noire of the summit. It destroyed the vaunted hopes of West, leaving them in tatters. Ed Miliband fulminated against China, accusing it of destroying any possibility of an agreement. Jonathan Pearlman, writing in the Sydney Morning Herald, reckons that at Copenhagen, China took a “great political leap forward”. He says that the older international doctrine of Deng Xiaoping has been superseded by a new willingness to “go it alone”.

Deng Xiaoping set forth a so-called 24-Character Plan for securing China’s place in the world. ”Hide our capacities and bide our time; be good at maintaining a low profile; and never claim leadership,” the then Chinese leader espoused early last decade.

But this year will be remembered, say analysts, as the year China abandoned its diplomatic quietism and Beijing displayed a clout on the international stage to match its global economic weight; the year Deng’s maxims were renounced.

The lesson for Australia and the United States, as China’s audacious diplomatic manoeuvring at Copenhagen demonstrated, is that they will increasingly have to accept a world in which China is willing – and able – to assert interests at odds with those of the West.

”Until now it has been possible to say that China’s economy has been growing but its political power has been lagging behind,” says Hugh White, a professor of strategic studies at the Australian National University and a visiting fellow at the Lowy Institute.

”Not any more – 2009 has been the year in which China’s growing political power has become an inescapable fact of international politics … The idea that we can dictate to China its position on issues is an anachronistic fancy. Copenhagen has been a demonstration of that.”

The recent global credit crunch probably proved the death knell of the old Deng Xiaoping doctrine. China has had to face up to the risks and consequences of being the major owner of US debt: it inevitably has realised that the borrower (the US) is the slave of the lender (China). Consequently, although the West hailed China’s moves to support the West in what was essentially a Western problem, it has become more and more clear that it was doing so for its own reasons, not out of deference or respect for the West. Copenhagen confirmed the point.

A dramatic show of China’s willingness to exercise global leadership occurred during the financial crisis, says Professor White, when its role was largely welcomed and encouraged by the West.

But Copenhagen has demonstrated – to Western eyes – a less agreeable side to Chinese assertiveness.

Across the developed world, China’s brazen stonewalling of efforts to reach a legally binding treaty on climate change was greeted by a stunned, angry and almost visceral response.

Australian officials, led by the Prime Minister, Kevin Rudd, were understood to be irate.

The US President, Barack Obama, was reportedly stood up by Wen Jiabao and barged in on a meeting that the Chinese Premier was holding with other leaders.

The British climate change secretary, Ed Miliband, showed even less restraint, accusing China of ”hijacking” the summit.

”The last two weeks at times have presented a farcical picture to the public,” he wrote in The Guardian. ”This was a chaotic process dogged by procedural games … We cannot again allow negotiations on real points of substance to be hijacked in this way.”

Malcolm Cook, the Lowy Institute’s program director for East Asia, says that for the first time the world is experiencing the emergence of global powers – China and India – that are also developing nations.

As if to underline the point, the Indian Environment Minister has openly acknowledged that his country worked with China to scuttle the West’s self-righteous, vaunted hubris.

India says it worked with China and others to thwart pressure from the developed world to agree to binding emission targets at the Copenhagen climate conference last week.

Environment minister Jairam Ramesh says all of Delhi’s concerns were safeguarded, including resisting calls for global reductions in carbon emissions.

He says the BASIC group of countries comprising China, India, South Africa and Brazil, have emerged as a powerful force in climate change negotiations, in the face of what he called relentless pressure from richer countries.

Geopolitical power is moving relentlessly to the south and the east. This will carry its own threats and challenges, but one thing is to be celebrated: at least the self-loathing of the Western elites, the hatred of their own historical roots, and the deep guilt over their inherited blessings, will no longer hold the globe in their thrall.

Far more enlightened national self-interest will likely return and that has got to be a much better outcome than the vacuous pretensions holding sway in the West which seek to make all countries follow the West’s dubious example. The West is a paper tiger. Its Babel-like attempts to build a brave new world upon the foundations of human rights are not just empty vainglory–they have proved dangerous and deadly. Beware when an arrogant nation tries to tell other peoples what they ought to be doing.

>More Suffering for Chinese Christians

>New Persecution Wave?

We have blogged before on how the Government of China is greatly intimidated by loss of control of its vast subject population. John Garnaut, the China correspondent in the Sydney Morning Herald recently posted two articles on Chinese government oppression of its people. The second deals with a new persecution of “house churches”.

Firstly, he reports on how people who complain against officials are ending up being imprisoned and persecuted.

How a complaint led to an ordeal in a secret prison

November 14, 2009 – 12:00AM

Liu Yuhong’s problem began as a private land dispute with the family’s landlord. But small troubles have a habit of escalating in China, a country that lacks institutions for effectively resolving disputes.

Last year Liu’s parents lodged a complaint at the local government’s petitions office. Since that brave and perhaps foolhardy move, the family has been drawn into a vortex of state-sanctioned kidnapping, violence and possibly worse.

”My father is 69 years old and he is in a re-education-through-labour camp,” she told the Herald on Wednesday.

”A baby has died … and I don’t know whether my mother is dead. For a rural woman, that is too much.”

In the absence of an effective legal system, citizens are officially encouraged to take their grievances – everything from high-level corruption to land disputes – to a unique Chinese institution: the petitions office.

These were established in imperial times and have since been replicated at almost every tier of government.

The design flaw of the petitions system is a fundamental one: the offices are typically run by the same officials that the petitioners are complaining about. When ”petitioners”, as they are called, don’t get results at the local level they tend to aim higher, in Beijing.

Yu Jianrong, a scholar at the Chinese Academy of Social Sciences, surveyed 632 Beijing petitioners and found only one case that had been satisfactorily resolved.

Professor Yu has warned that officials had incentives to subvert the petitions system because complaints relating to their jurisdictions count directly against their performance appraisals. He says the petitions system is strained to breaking point because the party refuses to loosen its grip on the political and legal systems, thus choking off alternative ways for disputes to be debated or independently adjudicated.

The Communist Party ignored his advice, choosing instead to reassert its primacy over the country’s media and courts.

And so China’s enormous security and legal apparatus devotes ever-increasing resources to preventing complaints from being officially registered or publicly aired, rather than resolving them.

The remainder of the article documents the particular sufferings and abuse suffered by Liu as an example of the cruelty and oppression of the regime.

The second article looks at how the Chinese Government is flexing its muscles against Christians.

BEIJING: President Barack Obama, scheduled to arrive in China last night, is under pressure to press the Chinese Government to halt a new campaign of “persecution” against the country’s flourishing network of unregistered churches.

The largest of these “house churches” in Beijing, Shanghai, Chengdu and Linfen have been evicted from their buildings in recent weeks and a number of their leaders have been questioned, detained or arrested.

“Obama should tell President Hu Jintao to stop the persecution of China’s house churches,” said Zhang Mingxuan, the president of the Chinese House Church Alliance, speaking by phone from a hotel in Nanyang where he was being detained for the duration of Mr Obama’s visit to China.

Fan Yafeng, a prominent church leader, legal scholar and human rights activist, told the Herald that the growing crackdown against house churches was larger and more important than campaigns earlier this year against human rights lawyers, the media and the internet.

He said the informal Christian church network was a more formidable adversary than any other section of China’s civil society because of its capacity to mobilise within China and abroad. “This is the Communist Party’s battle of life and death,” said Professor Fan, who was sacked from his Government think-tank job two weeks ago.

He did not think the party could win this battle because of the “contrast” between Christian and Communist Party commitment to their respective faiths.

The house church movement has been growing rapidly in China in recent decades.

China’s Christian population has surged from about 3 million during the Cultural Revolution to 130 million, according to the highest Chinese Government estimate.

The majority of Chinese Christians are members of “official” Catholic and Protestant church organisations that are closely linked with government organisations. But the fastest growth has been seen in hundreds of informal “house churches” which began as Bible study groups but have swelled into large congregations.

The crackdown on China’s larger house churches began in Shanxi province’s Linfen city in September, with the demolition of a church and arrest of two pastors. This month it spread to Beijing and Shanghai.

Eight days ago Beijing’s Shouwang congregation was forced to hold their Sunday service outdoors during a snowstorm after government officials had intervened to prevent property owners from renting or selling them any premises.

Yesterday 800 of Shouwang’s mainly young and professional followers were authorised to use a university auditorium, but preachers were prevented from leaving their houses to attend.

One preacher negotiated his way past police and plain-clothes security officials to arrive 90 minutes late, into the arms of elated church leaders. The Shouwang congregation has attempted to keep a low profile and its leaders did not accept interviews yesterday.

“The Government wants unregistered churches to go back to the mode of operation where they remain small, take place in apartments, and are not very public in their practice,” said Carsten Vala, of Loyola University, Maryland, who has researched China’s registered and unregistered Protestant churches.

“Most important is how the rank and file react to the Government stopping their meetings,” he said. “In Chengdu they have continued to meet, and that presents a real problem for the Government.”

In the Roman Empire, persecution of Christians came in waves. It was sporadic and swept the Empire, or parts of it, from time to time. The simple fact was that the Gospel’s spread could not be stopped. It would appear as though a similar bottom-up, grass roots conversion of the Chinese people is occurring now. It is of God’s Spirit. His means are preaching and teaching, worship and service against which guns and prison have little permanent effect. All the evidence indicates that such oppression only serves to make the churches more powerful and influential in the long run.

We do not know whether the current oppression of house churches will continue and widen into a fully fledged relentless persecution, as is the case against the Bhuddist Falun Gong, or whether it will die away in this case. But succeed it will not. The Spirit of God is moving across the face of China and when He changes hearts they do not change back again.

>Mid-Week Miscellany

>New Zealand, China, Peru, and the United States . . .

Some recent interesting material on blogs and the web includes:

1. Two Wrongs Do Not Make a Right

Madeleine at MandM arguing that the Foreshore and Seabed imbroglio is shaping up to be a case of two wrongs. She makes a case for the essential priority being given to due legal process rights and suspects that the current Government is about to commit an equally big injustice as did the bankrupt Labour administration.

She writes:

Basically the government is going to settle a case out of court; on our behalf when it is not clear that the government are guilty and not that long ago they denied a case existed on the part of Ngati Apa. Historical Maori land ownership claims are very difficult to prove. There were no deeds or titles issued and records consist of tribal stories, songs, carvings and so on. In addition, the land in question has to have been in continual use by the tribe making the claim from at least 1840 through to the present day (unless unjustly dispossessed). Not only is it very possible Ngati Apa may not have suceeded, there would not be a huge risk of floodgates because each tribe would need to be able to establish this long chain of use and ownership.

The government seems to be happy to have the land of its citizens taken without due process as long as it furthers their political popularity. The former government was willing to suspend due process of one group of citizens and unilaterally declare that the land in question belonged to a second group of citizens. The current government is willing to unilaterally declare that the land in question belongs to the first group of citizens and not the second group and again is not going to allow a court to hear the evidence.

The whole post is worth reading.

2. The Chinese Economic “Miracle” Looks Suspect

John Lee, in an article published in Policy Magazine, entitled Is China Really an ‘East Asian success story’? compares the development paths of Korea and Taiwan to China. In the cases of Korea and Taiwan, economic development took place under the direction and at the instigation of centralist and authoritarian regimes. However, the influence, relative size, and controls of the respective governments reduced over time.

China, however, has done the opposite. The control and power of the government has increased under the Chinese economic development path. He writes:

The explosion in the number of officials is further indication of the rise of the Chinese ‘corporate state.’ In the 1980s, China had fewer than 20 million officials on the payroll. In the early 1990s, the number grew to more than 20 million, and by 2004 there were more than 46 million. This equates to around one official for every 28 people.(16) This is backed up in a further report that indicated the doubling of officials during the 1990s. In the 1980s, a small township had around 10 to 20 officials and a large one had around 20 to 30 officials. By 2004, an average township had more than 100 officials.(17)

Another case in point is that more than 30 of the largest 35 listed companies on the Shanghai Stock Exchange are majority owned by the state and state-controlled entities. Between 1990 and 2003, less than 7% of the initial public offerings on the Shanghai and Shenzhen stock exchanges were from private-sector companies.(18) The Chinese state owns about 50% of all the shares of listed companies.(19) When state-controlled entities are included in the calculation, it is likely to be around 70–80% of all listed shares. In terms of assets, employment, national output, and control of the most important sectors, the state’s role in the Chinese economy is far more profound, extensive, and entrenched than at any time in East Asian countries such as Taiwan and South Korea.

The political motivations behind these developments are clear. The Tiananmen protests brought the Party to its knees. Authoritarian regimes become irrelevant at their peril. To preserve its relevance, the Party has gone to extensive lengths to retake control of the major levers of economic power. This control is at the heart of an economic structure that entrenches, for the moment, the role and status of Party officials and members in the Chinese economy and society.

We would expect that one of the consequences would be an enormous waste of resources and capital. Lee argues that this is exactly what is happening in China.

To put the situation in perspective, China’s overall use of capital is twice as inefficient as India’s when measured in terms of capital inputs used to produce additional output. In fact, World Bank findings indicated that about one-third of recent investments made generated zero or negative returns.(23) Given the regime’s need to continually stimulate the economy for political ends, it is no wonder loans keep on increasing at an incredible pace despite economic rationality demanding that it should not. This might further the end of maintaining loyalty to the ruling Party and entrenching its power, but it is at enormous cost to the country.

His conclusion: China will continue to be influential by virtue of its size alone. But it will not become the economic powerhouse that most expect. It will rather end up like Brazil–a country and economy that is distorted, inefficient, wasteful–and, therefore, vulnerable and weak.

3. Zero Tolerance for Prison Rape

Eli Lehrer argues in National Review Online that the US must strive for the elimination of prison rape. He writes:

Anyone who looks at the problem can’t react with anything other than horror. According to the Bureau of Justice Statics, over 60,000 prisoners — the great bulk of them male — fall victim to sexual abuse in prison each year. A fair number of these men are “punks” who are subject to frequent, even daily, male-on-male rape for years on end. . . .

But the nation’s prison-rape problems can’t go away overnight for at least two major reasons. To begin with, the racial supremacist gangs that control many prisons use rape as a tool for keeping other prisoners in line and, in some cases, prison officials may turn a blind eye towards sexual abuse when it keeps prison populations more orderly. Second, the understandable widespread social distaste for people in prison has lead to a widespread attitude that’s frankly inhumane. It is one thing to say that prison shouldn’t be fun and quite another to say that detainees “deserve” rape. Nobody does. But, somehow, prison rape remains a perfectly acceptable topic for sitcoms, widely trafficked websites, and late-night comedians.

Government runs the prisons and, in the end, government policy will have to play the dominant role in eliminating prison rape. But, to facilitate that, society also has to change and acknowledge that, even though most people in prison have done awful things, they’re still human beings and still have rights.

Amen!

4. Those Climate Change Killjoys

Anyone who has done even a modicum of research into the global warming debate knows that the earth has successively warmed and cooled over long periods of time well before our current generation. This indisputable fact is an embarrassment to the global warming alarmists because it calls in to question the human causation of current global warming–that is, society’s release of carbon into the atmosphere.

One earlier warm period occurred in the medieval period, and it was a time of great bounty and prosperity–at least for the Incas of Peru. An archaeological investigation in Peru has been written up on the web.

Apparently, the Incas flourished under the globally warmer conditions.

The last time global warming came to the Andes it produced the Inca Empire. A team of English and U.S. scientists has analyzed pollen, seeds and isotopes in core samples taken from the deep mud of a small lake not far from Machu Picchu and their report says that “the success of the Inca was underpinned by a period of warming that lasted more than four centuries.”

The four centuries coincided directly with the rise of this startling, hyper-productive culture that at its zenith was bigger than the Ming Dynasty China and the Ottoman Empire, the two most powerful contemporaries of the Inca.

“This period of increased temperatures,” the scientists say, “allowed the Inca and their predecessors to expand, from AD 1150 onwards, their agricultural zones by moving up the mountains to build a massive system of terraces fed frequently by glacial water, as well as planting trees to reduce erosion and increase soil fertility.

“They re-created the landscape and produced the huge surpluses of maize, potatoes, quinua and other crops that freed a rapidly growing population to build roads, scores of palaces like Machu Picchu and in particular the development of a large standing army.”

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