China’s migrant workers hit by economic meltdown

An excellent multimedia look at how they are surviving, and the difficult future tens of millions face as they trudge back to their villages unable to find work. As I read the articles and listened to the testimonies, I was reminded how the slightest nudge of inflation means a life-altering calamity for these people. And I think of where it seems we are heading, and I wonder what these people will do if prices soar (as I think they will). Can the state possibly summon the resources to shelter the hundreds of millions living on pennies a day?

The section on migrant workers who’ve lost their jobs making the one-way trip home by train struck closest to home, from the opening soundbite of someone clearing his throat in the bathroom to the quiet, resigned conversations of people who know their options, limited to begin with, are shrinking even further. And still, they laugh and smile and move on. (At the risk of succumbing to a bout of sentimentality, I have to say, this piece reminded me how much I miss everything about China and want to go back, if only to visit, as soon as I can.)


China: All that glitters…?

My friend Dror has put up an interesting post on Thomas Friedman’s controversial column that I wrote about yesterday. Dror fears that many of us, dazzled by gushing reports of China’s success a la Friedman, will get a distorted picture of a country that’s not really doing quite as spectacularly as Friedman would have us believe.

As Ian Buruma points out in a recent article, ‘China’s economic success is convincing too many leaders that citizens… want to be treated like children’. This ideological shift is already showing itself in the calls for increased government planning in the US, as well as the shift of geopolitical power towards China. Taiwan, for example, recently announced that it will not apply for a UN seat this year, for the first time in 17 years. We can expect to see more and more political and ideological deferral to Chinese interests as we progress deeper into the crisis.

All this has happened before. In 1929, American pundits were mourning the failure of capitalism and listing the achievements of central planning in other countries. Back then, commentators were impressed by the Soviet Union’s high employment rate, and its incredible environmental and infrastructure initiatives. These included the Dnieprostroy hydroelectric plant (the largest of its kind in Europe), the 950 mile Siberian-Turkestan railway, and the Volga-Don water canal. Other achievements of that period included Nazi Germany’s 100% employment rate, Hitler’s autobahn (highway) projects, and Fascist Italy’s train system and efficient cooperation between government and business.

(Go to Dror’s post for the many links he incudes to back up is argument.)

Dror and I have had an ongoing argument for months about how strong China’s economy actually is, and how it stands up to America’s. I tend to think China is in better shape than he does. If you are watching its behind the scenes maneuverings, like shoring up its natural resources by cutting deals with Iran, Iraq and African countries, or its nearly silent investment in gold, you can’t help but see that they do have a blueprint for wielding the kind of global influence that for decades we imagined only the US could. China and the US are both pulling out of their recessions, but the US is going to get pulverized by the next wave of home foreclosures and the ticking time bomb of CDOs, all of which must (not might) pull down the dollar and weaken our financial system. China, while faced with its own staggering problems, is relatively unaffected by America’s mess, especially as it quietly moves away from the dollar.

China’s economy is so fragile, making predictions about it is dicey at best. I do think it’s safe to say that its global influence will continue to expand as America’s contracts, and it will be increasingly better poised than we are to cut deals, win friends and influence people. And yes, I know the huge problems China faces. But it’s faced many of these problems for the past 30 years (and some for far longer) and has continued to move ahead, or at least to plod along. And China has what we don’t – money in the bank. And nothing else talks like money. Maybe they will screw it all up and go crashing down. But for now, I see them as having the upper hand. Which, considering how America’s fallen, doesn’t really say very much, but still….


China’s growth: An economic miracle built on sand? (Not necessarily)

Dror has written another provocative post about China’s economy that is well worth a read, even if I don’t completely agree with him. It’s about an issue many of us reflexively shy away from, i.e., the true sustainability of China’s boom, and the West’s refusal to acknowledge the possibility that much of the boom is smoke and mirrors. As Dror points out, there seems to be something irrational about leading economists writing in all seriousness about a recovery, for example, in China’s real estate industry when so many huge half-built and empty new structures dot the skylines of most of its cities (Chongqing seems to take the cake for this one but Beijing seems determined to catch up). And yet new malls and luxury housing are still being built left and right. Should they count as proof of China’s booming construction business and overall growth? In manufacturing, over-production and sometimes really bad production (dry wall and melamine toothpaste) are often par for the course, though on paper the results may look impressive – people are employed, factories are busy, production is rising.

On the other hand, China’s manufacturing has gone far beyond shoes and toys and they now make most of the electronics we’re buying, and increasingly the more complex items like sophisticated semiconductors. Many of their factories are truly world class (and I know, many are not). They seem to be serious about correcting their environmental mess (if not, they’re doomed). The infrastructure improvements in many Chinese cities are as impressive as America’s. And while I agree with Dror that consumer spending won’t start until the masses are assured they don’t need to save every cent for healthcare and education costs, there’s still a massive amount of money being spent here by a rising middle class. While the dream of 1.2 billion customers is exactly that, a dream and a fantasy, even if it’s just 400 million customers it can be one of the world’s most robust markets.

We all know the downside, the environment, the impossible problems, the corruption and the crimes of the government. But there is still enough change and progress that is real here to justify a lot of attention from the West, and everywhere else. As I quoted James Kynge in an earlier post:

It must be said that from a global perspective, China’s emergence is of enormous economic benefit. The value created by the release of 400 million people from poverty, the migration of over 120 million from farms where they perhaps raised chickens to factories where they churn out electronics, the quantum leap in educational standards for tens of millions of children, the construction of a first-class infrastructure, the growth of over 40 cities with populations of over a million, the commercialization of housing and the vaulting progress up the technology ladder have helped unleash one of the greatest ever surges in general prosperity.

Before anyone jumps on the quote with evidence to the contrary and the laundry list of reasons why China cannot succeed, please go back and read the entire post – this is one of many quotes, and all those problems are acknowledged. Kynge is not looking at China like a wide-eyed and naive child, and he sees much of what Dror sees. But he believes China will continue to “shake the world.” And “shaking the world” is not necessarily a good thing; in fact, it can be pretty awful. But China has the leverage, the tenacity, the ambition and the government coffers (and government protectionism) to shake the world for many years to come, so I suggest we get used to it and think about how to deal with it rather than denying it.

A part of me says those husks of buildings looming over us and the warehouses full of unbought refrigerators and dysfunctional state-owned businesses that employ millions of unnecessary workers – it all has to catch up with them and plunge them into a far worse crisis than they expect. Like China’s recently collapsed “modern art” industry, I see many, many of bubbles in Chinese construction and manufacturing. The structural deficiencies in the Chinese system are as deep and as many as the structural flaws in the Three Gorges Dam. But at least for now, the dam keeps operating, and China does too.

Fragile, improbable, sometimes absurd – yet in its own surreal way China “works,” no matter how much of its success is built on corruption, protectionism and/or Western self-delusion. If you write it off and conclude it is not a real, dynamic and ever-present force in global economics and politics, you do so at your own peril.


Catching up

I don’t know why things feel so slow in China news-wise. Looking over the blogs, it seems the most interesting posts aren’t dealing with breaking news, but rather with advice (always carry your passport and don’t co-habitate – a kind of scary post, and a great one, too); a discussion on the tendency of expats to live in a world of other expats and an extraordinary response to that argument; and an excellent discussion from the same blog on why there is no such thing as freedom of speech on blogs or other sites that are private property (a week old, but a good read, especially for those who still believe my blog and others’ are their personal soapbox to say whatever they’d like).

As far as news over here, this seems to be the slowest period I’ve seen in China in 8 years. My quick observations on the undertone of Chinese stories as I comb the news:

1. China is going all-out to smooth over past frictions with Japan and is going way out of its way to stress that they must work together to form a new paradigm of government and finance now that the US model has been “discredited.” The crash, caused entirely by the fiscal irresponsibility of the US, is being used like the descent of Russia into corruption and near anarchy in the early 1990s, as proof of the failure of democracy and the Western model. Asia will have none of that; it’s time to create something new and forge our own path. Japan and China will do the leading. Mainly China.

2. The South China Sea is the next big hotspot, and some in the military are actually itching for war. China has been robbed of its rightful offshore territory by plunderers in both the South and East China Seas, who’ve stolen oil and natural gas that belong to China. That big recent display of China’s blue water navy was strategic and intended to carry a message, perhaps a provocative one. On the other hand, I hear from my trusted sources that while the military’s lobbying and making all the noise, there’s little support from those in the seat of power. For now, and for some time to come, the noise about the offshore plundering will be exactly that. Noise.

3. Nearly every story that involves Western media coverage of China will claim the West is actively seeking to tarnish China’s image and make them look bad. The Jackie Chan storm in a teapot was just the latest example, and the Associated Press’s choice of words amounted to nothing less than a conspiracy that can be related to how the West deifies the Dalai Lama and misrepresents Chinese history. (For an excellent bit of insight on the general topic of Western coverage of China, check out this fine post.)

4. China has overcome the financial crisis. It’s real estate market is reviving, unemployment is in check and the government’s stimulus package was an unqualified success, untouched by corruption or mismanagement. You wouldn’t know that walking through The Place or the Solana graveyardsmalls, but if the media say so, there must be something to it.

On a more mundane note, the lease on my Beijing apartment expires in mid-July, six 10 short weeks away. Time for me to make another of those life-altering choices. Stay in Beijing, move to Yunnan for a change of pace, go back to Phoenix…. I believe, and all my colleagues tell me, if there was ever a time to live in China this is it. Especially when jobs in my industry are nonexistent, especially in a city like Phoenix. The next few weeks may be full of ruminations about this as I use my blog as a cathartic device to figure out what to do with this inexplicable albatrossblessing we call life.


“The crisis is over”

I felt it coming last week – a wave of positive stories about US banks doing better, with the icing on the cake arriving today with news of Citigroup’s record quarter. The markets have soared and gold has plunged.

I’m not the only one who sees this as a classic sucker’s rally. The Times’ smartest columnist looks at the breaking news and sees irrational exuberance aplenty.

Wells Fargo, for example, announced its best quarterly earnings ever. But a bank’s reported earnings aren’t a hard number, like sales; for example, they depend a lot on the amount the bank sets aside to cover expected future losses on its loans. And some analysts expressed considerable doubt about Wells Fargo’s assumptions, as well as other accounting issues.

Meanwhile, Goldman Sachs announced a huge jump in profits from fourth-quarter 2008 to first-quarter 2009. But as analysts quickly noticed, Goldman changed its definition of “quarter” (in response to a change in its legal status), so that — I kid you not — the month of December, which happened to be a bad one for the bank, disappeared from this comparison.

I don’t want to go overboard here. Maybe the banks really have swung from deep losses to hefty profits in record time. But skepticism comes naturally in this age of Madoff.

Read the Krugman piece to see why the most that can be said at the moment is that things have been deteriorating a little less dramatically than in previous months. The economy is worse, not better, and all those factory closings and bankruptcies and high unemployment rolls are still looming. This holds for China too, where the propaganda wave insisting that China is back and has emerged from the crisis unscathed, if not stronger than ever, is deafening. The shock waves of GM disintegrating, along with a number of malls and real estate companies, have yet to hit. And again, we see parallel situation in China.

It seems that thinking happy thoughts can actually convince people we’re okay. I wish we were so I wouldn’t have to worry about my family and my mortgage. But I have to think we’re still at the beginning, not the end. We’ve still got two wars to fight on top of all our other miseries, and in case no one’s noticing, another looming hotspot is now a tinderbox that will almost inevitably suck us in.

Thinking happy thoughts is made possible by obfuscation of information. Behind the propaganda wave is a treasure trove of information the powers that be do not want you or me to know. It would spoil all the fun.

U.S. taxpayers need to know the risks behind the Federal Reserve’s $2 trillion in lending to financial institutions because the public is now an “involuntary investor” in the nation’s banks, according to a court filing by Bloomberg LP.

The Fed refuses to name the borrowers, the amounts of loans or assets banks put up as collateral under 11 programs, arguing that doing so might set off a run by depositors and unsettle shareholders. Bloomberg, the New York-based company majority- owned by Mayor Michael Bloomberg, sued Nov. 7 under the Freedom of Information Act on behalf of its Bloomberg News unit. It made the new filing yesterday.

“The Board’s arguments are based on wispy speculation, lack evidentiary support and are contradicted by economic theory,” said Thomas Golden and Jared Cohen, lawyers with New York-based Willkie Farr & Gallagher LLP, in a motion asking the judge to require disclosure.

“These government actions, which have been shrouded in secrecy, are at the heart of Bloomberg’s FOIA requests,” the attorneys said.

Why the shroud of secrecy, the omerta among the boys behind the curtain? It’s pretty obvious to me: they know if we know what they know there will be a stampede out of the dollar like we’ve never seen before. If you choose only to look at the warm and fuzzy reports the banks are putting out to make things look happy you’re only fooling yourself.

I think this will go on for a couple more months, maybe even through the summer. But as the reports come in from the big companies revealing a devastating recession that is only getting worse, the floodgates will have to open and hell will have to break loose. China may escape some of that because they can control information better and keep propping things up with more cash. But it’s got to get uglier for both of us. Domestic consumption is not going to save China. The bottom line is, too many Chinese consumers are simply too poor.

So as we enter a phase of increased optimism and hope, I am gloomier than ever. In case you’re feeling a deluge of optimism, please start reading this guy on a regular basis. He’s saying what I’m saying, only better.


Hard Landing and the China Paradox

It’s not possible to look over Nouriel “Dr. Doom” Roubini’s new report on China’s economy [PDF; must use proxy in China] without feeling kind of sick. This is the doomsayer who correctly predicted the current global mess more than two years ago. He is predicting a very rough road for China moving forward, with no real end in sight.

Despite it’s being completely depressing, the report is well worth a read. It reinforces an observation I’ve been making recently, that everywhere you look there’s a dogged, cult-like insistence that the Chinese economy is safe and will grow by 8 percent in 2009, no matter what kind of statistical evidence you put in front of the “experts” explaining this is simply impossible based mainly on the catastrophic world demand for exports.

To achieve 8 percent growth, China would need to step up domestic consumption exponentially. Widespread poverty combined with a tendency to save at least 30 percent of earned income — mindsets and situations that will take years if not generations to change — makes this literally impossible.

Referring to this insistent denial of reality as “the 8 percent mantra,” Roubini says some private-sector analysts (which I suspect includes himself) see growth of less than 6 percent, and some as low as 4 percent.

For a country that has been growing at an average of 10% for the last decade (and as high as 13% in 2007 down to 9% in 2008) and that needs a growth close to 10% to move millions of poor rural farmers to the modern urban manufacturing sector every year, a growth rate of 5% would be the equivalent of a hard landing, and even 6% would be extremely weak. And the deceleration of growth in the last six months has been severe.

We’re pretty much there, in a hard landing. The big question, for me at least, is, What does that mean? What are the ramifications? About six months ago, Roubini predicted China would be hit so hard it would literally “fall apart.” As far as I can tell, it hasn’t happened and won’t happen anytime soon. The economy has been battered here for a long time now, and through a skillful blend of propaganda and a lowering of expectations, the government has managed to hold things pretty well together. I do expect things to get uglier and uglier, but not to fall apart. I’m still not certain how we measure how hard we’re landing.

This reflexive recitation of The 8 Percent Mantra, this official denial of reality, verges on the surreal. On the one hand, China is making louder and more aggressive claims that its economy is doing far better than that of the US, Europe and Japan. This is now stated as a given in the Chinese media, where the notion of “the US-originated global financial crisis” is being drummed into everyone’s heads, along with the notion that China is about to bounce back. Not only bounce back, but soon to stand head and shoulders with the other three (Europe, the US and Japan), and thus deserves a larger say in the affairs of the world. And I’m watching this insistence become ever more aggressive, bordering on provocative.

That may be deserved; if China is indeed this rich and successful, it does deserve more of a global say. But then the other reality butts in, dramatized in an excellent story a few days ago that had the China twittersphere all abuzz, and rightly so. The article is aptly titled Rich China, Poor China (and I wish I had blogged it earlier, but excuse, excuse, excuse). In a nutshell:

China the new power holds $2 trillion in foreign reserves, including about $1 trillion in U.S. debt, and increasingly lectures rich nations on economic management. Developing China has tens of millions of rural poor among its 1.3 billion people and falls in the same World Bank per capita income rankings as Cameroon and Guatemala.

The emergence of China as a heavyweight economic player with a relatively poor population has economists scrambling for new definitions, perplexes policymakers in other countries and has some competitors crying foul.

…China has raised eyebrows when it appeared to be demanding more rights as an unquestioned economic power while pleading poverty when asked to shoulder greater obligations.

Most powerful, superpower, Where is China’s reality? How is it possible for one country to be gripped with such wildly divergent contradictions? I’ve been wondering about this for years, and probably always will, and can’t write my thesis about it now. Meanwhile, another blogger has addressed the same issue pretty well and I suggest you check out his conclusions. I loved the quote he pulled up:

Travel to China for a week, and you’ll be able to write a book. Travel to China for a month, and you’ll be able to write an article. Travel to China for a year, and you won’t be able to write anything at all.

As a friend of mine put it recently, “The longer you stay here, the less you know.”

This was going to be a brief post about Roubini’s report, slipped in during a break at work. Don’t ask me how it morphed into the current meandering mess. Bottom-line points: Huge disconnect between what China sees vs. the world’s financial gurus (the ones who had it right about the global crash). Huge disconnect between claims of greatness and claims of poverty. Huge disconnect between where China actually stands today and where the government is telling us it stands (see the Roubini report for numerous detailed examples).

Meanwhile let’s hope for as soft and gentle a landing as possible,and pray that the government is more right than Roubini.


China stepping up or slacking?

Gady Epstein, Forbes’ man in Beijing (and a renowned Scrabble player), takes a look at the G20 talks and the seemingly universal notion that all the tough work lies on the shoulders of the US and China, a country that, as all fashionable pundits know, has failed to provide leadership and avoided sitting down to work out serious solutions. Which, Epstein says, is pure nonsense. Europe, he says, is the real slacker.

China in particular has stepped up to take an active leadership role after years of calls by Western nations to do so. Aside from its domestic efforts, China is pushing for IMF reforms that, while seeking to elevate China’s role in financing poorer nations, should also result in a more robust and better-funded IMF, which the developing world badly needs.

China has spoken up on the dominant position of the U.S. dollar in global reserves and trade payments and has made several deals with trading partner nations to provide export financing in its own currency. This is potentially helpful in an economy where trade financing has become scarce. And it would be misreading things to say that the Chinese are seeking to undermine the dollar, which, after all, they have bought so heavily to hold down the value of its own currency (and so make its exports cheaper).

No, China is, quite literally, invested in the global financial system as it is and, seeing that system in trouble is weighing in with real leadership. Many will disagree with some of the positions China takes from here forward, but now is the time to turn attention elsewhere. Now is the time for countries that have long wanted bold steps from China, the countries of Old Europe, to take some bold steps of their own.

The gist of the argument is the US and China’s stimulus plans, for all their faults, are big steps in the right direction. France and Germany’s plans are relatively toothless, and their commitment to serious stimulus simply too small.

I couldn’t help but notice how this assertion of China’s commitment and involvement contrasted with a recent column by Paul Krugman:

The bottom line is that China hasn’t yet faced up to the wrenching changes that will be needed to deal with this global crisis. The same could, of course, be said of the Japanese, the Europeans — and us.

And that failure to face up to new realities is the main reason that, despite some glimmers of good news — the G-20 summit accomplished more than I thought it would — this crisis probably still has years to run.

Krugman’s main beef with China is that their strategy of amassing dollars was unstrategic, counter-productive, self-defeating and dumb. What Epstein is claiming – and what Krugman either doesn’t see or doesn’t agree with – is that China is actually facing up to the present realities better than most, and certainly better than “Old Europe.” Looking at Krugman’s column, I think he’s caught up in what China did in the past with its dollar strategy and unimpressed with its stimulus plan – which parallels the way he sees the US. Krugman says it’s all much too little much too late. Epstein is saying both the US and China, despite the sins and stupidities that led us here, are at least taking serious steps to turn the calamity around and should be applauded for that.

I know there’s some “apples and oranges” in comparing the two columns. Krugman’s is more historical (and extremely critical of China’s role in the meltdown), Epstein’s is more about what needs to happen next. It was the diametrically opposed conclusion each drew about China’s stepping up to the plate that stood out for me.


Just a short note on unhappy China

Too wiped out to put up anything new, and know I’ve been delinquent the past couple of days. In the meantime, two worthwhile links:

Unhappy China – a translation of one of the best critiques of the much-discussed book. (Via Danwei.)

An Unsure China Steps Upon the World Stage – a good read after the Unhappy China link above.

Aside from that, let me just make one brief observation: This week I’ve been reading scores of articles on the financial crisis from a wide array of Chinese media, some written in English and others translated into English. One thing I suddenly realized today: Nearly every single one of them begins by stating matter-of-factly, in more or less these words, “The global recession, which was caused by America’s financial irresponsibility….” At a point later on in each article, with uncanny regularity, appears another matter-of-fact reference, this time to the certainty that China’s situation is now improving, the worst is over and it’s now just a matter of putting the finishing touches on a successful stimulus plan.

Now, I am the first to admit this disaster was to a very large extent caused by American fiscal irresponsibility. However, I also know that the exact same message planted in the opening sentences of one article after another after another after another is no coincidence and is part of a propaganda campaign that has two clear intentions:

1. To make it clear that it was America’s malfeasance that spoiled the party, and
2. To make it clear that China is bouncing back rapidly and was better prepared for catastrophe (through its savings) and better prepared for the arrival of new world order to come.

Keep your eyes opened for similar memes. They don’t just appear in a vacuum, and they are clearly choreographed. And for the record (yes, another mandatory disclaimer), I am not necessarily disagreeing with either of those two items – there’s some truth to both, though how much is impossible to say yet. I’m simply pointing out that we’re witnessing a campaign to engineer the way Chinese people look at this disaster – as entirely America’s fault, without question, and China’s opportunity. China was blameless, a victim, but thanks to its wisdom it will ultimately benefit from America’s blight on the world.

Both of the two links above offer insight into this mentality and how it relates to the present mood in the country. The popularity of Unhappy China makes perfect sense.


View from Shenzhen: What recession?

If this blogger will forgive me, I want to quote in its entirety an email he received and posted on his blog today, because many, many people are going to read it and perhaps walk away with a less than complete picture:

I went through my first recession during my freshman year of college after 9/11. I remember the most tell-tale sign of the slowdown was that construction sites, ubiquitous in Florida, slowed or stopped entirely. I’m living in Shenzhen, China, now during an even bigger recession….

Except it’s not really a recession. China will likely be pulling 5-6% growth this year. While the IHT and other major papers carry a story a week about how bad the Pearl River Delta is doing, I just haven’t seen it.

Everyone talks about things slowing down but few people are talking, or seeing, things closing up. Projects I saw started a year ago are finally begin to shape up as the scaffolding comes down and beautiful “gardens”, apartment complexes, emerge. New projects are breaking ground and cranes are almost as ubiquitous as they were three years ago. My best friend here – a Hakka man in his late-20’s who grew up able to eat meat just once a month – turned down a sales job paying, literally, 8x more than he makes now because he’s convinced his current one-man operation is going to explode any day now.

As a foreign teacher I’m making more than I ever have. I’m making $35 an hour doing private lessons preparing a brilliant student to study in the US. I can treat a few friends to an exceptional dinner for half that. Four hours a week pays the rent for my 29th story apartment. My sister, a single mother who just got her Bachelor’s degree, is making $8. Enough for a Happy Meal and Big Mac dinner, perhaps.

A final note is that it’s surprising how well China’s Maoist legacy acts as a safety net inside a capitalist economy. Shenzhen and cities like it, effectively, have half of their population living not as citizens, but as long-term temporary workers. Most of these workers who are getting downsized now will be returning to homes and farms in the countryside because they mostly were not allowed to sell. Most never made permanent residence because the archaic “hukou” household registration system ties delivery of government goods and services to those hometowns. If it works out well, they’ll be going back to a rent-free home with decent savings and severance to start their own projects, where their children have free education and increasingly subsidized health-care. As terrible as these policies looked during the boomtimes, they’re looking increasingly wise today.

First, let me say I think this teacher is overly optimistic. When growth grinds down from years in the double digits to 5-6 percent, that’s an enormous shock to the economy, nothing short of a calamity. And whether he can see this or not in Shenzhen, it’s real and it’s painful. Often what we see in front of us can be deceptive. Just because people aren’t rending their garments in the street and lighting themselves on fire doesn’t mean there’s not misery aplenty. I own a home in America’s second most depressed housing market (after Las Vegas) and when I went back in November things looked just fine. I didn’t see a single person looking any less happy than in the good old days. But there were indications things weren’t quite right: for-sale signs on house after house, some of which have now been on the market for nearly two years. Lots of seats at the higher-end restaurants. Absurd discounts at the malls. The thinnest help-wanted section I ever saw (on-line and in the local paper).

Even though there’s all that new construction and entrepreneurial enterprise going on in Shenzhen, that doesn’t mean there’s “not really a recession.” I have so many success stories to tell you from Beijing, some of which I’ve related on this blog, including my own easy search for a new job. Many people I know are making money, and some see this as a new golden age. Really. But I also know how some companies in recession-prone markets are doing, and it’s worse than disastrous. I have friends there, and they’re at their wit’s end.

I did a lot of train travel over the past month and saw all the migrant workers sleeping outside of the stations waiting to go back to their hometowns. I’ve seen the half-finished buildings and the ghost malls. I’ve read some debates on whether the Chinese characters for “economic crisis” really mean “danger-opportunity” (my Chinese teacher insists it does, but I’ve seen the arguments disproving this, at least to the blogger’s satisfaction). No matter who’s right about it, this much is a fact: every crisis will mean an opportunity for somebody. Those lucky enough to get contracts from the government stimulus package, for example, will have a ball. But for many, this crisis is as real as can be.

I also think our teacher’s perspective on the plight of jobless migrant workers and the ingenuity of the “Maoist legacy” is a touch rosy. I think most of these workers will do alright; they’ll at least have enough for them at home to eat and sleep, which is enough to keep them from taking up arms and revolting. But I had to gulp when I read, “If it works out well, they’ll be going back to a rent-free home with decent savings and severance to start their own projects, where their children have free education and increasingly subsidized health-care. As terrible as these policies looked during the boomtimes, they’re looking increasingly wise today.” (Isn’t Maoism cool?)

I won’t dissect this. I’ll just say I think this fellow means well, but his analysis is simplistic, failing to take into account certain realities, like the the tragic state of rural education here, the crushing poverty of most of China’s countryside and its notoriously inadequate health-care system.

But I can understand why he’s feeling positive. There’s an optimistic, even euphoric mood in Beijing and Shanghai at the moment, and that’s probably the case in Shenzhen, too. A flurry of news headlines from all over the world seem to have created an impression that China’s stimulus plan is a winner, that it will pull out of the slump soon and even that the worst is over. China seems to be heading for a new leading role in the new world order. Or at least that’s the recent buzz. It’s at moments like this that I become especially cautious. I don’t think it’s time yet to uncork the Champagne.


China, the next big enemy? (No.)

[Update Note: Danwei had the photos and some great commentary hours before the article cited below. Good work, and sorry I didn’t see it until now! Great comment thread over there, too.]

This story totally blew me away. I’m not saying I swallowed it hook, line and sinker, just that it made my jaw drop as I wondered how much of this is actually true? The writer is famous and hard to pin down politically (adores Ayn Rand, worked for Ralph Nader, etc.), and he’s obviously no dummy. (Strange, but not necessarily stupid.)

The article has to be seen, because the photos are essential. I do want to quote one section, however, that echoes my immediate reaction upon hearing of China’s “harassment” of the US Navy’s Impeccable.

Imagine if Chinese military vessels appeared 75 miles off the coast of, say, southern California, for the quite obvious purpose of tracking our submarine defenses and conducting surveillance of our San Diego naval base. It would be bombs away, pronto, and no questions asked. However, the Chinese penumbra of sovereignty is apparently more restricted.

Beijing claims U.S. actions violate the UN Law of the Sea, a treaty to which they are signatory and the U.S. is not. However, in contesting this assertion – which came up in the aftermath of the last Hainan incident – U.S. officials routinely note that the UN law, while granting China sovereignty over its “exclusive economic zone,” would have been violated only if the Impeccable was on a commercial expedition, and yet the clear concern on the part of the Chinese is that this was a military mission.

We have our Monroe Doctrine, which was specifically aimed at the crowned heads of Europe, who, in our nation’s youth, posed a threat on our very borders. (This same doctrine, ironically, was later tweaked and twisted into a rationale for our own imperial ambitions in South and Central America, as well as Mexico.) Other nations, however, are not entitled to a Monroe Doctrine of their own: China, Russia, and Iran have no corresponding prerogative to their own spheres of influence, as granted by geography, tradition, and the military necessities of a credible defense.

This made me think of an incident n the 90s when Cuba shot down two cuban exile-owned aircraft dropping anti-government leaflets on the streets of Havana. The planes had taken off from Florida. What would happen, I kept asking myself, if Cuba allowed aircraft to take off to fly over downtown Manhattan dropping anti-US-government leaflets on the sidewalk and all over Central Park?

For the past five years, the group’s volunteer pilots have patrolled the Florida Strait seeking refugees fleeing Cuba on makeshift rafts. In the past, the group’s aircraft reportedly have buzzed the Cuban capital, Havana, to drop leaflets attacking President Fidel Castro.

Castro replied with a warning that any aircraft violating the country’s airspace would be shot down. In Seattle, President Clinton “condemned this action in the strongest possible terms.”

The group, Brothers to the Rescue, had been praised in the US as heroes. And yet if the tables were turned the Monroe Doctrine would be put into play in seconds. We would never stand for it.

Okay, back to China. I realize this could be jumping the gun because I can’t fact-check Raimondo’s article. But looking at his track record I have to say I admire his original thinking and refusal to be slotted. His closing words on China make sense, at least until he gets to that one sentence about the Falun Gong:

There is plenty of anti-Chinese political sentiment in this country, and it’s a constituency that is bipartisan. Among the Democrats, you have organized labor, which is instinctively Sinophobic in this country and always has been, as the history of the oppression of Chinese coolies in California amply demonstrates. The protectionist unions are in a lather about the fact that Chinese workers produce cheaper and better products that American consumers want to buy. In tandem with international do-gooders of every sort, the anti-China popular front also consists of Republicans of the sort who will welcome any fresh enemy, as long as it means more subsidies for the military-industrial-congressional complex. Throw in the wacko cultists of Falun Gong, and what you have is the reincarnation of the old, bipartisan anti-Communist alliance of yesteryear, which brought us wars in Korea and Vietnam – and may yet succeed in provoking a third war on the Asian landmass, one just as futile and unwinnable as its predecessors.

The formulation of American foreign policy is all about domestic political pressures. It is the domain of lobbyists and de facto foreign agents, most of them unregistered, who work with targeted American constituencies to further various commercial and foreign interests. A rational foreign policy, i.e., one that serves authentic American interests, is virtually impossible in these circumstances.

Chas Freeman keeps coming to mind as evidence mounts all around us that we want – demand – to remain in a state of denial and delusion about Israel and China and just about everything else. Maybe it makes us feel safe. We want “analysts” who make us feel like were getting into a warm bath, all snug and safe. Ironically, it is precisely this self-delusional state of mind that landed us in the financial crisis that could well wipe out our dreams and our bankbooks.

Again, go see the photos and read the whole thing. And again, read the Wikipedia entry on the author. Too bad he sounds a bit crazy on why we entered WWII, and in his admiration of Charles Lindbergh. If you can put that aside….