Skip to comments.Chinopoly
Posted on 12/28/2007 10:46:56 AM PST by Calpernia
China will be the worlds next great nation, declared investment and commodities guru Jim Rogers in his 2004 bestseller, Hot Commodities. The 20th century, he noted, was the American century. The twenty-first will belong to China. Rogers went on:
Heres how important I think China will be: My daughter, who was born in 2003, is learning Chinese. Her Chinese nanny speaks only Mandarin to her, and I suspect that she might learn Chinese before she learns English. In her lifetime, Chinese will be the most important language in the world, next to English. If you are young and ambitious, learn Chinese. If you have ambitions for your children, persuade them to learn Chinese.
Learning a second language has always been good advice for a young person, and in our ever-shrinking world makes more sense now than ever. And Chinese may be as good a choice as any. However, is Mr. Rogers going a bit overboard? Yes, but hes in crowded company. More than a few other experts in business, banking, economics, and political affairs have been preaching the same gospel. Headline stories proclaiming The China Miracle, China, the New Superpower, and The China Century have been proliferating for years.
Chinas rags-to-riches-in-one-generation story is impressive indeed. Its journey from poverty-stricken, Third World nobody to top A-list business partner in 30 years is nothing less than stunning. The Asian Development Banks Eminent Persons Group may be correct in claiming that the speed and depth of Asias economic progress are unprecedented in world history. While the bankers were writing about Asia in general, they undoubtedly had China foremost in mind.
Virtually overnight, Communist China has gone from a pre-industrial, rural society to the worlds manufacturing capital. It is now the largest producer and exporter of consumer electronics, footwear, luggage, textiles, apparel, toys, household appliances, seafood, and numerous other products. It has amassed the largest foreign-exchange reserves in history, reportedly in excess of $1.4 trillion. And it is flexing that muscle in the global arena, investing in Africa, Latin America, Asia, the Middle East and the United States. That money is now being used to buy up Western assets, including in the United States, as the article "China's Bid to Buy the West" explains.
However, behind the litanies of Chinas economic triumphs and all of the hype about China as the emerging hegemonic power are some dark secrets. They are secrets that are well known but rarely mentioned by the Wall Street insiders, the major media organizations, and the bipartisan political lobby, which together have been the main forces pushing Chinas mercurial development. The truth is that Chinas continued economic, political, and military ascendancy is far from certain. In fact, it faces some very daunting challenges that some China watchers say could be its undoing.
First and foremost is the fact that the laws of economics have not been repealed. Productivity and general prosperity are maximized in market economies in which the actions of private citizens freely determine supply and demand. State-run economies, as all history has shown, are stagnant, inefficient, wasteful, repressive, and invariably result in a gross inequality in the distribution of wealth between the socialist rulers and the ruled.
Its impressive advances notwithstanding, the Peoples Republic of China remains an inefficient, oppressive, one-party communist state that could not have achieved its recent phenomenal development, except for the suicidal policies of the U.S. government (along with other non-communist governments) that transferred enormous capital, technology, and know-how to the Beijing regime, in violation of all economic and moral principles. And, in spite of its enormous gains and momentum, Communist China would quickly atrophy and crumble if the American people forced our politicians to end the destructive trade, spending, regulatory, and monetary policies that are destroying our middle class and transferring our manufacturing and technology base to China.
What? But everybody knows that China has been reforming and is in the process of transitioning from socialism to free-market capitalism, right? No, its leaders call its new path market socialism. Yet the China aid and trade lobby here in the United States insists that China has adopted a genuine market economy and that that path is irreversible. Besides, unimpeachable authorities, such as Microsofts Bill Gates, the richest capitalist in the world, agree that China has gone capitalist. China is amazing, Gates declared after a 2004 trip to the Middle Kingdom. It is capitalism, but at an unprecedented speed.
The declarations of Gates and the Wall Street gurus notwithstanding, China has not adopted a market economy, and there is little reason to believe it ever will, as long as we continue to support its current socialist counterfeit system. Market socialism is as much an oxymoron as dry water, kosher ham, or compassionate government. It doesnt exist and never has.
But what about the rapidly proliferating Chinese millionaire and billionaire entrepreneurs that Forbes magazine profiles each year? Forbes list of Chinas super-rich made an eye-popping jump from 15 billionaires in 2006 to 66 in 2007. Are they not proof of Chinas market orientation? Thats the usual media take on it, like the 2006 USA Today report that exulted that a country that once persecuted disciples of free enterprise is now barreling down the capitalist road. The capitalism that exists in China has little to do with entrepreneurialism. Rather, it is a form of statist monopoly capitalism that is reserved for the privileged princelings, who are either Communist Party members or the favored relatives and associates of Party members.
As China Digital Times points out, 90 percent of Chinas billionaires are children of senior officials. There are about 2,900 senior officials children in China, with total wealth amounting to two trillion yuan. Their businesses mainly cover 5 areas: finance, foreign trade, land development, large-scale projects, and bonds and securities. The Digital Times was not speculating. Like a number of other publications, it based its reporting on a published study by the PRCs own China Academy of Social Science and the Research Office of the (Communist) Party School.
Lets be a little more specific. Take, for instance, the top dog on Forbes list of Asias Self-Made Billionaires, Li Ka-shing, chairman of the mammoth Hutchison Whampoa conglomerate ($47 billion) and personally worth a reported $23 billion. Known as the Hong Kong Superman, Ka-shings fortunes have been closely tied to Chinas banks and corporations of the Peoples Liberation Army for many years.
Chinas market socialism is dominated by state-owned enterprises (SOEs) run by Communist Party princelings and foreign companies that operate under tight controls imposed by the Party and are directed more toward making products for export.
Even The Conference Board, a business research group that strongly supports increased trade with China, acknowledges, in its December 2007 report entitled Can Chinas Growth Trajectory Be Sustained? that Chinas moves toward market reforms have been dismally slow. The study, which focuses on the decade of 1995-2005, notes that in the early years of that period which is to say, 20 years after the beginning of so-called reform large-and medium-sized domestic private firms were virtually non-existent. Even as late as 1999, employment in these enterprises was still less than one percent of the total. By 2003, they accounted for 4.9 percent.
Yes, 30 years after the transition to market socialism, China is still 95 percent socialism and 5 percent market! SOEs, with their ties to the Party, receive favorable bank loans and contracts, as well as special tax, trade, and regulatory favors not available to genuine entrepreneurs. But even that bleak picture does not tell the whole story. For, as many economists and China observers have pointed out, even many of those firms officially designated private are, in essence, state entities.
Guy Sorman is a French author, journalist, philosopher, and economist who has regularly visited China over the course of three decades. He has ventured beyond the Partys tourist traps and show places, into the rural hinterlands where one billion Chinese live in the most squalid conditions and under harshly repressive communist rule, conditions rarely seen by Western visitors to Beijing and Chinas coastal urban centers.
In a searing essay for the Spring 2007 issue of City Journal entitled The Empire of Lies, Mr. Sorman tackled many of the most commonly believed falsehoods about China. Many in the West think that Chinese growth has created an independent middle class that will push for greater political freedom, he notes. But what exists in China, he reports, is not a traditional middle class but a class of parvenus, newcomers who work in the military, public administration, state enterprises or for firms ostensibly private but in fact Party-owned. Sorman continued:
The Party picks up most of the tab for their mobile phones, restaurant bills, study trips abroad, imported luxury cars and lavish spending at Las Vegas casinos. And it can withdraw these advantages at any time. In March, China announced that it would introduce individual property rights for the parvenus (though not for the peasants). They will now be able to pass on to their children what they have acquired another reason that they arent likely to push for the democratization of the regime that secures their status.
There are a few brave souls, of course, who refuse to toe the party line. One of the privileged-turned-pariahs Sorman interviewed is Mao Yushi, an internationally esteemed economist who, in 2004, had the temerity to send a polite petition, signed by 100 fellow intellectuals, to the Chinese government, asking it to apologize for the Tiananmen Square massacre. For this crime, Professor Yushi lost his teaching position at the university and has had to endure years of house arrest. Sorman writes:
Many goods that China produces are worthless, Mao Yushi reminds me especially those made by public companies. About 100,000 such Chinese enterprises continue to run in the old Maoist style, churning out substandard products because theyve got to hit the targets that the Party sets and provide employment to those the Party cannot dismiss, not because theyre responding to any market demand. Most public-sector firms dont even have real accounting procedures, so theres no way of ascertaining profitability. China is not a market economy, Mao says bluntly.
The Party directs the state banks as to whom loans should go, says Mao, and the rationale is frequently political or personal, not economic. Indeed, in many cases, banks are not to ask for repayment, Sorman notes. That investment decisions obey political considerations and not the law of the market is the Chinese economys central flaw, responsible at least in part, Mao Yushi believes, for the large number of empty office buildings and infrequently used new airports and an unemployment rate likely closer to 20 percent than to the officially acknowledged 3.5 percent.
If China is still a socialist economy and socialism doesnt work, how does one explain the regimes stellar successes? Quite simply, a socialist system can be productive if it allows external sources to provide the capital, technology, and expertise that it lacks, and if there are external sources able and willing (and foolish enough) to provide those things.
China simply drew on the experience of V.I. Lenin, who had faced a similar crisis in the early Bolshevik period in Russia. Having wrecked Russias economy, the communists new regime was facing imminent collapse in 1921. As a temporary measure, Lenin made peace with the hated capitalist West and invited foreign aid, foreign investment, and foreign expertise. His New Economic Policy (NEP) lasted for nearly a decade, including several years under his successor, Joseph Stalin.
By the late 1960s, Chinas communist leaders Mao Zedong and Zhou Enlai were in about the same fix that Lenin had found himself in 1921. Their disastrous Great Leap Forward and Cultural Revolution programs had caused tens of millions of deaths and devastated Chinas economy and society. They needed help from the West to survive.
Help was on the way. In July 1971, President Nixons National Security Adviser Henry Kissinger and Kissingers assistant Winston Lord (later to be U.S. Ambassador to China and president of the Council on Foreign Relations, or CFR) made their now-famous secret trip to China to visit Mao and Zhou. That set up the much more famous Nixon-Kissinger trip to China in 1972, and the equally important trip a few months later of David Rockefeller, chairman of the Chase Manhattan Bank and the CFR. Returning from his Beijing visit with Mao and Zhou, Rockefeller declared, The social experiment in China under Chairman Maos leadership is one of the most important and successful in human history. Mass murderer Maos social experiment had by that time taken the lives of up to 64 million Chinese.
But those deaths did not deter Rockefeller. He began arranging loans and technology transfers for Maos New Economic Policy, just as he had been doing for years for similar projects in the Soviet Union. However, even a banker and king maker as famous as he would not have been able to coax Western corporations and investors into Maos communist workers paradise without government guarantees to cover the risk of failure or expropriation. That is where the loans, grants, guarantees, subsidies, and insurance from the World Bank, Export-Import Bank, International Monetary Fund, Asian Development Bank, Overseas Private Investment Corporation, and other U.S. and UN entities came in. They not only provided billions of (taxpayer) dollars directly to China and/or the banks and companies doing business with her, but just as importantly, convinced the global business community and U.S. taxpayers that China was indeed going capitalist.
While U.S. politicians, bankers, and corporate elitists have been selling the message of Chinas conversion from Maoism to market socialism, the Communist Party of China and communist parties throughout the world have gone to great lengths to explain that this is just a replay of Lenins NEP strategy, albeit on a longer timeline.
Over the years, Political Affairs, the official monthly journal of the Communist Party, USA, has published many essays explaining this to the Party faithful. Most recent is a Political Affairs Online article for September 5, 2007, by C.J. Atkins entitled The Leninist Heritage of the Socialist Market Economy.
Just as Chinas socialist market economy is today dismissed by many in academia and the bourgeois press as a return to capitalism, it is important to recall that Lenin too faced similar criticism during the early years of Soviet power, Atkins wrote. [Lenins] New Economic Policy (NEP) was often characterized by critics, both outside and inside the Communist movement, as an abandonment of socialism and Marxist ideology.
Like Soviet Russia in the years following the October Revolution, China today also finds itself facing a world economy dominated by and structured in the interests of the most powerful capitalist economies. Just as Lenin did in the 1920s, the Communist Party of China (CPC) has, since 1978, reached the conclusion that the liberation and development of the productive forces is the key to building the foundations for a transition to socialism.
Yes, Chinas economic successes, made possible by the massive aid and trade transfers from the West, are building the foundations for a transition to socialism, not to free-market capitalism. But more importantly from the American point of view, these transfers, together with the U.S. regulatory and tax policies imposed on the American economy, are enabling China to drive us into the ground economically, and even (as the article "China's Bid to Buy the West" shows) to grab up our assets in a big way.
Let's remember who MoveOn.org is. Look at this archived screenshot of the Communist Party's website. Notice the blue text on the blue background in the left border at the bottom.
Thanks for posting the article. bmflr.
According to Intrade, the winner of the December 12th GOP debate was... Duncan Hunter.
Why the smart money is on Duncan Hunter
In this poll Hunter is up 3% and even with Paul and Thompson.
War is not far from us and will be the midwife of the Chinese century.
Hunter asks Bush for China policy meeting
HUNTER CALLS ON ROMNEY TO OPPOSE BAIN PARTNERSHIP WITH CHINESE COMPANY
Pentagon: China Gearing Up for High-Tech Warfare
GOP urges probe in China firm deal (Hunter, Hoekstra and Sessions)
>>>Senior Pentagon officials, meanwhile, are investigating the security aspects of the announced plan for Chinas Huawei Technologies and the investment firm Bain Capital Partners to buy 3Com, which makes equipment used by the Pentagon to block computer hackers, including those from the Chinese military.<<<
Tidbit for all. 3Com is the company responsible for providing the firewalls and security software to the Pentagon. Lets keep that in mind.
Chinese military hacked into Pentagon
1980’s Communism Evil Empire
2000’s Communism Good for Business
>>>Help was on the way. In July 1971, President Nixons National Security Adviser Henry Kissinger and Kissingers assistant Winston Lord (later to be U.S. Ambassador to China and president of the Council on Foreign Relations, or CFR) made their now-famous secret trip to China to visit Mao and Zhou. That set up the much more famous Nixon-Kissinger trip to China in 1972, and the equally important trip a few months later of David Rockefeller, chairman of the Chase Manhattan Bank and the CFR. Returning from his Beijing visit with Mao and Zhou, Rockefeller declared, The social experiment in China under Chairman Maos leadership is one of the most important and successful in human history. Mass murderer Maos social experiment had by that time taken the lives of up to 64 million Chinese.<<<
About Winston Lord:
Winston Lord (born in New York City on August 14, 1937) is a United States diplomat and administrator. He served as the president of the Council on Foreign Relations between 1977 and 1985.
Lord, who speaks some Chinese, was a key figure in the restoration of relations between the United States and China in 1972. From 196973, as a member of the National Security Councils planning staff, he was an aide to National Security Advisor Henry Kissinger, accompanying him on his secret trip to Beijing in 1971.
More at link
China is still run by the Party, and there is nothing to stop it from unleashing some other cause or ideology on the country that will cause a similar amount of human suffering, destruction of wealth, and economic disruption.
That, IMO is the latent threat to China’s future prosperity.
A political party is by its very nature a political animal, not an economic one. Money is only a means to a political end, which for Communists is power. China today holds some $800 billion in US financial assets due to the trade balance. What is not often observed is that the Chinese Government is skimming a few percent off all international trade, for the difference in purchasing power parity between the internal currency and the external one is skimmed when the money is exchanged at the window by those engaged in buying Chinese exports.
It is almost interesting why this topic is not of interest to the popular media, nor why the government is sitting on such a large amount of US-denominated instruments. I take it as further proof of what I wrote above: if the Chinese government was interested in improving the lot of the average Chinese citizen it would find ways to spend that mountain of US money on things that would benefit its own citizens. Instead it just collects the interest and lets the debt pile up. To what end? I don’t know, and they aren’t saying.
But to acknowledge China's military threat might threaten the profits of a few.
Saving the GOP from Itself: Duncan Hunter
One would think that the minority party during this period, the Republicans, would have been united and working overtime to save this nation from its drift into ‘former superpower’ status. Instead, a large portion of the party had come to accept not only the inevitability of coexistence with the USSR, but the inevitability of socialism in our own domestic policies. Indeed, it was Richard Nixon who swelled the size of the Federal bureaucracy with his creation of the EPA, OSHA, and Supplemental Security Income (SSI) programs. Nixon and Henry Kissinger were also the masterminds of the détente policy, a misguided attempt to appease the Soviets. His successor, Gerald Ford, continued the détente policy and continued the march towards Rockefeller republicanism, even going so far to name liberal Nelson Rockefeller as his Vice President. Ford’s full throated support of the Equal Rights Amendment is all one needs to know about the direction of the GOP leadership in the 1970s.
more at link
Kissinger told China communist takeover in Vietnam was acceptable: documents
Former U.S. secretary of state Henry Kissinger quietly acknowledged to China in 1972 that Washington could accept a communist takeover of South Vietnam if that evolved after a withdrawal of U.S. troops - even as the war to drive back the Communists dragged on with mounting deaths.
The late U.S. president Richard Nixon’s envoy told Chinese Premier Zhou Enlai: “If we can live with a communist government in China, we ought to be able to accept it in Indochina.”
Kissinger’s blunt remarks surfaced in a collection of papers from his years of diplomacy released Friday by George Washington University’s National Security Archive. The collection was gathered from documents available at the U.S. government’s National Archives and obtained through the research group’s declassification requests.
Kissinger’s comments appear to lend credence to the “decent interval” theory posed by some historians who said the United States was prepared to see Communists take over Saigon, as long as that happened long enough after a U.S. troop departure to save face.
more at link
Oh, my, check this out:
U.S. Navy to emphasize soft power
WASHINGTON, Dec. 27 (UPI) — The U.S. Navy announced its first major strategic shift in more than 20 years, refocusing the fleet’s role on humanitarian aid and other forms of soft power.
The Navy, along with the U.S. Marine Corps and the U.S. Coast Guard, unveiled the new strategy to embrace a broader shift at the Pentagon to bridge the “generational conflict” in its efforts to thwart extremists, the Christian Science Monitor reported Thursday.
The move focuses on building international partnerships based on convergent interests. Congressional leaders objected, saying the new plan discounts emerging military threats posed by China and other nations.
Republican presidential hopeful U.S. Rep. Duncan Hunter, R-Calif., said, “The Chinese government has the ability to quickly outstrip” the Navy fleet if measures don’t focus on military capacity.
U.S. Defense Secretary Robert Gates said in speech at Kansas State University in November the use of military operations other than war focuses on the fundamental issues regarding national security.
The hospital ship USNS Comfort toured South America recently on a humanitarian mission to 12 ports aiding nearly 100,000 people. Naval vessels also thwarted a pirate attack against North Korea ships off the coast of Somalia.
>>>It is almost interesting why this topic is not of interest to the popular media, nor why the government is sitting on such a large amount of US-denominated instruments.
Did you ever notice how many of our news outlets have affiliate/satellite offices in China? It is obviously needed for world coverage; however, I wonder what policies are in place that lend influence in reporting.
(As of 04/01/2006)
Only if you are using the Hsu
The Chinese will treat those willing stooges far worse than they will treat the rest of us.
Nobody likes a traitor, least of all those who gain by their betrayal.
Now THAT was a good reply!