Highlights: 1. Chinese President Xi Jinping described a two-stage plan for China’s “socialist modernisation” by 2050, which would see it become more “prosperous and beautiful” through environmental and economic reforms;
2. He warned against separatism – in an apparent reference to movements in Xinjiang, Tibet and Hong Kong – and reiterated the government’s principle that Taiwan is part of China; 3. Xi made it clear that China would not close its doors to the world and promised to lower barriers for foreign investors.
President Xi’s address at Chinese party congress
With thrust on a new era of Chinese power under President Xi Jinping, the Communist Party congress as China’s biggest political event, has begun in Beijing on October 18 under tight security. Chinese President Xi Jinping addressed more than 2,000 delegates in the capital for more than three hours, dwelling on the problems and prospects in China. . In his speech, Xi listed China’s recent achievements, saying that “socialism with Chinese characteristics in this new era” meant China had become a great power in the world, and the country would not copy foreign political systems. He briefly described a two-stage plan for China’s “socialist modernisation”, to be achieved by 2050. Xi also said China would further advance market economy and would not close its doors to the world, maybe an attack on Trump’s strict immigrations policy. .
Speaking in the Great Hall of the People in Beijing, at the start of the week-long 19th party congress, Xi told delegates that thanks to decades of “tireless struggle” China stood “tall and firm in the east”. Now, Xi said, it was time for his nation to transform itself into “a mighty force” that could lead the world on political, economic, military and environmental issues. “This is a new historic juncture in China’s development,” China’s 64-year-old leader declared in his bold 3hr 23 minute address outlining the party’s priorities for the next five years. “The Chinese nation … has stood up, grown rich, and become strong – and it now embraces the brilliant prospects of rejuvenation … It will be an era that sees China moving closer to centre stage and making greater contributions to mankind.”
The country’s rapid progress under “socialism with Chinese characteristics” shows there is “a new choice for other countries”, he told the Communist Party congress, the country has played “an important role in the history of humankind”.. More than 2,200 delegates have poured into Beijing for the week-long gathering, bringing with them an effervescence of political tributes.
The closed-door summit, which takes place once every five years, determines who rules China and the country’s direction for the next term. The congress also decides on a roadmap for China for the next five years. Shortly after the congress ends, the party is expected to unveil the new members of China’s top decision-making body, the Politburo Standing Committee, who will steer the country.
The Communist party of China is a great party; it has the fight and mettle to win.” “The Chinese nation is a great nation; it has been through hardships and adversity but remains indomitable. The Chinese people are a great people; they are industrious and brave and they never pause in pursuit of progress,” he said. Xi said that the Chinese model of growth and socialism under Communist rule was “flourishing”, and had given “a new choice” to other developing countries.”It is time for us to take centre stage in the world and to make a greater contribution to humankind,” he added.
In the surprisingly long speech – titled “Secure a decisive victory in building a moderately prosperous society in all respects and strive for the great success of socialism with Chinese characteristics for a new era” – Xi struck an upbeat tone that contrasted with the grey skies and drizzle outside. He introduced measures to increase party discipline, and touched on his wide-reaching corruption crackdown that has punished more than a million officials, report BBC correspondents in Beijing.
Xi warned that corruption remained the greatest threat to the party’s survival despite a five-year war on graft that he claimed had been “built into a crushing tide”. “We must remain as firm as a rock … and secure sweeping victory,” he said, warning that “pleasure-seeking, inaction and sloth” were no longer acceptable. “We must … rid ourselves of any virus that erodes the party’s health.”
Xi warned that achieving what he has hailed the “China Dream” would be “no walk in the park”: “It will take more than drum beating and gong clanging to get there. But our mission is a call for action, let us gets behind the strong leadership of the party and engage in a tenacious struggle.”
Jinping Xi also warned against separatism – in an apparent reference to movements in Xinjiang, Tibet and Hong Kong – and reiterated the government’s principle that Taiwan is part of China.
Commentators say Chinese President Xi Jinping has heralded the dawn of a new era of Chinese politics and power at the start of a historic Communist party congress celebrating the end of his first term in office on October 18.
Beijing is decked out in welcome banners and festive displays for the congress. However, the capital is also on high alert. Long lines were seen earlier this week at railway stations due to additional checks at transport hubs. The congress has also affected businesses, with some restaurants, gyms, nightclubs and karaoke bars reportedly shutting down due to tightened security rules. An austerity drive, instituted by Xi, has meant a more pared down congress, with Chinese reports this week of delegates’ hotels cutting back on frills such as decorations, free fruit in rooms and lavish meals.
Meanwhile, state media have said the Party is expected to rewrite its constitution to include Xi’s “work report” or political thoughts, which would elevate him to the status of previous Party giants Mao Zedong and Deng Xiaoping. Some see Xi as accruing more power than any leader since Mao, and the congress will be watched closely for clues on how much control now rests in the hands of just one man
Corruption – enemy of Socialism
China’s president, Xi Jinping, called corruption the greatest threat to the Communist party’s survival in his opening speech to the week-long congress meeting on Wednesday. However, the problem is largely a product of the one-party political system he leads. Three decades of breakneck development has produced vast wealth in China – and much of this is controlled directly or indirectly by the party. That means there are eye-watering money-making opportunities for cadres looking to supplement their modest salaries by cashing in on their positions and their contacts.
At the same time, the party’s stranglehold on the media means that independent reporting that might expose high-level corruption is all but non-existent, unless authorised by the party itself. Impunity, therefore, has traditionally been almost guaranteed. Xi now hopes to change that with his war on graft. “Great changes have occurred in China and we are so proud of it,” said Xue Rong, a delegate who had travelled to the capital from Henan province. “Xi Jinping is a great man. He is down-to-earth, too. He carries the people in his heart.”
Zhao Yongqing, the propaganda chief of the north-western region of Ningxia, said he had been inspired by Xi’s opening pitch to the congress. “I feel a big responsibility. As a delegate, I must study and understand Xi’s speech thoroughly, and publicize and implement it well when I return home.”
The event, which Xi will use to pack the Communist party’s upper ranks with allies, marks the official end of what is expected to be the first of his two five-year terms in power. For some though it has come to represent the advent of a new political era that could extend well beyond the originally anticipated end of Xi’s second term, in 2022.
The congress heralded the start of China’s third great political epoch since Mao Zedong’s communists seized power in 1949. The first epoch was Mao himself, a revolutionary standard-bearer who helped the country find its feet; then came Deng Xiaoping, the reformer who masterminded China’s economic opening and helped it grow rich. “Now it’s Xi Jinping’s turn to usher in … the Xi Jinping era,” said Chen.
China’s economy has continued to grow rapidly. The correspondents say the country has also become more authoritarian, with increasing censorship and arrests of lawyers and activists. Economy compared Xi’s bold political vision to a pyramid: “Xi Jinping sits on top of the Communist party, the Communist party sits on top of China, and China sits on top of the world.”
Chinese president Xi Jinping is to be given his own political theory as the Communist Party of China has created “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era”. The theory is likely to be incorporated into the constitution of the ruling Communist Party, which would strengthen Xi Jinping’s position at the top. He would be the first leader to lend his name to a political theory since Deng Xiaoping, who retired in 1989. The only other leader to do so was Mao Zedong.
Xi Jinping became president of China in 2012 – ushering in an era of increased assertiveness and authoritarianism. He has been front and centre of China’s push to cement its position as a global superpower, while also launching crackdowns on corruption and freedom of speech. A consummate political chess player who has cultivated an enigmatic strongman image, the leader of the ruling Chinese Communist Party is widely expected to stay at the helm until at least 2022.
Born in Beijing in 1953, Xi Jinping is the son of revolutionary veteran Xi Zhongxun, one of the Communist Party’s founding fathers and a vice-premier. Because of his illustrious roots, Xi is seen as a “princeling” – a child of elite senior officials who has risen up the ranks. But his family’s fortunes took a drastic turn when his father was purged in 1962 prior to the Cultural Revolution and imprisoned. At the age of 15, the younger Xi was sent to the countryside for “re-education” and hard labor in the remote and poor village of Liangjiahe for seven years – an experience that would later figure largely in his official story.
Far from turning against the Communist Party, Xi embraced it. He tried to join it several times, but was rebuffed because of who his father was. Once he was finally accepted in 1974, he worked hard to rise to the top – first as a local party secretary in Hebei province, before moving on to more senior roles in other places including party chief of Shanghai, China’s second city and financial hub. His increasing profile in the party propelled him to its top decision making body, the Politburo Standing Committee, and in 2012 he was picked as president. The Tsinghua University chemical engineering graduate is married to the glamorous singer Peng Liyuan, and the two have been heavily featured in state media as China’s First Couple. It’s a contrast from previous presidential couples, where the first lady has traditionally kept a lower profile. They have one daughter, Xi Mingze, but not much is known about her apart from the fact that she studied at Harvard University.
Xi has vigorously pursued what he has called a “great rejuvenation of the Chinese nation” with his China Dream vision. Under him, China has enacted economic reform to combat slowing growth, such as cutting down bloated state-owned industries and reducing pollution, as well as its One Belt One Road trade project. The country has become more assertive on the global stage, from its continued dominance in the South China Sea despite international protestations, to its exercise of soft power by pumping billions of dollars into Asian and African investments. This has been accompanied by a resurgence in patriotic nationalism whipped up by state media, with a particular focus on Mr Xi as China’s strongman leader, leading some to accuse him of developing a personality cult like that of former leader Mao Zedong.
Xi, who has sought to portray himself as a strong and stable international statesman since last year’s election of Donald Trump, also painted China as a responsible global power that was committed to tackling shared dangers such as climate change. “No country alone can address the many challenges facing mankind. No country can afford to retreat into self-isolation,” he said.
Since becoming president, Jinping Xi has tightened control within the Party and also in Chinese society, with increasing censorship and arrests of lawyers and activists. Under Xi, China’s modernisation and reform has also accelerated, as has its assertiveness on the world stage. He continues to enjoy widespread support among ordinary citizens in China.
Xi Jinping is a much more assertive leader than his predecessors. In a long and confident speech, he looked back on his first five years in office, saying the party had achieved miracles and China’s international standing had grown. But the most striking thing in his mission statement was ideological confidence. Recently Party media have talked of crisis and chaos in western democracies compared to strength and unity in China. Xi Jinping said he would not copy foreign political systems and that the communist party must oppose anything that would undermine its leadership of China. Xi also mentioned his wide-reaching corruption crackdown within the Party that has punished more than a million officials, report BBC correspondents in Beijing.
Xi became the Communist party’s general secretary – and thus China’s leader – at the last party congress in 2012, and has since emerged as one of China’s most dominant rulers since Mao Zedong. Xi has been consolidating power and is expected to remain as party chief. Since Xi took power in 2012,
Xi Jinping is a much more assertive leader than his recent predecessors. In a long and confident speech, he looked back on his first five years in office, saying the party had achieved miracles and China’s international standing had grown. But the most striking thing in his mission statement was ideological confidence. Recently Party media have talked of crisis and chaos in western democracies compared to strength and unity in China.
At home, Xi has waged a ruthless war on corruption which has punished more than a million “tigers and flies”- a reference to both high and low-ranking party officials. Some observers believe that the campaign is aimed at rooting out opponents, and is part of a series of political manoeuvres by Xi aimed at consolidating his power. Meanwhile China has seen increasing clampdowns on freedoms, from rising online censorship to arrests of dissidents and human rights lawyers, leading some to describe Xi as “the most authoritarian leader since Chairman Mao”. Despite this, Xi is still thought to enjoy reasonably widespread support among ordinary Chinese citizens – and is expected to keep shaping the country for the next few years.
The party will reveal the new members of its pinnacle body, the Politburo Standing Committee. Xi is widely expected to remain as party leader, while prominent Xi ally and anti-corruption chief Wang Qishan has stepped down and will not be in the next formation of the committee. Those in the Standing Committee will be especially scrutinized. Analysts say its make-up may give signs of how long Xi plans to stay on at the top of the party – he is expected to remain at the helm until at least 2022 – or any possible successors.
Xi Jinping said he would not copy foreign political systems and that the Communist Party must oppose anything that would undermine its leadership of China. Fighting USA or capitalism or imperialism is not on the agenda of China and therefore it does not claim any leadership of communist international.
China is eager to expand its ties across the globe and use its money power to influence Asia, Africa, and Latin America.
Xi was similarly uncompromising on China’s overall political model, offering no hint that democratic reform was on the horizon or that the party was considering loosening its grip on power. “No one political system should be regarded as the only choice and we should not just mechanically copy the political systems of other countries,” said Xi, who has overseen one of the most severe political chills in recent Chinese history. “The political system of socialism with Chinese characteristics is a great creation.”
Xi insisted China did “not pose a threat to any other country” but his speech chimed with the increasingly assertive – some say domineering – foreign policy that has emerged on his watch. He cited Beijing’s highly controversial island-building campaign as one of the key accomplishments of his first term. “Construction on islands and reefs in the South China Sea has seen steady progress.”
Without directly mentioning Trump, he noted how China had “taken a driving seat in international cooperation to respond to climate change”. He added: “Only by observing the laws of nature can mankind avoid costly blunders in its exploitation. Any harm we inflict on nature will eventually return to haunt us. This is a reality we have to face.”
Xi took a harder line on Hong Kong, which witnessed an unprecedented 79-day pro-democracy occupation and the birth of a nascent independence movement during his first term. He vowed that Beijing would not allow the “one country, two systems” model, under which the former British colony has operated with relative autonomy from the mainland since handover, to be “bent or distorted”. Nor would independence activists be tolerated. “We will never allow anyone, any organisation, or any political party, at any time or in any form, to separate any part of Chinese territory from China.”
Beijing did not seek global hegemony but “no one should expect China to swallow anything that undermines its interests”.
IMF warns on China’s credit boom
President Xi Jinping government’s early pledge to enhance market forces – giving them a “decisive role” has remained just that, a pledge. Thousands of factories have been closed but that’s as much about their polluting effect than their productive inefficiency. There have been consolidations in various sectors of the myriad state-owned enterprises. The (almost all state-owned) banks have come in with debt for equity deals – something close to a bail out – for the most troubled companies. But there hasn’t been a wave of bankruptcies. Preserving social stability is likely to be the main reason for this. A wave of concentrated unemployment could see protests that could threaten order.
Debt and risk are the two things that some think will combine to produce an economic catastrophe in China but the growth is still there to be able to pay off debt. When the debt gets so large it crowds out growth because of the cost of that debt – that becomes a problem. And China’s debt is huge; it is currently about 260% of annual economic output and is predicted to rise. What makes it particularly worrisome is that the bulk of this is held by state-owned corporate entities.
Risky practice has been growing too, particularly around the so called “shadow banking” sector. So much so that Beijing cracked down on the insurance market in particular, and went after some of China’s best known private firms who were deemed too risky in the way they raised money.
Firms who owned or had stakes in New York’s Waldorf Astoria, Deutsche Bank, Club Med and Wolves FC were all targeted. It’s steadied the boat, but that appears all. Other far more significant reforms have not yet happened; financial market reforms, substantial rural land reform, changes to the internal passport-like hukou welfare system.
One thing that is happening though is a deepening of the role of “the party” at the top of China’s state firms. There were reports this summer that foreign owned firms or joint ventures have been asked to give the Communist Party equal say over their major corporate decisions.
In a new report, the IMF says there is an increasing risk of a “disruptive adjustment” and/or a marked slowdown in economic growth”. The agency calls for decisive action to deflate the credit boom smoothly. Without the boom, the report suggests, China’s recent economic expansion would have been significantly slower. Since the global financial crisis, China’s economic growth has slowed, from an average of 10% a year in the previous three decades to a rate of 6.7% last year. The Chinese government expected a slowdown, since the earlier double-digit rate was not sustainable over the long term.
China has been trying to manage a transition to slower growth with a different pattern, one that is less dependent on industry and exports and has a greater role for consumer spending at home and service industries.But the IMF’s report says the slowdown would have been more pronounced, were it not for a boom in credit. It suggests that over the years 2012-16, a more sustainable pattern of debt and credit would have led to economic growth that was slower by two percentage points.
The IMF sets out some disturbing evidence from previous credit booms with similarities to China’s. It says that out of 43, only five were not followed by either a financial crisis or a major slowdown in economic growth. The report does set out a number of features of China’s situation that it says reduce the risks. One example is the surplus in China’s current account, which is its international trade plus some financial transactions. That makes it less dependent on borrowing from abroad and so less susceptible to a sudden loss of confidence on the part of foreign lenders – something that happened in many emerging-market financial crises. But for each of these relatively favourable factors, the report sets out reasons why the protection they provide may be limited.
The biggest single group of debtors are state-owned enterprises (SOEs), although there have also been large increases in the debts owed by the government, other businesses and households. SOEs are a long standing issue in China. Many are what are called zombie companies that are not financially viable and are often in industries where there is excess capacity. They account for the most pressing corporate debt issues, the report says.
There is also a warning about the housing market. A sudden “correction”, or in other words, a fall in prices, could pose a risk to financial stability. The report says that decisive action is needed.
The most general recommendation the IMF makes is that China should put less emphasis on targets for economic growth (this year it’s 7.5%), as it says these “have fostered an undesirable focus on short-term, low-quality stimulus measures”. Many of the other problems reflect that feature of China’s economic strategy. The report says the government has had the tendency of boosting infrastructure spending, real estate activity and credit during economic downturns to meet growth targets.There is also a menu of other more specific initiatives the IMF suggests, including a renewed effort to deal with the zombie companies, many of which are likely to go out of business. It says the government should consider restricting the use of unsecured loans to pay for down-payments by home buyers.
Millions of workers the Chinese government plans to lay off from failing state owned companies will be “abandoned”. China’s mountain of national debt is real worry, the possibility of bankruptcies and – ultimately – what it might mean for the thousands his multinational firm employs in China. They support reforms to overhaul China’s mammoth economy; but their stories, from three very different parts of China, reveal the consequences and anxieties associated with the changes.
The complex is home to the world’s biggest manufacturer of electric cars. BYD is a global leader in a technology that China hopes it can dominate; electric vehicles, and specifically the batteries that power them. The big push towards electric isn’t just about industrial strategy; it’s about trying to tackle China’s immense pollution problems – the most obvious of which is dirty air.
With incentives for infrastructure and aggressive quota demands for, mostly foreign, manufacturers, this is part and parcel of Beijing’s effort to make China’s economy less focused on government investment and cheap exports – and instead to one that is technologically advanced, with a sustainable base and driven by consumer spending.
Corruption is a serious crime in socialism. The mighty Soviet Union collapsed and eventually disintegrated, entire socialist system in East Europe got wound up because of rampant corruption in Russia eating away the very system of equality. Last Soviet president Michael Gorbachev made sincere efforts to fight corruption by Perestroika and Glasnost but he failed. Corruption had reached very high level as the CPSU tolerated corruption as a necessary evil to be allowed initially but it got strong and became an institution by itself.
President Xi would be remembered as the leader who made China a strong and powerful nation: Being strong first of all means being a global power: being a world leader and therefore leading the world. It also means that the Communist party must be strong and corruption free even while maintaining one-party rule.
President Xi knows corruption in China is deep rooted and has initiated steps to contain it. Whether Xi would be successful in making China corruption free – remains to be seen. As China tries to tackle chronic over-capacity in its traditional industries it’s also moving away from dirty coal to heat homes and power its economy. Many mines are being mothballed.
President Xi is seen as a transformative figure that saw himself in the same tradition as Mao and Deng. There’s no lack of confidence in Xi Jinping. In order to reclaim China’s historic greatness, its centrality in the world China needs a strong leader – and he is the person for the job.”
Xi Jinping faces a multitude of challenges in his country’s economy as he embarks on his second term at the top. Strengthening the party’s hold on the means of production is one of Beijing’s responses.
Meanwhile, China’s ruling Communist Party has voted to enshrine Xi Jinping’s name and ideology in its constitution, elevating him to the level of founder Mao Zedong. The unanimous vote to incorporate “Xi Jinping Thought” happened at the end of the Communist Party congress, China’s most important political meeting.
Xi has steadily increased his grip on power since becoming leader in 2012. This move means that any challenge to Xi will now be seen as a threat to Communist Party rule. More than 2,000 delegates gathered in Beijing’s Great Hall of the People for the final approval process to enshrine “Xi Jinping Thought on Socialism with Chinese Characteristics for the New Era” into the Communist Party constitution of China. At the end of the process, delegates were asked if they had any objections, to which they responded with loud cries of “none”, reported journalists at the scene.
The expression “new era” is the party’s way of saying this is the third chapter of modern China. If the first was Chairman Mao uniting a country devastated by civil war, and the second was getting rich under Deng Xiaoping, this new era is about even more unity and wealth at the same time as making China disciplined at home and strong abroad. Enshrining all of this under Xi Jinping’s name in the party constitution means rivals cannot now challenge China’s strongman without threatening Communist Party rule.
US led capitalist world has pinned hopes on China to finally close socialism-communism as being utopia but the news form the CPC Congress is not encouraging to them as China under President Xi Jinping would consolidate the gains of socialism and push further to achieve maximum for the people and nation. Unlike Soviet Russia that hurried up to end socialist ideology due to rampant corruption that had crept into the national body, China perused, albeit slowly, the process of socialist construction in a sustained manner.
It’s when not if China’s Middle Eastern tightrope snaps
China is manoeuvring to avoid being sucked into the Middle East’s numerous disputes amid mounting debate in Beijing on whether the People’s Republic will be able to remain aloof yet ensure the safety and security of its mushrooming interests and sizeable Diaspora community.
China’s challenge is starkest in the Gulf. It was compounded when US President Donald J. Trump effectively put China on the spot by implicitly opening the door to China sharing the burden of guaranteeing the security of the free flow of energy from the region.
It’s a challenge that has sparked debate in Beijing amid fears that US efforts to isolate Iran internationally and cripple it economically could lead to the collapse of the 2015 international agreement that curbed Iran’s nuclear program, accelerate Iran’s gradual breaching of the agreement in way that would significantly increase its ability to build a nuclear weapon, and potentially spark an unwanted military confrontation.
All of which are nightmare scenarios for China. However, Chinese efforts so far to reduce its exposure to risk are at best temporary band aid solutions. They do little to address the underlying dilemma: it is only a matter of time before China will have no choice but to engage politically and militarily at the risk of surrendering its ability to remain neutral in regional conflicts.
Israeli intelligence reportedly predicted last year that Iran’s gradual withdrawal from an agreement that Mr. Trump abandoned in May 2018 would ultimately take Iran to a point where it could create a nuclear military facility within a matter of months. That in turn could provoke a regional nuclear arms race and/or a pre-emptive military strike.
That is precisely the assessment that Iran hopes will persuade China alongside Russia and the European Union to put their money where their mouth is in countering US sanctions and make it worth Iran’s while to remain committed to the nuclear accord.
The problem is that controversy over the agreement is only one of multiple regional problems. Those problems require a far more comprehensive approach for which China is currently ill-equipped even if it is gradually abandoning its belief that economics alone offers solutions as well as its principle of no foreign military bases.
China’s effort to reduce its exposure to the Gulf’s energy supply risks by increasing imports from Russia and Central Asia doesn’t eliminate the risk. The Gulf will for the foreseeable future remain a major energy supplier to China, the region’s foremost trading partner and foreign investor.
Even so, China is expected to next month take its first delivery of Russian gas delivered through a new pipeline, part of a US$50 billion gas field development and pipeline construction project dubbed Power of Siberia.
Initially delivering approximately 500 million cubic feet of gas per day or about 1.6 percent of China’s total estimated gas requirement in 2019, the project is expected to account with an increased daily flow of 3.6 billion cubic feet for 9.5 percent of China’s supply needs by 2022.
The Russian pipeline kicks in as China drastically cuts back on its import of Iranian liquified petroleum gas (LPG) because of the US sanctions and is seeking to diversify its supply as a result of Chinese tariffs on US LPG imports imposed as part of the two countries’ trade war.
China is likely hoping that United Arab Emirates efforts to stimulate regional talks with Iran and signs that Saudi Arabia is softening its hard-line rejection of an unconditional negotiation with the Islamic republic will either help it significantly delay engagement or create an environment in which the risk of being sucked into the Saudi-Iranian rivalry is substantially reduced.
Following months of quietly reaching out to Iran, UAE minister of state for foreign affairs Anwar Gargash told a recent security dialogue in Abu Dhabi that there was “room for collective diplomacy to succeed.”
Mr. Gargash went on to say that “for such a process to work, it is essential that the international community is on the same page, especially the US and the EU, as well as the Arab Gulf states.” Pointedly, Mr. Gargash did not put Russia and China on par with Western powers in that process.
The UAE official said the UAE envisions a regional order undergirded by “strong regional multilateralism” that would provide security for all.
Mr. Gargash made his remarks against the backdrop of a Chinese-backed Russian proposal for a multilateral security arrangement in the Gulf that would incorporate the US defense umbrella as well as an Iranian proposal for a regional security pact that would exclude external players.
Presumably aware that Gulf states were unlikely to engage with Iran without involvement of external powers, Iran appeared to keep its options open by also endorsing the Russian proposal.
The various manoeuvres to reduce tension and break the stalemate in the Gulf put Mr. Trump’s little noticed assertion in June that energy buyers should protect their own ships rather than rely on US protection in a perspective that goes beyond the president’s repeated rant that US allies were taking advantage of the United States and failing to shoulder their share of the burden.
Potentially, Mr. Trump opened the door to an arrangement in which the United States would share with others the responsibility for ensuring the region’s free flow of energy even if he has given no indication of what that would mean in practice beyond demanding that the United States be paid for its services.
“China gets 91 percent of its oil from the Straight, Japan 62 percent, & many other countries likewise. So why are we protecting the shipping lanes for other countries (many years) for zero compensation. All of these countries should be protecting their own ships…,” Mr. Trump tweeted.
China has not rejected Mr. Trump’s position out of hand. Beyond hinting that China could escort Chinese-flagged commercial vessels in the Gulf, Chinese officials have said that they would consider joining a US-backed maritime security framework in the region that would create a security umbrella for national navy vessels to accompany ships flying their flag.
Chinese participation would lay the groundwork for a more comprehensive regional security arrangement in the longer term.
China’s maritime strategy, involving the development of a blue water navy, suggests that China already de facto envisions a greater role at some point in the future.
Scholars Julia Gurol and Parisa Shahmohammadi noted in a recent study that China has already “decided to take security concerns in the (Indian Ocean) into its own hands, instead of relying on the USA and its allies, who have long served as the main security providers in this maritime region… If tensions continue to escalate in the Persian Gulf, Beijing may find it has no other choice but to provide a security presence in the Middle East.”
Implications of French President’s Visit to China on the International Arena
French President Emmanuel Macron pursues a policy of opening up to China and solving problems that may arise peacefully and diplomatically. France and Germany are the main pillars of the European Union, and the French opening to China is a European recognition of the importance of China’s role internationally.
Last Monday, the French president paid a three-day official visit to China amidst the US-China trade war. The French president has previously promised to visit China once a year throughout his term. These official exchanges between China and France strengthen China’s international standing, and prove the theory that China is a peaceful country seeking cooperation and opening up to the world.
Fifty-five years after the establishment of diplomatic relations between China and France, a bilateral relationship based on respect and friendship despite some differences in regimes or strategic alliances. The Chinese model is mainly based on people-to-people communication and peaceful cooperation, and these are the main pillars of the Belt and Road Initiative launched by Chinese President Xi Jinping in 2013.
Despite Washington’s withdrawal from the Paris climate agreement in 2015, Beijing and Paris have kept their promises to contain global warming, a positive point in the bilateral relationship. The French president considered that China and France should lead the climate agreement. Cooperation between the two countries has emerged considerably in the industrial sector, such as the development of nuclear energy, aerospace, and the automotive industry. Academic cooperation between the two countries has also been boosted through student exchange programs and the high demand for Chinese language learning in France, which was previously rare.
Commenting on the importance of trade exchanges between China and the EU, the Chinese Ministry of Commerce showed that trade between China and the EU exceeded 322.5 billion US dollars in the first half of 2018, up 13 percent year on year. Chinese Ambassador to France Zhai Jun recently expressed that China and France are to expand cooperation in agriculture, energy, advanced manufacturing and artificial intelligence.
From the ancient city of Xi’an, the French president announced that an alliance between Beijing, Europe and Paris should be established for a better future for the world, and Macron stressed the need for a balanced relationship between China and Europe. The French president praised the Belt and Road Initiative and called for its activation in order to enhance the trade role of Asia and Europe.
France was the first Western country to recognize the People’s Republic of China. In a meeting with French ambassadors, the French president stressed that the West is in a moment of decline and China is progressing at a tremendous speed. During his visit to China, the French president took advantage of the trade war between the United States and China and worked to develop France-China trade relations, increase French trade partners to China, and promoting the French tourism, agriculture and services sectors.
France is seeking to strengthen Sino-European relations because of its great benefit to the European economy, but it is contrary to the Western orientation. China is also a beneficiary of good relations with France, because France has influence in Africa and many regions in the world and is a permanent member of the Security Council and it is a developed country at the military, technological and technical levels. China’s cooperation with a powerful country like France will bring many benefits and opportunities.
China’s great economic, technological and military progress indicates that China has become an important country in international relations, and it is in the interest of any country in the world to establish good relations with China. The best evidence is that France is seeking to establish good relations with China, as well as the European Union countries to make their relationship with China distinctive.
Tension in Hong Kong
After about three months of riots, often particularly violent and destructive, on October 23, 2019 the Chief Executive of Hong Kong, Carrie Lam, aliasChen Yuet-Ngor, withdrew the bill on mandatory extradition to China, which had sparked protests in the former British colony.
Never evaluate a mass protest on the basis of the reason triggering it, which can often be irrelevant.
The extradition bill, announced in September, was withdrawn a few days after the resumption of works in Hong Kong’s Parliament.
With a view to partially repressing the insurgency, the now former Chief Executive of the city-state resorted to emergency legislation, by mainly using the colonial law of 1922, which prohibits the use of masks and disguises during public demonstrations.
The protesters were and still are approximately one million, out of about eight million inhabitants.
The subsequent riots, designed to last well beyond the bill withdrawal, strained the always tense relations between the former British colony and China, with the result of throwing into crisis also the Chinese governance of the city-State and, in particular, the traditional Chinese model of “One Nation, Two Systems”.
If this model fails, the formula devised by Deng Xiaoping will not even apply to Taiwan, or possibly to the North Pacific islands, and it will anyway undermine the current Chinese idea of peaceful expansion and win-win collaboration between the Chinese motherland and all the bordering areas both in the Pacific and in Central Asia.
Since 1977 – when the Fragrant Harbour came under Chinese control – all riots in Hong Kong have been triggered by strong dissatisfaction with the Chinese motherland.
The deep economic and social dissatisfaction has always been targeted against China and never towards local power elites. In psychoanalysis, this phenomenon is called transference.
In 2003 many thousands of people living in the former British colony had protested against a law that, in their opinion, would make it difficult to express opinions and feelings defined as “anti-Chinese” and the law was postponed indefinitely.
Further riots broke out in 2012, when a clearly pro-Chinese school program was proposed and once again the local authorities (upon direct instructions from the national government) avoided implementing that law.
In 2014, there were the sit-in street protests of the Occupy Central movement, the so-called “Umbrella Revolution”, which lasted three months to ask – this time unsuccessfully – for the Chief Executive of Hong Kong to be elected by universal suffrage.
Currently, however, the real reason underlying the protests in Hong Kong is not so much the request for implementing – in the former British colony – democratic mechanisms typical of the Western culture, but rather the tension resulting from great economic inequalities.
Not to mention the broken social elevator, which is probably the real trigger of the youth rebellion in the Fragrant Harbour.
People, especially the skilled workers, cannot be ensured acceptable wages and salaries. This is the reason why many inhabitants of the old city-state migrate to Canada or Taiwan. Another blow to China.
Young graduates’ wages and salaries have dropped by at least 10% compared to 25 years ago. There is a very severe housing crisis, but anyway the choice to create a local oligarchy that tries to convince the other inhabitants is an old British idea.
In Hong Kong an oligarchy of very few families dominates the local economic system, which is worth a GDP of 343.5 billion US dollars.
The five most powerful families are still those led by Li Ka-shing, Kwong Siu-hing, Lee Shau-kee, Henry Cheng and Joseph Lau.
These five families alone control 70% of the entire Hong Kong market, including real estate and telecommunications, as well as TV channels.
The 21 leading families in Hong Kong control a wealth equal to 1,893 billion US dollars.
Obviously in China no family controls such a huge amount of wealth. In the People’s Republic of China the five major real estate operators put together control only 9% of the entire Chinese construction market.
China, however, has tried to gain support in Hong Kong, especially among entrepreneurs, with the Greater Bay Area plan, i.e. the new megalopolis on the Pearl River Delta between Hong Kong, Guangdong and Macao.
This is, in fact, Hong Kong’s infrastructure aggregation to the Autonomous Economic Zone of the Pearl River Delta, between Guangzou, Shenzhen, Zhuhai, Foshan, Zhongshan amd Jiangmen, which are the most dynamic economic areas in China.
Taxes are very low in Hong Kong, as in all business-friendly countries but, coincidentally, there is no inheritance tax.
The administrative machinery is therefore very simple: Hong Kong’sgovernment does not gain sufficient revenue from taxation and hence has no funds to invest in schools, hospitals and infrastructure.
A city like Hong Kong, with over seven million inhabitants, provides for a statutory minimum wage of 4.82 US dollars per hour. Almost all flats are illegal and, considering the cost of rents and properties, they are so small that they are about half of the “tiny apartments” in large U.S. cities, which are already very small.
The average size of Hong Kong flats per inhabitant is 16 square metres, while in Shanghai the average size per inhabitant is 36 square metres.
45% of Hong Kong’s inhabitants live in state-owned or subsidised apartments, while 90% of the Chinese people own at least their own houses.
Hong Kong’s tax reserves are at least 147 billion US dollars, but the local political system is too fragmented – even from the viewpoint of the complex electoral system – to mediate between different interests and to really solve the main problems of the city-state, namely housing, health and education costs.
Those who are ill must wait an average of 150 weeks before being examined, with 43 public hospitals that, however, employ 40% of the doctors available, since the private sector attracts many of the best professionals.
The solution of employing doctors from abroad is not very practicable, considering the low attractiveness of Hong Kong’s wages and salaries and the poor quality of health facilities.
One in six people living in Hong Kong suffers from mental disorders due to social, economic and health conditions.
The graduates’ average wages and salaries in the former British colony have fallen by over 10% compared to a decade ago. Nowadays graduates are easily paid the best salaries and wages of workers without university qualifications.
As already said, there is no social elevator.
The cost per square metre is much higher in Hong Kong than the average price in a central neighbourhood of New York.
As happens also in the West, the career prospects of young graduates in Hong Kong are very limited. They never have a house of their own and their prospects are much worse than those of their colleagues who lived in Hong Kong a few decades ago.
In Hong Kong the Gini Index, which is used as a gauge of economic inequality, is 5+, one of the highest and most unequal indexes in the world.
This is the real political core of the issue: for those who protested in Hong Kong – as currently happens everywhere in the world – “democracy” in the Euro-American sense means above all greater social equality, many opportunities and efficient public services.
This is obviously not true, but it is the model that took to the streets the crowds of the Arab Spring, the Euromaidan citizens in Ukraine and the “colourful” rebellions in Georgia.
Paradoxically, just when Western democracies are turned into States based on unearned income and the extent and quality of their Welfare diminish, they are mythicized as efficient and open.
In this case, Vilfredo Pareto would have spoken of “residues”, i.e. memories of a time that no longer exists, but that are still in action in the crowds’ deep psyche.
In 1997, at the time of unification based on the “One Country, Two Systems” model, Hong Kong’s GDP accounted for 18% of whole China’s GDP.
Currently, after China’s fast growth, the importance of the Fragrant Harbour is the same as the relevance of Guangdong or Shenzhen.
The current protests, however, have also put Hong Kong’s business community in severe difficulty.
The majority of Hong Kong’s leading companies do most of their business with China. It is not by chance that last August the Chinese authorities gathered 500 of the most important businessmen and political leaders in Shenzen to support the Hong Kong government and, possibly, sufficiently improve the social situation of the city-state, which, however, remains explosive.
Hong Kong’s financial market has suffered the greatest damage.
The Chinese company Alibaba has postponed its listing on the local Stock Exchange until the uprising has finally abated, while Fitch has lowered Hong Kong’s rating.
Pending a systemic integration with the regulatory network of mainland China.
Another problem that the riots in the Flagrant Harbour may cause is migration.
Last year 24,300 highly-skilled young people left the country and the rate of migration requests has risen by 15% per year.
Where do they go? To Canada, Australia, New Zealand and Taiwan.
On the other hand, the number of Chinese people migrating to Hong Kong has decreased by 14,000 per year.
Furthermore, this November there will be the Hong Kong District Council elections and it is very likely that youth discontent will find a way to assert itself in the polls.
A fragmented society under crisis creates many problems for those planning business cycles and Hong Kong is likely to see its growth rate decrease by at least 3%.
Where will capital go? Obviously in the Chinese area bordering on Hong Kong, with an expected investment growth of almost 6.5%, largely consisting of capital outflows from Hong Kong.
The differences between Hong Kong and China, however, are much wider than those shown with violence during the recent long protests, which often followed the same tactics of the color revolutions organized by the US Services, according to the old model developed by the Einstein Institute.
For China, Deng Xiaoping’s criterion “One Country, Two Systems” means that China takes over Hong Kong despite the differences in political and economic systems, which will eventually tend to overlap. Conversely, for Hong Kong leaders the “Country” is just lip service paid in view of maintaining the separation from China, both from a cultural as well as an economic and political viewpoint.
China has so far controlled Hong Kong with the same logic with which it has supervised its “dangerous” territories, namely Tibet, Xinjiang and Manchuria.
The current Chinese centralization stems from the analysis of the inglorious collapse of the almost federalist Soviet Union. In this regard, suffice to recall the ironic smiles that welcomed Gorbachev on his visit to China, just when the Tiananmen Square protests had reached their climax.
It does not matter that the right to secession was established in Lenin’s Sacred Texts. The fact is that, for the Chinese leadership, the unity of the Country and the repression of every regionalist secession is fundamental to the permanence of the State – and of the Party.
China, however, still depends on the financial hub of Hong Kong, the only one completely open to the world capital flows.
According to 2018 data, the Hong Kong Stock Exchange capitalizes 29.9 trillion local dollars.
Shenzhen and Shanghai cannot replace Hong Kong in this respect.
Therefore, China could not intervene in Hong Kong because otherwise it would have destroyed on its own the way connecting China to international capital flows.
Furthermore, the repression of the Hong Kong movements would have destroyed the model “One Country, Two Systems”, which is exactly the one that will be applied to Taiwan, at the right time.
Nor should we forget that, pending the New Silk Road promoted by China, the Western Powers are conceiving political mechanisms for disrupting and possibly stopping the “Road”, by organizing rebellions and anti-Chinese parties and movements in the various countries where the passage of the Chinese One Belt One Road (OBOR) is planned.
Obviously China does not stand by and wait to see.
From this viewpoint, the Hong Kong uprising is a model that will soon be imitated and that China will oppose exactly with the same political tactics.
As is recommended in the Thirty-Six Stratagems, “Befriend a distant State and strikes a neighbouring one”.
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