Tuesday, 26 April 2016

Hillsborough

Today, after the longest inquest in British legal history, the jury in the inquest into the 1989 Hillsborough disaster finally rendered its verdict. As I wrote seven years ago at the time of twentieth anniversary after watching the memorial service on television:
Seeing a government minister silenced by 30,000 people chanting "Justice for the 96" made me feel indescribably proud. I feel this to be a case similar to that of Derek Bentley - it doesn't matter if a re-opening of the case is too late, some measure of justice needs to be done.
It is striking to note that the re-opening of the case that finally rendered a measure of justice for the families of the 96 people who were killed in the disaster was actually a direct result of Andy Burnham's having been shouted down at the memorial service that day.

EDIT: In response to the verdict my brother posted this on Facebook, and I thought it quite fitting -

It took 27 years, but "we climb the hill in our own way/and every day is the right day"








Tuesday, 5 April 2016

"The Panama Route", the Panama Papers, and China's diplomatic relations


Right now the big item making waves in the news is the Panama Papers - a massive leak of documents from Mossack Fonseca which provides "rare insight into an operation which offers shady operators plenty of room to manoeuvre". Mossack Fonseca appears to be particularly active in Mainland China and Hong Kong, where 8 out of its 31 offices world-wide are located, and is rumoured to have some very well-connected Chinese clients - even Xi Jinping's brother-in-law has been implicated in the Panama Papers.

Obviously Mossack Fonseca are yet to be accused of any actual illegality as a result of this leak and they and their staff should of course be presumed innocent until any evidence is produced proving the opposite. However, speaking in very general terms, Chinese interest in Panama over the past decade or so has centred around two things: the canal that facilitates much of China's trade, and what is known as the "Panama Route" for moving money out of Mainland China, especially where the money has been earned in a way that might not be entirely legal.

Chinese interest in building a new canal across the Cantral American isthmus appears to have flagged somewhat, especially as the expansion of the Panama canal, which was well in hand when I visited that country, appears to render any new canal entirely redundant. The "Panama Route" on the other hand, is quite different: supposedly it works by smuggling money out of Mainland China to another country (South Korea is the one I've heard about, but others may work as well) and then wiring it from there to Panama. Once the money is safely in Panama, so legend has it, since Panama does not have diplomatic relations with the PRC but instead recognises the Republic of China, it is almost impossible for Mainland Chinese authorities to touch it.

Interestingly, the Panamanian government even sought to switch recognition to the PRC as recently as 2009, only to be rebuffed by the PRC government out of an apparent desire not to breach the diplomatic truce between the two sides of the Taiwan strait. Funnily enough, despite the end of the "truce" with the recent establishment of diplomatic relations between the Gambia and the PRC after their 2013 breach with Taipei, there has not been any sign, yet, of movement in the Panamanian case despite the long-expressed desire to switch recognition.

The suspiciously-minded might suspect that the PRC leadership are purposefully delaying the switch as the "Panama Route" is rumoured to have proved useful for them and their families. However, there is not nearly enough evidence at the moment to draw this conclusion - but if Panama's diplomatic switch from Taipei to Beijing is significantly delayed, you might be forgiven for thinking that their motive in doing so may have something to do with keeping the "Panama Route" open.

[Picture: a view through the fortress wall at San Lorenzo, Panama, which I visited with my wife whilst on honeymoon last year]

Saturday, 16 January 2016

Taiwan, after the gold-rush

Back around the end of October last year I took the opportunity offered by a friend's wedding in Hong Kong to make a week-long side-trip to Taiwan. Whilst I'd lived in Taiwan from 2001-2002, and visited there regularly whilst working for Foxconn (the Taiwanese manufacturing giant) in the middle years of the last decade, this was the first time I'd been back there since 2009.

Taiwan is still the great place to be that I remember, though of course as all the people there I knew in my 20's are dealing with the issues that you find yourself dealing with in your 30's and 40's, so clubbing was no longer on the agenda (though we did sink more than a few beers at The Hammer). Staying with my good friend The Writing Baron in Danshui I was able to visit all the local sites - the various old century forts and residences being worth a good afternoon's wander to see.

[At the Hongmao Cheng in Danshui]
When I'd previously lived in Taiwan, the generally-held view amongst the expats was that Taiwan was something of an undiscovered gem. If that was the case back in 2001 it no longer really can be said to be so since the expansion of cross-strait links has led to large scale tourism by mainlanders, with mainland tourist groups visible at all of Taipei's tourist attractions. The CKS memorial, which still has the propaganda-tastic War of Resistance museum underneath it (it basically tries to make out that the massive defeats that Chinese forces suffered during the war were a form of tactical retreat), was thronging with mainland groups.

Politically also Taiwan has seen some surprising developments. I was amazed to find, as I walked down Ketagalan Boulevard (the main thoroughfare going by the presidential palace in Taipei) to find half the road blocked off with tape for a demonstration by no more than about a dozen or so aged pro-unification demonstrators singing pro-Communist songs. The sound of Without the Communist Party, There Would Be No New China being sung somewhat tunelessly in an unmistakable Taiwanese accent is certainly not something I would have expected to hear in Taiwan even now.

[PRC flags on display at the pro-unification demonstration on Ketagalan]


A few hundred yards from Ketagalan I also stumbled on the stalls and banners of the pro-independence camp, brashly declaring themselves in favour of democracy and liberty. In contrast to the pro-unification demonstration, these were totally unmanned -it appeared that they had gone off for lunch.
[Out to lunch? The stalls of the pro-independence movement] 

Of course, both demonstrations form the wave-top-froth hiding the deeper currents in the waters of Taiwanese politics. Arriving in the aftermath of the replacement of the KMT's presidential candidate Hung Hsiu-chu (who had proved unpopular) with Eric Chu (who was proving equally unpopular), the result of the presidential election (the polls for which have just closed) seemed an almost foregone conclusion. The DPP's Tsai Ingwen is almost certainly going to become the first female president in the Chinese-speaking world, the first de jure (as well as de facto) female ruler of a de jure (if perhaps not really de facto) Chinese state since the Empress Wu Zetian in the 8th century AD.

The reasons for this likely electoral avalanche go beyond the mere unpopularity of the KMT candidate to economic stagnation which seems to have Taiwan in a solid grip. The economic boon which the greater integration with mainland China (as championed by the KMT) promised has not been realised. It is uncertain, however whether the DPP would have done things very differently had it been in power over the last 8 years - indeed when asked about Ma Yingjiu's achievements in establishing links with the mainland in a 2012 interview Tsai Ingwen essentially said that the credit for them belonged to the DPP's pre-2008 talks with mainland officials.

The impact of this economic malaise is palpable throughout Taiwan. On a nostalgic trip back to Miaoli, where I had first lived in Taiwan, it struck me that at the time I had lived there the town had been in the middle of a mini-gold-rush of sorts. Miaoli was home to many of the engineers who worked on the construction of the high-speed railway, now completed, and at the same time Taiwan in general was going through a fad for buxiban (cram schools) that employed many foreign teachers. Bars and schools abounded in the town to serve both.

Now many of the old bars which I knew have closed, with few new ones opening to replace them. Many of the old buxiban had also closed, in fact whole chains that ordinary people in Taiwan would have known by name had dwindled to insignificance - the Shane English Schools chain that I worked at in 2001 seemed to have shrunk to only it's head office on Roosevelt Rd in Taipei, and re-focused its efforts on study-abroad programs. Friends who I met over a bowl of noodles had all either lost their jobs or found themselves stuck in an economic rut.

Despite inflation averaging 1-2% since 2001, the salaries people were earning for jobs like English teaching were exactly the same, or even a bit less, than those that they would have made 15 years ago. This problem is not limited only to the English-teaching business either - real-terms wages in Taiwan saw no growth between 2000 and 2011. The prospect of Taiwan becoming permanently stuck in what might be termed an "upper-middle income trap" is very real.

Inevitably, the cross-strait issue remains the big issue in Taiwan. Paradoxically to what some on the pro-China side might have expected, the Taiwanese identity has only strengthened as cross-strait ties have burgeoned. Everyone I asked about in Taiwan spoke of this.

It's glib to talk of familiarity breeding contempt, but there is certainly an element of this. I saw this even amongst my pro-KMT colleagues at Foxconn - the more they came into contact with the mainland and particularly its government, the more they became conscious of the differences between mainland China and Taiwan. It is hard to see people who identify primarily as Taiwanese ever willingly accepting the rule of the present mainland Chinese government.

With Tsai's likely election, it's inevitable that there will be talk of increased tensions. It is important to keep in mind here that the real tensions in the Taiwan Straits come from the threat of invasion of Taiwan from mainland China, and that it is only the complete withdrawal of this threat to Taiwan's freedom and security that will remove these tensions. With the growing military capabilities of mainland China, capabilities that will soon mean that (unlike in previous years) an invasion might actually be launched with a fair degree of certainty of success, and with a much more hardline mainland Chinese government that is also facing potential economic problems which it may wish to distract people from, this seems unlikely.

[UPDATE 1] The BBC is now reporting a victory for Tsai. with Chu conceding and resigning as head of the KMT. Taiwan is now entering a new era . . .

[UPDATE 2] The Central Electoral Commission has Tsai receiving 56.2% of the vote, an increase of more than 10% over her defeat in 2012. This compares favourably with Ma's 51.8% in 2012, but is a bit lower than Ma's 58.5% victory in 2008. The KMT languish at 31% of the vote.

[UPDATE 3] Shanghaiist reports that the DPP has won 50 of the seats in 110-seat Legislative Yuan  declared so far, with 34 seats still to announce. A majority seems virtually guaranteed, a 75% super-majority for the Pan-Green parties required to pass constitutional amendments is uncertain.

[UPDATE 4] HKFP is reporting a different figure - 41 seats for the DPP, 14 seats for the KMT, 3 seats for the post-Sunflower New Power Party.

[UPDATE 5] CTI news has the DPP at 68, KMT at 35, NPP at 5, PFP at 3, and others (New Party and TSU?) at 2. Depending on who the "others" are, that's 11-13 seats short of the 86 seats needed for a pan-green super-majority.



Tuesday, 12 January 2016

Bowie

I was hesitant to write about David Bowie simply because it would inevitably mean having to address the, umm, difficult to talk about song China Girl (sure: there's an argument that it really isn't that racist, but it's not exactly a convincing one). However, since Jeremiah has already cleared the way on that one, I can simply dive into the fact that if you were born at any time from about 1955 onward his music has been an inevitable part of your life in a way that not even the Beatles, whose truly productive period lasted only about five years, really managed.

Even if you weren't much of a music aficionado, and I can't claim to be one, his music brings back memories. Here's mine -

Any Friday night at Kenny's bar in Miaoli 2001-2002:



The day after the wedding, very hung over, singing along whilst my brother noodled around on guitar, Wroclaw, 2014:



David Bowie was of my parent's generation, a generation that is now mostly either retired or fast approaching retirement, and which will start to pass from the scene in the coming decade. Unlike them, I and my middle-class middle-England peers did not, generally speaking, have to struggle against the social mores and constraints of our parents the way that they had to against theirs - we could if we wanted have long hair and wear make-up, listen to loud music and so-forth.

There is of course something embarrassing about this inter-generational cosiness, the embarrassment of a younger generation that never really rebelled all that much but which instead lives increasingly in the parental home and is reliant on parental money, but it sprang from an attitude of personal freedom and liberation which that generation championed simply by exercising it.




Thursday, 24 December 2015

Poland, revisited

One sentiment you occasionally hear expressed by some of the outside observers of Polish affairs that knew the country in the 1980's is that it has become a much more normal, ordinary, (and perhaps even boring?) country since the end of Communism. With the recent election of Law & Justice (known to Poles as PiS) and the wrangling over the constitutional court, this may no longer be quite the case.

Visiting Poland for Christmas holidays I find that regular demonstrations now occur in the city of Wroclaw, and many others. This was certainly not the case a year ago.

On the one hand we have the supporters of the former governing part (Civic Platform, or PO as it is known in Poland) and others who characterise PiS's recent changes to the constitutional court as a coup - I have even heard people in all seriousness compare them simultaneously to the Nazis and the Bolsheviks. It is fair to say that almost of all the people I know in Poland are of this opinion, though this is merely evidence of the kind of people who I associate with and demonstrates, yet again, that one cannot simply rely on one's acquaintances to give you a full picture of the political sentiment of a country.

On the other there are the supporters of PiS (who are the majority of the voting public) who believe that these changes are necessary in order to address some of the compromises made in the negotiations that brought about the fall of communism in the country. Finally, there is, even in a fairly liberal city like Wroclaw, a small but substantial fringe of supporters of fascist parties like the ONR and NOP who believe that things should be taken much, much further. The graffiti of the supporters of these far-right parties can be seen throughout the city, often paradoxically paired with the symbol of the wartime Polish resistance.

My personal instinct is that things cannot possibly be so serious as all that - coming from a country without a constitutional court, or even a single codified constitution, it is hard to see what the fuss is all about. This is particularly  the case when PO seems to have contributed significantly to the 'crisis' by trying to rush through the appointment of judges to the constitutional court prior to its electoral defeat.

I am however a bit concerned by the rhetoric of some of the prominent members of PiS (Jarosław Kaczyński described those who demonstrated against PiS's policies as "the worst kind of Poles") and by the very odd incident of a night-time raid on a Warsaw-based NATO-affiliated counter-intelligence organisation. This is, however, still a long way from Putinism or even Viktor Orban-style down-grading of democracy and I cannot see the idea of a potential EU condemnation of PiS actions as anything but very unwise - it smacks of exactly the kind of interference in internal affairs that has done some much to alienate Britons from the EU, and will seem hypocritical coming from an organisation that has so often rode roughshod over the democratically-expressed wishes of national polities.

Tuesday, 15 December 2015

Monday, 30 November 2015

Japan's "scientific" whaling


So the Japanese government has announced that it's going to permit further whaling for "scientific" purposes even though the ICJ reportedly ruled that all Japanese whaling should cease.

Whilst I don't really know enough to comment on the legality or otherwise of Japanese whaling, the one thing that anyone who has spent a while living and working in Japan can easily comment on is the claim that this whaling is scientific: put simply, it's very hard to believe that any scientific purpose is served by this whaling. Instead the whale meat harvested for supposed "scientific purposes" is actually sold throughout Japan in specialist restaurants as well as from stalls at events.

I found this out first hand when I went to a company banquet back in 2010 in Kochi, on the south coast of Shikoku island, and was served what appeared to be a thick, layered, rubbery-looking substance with tiny bits of meat in it. It looked, smelt, and tasted foul, and even before discovering what it was I felt sick - it is hard to understand how anyone would eat such whale meat by choice.

The day after the banquet we went on a tour of a local museum dedicated primarily to local hero Sakamoto Ryoma. Whilst the museum was interesting enough, it had a section given over to "local cultural practices", with dioramas showing the hunting of walls by the locals in ill-defined "ancient times".  It was easy to connect the dots - like similar practices elsewhere in the world, this appears to be one maintained in the face of outside opposition primarily because the opposition to it comes from outside the community in which it occurs and is defended as "traditional".

[Picture: a detail from a painting showing whaling off the coast of Wakayama. Via Wiki]

Monday, 26 October 2015

A whistle-stop visit to Hong Kong

Right now I'm sat in Hong Kong airport waiting for a flight to Taipei. Hong Kong is much the wonderful mix of a place that I remembered it to be. I spent yesterday at a friend's wedding up in the hills of the New Territories, where English, Cantonese, and Mandarin joined in a merry cacophony about the dining tables.

On a quick visit like this it's hard to draw much of an impression of a place: the biggest concern on most people's minds was the ever-increasing price of property her - a not dissimilar worry to that on the minds of a lot of people back in the UK. The biggest difference I noticed was the increase in the prominence of Mandarin in Hong Kong, a language that more and more Hong Kongers are at least trying to get some familiarity with, though for professionals it has not yet knocked English off the number two spot.

Monday, 31 August 2015

Jeremy Corbyn and Press TV

I've written a few times about the phenomenon of western European and American journalists and commentators appearing on the state-run media outlets of autocratic regimes, such as Press TV, RT, CCTV 9, and the like, and the moral hazard inevitably involved in doing so. Whilst I'm willing to accept the protests of those who say that appearing on these channels does not mean that they actually support the regimes that control their editorial content, it really is hard to believe that these people were not guilty of (at minimum) extreme naivety and incuriousness.

It is therefore with very little surprise that I read that (left-wing hopeful for the leadership of the Labour Party) Jeremy Corbyn regularly appeared on Press TV in recent years (he stood in for George Galloway), even after Press TV's activities during the Iranian regimes repression of the Green Revolution caused many to question whether it was appropriate to appear on this channel. To quote one journalist who refused to appear on the channel: "it seems to give legitimacy to a regime that treats its own people like sh*t and spreads poison and violence around the world".

The comments made by him when appearing on the channel that have caused the most controversy (that Bin Laden's death was a "tragedy") are actually defensible - whilst few tears were shed over Bin Laden's demise, it would have been better if he had stood trial. What for me is very difficult to defend (or even comprehend) is how Corbyn could have, in good conscience, appeared on a channel that has previously trumpeted holocaust-denial and defended the execution of people for the 'crime' of being gay, a channel that had previously broadcast the torture-extracted 'confession' of an Iranian human rights activist to working with foreign 'spies' disguised as journalists. This, by itself, should cast doubt as to whether he is at all suited to high office in a democratic country like the UK.

Unfortunately, Jeremy Corbyn's supporters seem totally immune to evidence of his unsuitability as Labour party leader, which is legion, so knowledge of his appearances on Press TV is unlikely to shake their resolve either. I totally agree with Alex Massie that the likely outcome of his selection as party leader (which now seems inevitable) will be a total slaughter at the polls in 2020. However, there is always the risk in politics that some disaster will tip one party out of power and another in, regardless of how suited it is for rule, so there is always the possibility, albeit slim, that this man might one day become the leader of the UK - and that would be a disaster compounded by a disaster.

[EDIT: Interestingly, Jeremy Corbyn has declared at least two payments of up to £5,000 in recent years from Press TV for appearances]

Monday, 17 August 2015

"More market-friendly"

One of the reasons given for the People's Bank of China's devaluation of the Yuan was to allow the currency to reach "more market-friendly" value, one closer to that at which offshore Yuan are being sold on the open market. After all, the devaluation wasn't achieved directly by fiat, but instead by allowing the trading price to vary within a 2% band and, officially, no longer holding the reference rate at a fixed value but instead using the previous-days closing price to decide the reference rate for the next day.

The problem is that PBOC seems intent on deciding what the previous day's reference rate is by intervening massively in the market in the final minutes of the trading day. That at least is what appears to be happening based on the volume of trading seen in the last few minutes of the trading day in the above graph.

Does this really matter? Well, to the extent that the PBOC loses credibility through apparent rigging of the market, and to the extent that this change was trumpeted as an example of the Chinese authorities "freeing" the Yuan, supposed boosting Beijing's case for the Yuan joining the major world currencies in the special drawing rights basket, yes it does matter.

[Click here to see the original graph on Neil Gough's Twitter feed] 

Saturday, 15 August 2015

The Apology

Yesterday the Japanese Prime Minister, Shinzo Abe, gave a speech on the occasion of the 70th anniversary of Japan's surrender to the Allies, which brought an end to the Second World War. Whilst re-iterating the expressions of remorse for the harm caused by the war which Japan launched on Asia, and expressing the view that Japan had advanced along the road to war and been a challenger to the international order, the speech made no new form of apology, which has led to renewed criticism of Japan's leadership for being insufficiently contrite about the war from Japan's Asian neighbours.

Personally, I do not at all believe that there is any form of apology that Shinzo Abe could have given that would fully mollify the South Koreans and Chinese. The South Koreans at least recognised that a deeper apology was given by former Prime Minister Murayama and asked why he did not repeat this as Junichiro Koizumi did in 2005, though their response at the time Murayama and Koizumi made their apologies did not seem to recognise them as full apologies either. The Chinese, on the other hand, seem not to recognise that any real apology of any kind has ever been made by Japan's leaders.

The reasons for this have little to do with lasting memories of Japanese war crimes and crimes against humanity in the years between 1931 and 1945, which were numerous and terrible. This can be stated with confidence simply because in the decades immediately following the war criticism of Japan for being insufficiently contrite was so much more muted, both from China and Korea. For example, the document that established relations between the People's Republic of China and Japan dealt with war-guilt in only two places. Here:

"The Japanese side is keenly aware of Japan's responsibility for causing enormous damages in the past to the Chinese people through war and deeply reproaches itself . . . The Chinese side welcomes this"
And here:

"The Government of the People's Republic of China declares that in the interest of friendship between the peoples of China and Japan, it renounces its demand for war indemnities from Japan"

The statement felt no need to note insufficient contrition on the part of the Japanese, nor was this expressed by any of the officials responsible for re-establishing relations on the Chinese side either. Such misgivings, if they existed, had clearly be shelved for later generations to address. China at that time was supportive of various Japanese initiatives, including their resumption of sovereignty over Okinawa, despite later claims from people like (PLA General) Luo Yuan within China that Okinawa really belongs to them.

In Chinese affairs the change from a broadly-friendly position towards Japan to one suspicious towards Japan came later. Whilst Taiwan under the ROC, and to a less extent Hong Kong, saw protests about the 1972 transfer of administrative rights over the Senkaku Islands, these were not echoed in mainland China. Instead it was with the decline in communist ideology in mainland China and its replacement with nationalist rhetoric that differences with Japan and the war became an endless source of material to inspire such sentiment amongst young people through the education system and the media.

That this was so was instantly apparent to anyone who observed the 2005 anti-Japanese protests, sparked by the approval of denialist text-books for use in at most 18 schools in Japan, which were overwhelmingly made up of young people, and for which supporting sentiment was most widely expressed amongst young people. As the sellers of Japanese goods and Japan-themed restaurants tried to protect themselves against attack by displaying Chinese flags and poster-sized pictures of Mao Zedong in their windows, the people who marched outside their doors were overwhelmingly of university age. In Nanjing, where I was working and studying at the time, wide-scale protest was headed off by the authorities after it had outgrown its usefulness by the simple expedient of threatening to expel students who took part.

Whilst the issue of whether Japan's leadership and government has been contrite enough about the war, done enough to educate people as to what actually happened, and done enough to counter those who deny that Japanese war crimes occurred or that Japan was responsible for the war, is a real one. However, it's clear that in the People's Republic at least it is basically a tool for use both in domestic control and in external diplomacy.

In countries which suffered at the hands of that Japanese where the impact of nationalism is less strongly felt, including my own, such things are commonly regarded as of lesser importance than the trade a cultural links with Japan. Whilst the UK did not suffer even nearly as badly as China did at the hands of the Japanese, I heard similar sentiments expressed in Malaysia when I visited there back in 2009, in the Philippines when I visited there in 2003, and from Indonesians I have been acquainted with - all places which suffered greatly at the hands of the Japanese.

Abe's speech also contained one very sane statement:
"In Japan, the postwar generations now exceed eighty per cent of its population. We must not let our children, grandchildren, and even further generations to come, who have nothing to do with that war, be predestined to apologize. Still, even so, we Japanese, across generations, must squarely face the history of the past. We have the responsibility to inherit the past, in all humbleness, and pass it on to the future."
At some point the Second World War will merge into the past and its grievances will have to be set to one side. It is certainly illogical to demand apologies for events that occurred before the people who you are demanding them from were even born. This point is fast approaching, and these demands for apologies cannot be allowed to continue beyond it. The alternative is the idea that it correct to inflict some kind of biblical punishment "unto the third and fourth generation" on the Japanese people.

[Picture: The letter sent to former British inmates of Japanese POW camps by the King welcoming them on their return to the UK] 

What the hell just happened in China?


It's been a crazy, dangerous period in Chinese affairs. Firstly, following on from the stock-market crash which saw indexes fall by 30% over a couple of weeks, and which was only stopped by suspending trading more than 1000 companies (hundreds are still suspended even now) and restricting selling, we've seen a slew of economic data that strongly suggests that an economic slow-down is now in progress, despite government GDP growth figures that suggest otherwise

This was then followed by a devaluation of the Yuan by what, whilst it was not a large amount in the grand scheme of things, was done in a way that seemed almost calculated to destroy government credibility on the issue of the value of the Yuan. It came after the government said it would not devalue the Yuan for the entirely valid reason that this would be counter to their goal of encouraging a consumer society in place of the export-driven economic model of the past few decades. It was a "one-off" devaluation that was then continued for three days.  It was announced as an attempt to lower the Yuan to a more market-friendly value, but when the value kept falling the PBOC then stepped back in to buoy up the price and we saw volatility in the price go right to zero as the PBOC fought to stop any further decline in the value of the Yuan.

Meanwhile the gap between the onshore (i.e., government-controlled) and market-decided offshore values of the Yuan was not closed by much, allowing the onshore value to sink just re-set expectation as to the offshore value. This won't be the last time it happens.

After this, came the series of massive explosions at the port of Tanggu in the Tianjin Economic Development Area which is now reported to have killed more than 85 people.  Whilst this is the kind of accident that can occur in any country (indeed, just today a chemical plant in Texas saw multiple explosions), the distrust of the official government explanations behind it, the censorship of stories about it, the blocking of foreign media trying to report on the story, all speak of a country in which the government still seeks to control what the public think about domestic events. The content of the rumours around the blasts is hardly likely to be music to the government's ears: not least of all story that the owner of Ruihai Enterprises, the company on whose premises the explosions occured, is a relative of Li Ruihuan, a former politburo member who hails from the Tianjin area.

Finally, came the senseless killing of a young woman in Beijing's Sanlitun district and the stabbing of her French husband to whom she had only recently been married. Whilst Chinese police have proclaimed themselves baffled as to the motives of the killing, social media is reporting that this was motivated by hatred of foreigners. It would be deeply unfair to extrapolate from this incident to a picture of growing anti-foreigner sentiment in China in general - in my experience the majority of Chinese people do not harbour such sentiment though a sizable minority do. However, the government hardly does anything discourage such sentiment when pretty much everything bad that happens in China is intimated in government propaganda as being linked to shady foreign forces.

Above the daily churn of stories of the kind which might emerge anywhere, China seems to be entering a period of growing instability. Whilst I agree with Eric Fish that no-one really knows what will happen long-term in China, the very fact that no-one can predict with confidence what direction China is going in speaks volumes about the country's instability.

[Wrecked cars and buildings damaged by the Tianjin blast in a residential area near the port. Via Wiki]


Thursday, 30 July 2015

UK Visas & Immigration on Ai Wei Wei: Embarassing, stupid, and wrong

Back in 2010 I had the pleasure of catching Ai Wei Wei's sunflower-seed exhibit at the Tate Modern art museum with a Taiwanese friend who was visiting the UK. Whilst looking at millions of artificial porcelain seeds it not quite my thing the exhibition had a certain immensity to it, realising all the work that must have gone into making these seeds: many of them, but each one an individual. The parallel with the Chinese nation itself was obvious, and remarked on in reviews of the exhibit.

It is therefore with intense embarrassment and not a small measure of anger that I read of the UK Foreign Office's decision to limit Ai Weiwei's visa to the UK for the preposterous reason that he has a criminal records undeclared on his visa application form by a certain A. Cramer, entry clearance manager at the UK's Beijing embassy.

In his letter to Ai Weiwei explaining the decision (copied above), Cramer refers to it being a "matter of public record" that Ai had "previously received a criminal conviction in China". This is the precise opposite of the truth. It is in fact a matter of public record that Ai Weiwei was imprisoned for 81 days without being charged with anything, far less convicted, and that this extra-judicial punishment was the only proceedings even vaguely resembling criminal proceedings against Ai that have been in the public eye.  A separate, almost certainly politically-motivated law-suit was brought against Ai for unpaid taxes, but being a civil matter, this is nothing to do with criminal charges.

Whilst some have said they believe this may be an excuse for getting Ai Weiwei out of the country whilst Xi Jinping is visiting, I dearly hope this is not the case. Having seen first hand the mindlessly bureaucratic attitude that some embassy officials can take, and the blockheaded obstinance with which they refuse to change their minds even when proved totally incorrect it might even be the case that this is a genuine mistake by the embassy officials - but I'm afraid this may be wishful thinking on my part.

Of course, given that the UK is home to all sorts of activists who might make Xi's visit an embarrassment, from Free Tibet activists to Fa Lun Gongers, even the theory that this might be a sop to Xi makes little sense. One is left with the impression that UK officials have decided to confirm validity on extra-judicial punishments meted out by the CCP for no real reason at all.

[UPDATE: The decision has thankfully been reversed, perhaps this decision really was the act of a lone bureaucrat?]


Sunday, 19 July 2015

Greek lessons for Chinese GDP growth

As well as being an object lesson in why national debt is something that should concern a country's leadership, and why parties attempting to sell their electorates on a dubious mixture of debt-renunciation and increased borrowing-funded spending should be avoided like the plague, Greece also has lessons for us on just how far national statistics can be skewed in the absence of independent auditing and analysis. As Michael Lewis discovered in a 2010 article on the causes of the Greek crisis:

When Papaconstantinou arrived here, last October, the Greek government had estimated its 2009 budget deficit at 3.7 percent. Two weeks later that number was revised upward to 12.5 percent and actually turned out to be nearly 14 percent. He was the man whose job it had been to figure out and explain to the world why. “The second day on the job I had to call a meeting to look at the budget,” he says. “I gathered everyone from the general accounting office, and we started this, like, discovery process.” Each day they discovered some incredible omission. A pension debt of a billion dollars every year somehow remained off the government’s books, where everyone pretended it did not exist, even though the government paid it; the hole in the pension plan for the self-employed was not the 300 million they had assumed but 1.1 billion euros; and so on. “At the end of each day I would say, ‘O.K., guys, is this all?’ And they would say ‘Yeah.’ The next morning there would be this little hand rising in the back of the room: ‘Actually, Minister, there’s this other 100-to-200-million-euro gap.’ ”

Indeed, guaranteeing the independence of the Greek statistical agency to prevent this kind of thing happening again was a key demand of Greece's creditors at the negotiations for Greece's bail-out, a request that has now been accepted by the Greek government and approved by the Greek parliament.

It was with this in mind that I read Christopher Balding's latest post over at the Nanfang on how China's GDP growth has some somewhat suspicious irregularities in it.

Anyone who has followed Chinese affair for a while will be aware that Chinese GDP statistics have some problems with them, such as, for example, the tendency of nearly all provinces and municipalities to publish growth figures higher than the average. It has been assumed, however, that national statistics are more reliable than those collected by local governments, and of course these are the only statistics available so there is little choice in which statistics to use. Balding's piece, however, give very persuasive (but not absolutely conclusive) evidence that the national statistics may also be highly problematic. This includes:
  • What appears to be the wild under-estimation of inflation. The example Balding gives is the private consumer price index (CPI), which has increased by only 8% (not annually: in total) since 2000. The idea that the cost of housing in China could have only increased by this much is utterly preposterous to anyone familiar with the vast increase in housing cost in that country that has left a generation of young families struggling to buy a place to live. It also goes against the findings of independent studies that house prices have increased by roughly 10% per year since 2004. Obviously, if you under-estimate inflation, then you over-estimate actual GDP growth, since GDP growth is adjusted for inflation by apply a deflator roughly equivalent tor inflation - the larger the deflator, the lower GDP growth will be.
  • Estimating the percentage of households renting at 12%,  meaning the 53% inflation in rent costs in the 2000-2014 period applies only to a relatively small portion of the population. To anyone with experience of China during this period, this does seem very low, however obviously you should not decide this figure is inaccurate based simply on anecdotal evidence.
  • Applying, since the year 2000, an 80:20 urban:rural weighting to statistics in a country that has only recently become majority-urban and is still only around 55-60% urban-dwelling. Given that it is urban areas which see the highest growth and the lowest price-inflation, this would clearly slant the figures towards higher growth and lower inflation.
  • 1.1% growth in electricity consumption for the Jan-May 2015 period compared to the previous year. The growth in electrical consumption has long been treated as an unofficial measure of GDP (although there are obvious problems with using it in this fashion) but the discrepancy between the increase in electricity consumption and the 7% GDP growth figure given for 2014 is quite a big one.
  • Corporate profits grew by only 0.6% (I assume this is for 2014 - Balding doesn't give a source in his post). Again, the question is: how this can possibly be in a country where the economy is supposedly growing by 7% a year? Really there are only three options: unobserved massive growth in the state sector (highly unlikely), massive fraud on the part of corporations to avoid tax (unlikely), or the GDP growth figure is wrong.
  • A 20% fall in imports in 2014 that has driven some of Chinese trade partners into recession, yet does not seem to be at all reflected in trends in the GDP statistics. Normally you would expect such a massive decline to be the result of some internal changes visible in the GDP growth figures, but not here.
Again, none of these are absolutely conclusive, but they at least should give anyone treating the Chinese GDP growth figures as even being broadly indicative of the state of the Chinese economy food for thought. China's statistical agency, the National Bureau of Statistics China (NBSC) is every bit as vulnerable to political pressure as Greece's one was, probably more so because in a closed society lacking free media like China manipulation of the statistics would be much easier to get away with.

Whilst I understand the hesitancy of publications like The Economist to concede that the NBSC is doing much more than "smoothing" the data, Balding's evidence (if accurate) hints at much deeper manipulation. Whilst no-one wants to play the role of doom-monger about the state of the Chinese economy (particularly since Gordon G. Chang has that role sewed up), this does suggest that China's GDP growth has been much slower in recent years than official statistics portray them to be, and may well be around the 5-6% mark (or less) that was predicted earlier in the decade - a rate that would be far from disastrous. 

Finally, there is the question of whether it will ever be possible to know the true rate of economic growth. Balding is undertaking research into this very subject,and I wish him luck with this, but it may well be that, as with Greece, the value of an independent statistics agency won't be recognised until a financial crisis has washed over the country.