As I am writing this entry, 2008 has finished in China. Fortunately, we still have a few hours in Home Country to fit in my last 08 post before the evening aperitif. I take the chance to get back in action after this week’s holidays and do my little roundup of 2008.

It has been a good year to blog China. The Chinese have continued to amaze the World with their constant source of news. Successes, catastrophes, change; we’ve had our fair share in 2008. And everything seems to indicate that 09 will be every bit as bloggable. So stay tuned, China is still changing us, and I hope to be there to witness it next year too.

And now down to the hard numbers. I won’t go over the main events of 08, as more diligent bloggers have already done it while I slept. Instead, I just include below the latest results of my own  Chinanews-meter:

In case you haven’t been following, this chart shows the number of articles containing “China” over the last 128 years (from LaVanguardia). As I predicted a month ago, 2008 has beaten 2007 by one length. Bets are open for 2009, and my money is on the rise of China news. In spite of the crisis and Obama’s tough competition in the West, I am going for the 5,000 mark.

Ah, Christmas is a great time to be back home, but I’m missing China already. And if I believe my cell phone, China must be missing me too: There’s dozens of sms in characters coming in this week, offering Christmas wishes, readily made poems and quick no-questions-asked credit at 3% a month. I even received one unexpected proposal that filled my heart with joy: “Marry Christmas”. Thanks all for remembering me.

To the readers that have come into my garden these last days and found it deserted I dedicate this picture I took yesterday of The Shire. This is what I have been doing when I was not answering comments on the blog:

Barely two weeks after the publication of the Chrter 08, it has already become old news, lost in the indifference of Western media (with notable exceptions), and erased in China by the cold intervention of the censors. I want to examine here the importance of this document and give some more thought to it and its possible impact.

There is one line in Chrter 08 which concentrates in my understanding the essence of the document:

“Human Rights are not bestowed by a State. Every person is born with inherent rights to Dignity and Freedom. The government exists for the protection of the Human Rights of its citizens.”

This principle, inspired in the long tradition of the Enlightment and the famous 18^th century Declarations, is at the heart of the matter. Should these rights apply to China, or are they just an interference of foreign ideas in Chinese affairs? This mostly unspoken debate that rages today in China is putting in doubt the universality of Human Rights, and questioning it in view of the singularities of the Chinese culture.

Of course, this line of argument does not resist the minimum intellectual scrutiny, but it’s marketable to avid patriots. One doesn’t need to put many brain cells in contact to see that the entire ideology of Maoism -or today’s wild capitalism for that matter- are also based on foreign ideas. And that great Ideas, like print and paper, cure to cancer or Human Rights, belong to Humanity.

One of the most influential political thinkers of the Enlightment, who inspired the precursors of this Charter, wrote 3 centuries ago:

“I am a man before being French. For I am necessarily a man, but French only by accident.”

This Charter is up to now the boldest effort in mainland China to speak out for the Universality of Human Rights. Its influence, directly or indirectly, will no doubt be decisive at the time when these questions will have to be seriously debated by the Chinese government. Whether this happens in turbulent 2009 or many years later, China will be in debt with those 303 brave men who dared to stand up for their ideas.

Reflections on the Chrter 08

Before I write these reflections, I want to state my respect for all the authors and supporters of the Charter in China. My points below are not rejecting their fundamental principles, and they should be understood as constructive critic.

1. The fact of publishing the Charter and obtaining a few thousand signatures in the Mainland is in itself the most important action for Human Rights ever done in China, and it represents a qualitative leap from previous actions which were: 1- Purely reactive, 2- Mostly isolated, 3- Strongly supported by Western actors. This is a serious challenge to the Chinese government, and a very dangerous one for the signers, as it is well known how China reacts to coordinated efforts of this kind.

2. One important difference from past actions is the positive nature of the movement. The Charter is not merely a reaction or complaint; it is a statement that stands in its own right. Note, however, one important difference between the line quoted above and those in the classic American and French Declarations: this one is formulated in the negative, “Human Rights are not bestowed by a State”. There is still an important element of reaction which will have consequences on the future of the Charter.

3. A document of this kind should try to seek the maximum consensus in mainland China. This is, in my understanding, the main weakness of the Chrter 08. Going into particular details, such as proposing federalism for Taiwan, or putting in question sacred figures like Deng Xiaoping (by mentioning Tiananmen*) is not working to achieve maximum consensus. Neither is aggressively criticizing Mao’s legacy while failing to recognize the important successes of the present regime. These points can be easily utilized by detractors to turn public opinion against the Charter.

4. Most importantly, from a theoretical point of view, figures like Mao or KMT should have no place in a Charter that wants to unite the Chinese. The recent History of China is an amazing tale of cruel failures and unequaled successes. Events that need to be openly discussed at some point, certainly, and compensation given to the victims. But direct accusations are altogether at a different level and unworthy of sharing the same document with the generous ideals stated in the Charter. These things do not only weaken the Chrter 08 from a practical point of view, but also reduce its soundness as a Universal Statement.

Will Chrter 08 fly into 09

I have written it before in this blog, and I am convinced of this: China has an intelligent government. For each propaganda muncher crying traitor at Liu Xiaobo, there is one thoughtful official that reads the Charter and understands the challenges that his country is facing. The government of China is as skillful to control internal issues as it is unable to control the external image of the country, and it has done an impressive job this time at downplaying and silencing the Charter. The lesson of 1989 is well learnt.

The sad consequence of this is that today the vast majority of the Chinese population has no idea of the existence of the Chrter 08. And I am not only speaking of the masses of peasants. A quick survey among my personal Shanghai friends, all of them with university education and speakers of at least one foreign language, gave discouraging results: Not a single one of them had even heard the term “lingbaxianzhang” (Chrter 08) one week after its publication.

It is unlikely that this Charter -or any other Charter for that matter- will in itself spark political change. Its direct impact is limited, and it has probably already run all it had to run. It is not Charters, but Leaders that start revolutions. And when they do, they look back to the works of the intellectuals to give a meaning to their actions. Inevitably, the time will come for political change in China, and Chrter 08 can be the precursor and the basis for future debate.

However, for these changes to happen peacefully they should first reach the largest possible consensus, not only among the intellectuals, but among the people of China. This includes millions of honest middle aged Chinese who still regard Mao as a respectable leader, and who understand that it is him and his followers, with all their faults, that led China from misery and humiliation to the present prosperity.

These people are not criminals or radicals, nor did they consciously cause any suffering to others during Mao’s terrible years. They are simple, honest Chinese who lived the time they had to live working quietly for their country. Brainwashed or not, these are today the good people of China. And when the intellectuals draft and sign a charter they should always bear in mind that it is for them that they are fighting.

History shows that there are two ways to change the system in China: the violent revolution way (Mao) and the peaceful consensus way (Deng). I believe that this second way is the one that most Chinese desire for their country, and China has proven in the past that it is capable of taking it successfully.

However, to move the massive inertia of the CPC requires some level of distress, like the one existing prior to 1978. Whether the impact of the crisis in 2009 will be enough to lead to this situation and whether the leaders in China will be willing or brave enough to push the changes, remains to be seen. But 2009 might very well bring the first real opportunity in many years, and this well timed Chrter 08 might still have its word to say in the coming months.

Conclusion and note to censors

I am living in China, where I have always been treated with patience and generosity by the Chinese people. For this I have learnt to love and admire this country. I know my obligations as a guest, and with my work, my life and my writing I try my best to return all that China has given to me.

Therefore, I state here my respect to Chinese of all ideologies. Dear censor, I would much appreciate it if you can continue to afford me the privilege of living in your country, not only physically, but also through my little voice on the internet. Please, do not block my blog.

Finally, my best wishes to Liu Xiaobo and his family in these difficult moments. Lu Xiaobo is the main drafter of the Chrter 08 and at this moment he is still detained by the police. He should be released immediately.

I want to show him all my support here, and give my tiny contribution by spreading his work below.

Happy Christmas.

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The Principles

These are the noble principles that 303 brave men published in China in 2008:

Freedom. Freedom is at the core of universal human values. Freedom of speech, freedom of the press, freedom of assembly, freedom of association, freedom in where to live, and the freedoms to strike, to demonstrate, and to protest, among others, are the forms that freedom takes. Without freedom, China will always remain far from civilized ideals.

Human rights. Human rights are not bestowed by a state. Every person is born with inherent rights to dignity and freedom. The government exists for the protection of the human rights of its citizens. The exercise of state power must be authorized by the people. The succession of political disasters in China’s recent history is a direct consequence of the ruling regime’s disregard for human rights.

Equality. The integrity, dignity, and freedom of every person—regardless of social station, occupation, sex, economic condition, ethnicity, skin color, religion, or political belief—are the same as those of any other. Principles of equality before the law and equality of social, economic, cultural, civil, and political rights must be upheld.

Republicanism. Republicanism, which holds that power should be balanced among different branches of government and competing interests should be served, resembles the traditional Chinese political ideal of “fairness in all under heaven.” It allows different interest groups and social assemblies, and people with a variety of cultures and beliefs, to exercise democratic self-government and to deliberate in order to reach peaceful resolution of public questions on a basis of equal access to government and free and fair competition.

Democracy. The most fundamental principles of democracy are that the people are sovereign and the people select their government. Democracy has these characteristics: (1) Political power begins with the people and the legitimacy of a regime derives from the people. (2) Political power is exercised through choices that the people make. (3) The holders of major official posts in government at all levels are determined through periodic competitive elections. (4) While honoring the will of the majority, the fundamental dignity, freedom, and human rights of minorities are protected. In short, democracy is a modern means for achieving government truly “of the people, by the people, and for the people.”

Constitutional rule. Constitutional rule is rule through a legal system and legal regulations to implement principles that are spelled out in a constitution. It means protecting the freedom and the rights of citizens, limiting and defining the scope of legitimate government power, and providing the administrative apparatus necessary to serve these ends.

*For the mention of Tiananmen incidents and discussion on discrepancies in the Charter, see my previous post here.

Last 10th December, a group of Chinese human right activists published a document called Chrter 08,  requiring political reform in the PRC. This document has had surprisingly little impact in the Western media/blogging scene.

There is no telling right now how influential this document is going to be looking into potentially conflictive 2009. In any case, it is a must read for anyone interested in the political evolution of this country. I have spent the little free time that I had last week reading the Charter in its original Chinese form. I am preparing a more detailed post about it, but for the moment, I want to share these  notes:

• There is a translation by professor Perry Link, published on the New York Review of Books, that has been almost the single source for non-chinese speaking readers worldwide. It is the translation used by Wikipedia (unless they accept my change), and also by the mainstream media, including WSJ and Time. I was shocked to see that the translation is not accurate, including in the preamble some references to the Tiananmen incidents that are not on the Chinese original. Has the original been modified, or did Perry Link publish a creative translation, adding juicy  details about his favourite subject? I leave this question open until I find an answer. But needless to say, I think if the translator has consciously altered the content of the document it is a lack of respect for the brave Chinese who risked their freedom to sign it. (my apologies to professor Link if this is not the case)

• I am surprised by the little echo that this significant event has had on the Western media/blogging scene. All those noisy journalists that are self proclaimed defensors of Human Rights in China, but only raise thir voices when there is some spectacular violence to sell newspapers, and not for a “boring” document without pictures that lazy Westerners will never read anyway. Fair enough, it is very possible that the Charter will not fly, but there is no telling what 09 will bring us in China, and the effort and sacrifice of all these Chinese intellectuals in itself deserves more attention.

• The Chinese government has done a good job of controlling the net. At the time of writing  it seems impossible to access from the mainland any site carrying the Charter in Chinese. It is sad to see that they have succeeded in silencing also the Western blogs (although as far as I know there has not been a single one blocked for speaking of the Charter). I guess most are simply not interested or else too scared of seeing their blog blocked in PRC. I know that I am risking many hours of efforts if I get my own blog blocked because of this post, but I think it is the least I could do for those 300 odd authors that are risking much more than this.

Because of point 2 some readers might still not be aware of these events. You can get a summary in the Wikipedia article for Chrter 08 or on this article on Global Voices.

I have also found a more accurate translation of the Charter here.

UPDATE1: The article on Wikipedia has been changed. See the article’s dicussion page for more details.

UPDATE2: Thanks to comment below and to some further research on the internet, I have the theory now that Chinese authors introduced last minute modifications to eliminate some non-essential points and avoid trouble for those already arrested, like Liu Xiaobo. This would make sense, as Liu Xiaobo had been sentenced before for participation in Tiananmen89 activities. Even if this is the case, it is difficult to understand why professor Link didn’t change his translation accordingly, perhaps reflecting some disagreement among the original authors.

I love the way Xinhua refers to the People’s Daily as a “mouthpiece newspaper”, or “the mouthpiece of the ruling party”. For example, in this otherwise boring article that I just read. Recommended if you need to doze off for a quick siesta.

I find all this mouthpiece thing funny in 3 different ways, which I list below:

• It looks like an effort by Xinhua to position itself as an independent source, copying a commonly used expression by the media worldwide, and differentiating itself from the “mouthpiece”. A new variation on the good cop and the bad cop.

• I always understood this word as having negative connotations, and I am surprised every time I see journalists using it in the neutral sense of spokesperson. In any case, speaking of a newspaper the phrase “mouthpiece of the ruling party” normally implies disapproval. I wonder if the editors at Xinhua are conscious of this. Xinhua, watch your steps, this is a 贬义词！(negative word).

• I am also wondering if the People’s Daily knows this and when will it start a feud with Xinhua accusing it of mouthpiece too. After all, a large part of the articles that People Daily publishes are taken directly from Xinhua, including some of those containing the M word!

On second thought, I guess “mouthpiece” is probably a great thing to be called when you are an editor at the People’s. It is extra points with your boss and it works to keep your iron bowl in good shape.

Busy week. Yesterday I had to cancel my Chinese lesson in the last minute due to an unexpected request from one of my hardcore Chinese clients. It made me feel miserable, partly because I always feel like a 9-to-5 bitch when I have to break my word for a client. But most importantly, because I know how well my teacher prepares her lesson and how she cares.

To try to make up for it (and to prove that I do study my lessons sometimes) here comes a long overdue post for the Learning Chinese section, dedicated to the most patient of Chinese teachers, FuTing.

Today’s lesson is called: The Riches of the Language.

There are many ways to measure “richness”, and whether one language is richer than other is usually a dumb discussion that I don’t like to enter. However, I can’t help being fascinated by the way some languages seem to have infinite variations and nuances for what in my own tongue is just one word. At the risk of exciting some patriotic readers from all sides: This is the lesson where I discover the amazing richness of the Chinese language.

During our last vocabulary review, I was struck by the number of characters that express different options for taking/carrying things. I asked Fu to help me put them all together, and after a short brainstorming session we came up with the list below.

Here are my 18 20 different ways to carry things in Chinese (and I’m only intermediate level):

1. 带 – dai4   – to carry in general
2. 拿 – na2    - to carry in your hand
3. 抓 – zhua1 – to carry in your hand holding strongly
4. 夹 – jia1    - to carry between two long things (like chopsticks)
5. 捏 – nie1   – to carry with finger and thumb (like you carry a bogey)
6. 挟 – xie2    - to carry under your arm
7. 牵 – qian1 – to carry sb (holding hands)
8. 挽 – wan3  - to carry sb around your arm (holding arms)
9. 攥 – zuan4 – to carry in your hand  tight (like a fly you just caught)
10. 捧 – peng3 – to carry with both hands facing up (like an idol)
11. 端 – duan1 – to carry holding it from the sites (like a big plate)
12. 抱 – bao4  -  to carry something hugging it (like a baby)
13. 拎 – lin1    -  to carry something that hangs (like a handbag)
14. 挎 – kua4  -  to carry a bag with a band across your shoulder
15. 背 – bei1   -  to carry on your back (like a sack of potatoes)
16. 提 – ti2     -  to carry in your hand with the arm down
17. 举 – ju3    -  to carry in your hand with the arm up
18. 抬 – tai2   -  to carry something heavy, usually 2 or more people
19. 驮 – tuo2   – to carry on a donkey/horse/red-nosed reindeer’s back
20. 扛- kang2 –  to carry on the shoulder, like the 7 dwarfs carry shovels
21. 荷 – he4    - to carry on the shoulder or back
22. 挑 – tiao1 –  to carry using a stick with two baskets hanging from it

This is only single characters, excluding combinations of them and excluding words that don’t bring a difference in meaning, like (握 and 抓). I am sure there are still more ways of carrying, and I would like to add them to my carrying list. I would be grateful for any contribution or correction in the comments.

Non-students of Chinese: now you understand what is taking us so long to learn this language!

NOTE: if you are reading this and you are struggling with the characters like myself, you should absolutely try Skritter, a new software that has been developed to help memorize the characters by having you write them yourself, instead of just looking at them on a flash card. I have been trying it this week, and although it is in beta, it works really well. It is stunning the things some people can do with a computer.

UPDATE!: Come on, we got up to 20 already, thanks to XiaoLu, who has earned thereafter the status of VIP commentator. I am sure there are still lots of “carry” characters left, any suggestions?

It is Friday. It’s a beautiful, beautiful day. I’m in an excellent mood this morning, pondering the unexpected turns of Fate and Fortune.

I mean, take the weather in Shanghai, for example. Did you ever imagine we would see these long weeks of clean blue skies? You lose faith in things and then they happen, and it makes you dream. If this is possible, then everything else must be: World Peace, End of Poverty, China winning the soccer World Cup.

On Fridays like this my mind drifts on the world wide web and I end up reading funny bits of information, like this delicious “boat drifting skills” I found over at the Engrish website. I saw it and laughed for a bit, and then I read the comments and I thought I might do something useful for the community.

So I went on Google Translator and I asked it to translate the drifting instructions into English. This is the disappointing message I got:

What! No translation English-English? What kind of service is this? And who said that it was English in the first place?  If there is someone at Google reading this now (other than my friends the bots) please raise the issue immediately to your management:

“You are missing out on the largest market in the World. Develop Chinglish translator ASAP!”

This week David Dollar has a very informative post: On exchange rates, think multilaterally. It is an analysis of the RMB exchange rates and their change over time. Using one of those useful trade-weighted indexes that the World Bank likes so much, David goes over the history of RMB exchange rates from the 90s to now, drawing conclusions on the policies of the Chinese government and their consequences at each stage.

After some retrospective paragraphs that I absolutely recommend to read to anyone who wants to understand past Chinese currency policy, he goes on to speak of the future:

There is a lot of potential for misunderstanding in this area. China feels that it has had a rapid effective appreciation and now wants to see what the real effects are before going further.The U.S. is probably looking at a substantial devaluation of the dollar against other major currencies, as the immediate financial crisis wanes and the U.S. needs to rein in its consumption and save more. If that happens, it is not in China’s interest to follow the dollar down. It will take good coordination between China and the U.S. to resolve their large imbalances in a smooth manner.

And I have the same objection that I always make to the World Bank Chinese publications: they stick to strictly economic terms, and avoid Chinese politics as much as possible. OK, I can understand being part of the WB he is not as free as this anonymous blog,  and he prefers to not stick his nose into sensitive matters. The trouble is, looking at the economy without the politics around it leaves you completely blind to see the immediate future.

I am not even close to having the experience of David Dollar or the number crunching capabilities of the World Bank, but I have eyes to see that something very big is missing in his picture. Multilateralism? Misunderstanding? Before any misunderstanding can actually happen, there has to be a will to understand. And this is far from sure at this point.

I just copy here part of the comment I wrote on his blog to show what I mean:

Still, as you imply yourself in the post, economists are always better at explaining things in retrospect. I am not sure at all that Chinese authorities will do the right thing in 2009.

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We need to keep in mind that Chinese politics always give priority to internal issues over external image or foreign affairs in general. Examples of this abound in recent times, such as their attitude towards protesters during the Olympics, or their cancellation of latest EU Summit because of DL, etc.

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If it comes to a point where unemployment gets even slightly out of control I have no doubt that Beijing will do what it takes to avoid internal problems. Including playing with the RMB, engaging in trade wars, and all the while siding with the “people” against the “Western menace”.

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We should keep an eye on Unemployment and Currency.

Hm, no comments. I wonder what the readers are thinking of all this. I can picture some scratching their heads and trying to type in lines of zeros in their office calculator. “RMBs to the Moon? Rubbish! Show me the money!”

Here’s my little math for the non believers:

4,000,000,000,000RMB * (0.015m/10,000RMB)  =  6,000,000 m = 6,000 km
… Idem times 100 …  = 600,000km

The Mean Radius of the Earth is : 6,371 km
The Average distance to the Moon is : 384,403 km

If you are very picky you might say now that my stack of RMB notes doesn’t quite make it all the way back from the Moon. But that is only because you didn’t take into account the crumpling factor.

My base observation was made on a stack of clean, freshly baked 100RMB notes. Now try to pile up those crumpled oily RMBs that taxis hand you as change, and see if you can not come back from the Moon and probably go all the way around again.

I was thinking last night of the stimulus package and of how, since the beginning of the crisis, economy has invaded every conversation, and we all go about speaking of Billions and Trillions like nobody’s business.

And I have decided to write this little post to explain to my readers what is a Billion and what is a Trillion. Now, don’t get me wrong, I am not taking you for an idiot, we all know that a T is a thousand B and a B is a thousand M (this is the generally accepted convention in English today, and the one I will use).

But when we hear that the Chinese are going to spend 4 trillion RMB to stimulate their economy, or in general when we discuss such large quantities of money, do we really understand what they mean? Do we have even a notion of what they can do?

I am going to give you first a quite surprising calculation from an Engineer. Based on the empiric observation that a 万 (100notes of 100RMB) stacks up to about 15mm, and supposing that 1RMB notes are about as thick as 100RMBs, I have come to the following results for the 4T RMB stimulus:

• In 100RMB notes it would stack up as high as the Earth’s Radius.
• In 1RMB notes it would stack up to the Moon and back.
  

Considering that a large part of the population spends not much more than 1RMB for a lunch in China, now perhaps you can visualize a bit better the significance of the money we are talking about.

Hospitals and Factories

For those serious business readers who are not impressed by the magic of numbers. As a blogger whose -attention, disclosure!- day job is advisor to direct investments in China,  I can use some figures to reposition our currency. I will not support these estimates here, but if you want you can easily find examples in many corporate websites on the announcements section.

These are my figures:

- One average city hospital, about 400 beds:              250 MRMB
- One average size factory,  2000 workers:                 400 MRMB

This is a fairly average state-of-the-art plant in capital intensive industries, not the toy sweatshops in the Pearl Delta River, nor the monsters like Foxconn Shenzen.

So now we can convert our currency to Hospitals and Factories and look back at some of the quantities that we have been speaking about these last days in the light of this conversion:

• The Stimulus plan is worth 16,000 Hospitals or 10,000 Factories.
• The Shanghai tower is worth 60 Hospitals or 40 Factories.

And speaking of the Shanghai Tower, I have some friends in Shanghai working for Gensler and I wish them the best for this beautiful building. But one can only hope that by 2014 the situation will have changed, because right now it looks like empty offices are flying in the sky.

Note:   Europeans: divide all numbers by 10 for Euro.  Americans: divide all by 7 for Dollar.

After what I wrote last week in my sensationalistic post of the Tower of Babel, I have continued to follow as promised my Path to Enlightment. The results are modest for the moment, but I’ve found already five good links to get me closer to smelling Chinese politics. And I have added these 5 links on a separate section of the sidebar called “Intelligence”. This is not to say that the links in the Normal Blogroll are any less intelligent, I continue to read them and respect them as much as ever.

Now, the difficult part. In my quest to knowledge I have been lucky enough to speak (through email and blog comments) with some of the best specialists in Chinese politics and media. One of them who I am not allowed to quote has confirmed to me that the China Daily editorial was probably just that: an article by an editor in the paper looking for controversy to get the sales up. This is not so unusual nowadays in Chinese newspapers, neither is this article considered particularly risky, as it is not attacking any of the CCP holy principles.  So yeah, my thesis is limping a bit after this.

This doesn’t mean that I regret posting that entry. Some of the hypothesis might be wrong, but the core of the message (tensions in Zhongnanhai) still rings very true. In the end, each entry in the blog has a different role, and this one clearly specified its own: propose some wild hypothesis, incite discussion and try to get some commenters to come in the aid of the party. And yes, let’s admit it, I am still quite proud of having quoted the Bible and China Daily in one single post.

Finally, I would like to make a statement: I set a high value on the accuracy of this blog. Yes, I might write some weird stuff sometimes,  post on politics like a paparazzo or draft nonsensical Chinese lessons. But this has nothing to do with me not taking seriously my readers. What CHINAYOUREN will never do is tell you that a word is fact, or a fact is none, unless it has the proof or citations to support it. I feel the need to say this particularly because I know my being (semi)anonymous takes away part of my credibility. And I wouldn’t want to have people mistaken about me.

So, there’s that for today. And now if you excuse me I will continue with my Blog Optimization Routine (BOR):

“Dalai Lama, Dalai Lama, Dalai Lama, Dalai Lama, Dalai Lama … “

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I have been looking carefully at the Xinhua serial feeder today, and it’s been as expected: no news from Beijing. At least now we know who and when (Hu and Wen) attended the conference, but that’s about all they tell us from The Annual Meeting to Set the Tone for the Economic Development Next Year.

So that’s that. The opportunity is lost, no more China rebalancing until 2010. Next.

This week the international observers are observing us with renewed interest: China’s Annual Central Economic Work Conference is being held in Beijing Monday to Wednesday, where the country’s leaders will decide how to maintain a stable economic growth that will “improve people’s livelihood“.

Expectations are high on the meeting that will change the World. The trouble is, it will not. Xinhua has just published a first official explanation from NDRC, containing no news. The 40BRMB for “healthcare, education and cultural undertakings”, or the 280BRMB for housing projects were already announced before the meeting. If anything, note that now they have added the “cultural undertakings” for extra flavour.

What about all the rebalancing of the economy that we were supposed to see?

Wishful Thinking

What began as a series of advice by some economists has evolved into a streak of generalized optimism, as  more people started to believe that Chinese leaders will take the chance now to rebalance the economy. I suspect this very optimistic and profusely quoted World Bank report is partly responsible for this state of mind.

But the rebalancing of China’s economy, including a social safety net, health care, and all sorts of measures to bring into the economy the 900 milion rural residents that have been left out is not going to happen now.  Because it doesn’t make sense.

Here is why:

1- Hu Jintao hasn’t been able to implement his rebalancing policies during the first half of the 11 year plan. It is difficult to imagine that the development hawks in the CCP will allow him to implement them precisely now. Especially considering that things like a health care system are costly and someone needs to finance them. How much power do Hu and Wen really have to oppose the immediate interests of business?

2- Chinese like to save money, that is just the way they are, it is a trait of character. No amount of health care or land reform is going to make them spend more in 2009. How would it make sense that the same people who were saving during an economic boom decide to spend more now that there is fear of crisis?

3- All the social rebalancing and Scientific Development of Hu might be great for the long term, but they will not help China weather a difficult 2009. The real worries of the leaders now are: How well will the system resist the social and political tensions that will arise? And how well will Hu Jintao and an already fragile Social Wen resist them in the Party?

An emergency package

But there is a more fundamental objection to the notion that the stimulus package will implement any serious structural change: it is not its role. It is an effort to save an emergency situation and avoid the worst aspects of the crisis (notably unemployment) getting too serious.

And the sad fact is that great restructurings are not done in advance of crises, they are done afterwards. Hard times comes first, then reform. As an example, a quick look back at one of the historical cases that is most fashionable these days: FDR started his famous New Deal only in 1933, well after the crash of 29. In the meantime what was Hoover doing? Investing in infrastructure, like the Chinese now.

“Social” Stimulus

So will the package improve the livelihood of the peasants? Well, if you consider that buying a new color TV at a discount price is going to change their lifes, then yes. But otherwise, not.

The subsidies to buy home appliances that WSJ mentions here are clever measures, and they will probably be effective to boost the consumption of some farmers in the short term. Which makes sense, because the factories producing those TVs have to keep running, unless someone imagines that a legion of jobless manufacturing workers can be set to construct roads and railways overnight.

But nobody should be fooled: these are no social measures. They are measures to help the manufacturing companies to find a substitution market for the failing exports.

Another related “social” measure which might be hidden in the stimulus budget is an emergency fund to cover the possible cases of layoff riots. Victor Shih estimates it in his blog to be around 120BRMB in the worst of cases. I don’t think the government would be announcing this fund publicly, as it is a signal for disaster. But if 120B are missing in the 4Trillion package, now you know were to look.

Conclusions

It is all very healthy to dream, but I am afraid the largest part of China’s money in 2009 will go to help the companies resist the crisis and to mitigate the effects of it. The leaders are nervous, and the time is not for experiments.

But enough of stimulus already. Too much has been said, and I have the feeling that there are more important things to watch right now. Namely: Unemployement and Currency.

I have done enough tea leaf reading in my posts as of late, so I will leave these two subjects for next time. But if you want to know what 2009 is going to bring us in China, make sure keep an eye on them.