I was not there and I do not know more than what is in the press. But in the light of the available information, I think it’s worth it to have another look at the events, and see what we make of it. Refer to the NYT diagram linked on the illustration, this paper is hardly suspect of pro-CPC, and the information included (from witness accounts) is about as detailed as has been published concerning the events of 5th May.

It all started with a protest in People’s Square, followed by a concentration along Liberation Road, which was met around 6.30 by the People’s Armed Police. Up to here everything is “normal” in the logic of street rioting: there were clashes and probably some victims from both sides. But Liberation Rd. is very central, many people live there and surely the NYT would have found at least a witness to mention it if hundreds of people had been killed or made prisoner at this point.

But it is afterwards, especially after 8, along the axes of Tuanjie and Dawan Roads, that the events are not normal by any standard of social disorder. Street riots, like other forms of violence, can have collateral damage, but this is not the case. The police was not there, the Han mobs couldn’t have been organized in such a short time, and the only way to explain those deaths is that it was a deliberate large scale massacre of civilian residents and passers by. This is consistent with what was written in other accounts by various newspapers.

The initial count of 123* Han casualties that has been more or less accepted by all sides as minimum is an astonishing figure for actions that happened mostly in the space of 5 hours and in such a reduced area. Looking at other riots in the region, including Xinjiang, Tibet or other Chinese areas, we see this ratio is completely out of range. This was not the heat of the fight in a political riot. It was cold-blooded persecution, the kind of actions that can only be the work of fanatics.

Who was behind the events

In its August 2 issue, the Hong Kong newsweekly Yazhou Zhoukan interviewed Heyrat Niyaz, a Uyghur journalist, blogger, and AIDS activist, the kind of person who is unlikely to be partial to the CPC. Heyrat speaks about the Islamic Liberation Party, Hizb-ut-Tahrir al-Islami, a pan-islamic international political party which is formally peaceful, but which has been accused in the past of inciting violence in Europe. This organization has spread very quickly in Xinjiang in the last decade.

As a witness in Urumqi, Niyaz notes the strong Kashgar accents of many of the protesters and the religious slogans that were heard in the protests. This brings to mind all the times the CPC has spoken of the menace of an Islamist group called ETIM, which might actually exist or not. In any case, some radical groups do exist, as was clearly seen from attacks like this one last year, where 16 policemen were coldly knifed and bombed after being run over.

I will not accuse any group without proof, as I would be guilty myself of the same “solid block” thinking I criticized yesterday. But what we have seen up to now should make any honest observer curious, and it certainly warrants further investigation in the field of radical islamism in Xinjiang. In a region bordered by countries like Afghanistan and Pakistan, it is not at all unthinkable that frustrated youths take example of their counterparts across the border and find an escape in a perverted version of religion.

Response

The Chinese government has handled the crisis relatively well, given the circumstances. Actually, the main objection one could make is the opposite of what most Western readers like to imagine: on Sunday 5th more force should have been used to avoid the murders.

If you think of it, you might agree that the CPC leaders are not precisely idealistic dreamers. When they let the foreign reporters into a place it is because they know they have nothing to lose, and this time they must have been pretty confident that they were not to blame. Also we have to admit that, even when in front of journalists, it is unusual in most armies in the World to exhibit so much discipline and restraint as the Chinese did in the aftermath of indiscriminate racist attacks against their own people.

A large part of the Western media were confused by this attitude, which perhaps explains why they left so early. Indeed, it is some food for thought and it can make some weaker spirits shrink, to consider that for the second time in a row (after the Sichuan disaster) China proves that, sometimes, an authoritarian regime can do things better than a democracy. It takes some solid convictions and some understanding of ones own ideals to be able to look at the World without the mould of good and evil.

In any case, there is little doubt – the Western media has given me no reason to think otherwise – that the Chinese double approach of media control and moderate police action has produced the best results during the crisis. It goes without saying that this only works as a short term formula to curb down the violence, and that much more will need to be done from now on to really solve the problems in Xinjiang. More about long term solutions in the next posts.

Rebiya Kadeer

I will not waste time here to discredit Rebiya Kadeer, because from the beginning she discredits herself. She has provided no basis at all for most of the information she gave to the media, and some of her claims are so absurdly wrong that it actually makes me think she has to be innocent: someone who’s made it in business can’t possibly be such a bad liar. The only explanation is that she is totally clueless.

Click on the picture for one example of her latest claims.

More than anything, Kadeer gives the impression that she is desperate for TV time. She knows her time of fame is running to an end, and she is forced to place ever stronger claims, raising the stakes at each go to attract the tired audiences. As blogger twofish reflected, if she really cared about the future of Xinjiang, she might have grabbed this chance to send a message of peace and try to connect with the rest of the Chinese at a time when they were brutally attacked, earning perhaps the respect of the moderates.

But how has someone like Kadeer, a successful businesswoman in her time, imprisoned and then released by the CPC, ended up as de facto representative of the Uyghur people? Kadeer was called to play a role, and she plays it just fine. It is a role that has been written by the CPC, and by the Western media, and by the audiences and by the American NED, who is funding her. The story was written long before she arrived, a well proven plot that works with the public and will make everyone happy. It is all over again the Dalai Lama saga, and thanks to the copy-paste now the scriptwriters can relax and enjoy their Summer holidays.

Except, of course, that Rebiya Kadeer is no Dalai Lama, and neither her deeds nor her standing among the Uyghur justifiy any such comparison.

The Important Question

And now down to what many consider the crucial question: is Kadeer in contact or even financing the extremist groups who arranged the killings, or is she, as I suspect, totally ignorant of the reality on the ground? I don’t think we will ever find out. It is difficult to believe that the NED, funded by the American Congress, would sponsor anyone connected with terrorism; but if by mistake they did, I am sure they will take good care to hide all the proofs.

Note that, either way, the NED doesn’t come out very well from this story. Sponsoring an opportunist who jumps at the chance to get a name for herself while she coldly observes the killings of dozens is hardly in line with the objectives of a National Endowment for Democracy.

But really, is all this so important? I don’t think so. Kadeer will not last, and whether she is guilty or not, the peanuts that the NED pays her do not really change anything. Kadeer with her accommodated expatriate Uyghurs of the WUC cannot possibly control the operations of a terrorist group on the ground. And, as an inspirational role, I doubt it very much that she – a woman, twice married, business and PC background – could ever work for young islamist radicals. She will most certainly not turn into the new bin Laden.

No, the real questions for China and for the World are others:

Who was really behind the killings of 5th July? How will the prisoners be judged? How are the interethnic policies of the CPC failing? How is this failure feeding the bases of some violent groups? What is the connection of these groups with islamist terrorism and what is the probability of Al-Qaeda joining the party? And why is China the only Security Council country that hasn’t received a large-scale attack from islamists, in spite of the years-long Uyghur conflict?

And finally, where are the people that are supposed to be answering all these questions?

*See my comment below for the basis of this number.

Have you been watching Xinjiang TV these days? I am a fan. It’s the new Love TV, a 24-7 concentrate of all the corniest efforts by the Chinese official media to promote harmony after the events of 5th July. Smiling kids, flowery dances, long meetings of interethnic neighbour associations discussing love and togetherness. Best served with tequila, lemon, and a grain of salt.

But seriously. It’s been a month since the events of Urumqi, and it feels like there hasn’t been much done in the way of analysis. All the channels of the media were red hot for a week, but they cooled down as soon as the blood dried on the streets, and no new insights are forthcoming. Too soon the debate has been hijacked by unproven claims of opportunists like Kadeer, and the predictable responses from China. The peace loving Uyghurs and Han who lost their lives in Urumqi deserve better.

So yes, I am consciously watching XJTV, and I suggest you do the same. For lack of anything better and in protest against the rest of the media establishment, both Chinese and foreign. Because no matter how awkward XJTV’s efforts might seem, at least this TV station is doing its job.

The events of Xinjiang are more important than the bland Summer coverage would lead us to imagine. It is probably the most deadly single political riot that has happened in China since Tiananmen 1989. It is also the only major case of social unrest where the international press has been granted permission to report from the ground. And there are important lessons to draw from the experience, particularly in the fields of 1- Media and 2- China’s policy.

The Chinese Media

I am and I will always be against State-controlled media, and every person I respect here, some CPC members included, agrees with my point of view: without the freedom to blame, all comment is meaningless.

But precisely because we don’t believe in that media, we don’t expect too much from them. After all, it is not the fault of the writers or editors if they live in such a system, not everyone can be a hero. From this relative point of view, we can say that the Chinese media – or the CPC, which is the same in this case – has done a good job.

Indeed, one interesting phenomenon in the aftermath of the July 5th events is the media’s role in calming things down on the Han side. We made fun of all those silly heart warming articles, but probably the love talk was crucial at a moment where ethnic feelings were getting out of control. How many times in the World have you seen interethnic clashes* killing more than a hundred to simply peter out in 2 days with no more than moderate force applied by the State?

By choosing to focus on the positive, turning the blame on external elements and being loyal to the principle of harmony, the Chinese media did a valuable service to their country and probably avoided many more deaths. This might seem obvious now with hindsight, but it might have been just as easy for them to try to appeal to the pride of the Han and disaster would have ensued.

The Free World Media

But what about the media from the free World?

The Xinjiang events were of particular interest for many of us following the debate of anti-China bias in the Western media. In the highest point of the discussion, after the Tibet 2008 events,  the Western media always had the point that, since they had been banned from the area, they couldn’t be held accountable for inaccuracies in their reporting. Now we have the first major riot where this argument is not valid. The time is to evaluate the results. How well have they fared?

In my opinion, it has been disappointing, at least for two reasons.

1- In a large part of the media there was a clear prejudice against the Han and against the authorities. Not all were as extreme or ignorant as this example, but the principle was clear: their mission was to witness how inhuman the Chinese system is. Even if some of them later moderated their reports, the harm was already done, and when travelling in Europe mid-July I found it a common opinion that “China is slaughtering its minorities again”.

2- Fortunately, free media IS to some extent free and diverse, and we have seen some examples of fair reporting from the ground. In particular I was following the Telegraph journalist Peter Foster, who did a great job of reporting honestly what he saw. And then, I got to this article, only 4 days after the events, and to my despair he announces that he leaves on holidays. Like blogger B&W Cat noted, almost all the others soon followed suit and, to this day, nobody has told us what really happened in Xinjiang.

In the meantime, Xinhua and the others stayed at their posts, showing the Chinese and the World who really cares about Xinjiang, and who really cares about China.

Some Conclusions

There is something very wrong with the World media, and it is something much deeper than a anti- or pro- China stance. It has to do more in my opinion with how it is organized. Remember the line:

By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.

It is a pleasure to read Adam Smith and imagine that, indeed, the invisible hand is working every day to make our lives better. And yet, this example has made clear that if there is one industry were the hand cannot work it is the media. That is, of course, unless we accept that its role is to produce “the truths we like to hear” in the same way as the role of Apple is to produce computers we like to use.

Because that is exactly the problem. The minute the media sees that there are no obvious CPC crimes, that the police is handling the situation well, and that actually a communist authoritarian regime sometimes does things better than a democracy, this is not interesting. It is not even about political lobbies or advertising companies’ pressure, it is simply that most readers don’t like it. It is more comfortable to live with their solid categories, Islamism bad, communism bad, democracy good. And the invisible hand says: journalist shut up.

There is a lot of talk on the internet about the future of traditional newspapers, and many are analyzing the reasons for their demise. Well, how about this one:

There has been a major political riot, the most deadly in 20 years in the most important rising country in the international scene, and the media has still not even attempted to explain the reasons behind the events, instead working full-time as a mouthpiece for a self-appointed leader in Washington with very dubious legitimacy, and who might possibly be connected with the terrorist group who has organized the killings of more than 100 people.**

I am not so idealistic to think that internet and blogs are going to change the situation. The information lobby will always be powerful, whatever the shape it takes, and in the end the mainstream reader will always read what he wants to read.

For the people who care, the only hope, now as always, is in diversity. And fortunately the internet works in the right direction for this. Visit this link for just one example of how a blog can provide you –if you take the time to read carefully- with better commentary than your Sunday paper.

* Interethnic clashes:  whether or not the initial violence was organized by terrorist elements, by the time the Han mobs went out with bats it clearly became an interethnic clash.

** More about this upcoming.

From the post left unfinished last week. Some of the main arguments read (or heard) in China Crisis discussions:

The Time

Economies don’t grow indefinitely.  Low cycles follow high cycles and after 30 years it is about time. China cannot break the laws of economics, so the recession must necessarily come in the next X years. The country hasn’t prepared itself politically and psicologically to face this period. In the end, we are sure to have trouble.

Of course, this argument is of little value without the X, and many proponents of a time limit have failed in the past. This is the field of technical analysts and other mystical thinkers. Mythology also plays a role:  In Chinese history, cataclysms mark the end of a cycle. An earthquake preceded this crisis, and a solar eclipse is coming in July, the dynasty has lost its virtue. These arguments tend to work better with a bit of hindsight.

The Markets

The World’s economies are interdependent today. China’s economy is largely dependent on exports and FDI. The weight of these external factors in China’s growth has been much discussed, but regardless of the exact numbers, few doubt that it is a significant motor of the economy. External motors failing, China turns to internal ones: investment and consumption. Today, strong public investment, mostly in infrastructure and energy, is making up for the loss. Click to continue »

More bad news about the Crisis. Yesterday All Roads had another of those worrying posts: 3 Announcements and 2 Rumours, and not one of them good.

Still, on our return from the double New Year’s season, many of us are suprised to see the sky is not falling on our heads, and the dire predictions we did before the holidays have not quite turned true. Indeed, the Crisis in China seems to have a very annoying quality for bloggers: it is not happening. Yes, we’ve had bad news coming every week for the last months, we’ve seen experts we respect telling us how bad the unemployment is, how many factories are closing. And all of them are right, if we look at the numbers. Yet, on the street, no Crisis to be seen.

What is going on here? Who is taking our Crisis away, depriving the dismal scientists of their fair share of joy and fulfilment? And more importantly: is it not time to deem the whole affair a bluff, and go join the ranks of the optimistic, together with the guys at the World Bank and the CPC?

Where are all the Crises Gone, long time passing?

You might remember that post I wrote where I started out wondering about the different perceptions of the Crisis in China and in the West. 3 months have passed and this contrast is, if anything, sharper than before, as I have seen during my New Year’s travels. Right now Europe is bleeding, there is no question about this. China, on the other hand, looks to the casual observer like a normal, almost healthy economy. One cannot sense the Crisis.

In Shanghai, Zhejiang, Fujian, three of the engines of China’s economy, I have seen nothing going on but normal everyday life. The shops are full of people, “we hire” signs are on the windows, and taxi drivers remain for the most part optimistic – at least those who didn’t buy shares. One of them even told me: “Riots only happen in Guangdong, in Shanghai we are civilized”

Back to the office, in my work with industrial investors in China I see the same picture: while some Western clients have cancelled or postponed their 2009 FDI projects, not a single project has been stopped by our Chinese clients, which are all large SOEs.

The time’s for the Ox and don’t give me no Bull

Here are 3 reasons that might explain this strange gap between theory and observation: delay, transparency and inertia.

• Delayed effect: The crisis comes to China in a very different way than to the West. In our case it was a bursting financial bubble,  hitting us all with the speed of sound. In China, it is different. They didn’t have the “complex financial instruments”,  their financial system was relatively isolated. In China the Crisis is caused by exports and FDI, which is a far less explosive mix. Look at FDIs, for example: a typical project cycle to build a factory is 3 years, and there’s a point of no return somewhere in year 2, when the construction is mobilised and the equipment paid for. This introduces a long delay while the ongoing projects finish and until the absence of new projects cause panic in subcontractors. Same effect with the production of factories which had a large backlog in 08.

• Inertia: China is a massive system that has been moving at high speeds for 30 years. This doesn’t stop in one day. It is not only the phisical momentum of the thousands of ongoing projects, it is also psycological inertia. in the minds of many Chinese the system is strong, and there is no reason to believe in a Crisis that has never happened in their working lifetime. Behaviours do not reflect fear, and many go about their New Year’s shopping like any other year. Worse still, some seem happy to believe that it is America’s fault and this is an American Crisis; and mind you, not all agree that smart China need lend the old brother a hand.

• Transparency: This is the most important reason of the three, and the one that scares me most. For all the good things that one can say of CPC’s economic policy (yes, they did draw 300million out of poverty) there is one serious fault that nobody fails to notice: Lack of Transparency. With the largest part of the economy dominated by SOEs or following direct orders from the party, it is not unreasonable to think that there might be a bigger soup on the fire than we are led to believe.

I don’t want to cause alarm or instigate hoarding behaviours like that of our old professor, but this is not looking good. If there’s one single best way of making a Crisis more deadly, that is withholding information and letting it burst only when it is too late.

The two pillars of China’s growth in the 2000s were SOEs and FDIs. The FDI leg is seriously failing now, and the effects will be felt progressively. Even with all the financial might of the Chinese State, it is hard to imagine the SOEs taking the place left by the FDIs, let alone going out to take over the World. I cannot see the Chinese companies leading the effort, I can’t see their necessary creativity and initiative to open new markets to replace the lost export ones. All I can see is a bunch of Giant SOE’s which are better at leveraging their massive size and influence than at impressing us with their products.

There is something quite anomalous in this perceived calm of today, and this blogger thinks that he can smell a Rat. But the time is not for Rats anymore, it is for Ox.

Which is one 2 bits short of a Bull.

You will excuse me for writing two serious posts in a row. It’s been ages we don’t do anything on the Crisis, and these days there’s been a series of articles on the subject that I couldn’t just let pass.

Two of them have to do with the growth projections for 2009. Yawn. We’ve been seeing new projections and discussions thereof almost every week, and after the holidays break it looks like here it is all over again. It is mostly fruitless, because there’s not enough new information between one projection and the next, and so most of the times the changes reflect the mood of the expert more than anything else.

It was however interesting to read this PD article Sunday where one CPC “renowned economist” worried that “China is likely to lose 3.9 million jobs in 2009″ if GDP growth slows to 8 percent. Well, he need not worry anymore, according to other top CPC officials quoted here the very next day, “China Risks Missing 8% Growth Target”, which will be “extremely arduous” to achieve. They are starting to change their tune, again.

And this brings us to a more interesting subject which, although it is as difficult to predict, at least it is more telling than the empty statistical artifice of GDP. I am speaking of Unemployment.

There has been two contradicting articles over the weekend, by Wang Tao from UBS and by Victor Shih. They hold different positions as to what will be the unemployment figures in 2009 and what will be their social impact. In any case, it is worth noting that both of them, with their 15 Million (Tao) and 35-50 Million (Victor) figures, are way above any calculation by the “renowned economist” of the People’s Daily, who gives 1 Million for every % of GDP lost.

Needless to say, I am with the relatively pessimistic predictions of Victor on this issue. Partly because I deeply distrust socio-economic projections issued by banks (you can hardly blame me on that). But mostly because the arguments that Victor puts forward are more solid than Tao’s. Based on his deeper knowledge of Chinese politics,  Victor goes on to analyze the possible consequences of his prediction in a worse-case scenario.

Noting that, even if the government has the capacity (as he calculated here) to subsidize the unemployed families for an extended period,

the current wave of layoffs affects a young and vibrant cohort most capable of carrying violent collective action against the state. Without any systematic triggers, we at least will see a spike in localized riots which necessitate the mobilization of People’s Armed Police (PAP) units all over China. The central government would also be compelled to (and they are doing so already) roll out generous unemployment benefits for migrant workers and college graduates (to the tune of 300-400 billion RMB). If a systematic trigger occurs and instability spreads to a sizable city, we will see the large scale mobilization of both PAP and army units and possibly substantial bloodshed. In most scenarios, the CCP regime would still survive a large scale, cross regional rebellion. However, “overall investor confidence” will be lost.

What is the “systematic trigger” which I refer to? I don’t know exactly what it would be. However, if we look back in history, it can be a wide range of events, including the death of a popular leader, a serious natural disaster, the spread of a deathly infectious disease, a small student demonstration turned violent, religious groups…

This idea of the “trigger” (I called it the “Spark” on my previous post) is right on. It is exactly the element that is missing and the one that will make all the difference: when we have social tension to get the people in action, and intellectuals to draft the road map, the mix is an unstable equilibrium waiting to get in contact with a spark. Of course, Victor doesn’t know what exactly this spark would be, and neither do I because its own nature makes it unpredictable. But I would add to his hypothesis one of my own:

The emergence of a massive wave of protest on the internet that extends to all the forums and BBS simultaneously, with new sites being created faster than the government can block the old, which could create a cascade effect that would force the government to commit its worst mistake: close down the internet altogether. This would add to the protesters millions of online game addicts released from their cybercafes, constituting a serious army of instability.

Check out today’s post by Imagethief on the subject, showing with 2 nice graphs that we have an unprecedented situation in China. Also,  yesterday Jeremiah of the Granite Studio did an interesting comparison of the present situation and the one in 1919 during the May 4th movement. In those times, there was a clear “trigger”: the humiliating treatment of China by the Western powers in the Treaty of Versailles after the First World War, including the unforgivable transfer of territories to Japan.

One last note for the optimists: this weekend I learnt of a reputable economics professor living in Shanghai who recently bought 3 months advance of canned food to store in case the situation gets rapidly unmanageable. In a city like Shanghai, if the logistic networks are disrupted we can run out of food in a matter of days. I am still not quite there myself, but I must admit that, since I heard this, the idea hasn’t quite left my head and I tend to go more generous on every visit to Lawson’s.

UPDATE: Oops, I completely missed this one. All Roads has been doing the same comparison and drawing his own conclusions. You can see it here.

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.

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.

One of the advantages of Crisis Watching in China is that there’s such a large community of observers dedicated to this country that you are never short of ideas. The downside is that with so many voices it is difficult to make sense of the whole thing. To the question in the title, for example, depending where you look you can find today the whole range of answers: yes, no, badly, take it easy!

What is most remarkable is how fast opinion is shifting towards the Yes side, when only 2 months ago most people still believed China’s system was immune to Financial Crises.

Especially interesting is the story of the closing factories on the Pearl River Delta, which has captured the imagination of western media in the past few days. Fortunately we have some sensible China bloggers to shed light on this mess. The guys at All Roads and the Law Blog are the first to question the significance of the events.

Factories are closing sure enough, and this picture I stole from the bbc website is not an evil western media setup. But take a closer look: do you see any difference between this “workshop” and any random car parking? Do you see any traces of heavy fixed equipment, hoisting devices, utilities? anything looking like proper working lights for the operators? It looks exactly like what it is, a precarious facility quickly improvised to catch some coming contract and quick to disappear the minute things start to look bad. It is probably in places like these that they put together the fakes sold at Qipulu.

So it is mostly the fat of the economy that is being lost for the moment. Business which probably would end up closing anyway in a normal economic system that didn’t have as many holes as the Chinese. The bread and meat of the economy are still producing, and doing quite well given the circumstances. The disappearing of these companies will make things easier for the ones remaining, eliminating the pressure of their (sometimes unfair) competition. It’s part of the good effects of a downcycle, really overdue in an economy that’s been racing nonstop for the last 30 years.

So from my point of view the Crisis has still not hit China in any significant way. The international economic slowdown is definitely starting to show, but for the moment we are still riding it better than most of the Western economies.The Wall is holding strong.

Now, what Crisis really means is what by now is in everybody’s mind. The New Republic calls it Crash and Burn. But many observers around the world got excited about the recent protests in the Delta, and failed to realize that those protests are essentially no different from the many other Crack and Burns that happen daily in China. If it is not a taxi strike, it is a drowned kid or citizens unhappy with relocations.  Each of them for their own reason, and usually with no intention to question the role of the central government, but rather trying to call its attention to help against local injustice.

Crack and Burn we have had for years, and it didn’t do much to unstabilize the system, because it was never meant to anyway.

But here is a method to estimate what might happen if some day the Crisis really hits China:

1. Google “Riots China”
2. Collect the first different 50 results
3. Add up the number of people violently protesting in those results
4. Add the thousands of people that are going to lose (or not find) jobs in the year to come.
5. To that reactive core you can add hundreds of millions of unhappy peasants, too isolated to organize protests on their own, but happy to ride along if there is any serious movement.
6. Now all those millions of chinese  put them together at the same time to protest against the same problem. Typically inflation, unemployment, corruption, injustice or inequality.

When there is a critical mass of unemployed and discontent rioting in a particular region, this could spark the chain reaction and spread to the whole country like gunpowder.

Looking at the economy today, I think we are still far from that situation. On the other hand, I also think that, if it ever happens, it will happen so suddenly that none of us will even smell it coming.