Editorials: October 2009 Archives

The Sacramento Bee | Paul Krugman

October 24, 2009

Senior monetary officials usually talk in code. So when Ben Bernanke, the Federal Reserve chairman, spoke recently about Asia, international imbalances and the financial crisis, he didn't specifically criticize China's outrageous currency policy.

But he didn't have to; everyone got the subtext. China's bad behavior is posing a growing threat to the rest of the world economy. The only question now is what the world - and, in particular, the United States - will do about it.

Some background: The value of China's currency isn't determined by supply and demand. Instead, Chinese authorities enforced that target by buying or selling their currency in the foreign exchange market - a policy made possible by restrictions on the ability of private investors to move their money into or out of the country.

There's nothing necessarily wrong with such a policy, especially in a still-poor country whose financial system might all too easily be destabilized by volatile flows of hot money. In fact, the system served China well during the Asian financial crisis of the late 1990s. The crucial question, however, is whether the target value of the yuan is reasonable.

Until around 2001, you could argue that it was: China's overall trade position wasn't too far out of balance. From then onward, however, the policy of keeping the yuan-dollar rate fixed came to look increasingly bizarre. First of all, the dollar slid in value, especially against the euro, so that by keeping the yuan/dollar rate fixed, Chinese officials were, in effect, devaluing their currency against everyone else's. Meanwhile, productivity in China's export industries soared; combined with the de facto devaluation, this made Chinese goods extremely cheap on world markets.

The result was a huge Chinese trade surplus. If supply and demand had been allowed to prevail, the value of China's currency would have risen sharply. But Chinese authorities didn't let it rise. They kept it down by selling vast quantities of the currency, acquiring in return an enormous hoard of foreign assets, mostly in dollars, currently worth about $2.1 trillion.

Many economists, myself included, believe that China's asset-buying spree helped inflate the housing bubble, setting the stage for the global financial crisis. But China's insistence on keeping the yuan/dollar rate fixed, even when the dollar declines, may be doing even more harm now.

Although there has been a lot of doomsaying about the falling dollar, that decline is actually both natural and desirable.

America needs a weaker dollar to help reduce its trade deficit, and it's getting that weaker dollar as nervous investors, who flocked into the presumed safety of U.S. debt at the peak of the crisis, have started putting their money to work elsewhere. But China has been keeping its currency pegged to the dollar - which means that a country with a huge trade surplus and a rapidly recovering economy, a country whose currency should be rising in value, is in effect engineering a large devaluation instead.

And that's a particularly bad thing to do at a time when the world economy remains deeply depressed due to inadequate overall demand. By pursuing a weak-currency policy, China is siphoning some of that inadequate demand away from other nations, which is hurting growth almost everywhere. The biggest victims are probably workers in other poor countries. In normal times, I'd be among the first to reject claims that China is stealing other peoples' jobs, but now it's the simple truth.

So what are we going to do? U.S. officials have been extremely cautious about confronting the China problem, to such an extent that last week the Treasury Department, while expressing "concerns," certified in a required report to Congress that China is not - repeat not - manipulating its currency. They're kidding, right? The thing is, right now this caution makes little sense. Suppose the Chinese were to do what Wall Street and Washington seem to fear and start selling some of their dollar hoard. Under current conditions, this would actually help the U.S. economy by making our exports more competitive.

In fact, some countries have been trying to support their economies by selling their own currencies on the foreign exchange market. The United States, mainly for diplomatic reasons, can't do this; but if the Chinese decide to do it on our behalf, we should send them a thank-you note. The point is that with the world economy still precarious, beggar-thy-neighbor policies by major players can't be tolerated. Something must be done about China's currency.

>>original source

By Christopher Walker and Sarah Cook | Far Eastern Economic Review
October 12, 2009

The Chinese government's effort to prevent dissident authors from taking part in the prestigious Frankfurt Book Fair, an international showcase for freedom of expression, has offered Germany a close-up view of China's intolerance of dissent.

In September, two Chinese writers, journalist Dai Qing and poet Bei Ling, had their invitations to the fair revoked by German event organizers after China's organizing committee complained. The Chinese delegation threatened a boycott over invitations to the writers for a September symposium promoting the Frankfurt Book Fair, which begins on October 14. In the face of this pressure, the event's organizers withdrew the invitations. The writers' participation was ultimately enabled when the German PEN club of independent writers invited the two Chinese dissidents.

While Beijing's coercive behavior caught many Germans off guard, it should not have come as a surprise; the Chinese Communist Party's (CCP) censorship ambitions are neither new, nor limited to Germany. In fact, this action is just the latest example of an ongoing pattern of interference, cooptation and intimidation beyond China's borders used to muzzle voices critical of the Chinese government.

Two days after the opening of the Frankfurt Book Fair, a film festival in Taiwan's second largest city, Kaohsiung, will begin. It, too, has come under pressure to censor. In this instance the issue is a planned screening of "The 10 Conditions of Love," a documentary about exiled Uighur rights activist Rebiya Kadeer. Chinese authorities assert Kadeer has terrorist links, unsubstantiated claims not accepted by most Western countries or independent analysts. Despite pressure to shelve the film--linked to fears that the city's growing industry servicing mainland tourists could be hurt--the Kaohsiung Film Archive and the organizing committee of the 2009 Kaohsiung Film Festival announced on September 27 that it would go ahead with the screening. A similar series of events unfolded at the Melbourne Film Festival this summer.

In September, Uighur activist Dolkun Isa, who holds German citizenship, was denied entry into South Korea, to take part in a conference on democracy. China is South Korea's largest trading partner. Isa, who fled China in 1997 and obtained asylum in Germany, was held at the Seoul airport without explanation for two days after being denied entry to South Korea.

The Chinese authorities have developed an elaborate arsenal of censorship, including an extensive domestic apparatus of information control. Less appreciated and understood are the methods of interference and intimidation employed to muzzle critical voices abroad. Some of the modern authoritarian techniques the Chinese authorities use for this purpose beyond its borders are detailed in a study, "Undermining Democracy: 21st Century Authoritarians," recently released by Freedom House, Radio Free Europe/Radio Liberty and Radio Free Asia.

Economic coercion is a principal line of attack in the transnational suppression of issues deemed sensitive by China's rulers. The coercion is applied directly and indirectly.

Instances of direct economic coercion and censorship typically occur when an event has already been planned or already begun. Pressure is then applied by Chinese government representatives on the organizers or local authorities to suppress certain activities or appearances deemed undesirable by the CCP. In such instances, explicit or implicit threats of boycotts, trade sanctions, or withdrawal of Chinese government funding have been used to force the hand of those in charge. The CCP's Frankfurt Book Fair gambit fits this model, given the financial implications of the Chinese government's $15 million investment in the event.

More insidious has been an indirect form of economic intimidation, whereby publications, event organizers or governments engage in self-censorship on topics deemed sensitive to the mainland, a dynamic some have dubbed "pre-emptive kowtowing." Given their small size, proximity and relationship to the mainland, Hong Kong and Taiwan are particularly vulnerable to this phenomenon.

This June, the Hong Kong edition of Esquire magazine, published by South China Media, pulled a feature story by journalist Daisy Chu on the Tiananmen Square massacre slated to run on the 20th anniversary. In 2008, a prominent legal journal in Hong Kong made a last-minute decision not to publish an article on Tibetan self-determination. A blackout on independent coverage of the Falun Gong is believed to be practiced among certain Hong Kong and Taiwanese outlets whose owners have close ties to Beijing or significant business interests on the mainland.

As China's economic clout and role on the global stage grows, it will inevitably exert greater influence beyond its borders. However, the issue is not whether China--which features one the world's least hospitable environments for free expression--will project influence but what shape this growing power will take. The CCP plans, for instance, to spend billions of dollars on expanding its overseas media operations in a potentially massive show of "soft power." But whether this enormous investment will simply project the deeply illiberal values that characterize China's domestic media scene to a wider playing field is a question advocates of free expression should seriously ponder.

This critical question, so far, does not provide an encouraging answer.

China's attempts to insinuate itself into Taiwan's media sector, and Beijing's ongoing efforts to limit the vitality of Hong Kong's media, are among the examples of this phenomenon in Asia. The CCP has recently demonstrated its willingness to suppress open expression in Germany and Australia. The United States is not immune to this pressure. The Dalai Lama will be waiting a bit longer for his meeting with President Obama.

The Chinese government's position at the vanguard of efforts to monitor and filter Internet content, using its wealth and technical acumen to devise methods to limit the free and independent flow of information online, also has serious transnational implications for free expression. China effectively serves as an incubator for new media suppression; authoritarian governments around the world carefully watch China's censorship techniques and learn from its innovations.

The community of democratic states must acknowledge the Chinese government's growing media ambitions and efforts to censor beyond its borders. Acquiescence in this challenge will only embolden the Chinese authorities.

>> Original source

Gulf Daily News - The Voice of Bahrain
October 07, 2009

Sixty years ago, his army victorious, Mao Zedong stood at the Gate of Heavenly Peace in Tiananmen Square and announced a new era for China after a terrible civil war and the horrors of Japanese occupation.

The new national anthem urged the Chinese: "Stand up, those who refuse to be slaves!" and the Communists confidently proclaimed the People's Republic of China, "the people's government".

As Mao's doctor, Li Zhisui, later wrote in her memoirs, the leader was "China's saviour, the messiah in the flesh".

But revolutions, like Saturn, devour their own children. By a cruel irony of history, there followed 30 years, when the Chinese people were crushed and repressed, with a debauched and brutal Mao presiding over the Great Leap Forward and the Cultural Revolution, which between them claimed tens of millions of lives.

The whitewashed Mao now being presented to Chinese people is a myth based on lies.

The China of today was made not so much by the advent of Mao in 1949, but by that of Deng Xiaoping 30 years later.

It was Deng who in 1979 had the courage and vision to introduce economic reforms that put China on the road to the free market, giving it wealth at home and influence abroad. It should be a subject of great joy and celebration, not just to the Chinese but to people around the world, that hundreds of millions have been lifted out of misery to new lives of health, wealth and, at least in material terms, choice.

Yet Deng himself, fearful that reform would lead to the collapse of Communism, perpetuated the founding myth of Mao by declaring in 1981 that 70 per cent of what the "Great helmsman" had done was right, even if 30 per cent of it was wrong. This, too, was not just a lie but an absurd oversimplification.

A nation that cannot debate its past and cannot be candid about its present failings and achievements will struggle to make the most of its future and, in the case of China, build a society worthy of a 21st-century superpower.

Many younger Chinese are not taken in by the airbrushed cult of Mao the revolutionary hero. They are more interested in opportunities to get rich offered by the market economy - sometimes to the point of capitalist excess. For them, Mao is simply a face on kitsch mugs and T-shirts.

China's current rulers cling to the belief that they can combine Mao with McDonalds, capitalism with one-party rule, for which the official euphemism is "socialism with Chinese characteristics".

But they do not trust their own people: 60th anniversary regimented parade took place in streets cleared of all but approved spectators, with residents of Beijing told to watch the celebrations on television behind closed doors.

China's leaders were desperate to prevent any repetition of the Tiananmen pro-democracy protests of 20 years ago. They have still not learnt to tolerate dissent or to treat all citizens equally, from Tibet to the ethnic Uighurs of the Xinjiang region. President Hu Jintao's China can take pride in its huge advances. But it is not confident enough to give the Chinese people freedom of choice in a democratic vote. Until the rule of law is introduced, it will lack full legitimacy.

China also has to face up to its world role. Mr Hu made a good start at the UN General Assembly by taking the lead on climate change, and Beijing has another chance to pull its weight by helping the West to confront Iran over its nuclear programme.

Unless Beijing accepts the need for a firm stand on Iran, Zimbabwe or Darfur, it will fail to live up to the world power status it craves.

Too often it sees the world purely in terms of its interests and economic advantage. If this is to be "the Chinese century", it must put aside myth and confront its responsibilities.

The Chinese people have stood up - but for what?

>> Original editorial

By Andrew Jacobs | The New York Times
October 2, 2009

CHANGCHUN, China -- Unlike in other cities taken by the People's Liberation Army during China's civil war, there were no crowds to greet the victors as they made their triumphant march through the streets of this industrial city in the heart of Manchuria.

Even if relieved to learn that hostilities with Chiang Kai-shek's Nationalist Army had come to an end, most residents -- the ones who had not died during the five-month siege -- were simply too weak to go outdoors. "We were just lying in bed starving to death," said Zhang Yinghua, now 86, as she recalled the famine that claimed the lives of her brother, her sister and most of her neighbors. "We couldn't even crawl."

In what China's history books hail as one of the war's decisive victories, Mao's troops starved out the formidable Nationalist garrison that occupied Changchun with nary a shot fired. What the official story line does not reveal is that at least 160,000 civilians also died during the siege of the northeastern city, which lasted from June to October of 1948.

The People's Republic of China basked in its 60th anniversary on Thursday with jaw-dropping pageantry, but there were no solemn pauses for the lives lost during the Communist Party's rise to power -- not for the estimated tens of millions who died during the civil war, nor the millions of landlords, Nationalist sympathizers and other perceived enemies who were eradicated during Mao's drive to consolidate power.

"Changchun was like Hiroshima," wrote Zhang Zhenglu, a lieutenant colonel in the People's Liberation Army who documented the siege in "White Snow, Red Blood," a book that was immediately banned after publication in 1989. "The casualties were about the same. Hiroshima took nine seconds; Changchun took five months."

The 40,000 who survived did so by eating insects, leather belts and, in some cases, the bodies that littered the streets. By the time Communist troops took over the city, every leaf and blade of grass had been consumed during the final desperate months.

There are no monuments or markers recalling the events that decimated Changchun's populace. Most young people have no knowledge of the darker aspects of the siege, and the survivors, now in their 70s and 80s, are reluctant to give voice to long-buried trauma. "I've always heard that Changchun was captured without bloodshed," Li Jiaqi, a 17-year-old high school student, said as she sat on the steps in front of the city's Liberation Memorial.

Chinese scholars have largely steered clear of the subject. Several historians, when asked about the episode, declined to be interviewed. Zhou Jiewen, a retired nuclear physicist in Changchun who has become a self-taught expert on the siege, explained that many key details, if widely disseminated, would tarnish the army's reputation as defenders of the common man. Those include shooting civilians who tried to escape the city and ignoring the pleas of mothers holding aloft starving children on the other side of the barbed-wire barricades. "To cause so many civilians to die was a great blunder by the P.L.A. and tragedy unparalleled in the civil war," Mr. Zhou said.

While history is often written by the victors, the Communist Party has never been shy about shaping the past to serve its central narrative. Textbooks portray the revolution as the inevitable outcome of a popular uprising; the patriotic films that have flooded television in recent months are not subtle in their glorification of Mao's troops as munificent liberators. The unpleasant aspects of the revolution, including innocents caught in the cross-fire, are often omitted.

>> Complete report