China held its Central Economic Work Conference last week, chaired by president Xi Jinping, so here are a few thoughts on the current state of the Chinese economy and a few links to an article I have written, and talks I have given, recently about the Chinese economy.
First up, the slogan du jour is definitely ‘new normal’ (???). Xi Jinping has been using this for about six months, but now he is really using it. Xinhua’s short, official report on the conference has ‘new normal’ in the headline and ‘new normal’ six times in the text. See here for the English version.
What does it mean? It means that local politicians, state firms, and everybody else should dial back their expectations about credit and growth. The increase in both is slowing and that is the way it is going to be as China undertakes a deleveraging process in the banking and corporate sectors. There is not going to be the kind of collapse in growth that many have predicted. The government has plenty of room to fine tune the slow-down, Chinese exports remain competitive, and the global economic environment, while not great, is not a disaster from the perspective of China’s needs. Look out for reported GDP growth in 2015 between 6-7 percent.
Against this background reforms will continue to increase the extent to which the market prices credit in China’s economy. There has already been a big shift in favour of lending to the private sector since the global financial crisis (see my review of Nicholas Lardy’s new book, below), and this is one aspect of an ongoing financial liberalisation process. To my mind, this explains the recent strong performance of the Chinese stock market much better than claims it is down to an interest rate cut (which wasn’t really a cut at all given falling inflation). Previous run-ups in the Chinese market have coincided with periods of financial sector deregulation. The difference this time I suspect is that the bull market will last longer.
All in all the outlook is a not unattractive one: slower growth, better credit rationing hence higher quality growth, and a rising share for consumption in the economy at the expense of slowing investment. The main risk — as was the case during Zhu Rongji’s long period of ‘structural adjustment’ in the 1990s — is that the central government listens to local politicians who say they cannot maintain ‘social stability’ without more credit and growth. Zhu didn’t listen to such imprecations, and we have to hope Xi won’t either. As the slogan says, China needs and is getting a new normal. Otherwise the books really cannot be balanced and financial system risk will become unmanageable.
Later re. the new normal: Damian Ma has written an excellent piece for the new issue of Foreign Policy around the theme of the ‘new normal’. Well worth a read, with a lot more detail than I can offer here.
Links:
Below is a link to download the review of Nick Lardy’s latest book, Markets Over Mao, that I wrote for the latest China Economic Quarterly. The book makes an important contribution to the optimists’ case that China will overcome its current slough of non-performing loans in the banking system.
This next link is to a download of a synopsis of a talk I gave at the Madariaga College of Europe in Brussels (an EU think-tank) a couple of weeks ago. It is about how China’s development model is similar and dissimilar to those of Japan, Korea and Taiwan. The theme will be familiar to anyone who has read How Asia Works, but there are some additional, up-to-date thoughts about China as well as responses to questions raised by the Brussels nomenklatura. The precise topic I was asked to speak on is ‘What can east Asian countries learn from China’s economic policies?’
The Youtube video below is a speech I gave at the National University of Singapore in October (blog entry about that trip here) on the subject of ‘When will governance matter to China’s growth?’ (governance here meaning institutions like a free and fair and prompt judiciary). Roger Cohen of the New York Times speaks first about the role of the US in east Asia. Then I speak at roughly the 25-minute mark. Then there is a joint Q&A.
And here is another Youtube video where I spoke separately about How Asia Works at the National University of Singapore. There is quite a long Q&A in which lots of questions about development from a more Singaporean perspective are addressed.
I am posting a number of documents by Adair Turner relating to the concept of ‘helicopter money’. The term was coined by Milton Friedman and refers to the idea of simply dropping money into an economy to expand the monetary base without any commitment by a government or central bank to ‘pay’ for the money. Indeed, the point is to increase money supply, possibly permanently, in order to pay for government expenditure.
Printing money to cover a government’s bills is never going to be an easy policy to sell. But Turner has bravely put this option on the table because the place to which the major economies of the world are heading under current policy may actually be worse.
How so? Turner’s point is that the policy of central banks expanding their balance sheets and flooding financial markets with cash to force down interest rates to zero is merely fuelling asset bubbles – in real estate, in stocks, and even now in things like fine art. What the world needs is a return to somewhat higher interest rates to head off another speculative bubble and bust (selling some Apple shares yesterday at 18 times earnings and more than four times what I paid for them reminds me we may already be in bubble territory). The problem, of course, is that higher interest rates cannot come at the expense of another collapse in the demand in the real economy and hence a spiral of 1930s-style deflation. Logically, as Turner argues, the only option may therefore be to expand the monetary base, create a bit of inflation to allow a meaningful rate of interest, and simultaneously use the printed cash pay off some government debt and fund expenditures that maintain real economic growth.
Such a policy would (probably) put the fiscal boot on the other foot compared with the past six years. Almost all UK and US policy since 2008 has favoured those with assets – real estate, stocks and bonds — as asset values have been restored by the near-zero interest rate policy. If rates rise, those who hold assets under leverage will pay more debt service and asset prices will come under pressure. On the other hand, a positive real interest rate gives those with only a bit of cash (the young, the poor) some return on their money in the bank, while money creation can pay for lower taxes on work and investment in things like infrastructure. In other words, such a policy tilts the table away from those with assets and towards those without assets but with a willingness to work for a living. You begin to see quite how outrageous this proposal is…
The proposition is indeed shocking. However it is a measure of the times in which we live that you really should read what Turner is saying. He is not a red, and nor are the economists (like Milton Friedman and Irving Fisher) whom he cites in support. Turner is pretty much an Establishment figure…
The lightest iteration of what Turner is saying is an FT opinion piece from last week. I have not done this before, but I am reproducing it in the hope the FT won’t pursue me for breach of copyright. (Having only been paid £250 for my recent opinion piece for them, perhaps they will decide they owe me a bonus; one notes that deflation is already haunting the Pink’Un.)
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November 10, 2014
Printing money to fund deficit is the fastest way to raise rates
By Adair Turner
No technical reasons exist for rejecting this, only the fear of breaking a taboo, writes Adair Turner
What is the right course for monetary policy? The International Monetary Fund seems to answer with forked tongue. Its latest World Economic Outlook urges that monetary policy should stay loose to stimulate growth. Yet its Global Financial Stability Review warns that loose monetary policy risks creating financial instability, which could crimp growth. In fact the best policy is to print money and raise interest rates. That sounds contradictory, but it is not.
The global economy is suffering the hangover from many decades of excessive private sector credit growth. In 1950 private credit in advanced economies was 50 per cent of gross domestic product; by 2007 it was 170 per cent.
After the 2008 crisis, households and companies began trying to pay back what they owed. This depressed consumption and investment, generating large fiscal deficits as tax revenues fell and social expenditure rose. It then seemed essential to balance public sector accounts, which has depressed growth further and made deleveraging harder.
Debt owed by the public and private sectors has actually increased as a proportion of GDP, from 170 per cent five years ago to 200 per cent today. Weak demand has led to below-target inflation in all major economies.
Economists agree that this is how we got into the current mess, but they disagree about how to get out of it. Some, such as Paul Krugman and Lawrence Summers, argue for more relaxed fiscal policies. Cutting taxes or increasing public expenditure is the most certain way to stimulate demand. In Milton Friedman’s words it is an injection directly “into the income stream”. But this route out of recession would increase public debt even further. It seems blocked.
Instead, most countries have opted to combine fiscal tightening with ultra-loose monetary policy, setting short-term interest rates close to zero and using quantitative easing to reduce long-term rates and boost asset prices.
There are no technical reasons to reject such measures, only the fear of breaking a taboo.
But there are dangers. Sustained low interest rates create incentives for highly leveraged financial engineering. They make it easier for uncompetitive companies to survive, which could stymie productivity growth. And they work by restarting growth in private credit – which is what led to our current predicament. The Bank for International Settlements therefore argues that monetary policy should be tightened as well as fiscal, but that would depress demand yet further.
We should indeed seek a swift return to higher interest rates, to remove the dangerous subsidy to high leverage. But paradoxically, the best way to do that, particularly in Japan and the eurozone, would be to deploy a variant of Friedman’s idea of dropping money from a helicopter. Government deficits should temporarily increase, and they should be financed with new money created by the central bank and added permanently to the money supply.
Money-financed deficits would increase demand without creating debts that have to be serviced. This would lift either real output or inflation and allow interest rates to return to normal more quickly. True, banks might amplify the stimulus by creating additional private credit, but they can be restrained with higher reserve requirements.
There are no technical reasons to reject this option, only the fear that once we break the taboo, money-financed deficits will be used on too large a scale.
Despite that fear, de facto monetisation is inevitable in some countries, even if policy makers deny it.
Japan’s official policy involves using sales tax increases to make government debts sustainable, while massive monetary stimulus spurs inflation and growth. In fact there is no believable scenario in which Japan will generate fiscal surpluses sufficient to pay back its debts, nor one in which the Bank of Japan will sell all its holdings of government debt back to the market.
All the same, the pretence undermines the effectiveness of the policy. Japan should either delay the next sales tax increase, or announce a temporary fiscal stimulus financed with new money. It should make clear that the debt the government owes the central bank will never need to be repaid, dispelling fears of a massive future fiscal tightening.
Orthodox theory sees helicopter money as risky. But current quantitative easing policies are at least as risky, and have produced adverse side effects. In the UK the Bank of England has bought £375bn of government bonds to try to stimulate the economy through swollen asset prices and rock-bottom interest rates. It could instead have created new money to finance a smaller one-off increase in the fiscal deficit. If it had done so, a return to normal interest rate disciplines would now be nearer.
And the slides that go with the CASS speech. (Lots of them, but many worth having if you live in the UK and are about to have people knocking on your door in the run-up to the May national elections asking you to vote for them. ‘Come in,’ you can say. ‘Have a seat and let’s look at the slides together!’)
Finally, on Thursday 20 November, the UK parliament will hold a backbench debate on the topic of ‘money creation and society’. It will be the first time that the issue has been addressed in a full debate in the House since the 19th century. You can watch here on Parliament TV and discover just how ill-equipped our politicians are to deal with the aftermath of the global financial crisis.
Obama and Xi Jinping have reached an understanding (no written agreement, mainly — I am guessing — because of the difficulty of ratifying one in a Republican-dominated congress) on curbing carbon energy emissions.
I am just pasting the New York Times coverage below. You can also click through to a supporting opinion piece by John Kerry.
Some immediate thoughts:
China is promising that its carbon emissions will peak, at the latest, in 2030. Cynics will say the Chinese have not said what the peak will be, or limited it. However China’s carbon emissions per unit of GDP are already officially targeted to fall 40-45% 2020 vs 2005. And China has set and met/is meeting targets to cut energy consumption per unit of GDP 19% in 2005-10 and 16% in 2010-15. These targets were in the last two five-year plans and it would be hard to move away from what is now a 10-year trajectory line in cutting energy intensity in forthcoming five-year plans. In sum, I think the emissions peak by 2030 is a very meaningful target that will not be rendered meaningless by political jiggery-pokery.
China also promised to make renewables 20% of total energy production by 2030. Last year was the first one in which Chinese installation of renewables’ generating capacity exceeded that of carbon electricity generating capacity. A cursory reflection on the numbers suggests to me that installation of power generation capacity going forward will, in just a few years, be almost all renewable in order to achieve the 2030 target. (If your ‘investment advisor’ has not already shorted the stock of Harbin Electric and Dongfang Electric, the two most exposed coal turbine and boiler makers, sack him/her. You probably don’t want to own Shanghai Electric either.)
The US has promised huge cuts versus trend line carbon emissions, too. More cerebrally-challenged Republicans are already doing their nuts.
Obama is back. He’s done healthcare. Now he might go down as the President who saved the planet. So much for playing too much golf…
Xi Jinping’s domestic position goes from strength to strength. But it is a little frightening when one guy commands so much popular support in a society with too few checks and balances on executive power.
Here’s a speculative thought. If the delivery of this understanding turns out to be as good as what appears to be written on the tin, the Nobel Committee will have to think very seriously about giving Obama and Xi a joint Peace Prize. At first blush that might seem a tough choice for the committee, given China’s human rights record and the anti-dissent crackdown under Xi. But should a prize be given, it would be even tougher on President Xi. How could he accept after Liu Xiaobo already got the prize in 2010? This is very premature, but I throw out the thought.
Meanwhile, make a note of where you were when you heard this potentially historic news. I was in the library.
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U.S. and China Reach Deal on Climate Change in Secret Talks
President Obama and President Xi Jinping of China were greeted by children during a ceremony inside the Great Hall of the People in Beijing on Wednesday. Credit Feng Li/Getty Images
BEIJING — China and the United States made common cause on Wednesday against the threat of climate change, staking out an ambitious joint plan to curb carbon emissions as a way to spur nations around the world to make their own cuts in greenhouse gases.
The landmark agreement, jointly announced here by President Obama and President Xi Jinping, includes new targets for carbon emissions reductions by the United States and a first-ever commitment by China to stop its emissions from growing by 2030.
Administration officials said the agreement, which was worked out secretly between the United States and China over nine months and included a letter from Mr. Obama to Mr. Xi proposing a joint approach, could galvanize efforts to negotiate a new global climate agreement by 2015.
Op-Ed Contributor: John Kerry: Our Historic Agreement With China on Climate ChangeNOV. 11, 2014
It was the signature achievement of an unexpectedly productive two days of meetings between the leaders. Mr. Obama and Mr. Xi also agreed to a military accord designed to avert clashes between Chinese and American planes and warships in the tense waters off the Chinese coast, as well as an understanding to cut tariffs for technology products.
A climate deal between China and the United States, the world’s No. 1 and No. 2 carbon polluters, is viewed as essential to concluding a new global accord. Unless Beijing and Washington can resolve their differences, climate experts say, few other countries will agree to mandatory cuts in emissions, and any meaningful worldwide pact will be likely to founder.
“The United States and China have often been seen as antagonists,” said a senior official, speaking in advance of Mr. Obama’s remarks. “We hope that this announcement can usher in a new day in which China and the U.S. can act much more as partners.”
As part of the agreement, Mr. Obama announced that the United States would emit 26 percent to 28 percent less carbon in 2025 than it did in 2005. That is double the pace of reduction it targeted for the period from 2005 to 2020.
China’s pledge to reach peak carbon emissions by 2030, if not sooner, is even more remarkable. To reach that goal, Mr. Xi pledged that so-called clean energy sources, like solar power and windmills, would account for 20 percent of China’s total energy production by 2030.
Administration officials acknowledged that Mr. Obama could face opposition to his plans from a Republican-controlled Congress. While the agreement with China needs no congressional ratification, lawmakers could try to roll back Mr. Obama’s initiatives, undermining the United States’ ability to meet the new reduction targets.
Still, Mr. Obama’s visit, which came days after a setback in the midterm elections, allowed him to reclaim some of the momentum he lost at home. As the campaign was turning against the Democrats last month, Mr. Obama quietly dispatched John Podesta, a senior adviser who oversees climate policy, to Beijing to try to finalize a deal.
For all the talk of collaboration, the United States and China also displayed why they are still fierce rivals for global economic primacy, promoting competing free-trade blocs for the Asian region even as they reached climate and security deals.
The maneuvering came during a conference of Pacific Rim economies held in Beijing that has showcased China’s growing dominance in Asia, but also the determination of the United States, riding a resurgent economy, to reclaim its historical role as a Pacific power.
Adding to the historic nature of the visit, Mr. Obama and Mr. Xi were scheduled to give a joint news conference on Wednesday that will include questions from reporters — a rare concession by the Chinese leader to a visiting American president.
On Tuesday evening, Mr. Xi invited Mr. Obama to dinner at his official residence, telling his guest he hoped they had laid the foundation for a collaborative relationship — or, as he more metaphorically put it, “A pool begins with many drops of water.”
Greeting Mr. Obama at the gate of the walled leadership compound next to the Forbidden City, Mr. Xi squired him across a brightly lighted stone bridge and into the residence. Mr. Obama told the Chinese president that he wanted to take the relationship “to a new level.”
“When the U.S. and China are able to work together effectively,” he added, “the whole world benefits.”
But as the world witnessed this week, it is more complicated than that. Mr. Xi won approval Tuesday from the 21 countries of the Asia-Pacific Economic Cooperation forum to study the creation of a China-led free-trade zone that would be an alternative to Mr. Obama’s Trans-Pacific Partnership, a 12-nation trading bloc that excludes China.
On Monday, Mr. Obama met with members of that group here and claimed progress in negotiating the partnership, a centerpiece of his strategic shift to Asia.
Negotiations for the Trans-Pacific Partnership are much further along than those for the nascent Chinese plan, known as the Free Trade Area of Asia Pacific, and some analysts said the approval by the Pacific Rim nations of a two-year study was mainly a gesture to the Chinese hosts to give them something to announce at the meeting.
For all the jockeying, the biggest trade headline was a breakthrough in negotiations with China to eliminate tariffs on information technology products, from video-game consoles and computer software to medical equipment and semiconductors.
While the reaction pieces are being penned, Manning expresses a desire for hormone treatment to assist in a desired gender reassignment. Federal prisons offer this, military ones do not. Manning has asked that she [sic] be referred to henceforth as Chelsea, with the former name Bradley reserved only for letters to the the confinement facility at Fort Leavenworth, Kansas. There are worse ways to spend half an hour than writing him/her a letter of support, so why not do so?.
It is depressing to read how the poodles in the UK government told their bosses in Washington that Guardian journalist Glen Greenwald’s partner David Miranda would be detained at Heathrow, how Met police say they checked they were using anti-terrorism legislation correctly and how the police reckon they were procedurally perfect. Having taken the call from the lickspittle Brits, Washington then moved to distance itself from the Miranda detention and the seizure of his possessions, saying it wouldn’t happen in the US. As the Economist points out (sub needed), the anti-terrorism legislation under which Miranda was detained was established for the police to ascertain if a person “is or has been concerned in the commission, preparation or instigation of acts of terrorism”. To use such legislation against journalists is grotesque.
Separately in China, the New York Times discusses ‘Document number 9’ and the alleged ‘seven subversive currents’ at large in the Chinese nation. Per my recent blog about Xi Jinping, we are starting to get more visibility on the new Chinese president and what we are seeing is not pretty. Xi’s evolving proto-Maoist approach to politics provides the background to the trial on corruption and abuse of power charges of fellow princeling Bo Xilai, which started this week. Bo was the person who invented the ‘New Red’ school of modified Maoist populism when he was running Chongqing. As Xi and pals move to crush him, the irony and hypocrisy are not lost on John Garnaut in Foreign Policy.
Here in Italy, meanwhile, we are enjoying a peculiarly Italian twist on the abuse of state power. Silvio Berlusconi, having been definitively condemned for a felony for the first time, has opted for an attack on state power that recalls, for me, Italy’s fascist past (much more so than the claims, which I previously dismissed on this site, that Beppe Grillo is proto fascist). Over the Ferragosto holiday Sil promised a programme of direct action on Italy’s beaches, with his supporters leafleting holiday makers who would otherwise be trying to catch a rest. The focus of Sil’s campaign is not so much a proposal for structural reform of the judiciary, or indeed enforcement of existing norms (which would be half the job done already), but instead a direct attack on magistrates and judges as a species. The strategy has more than a whiff of hoped-for intimidation.
Here is a lead story (in Italian) from Berlusconi’s Il Giornale during the holiday. Although the article was on the front page, it has no news content, and comprises a simple frontal assault on the judiciary, likening its perceived efforts to ‘attain political power’ over the nation to Mao Zedong’s Long March. The connection with Maoism/communism is established in the first sentence. Italy, we learn, does not have a mundanely inefficient legal system to be improved by systemic change, but an extremist, personal, visceral political conspiracy against the Italian people (to wit, Sil and his businesses).
Here are some current icons from Berlusconi’s PDL/FI site:
The manner in which Berlusconi’s personal interests, those of the Mediaset group he controls, and national politics are conflated is bewildering for anyone from the First World. But of course this is not the First World. Next month Sil will relaunch Forza Italia (FT, sub needed), his original political movement named for a football chant (in the country that now boasts the worst record of football violence and racism in western Europe). ‘Ancora in campo’ / Back on the Field is the new tag line.
To me the strategy looks more than a little fascistic, involving as it does an attack on the institutions of the state and promises of more direct action. However, as the holidays wind down I suspect that we won’t see a proto-fascist movement take hold in Italy. Instead we will see business as usual. The main evidence of Sil’s promised campaign of direct action so far (the plan on the beaches described here in the FT, sub needed) is a few Forza Italia militants in Rome (here telling journalists they have not been paid to march, that they are ‘spontaneous volunteers’ and that they have ‘just come for Him [Sil]’) and a pisspoor little plane dragging a bit of superannuated toilet paper above a few holidaymakers. ‘Forza Italia, Forza Sil’, I think it says.
I don’t want to do you down Sil, but I’m not sure you’ve really got the fascist cojones for this thing….
Meanwhile, my own experience with abuse of state power occurs when I stop at Sasso, the bar on the river on the way to Citta di Castelllo. Despite the fact that there were few people around when I stopped, and lots of safe parking available, a carabinieri police car was parked across the zebra crossing that leads to the children’s playground, with two wheels outside the white parking line and hence well into the road. Thinking this a bit slack, even by Italian police standards, I took a photo on my phone. Walking into the bar, I found two carabinieri eating cream buns. I bought a small bottle of cold water and went outside to drink it in the sun.
While I was doing this, it seems one of regular clients at the bar told the carabinieri I had taken a photo. One of the carabinieri came over and demanded ‘a document’. Of course, I said, handing him my EU photo driving licence. He took it away and wrote down all the details, resting on the boot of his car. Then he came back and said: ‘I have taken down all your details because you took a photo.’ I replied: ‘Yes I did take a photo because of the way you parked.’ The policeman responded: ‘You have no idea what business we are engaged on here.’ I resisted the urge to reply: ‘It looked like you were engaged in eating cream buns.’ Both policemen were standing over me, not completely in my face, but close enough to make me feel uncomfortable.
The officers then made a series of threats:
1. ‘We have your details. If that photo is published on the Internet [he only seemed concerned about the Internet] we know who you are.’ I replied that I have no problem with them knowing who I am.
2. [from the second carabinieri, thinner and younger]: ‘That is a MILITARY vehicle. Do you understand?’ I replied that I am fully aware that the carabinieri is a para-military force.
3. The first officer mentioned seizing my phone (the verb he employed was ‘sequestrare’). I remained impassive, just looked him in the eye. There were a few people around the bar (maybe 8), plus the female boss, whom I have known for years. He didn’t take the phone in the end, just saying: ‘Get rid of that photo or I will seize your phone.’ I said nothing.
At this point the policemen appeared to run out of threats. They went back to their car, got in it, turned around, and followed me to Citta di Castello, before turning off in the direction of the police station. Should I complain to the justice system or should I launch a proto-fascist programme of direct action? Thankfully this dilemma no longer presents itself. I now live in Cambridge. I think I’ll just go home.
More:
If you would like to harass people on street corners until Silvio is let off his felony, you should be able to sign up at the site below. (Latest talk is of a general amnesty for convicted felons facing up to as much as four years’ jail time. This would be a triple triumph — saving money spent on prisons, reducing Italy’s huge trial waiting lists, and getting Sil off his fraud sentence (plus other sentences that may soon follow). The only downside would be to put a few thousand crooks, some of them violent, back on the streets. What is not to like?)
Here are three articles on questions of race and nationalism.
2a. Orville Schell and John Delury offer a thoughtful piece about China’s need to move on from the narrative of national humiliation that the country’s schools and politicians have fed the population ever since 1949 (and indeed longer in the case of early converts to the communist party’s cause).
2c. Philip Stephens in the FT (sub needed) reflects on the mindless racism of Italian politics, but ends with his ideas that just maybe Gianni Letta represents change. Would that it were so!
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3. Third, a near miss. Gideon Rachman in the FT (sub needed) has a thoughtful piece on Putin’s Russia but fails to nuance it with what Putin’s government is doing to put Russia back on an economic development path — in essence, reining in the oligarchs and bringing cash flows from national mineral assets back under public control. Putin may be a revolting man, and yet may also be a revolting man whose time has come.
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4. Finally, a heartening curiosity. Teach First seems to be working. It is now Britain’s single biggest recruiter. So it turns out that smart people often do care, and don’t reflexively sell their souls to a law firm or investment bank.
In my neighborhood, near the Lama Temple, the men and women in fluorescent orange jumpsuits work for the district sanitation department. Many are migrant workers from the countryside; they sweep the alleys, clean the public restrooms, and collect the trash. Some wear straw farmers’ hats that cast a shadow across their faces, and, I admit, the matching uniforms make it difficult for me to keep them straight. I don’t know if there are three of them or thirty.
One afternoon not long ago, I was chatting with my next-door neighbor, a retiree named Huang Wenyi—a proud Beijinger, born and raised—when one of the sweepers in an orange jumpsuit wandered by. He had tousled hair, sun wrinkles around his eyes, and a smile of jumbled teeth. He approached and pointed to a gray flagstone at our feet. “Can you see the emperor on that rock?” the sweeper asked.
I thought I’d misheard. He said, “I can see an image of the emperor right there on that rock.”
Huang and I looked at the rock and back at the sweeper. Huang was not interested. “What are you bullshitting about?” he asked. “You have no idea what you’re talking about.”
The sweeper smiled and asked, “Are you saying you think I’m not a cultured man?”
“What I’m saying,” Huang said, “is that you’re not making sense.”
The sweeper gave him a look, and turned, instead, to face me. “I can look at anything, and pull the essence from it,” he said. “It doesn’t matter how ordinary something is; in my eyes, it becomes a treasure. Do you believe me?”
Huang was irritated: “Old man, I’m trying to have a chat with our foreign friend here. Can you not disturb us, and go back to your work?”
The sweeper kept talking—faster now, about ancient Chinese poetry, and the great modern writer Lu Xun—some of it too fast, and the references too obscure, for me to understand. He sounded somewhere between interesting and bonkers. Huang had had enough, and he poked fun at the man’s countryside accent. “Come back after you’ve learned to speak Beijing dialect,” he said.
Under his breath, the sweeper said, “As long as it’s a dialect of human beings, it’s legitimate.” But Huang didn’t hear him. He’d waved him away and wandered into his house.
I introduced myself. The sweeper’s name was Qi Xiangfu. He was from Jiangsu Province, and he said he had come to Beijing three months ago. Why did you come, I asked.
“To explore the realm of culture,” he said grandly.
“What kind of culture?”
“Poetry, mainly. Ancient Chinese poetry. During the Tang Dynasty, when poetry was the best, every poet wanted to come to Chang’an,” he said, invoking the name of the ancient capital, the predecessor to Beijing. “I wanted a bigger stage,” he said. “It doesn’t matter whether I succeed or fail. I’m here. That’s what matters.”
It was getting late; before I went inside, Qi said he had competed in poetry competitions. “I won the title of ‘Super King of Chinese Couplets.’?” In his spare time, he had taken to hosting an online forum about modern Chinese poetry. “You can go online and read about me,” he said.
That night, I typed his name into the Web, and there he was: Qi Xiangfu, the Super King of Chinese Couplets. In the photo, he was handsomely dressed in a bow tie and a jacket; he looked young and confident. Chinese poems are hard for me to understand, and many of his, especially, were impenetrably weird. But I appreciated some moments of grace: “Earth knows the lightness of our feet,” he wrote. “We meet each other there?/?Between heaven and earth.”
To my surprise, the more I searched about Qi Xiangfu, the more I found of a life lived partly online. He once wrote a short memoir, in which he described himself in the third person, with the formality usually reserved for China’s most famous writers. He wrote that his father died young, and Qi was raised by his uncle. He wrote, of himself, “The first time Qi read Mao’s poem ‘The Long March,’ he resolved that Mao would be the teacher to show him the way. Later, he studied the poetry of Li Bai, Du Fu, Su Dongpu, Lu You, and others, and he made a promise to himself: Become a master of literature.”
He described the first time he ever presented one of his poems to a large group—it was played on a speaker at a construction site—and he described a bus trip in which he met, as he put it, “a girl who sympathized.” They married and it “ended his life of vagrancy.” There were hints of trouble in his life—at one point, he wrote a plea for donations, saying, “Alas, Comrade Qi is having a difficult time”—but something in the spirit of his online persona captivated me.
So much of it was impossible just a few years ago: the journey to the city, the online identity, the interior life so at odds with the image he projected to the world. When I first studied in China, seventeen years ago, the Internet was only a distant rumor. It had reached China two years earlier, but hardly anyone had access. When I brought a modem from the U.S., and tried to plug it into my dorm-room wall in Beijing, the machine emitted a sickly popping sound and never stirred again.
When I moved to Beijing, in 2005, to write, I was accustomed to hearing the story of China’s transformation told in vast, sweeping strokes—involving one fifth of humanity, and great pivots of politics and economics. But, over the next eight years, some of the deepest changes in the lives around me have been intimate and perceptual, buried in daily rhythms that are easy to overlook. A generation ago, foreigners writing about China marvelled most at the sameness of it all. Chairman Mao was the “Emperor of the Blue Ants,” as a memorable book title had it. But in my years in China, I have been seized most of all by the sense that the national narrative, once an ensemble performance, is splintering into a billion stories.
Living in China at this moment, the stories bombard you with such fantastical vividness that you can’t help but write them down and hope to make sense of them later. Writing about China, in The New Yorker, for the past five years, I’ve tried to capture something of this age, to grab a few of these stories out of the air before they slip by. The complexities of individual lives blunt the impulse to impose a neat logic on them, and nobody who stays here for some time remains certain about too much for too long. To impose order on the changes, we seek refuge, of a kind, in statistics. In my years here, the number of airline passengers nationwide doubled; sales of personal computers and cell phones tripled. The length of the Beijing subway quadrupled. But the longer I stayed, the less those impressed me than the dramas that I could never quantify at all.
On Sunday, my wife, Sarabeth, and I are flying out. I’ll be on leave for the next couple of months, wrapping up a book about a few individuals I’ve come to know in China. It will be published next spring, and I’ll be saying more about that later. I’ll resume writing for the magazine this fall, based in Washington, D.C. China is not leaving my blood stream; I’ll be back to write pieces, and, in between, I’ll be writing at Daily Comment and elsewhere about how China looks from afar.
Since we launched this blog, in January of 2009, I’ve written about five hundred posts. This will be the last for a while, and I want to thank you for visiting over the years. There will be much more to come on China on this site, and in the magazine, so I won’t pretend to sum things up. For now, I’ll mention only the fact that returns to me more often, perhaps, than any other: never in modern history has China been more prosperous and functional and connected with the world—and yet, it is the only country in the world with a winner of the Nobel Peace Prize in prison. Contradictions like that have been the essence of this moment.
After I met the street sweeper Qi Xiangfu, I started bumping into him frequently. We swapped phone numbers, and he would send me a poem, now and then, by text message. He typed out the characters on his phone, with the help of a magnifying glass to aid his eyes. Many of his poems were heavy with Communist fervor; others were oracular and strange. But I sympathize with anyone trying to make sense of this place in writing, and I admired his persistence. “I’ve experienced every kind of coldness and indifference from people,” he told me once, “but I’ve also given myself knowledge, all the way up to the university level. I don’t have a diploma. People look down on me when they see me.”
A few weeks ago, Qi told me he had been reassigned to the sanitation department in another part of town; he said he would come back when he could. The last time I saw him, he wasn’t wearing his uniform; he was in street clothes—a crisp white shirt and a black jacket—on his way to see his daughter who worked at a restaurant nearby. He had a book under his arm: “Ten Contemporary Authors of Prose.” For the first time, I saw the two personae, online and real-world, in one. What inspires you, I once asked him.
“When I write,” he said, “anything becomes material. In life, I must be practical, but when I write, it is up to me.”
Photograph, of Evan Osnos and Qi Xiangfu, courtesy of Osnos.
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2. Next, a bit of Australian fun. A Kath and Kim movie came out last year. It got terrible reviews, so don’t go see it. However this appearance on Sunrise is pretty funny. Seems like good background to the Ashes series.
4. Now something serious. Christopher Wood, one of the best (perhaps the best) equity analyst in east Asia, doesn’t like his weekly missive reposted. So I am just going to quote a couple of bullets about the income distribution effects of the QE approach to stabilising the global financial crisis. I was banging on about the same thing soon after the crisis hit in 2010 and the QE started:
<The practical way unconventional monetary policies work is to lead to ever more extreme wealth distribution. Wealth distribution would have become much less extreme as a consequence of the 2008 crisis if losses had been imposed on creditors to bust financial institutions in line with capitalist principles, as opposed to the favoured ‘bailout’ approach pursued for the most part by Washington. The ‘great reckoning’ has been deferred to another day as the speculative classes have continued to game the system by resort to carry trades actively encouraged by the Fed and other central bankers. The leverage taken on in such trades is highly risky because of the underlying deflationary trend.>
6. Looking at the Stephens’ canon, I see a piece from June (sub needed) making the case for shutting down the UK Treasury. It would save money and get rid of dangerous incompetents whose follies we, the taxpayers, must finance. I would just add that in shutting the Treasury to save money, government could also shut the Foreign Office, another black hole of self-regarding incompetence. George Osborne is right that we should not waste money. Mainly on people he went to school and university with.
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7. Finally, this looks like something useful to do if any UK university students read this blog:
Hi there, My name’s Jonathan Goggs – I’m from an organisation called Team Up, who are establishing a student committee at Cambridge for 2013/14. I would very much appreciate it if you, or one of your colleagues, could circulate the following blurb into an email to all students in the business school, including the enclosed attachments as well. Do let me know if there are any questions from students by responding to this email, or copying me in. “Team Up is passionate about improving social mobility and transforming the prospects of bright young people and we are looking for outstanding university students from Cambridge to join one of our accredited leadership programmes next year. You will be trained in the highly sought-after professional skills to make a genuine difference and empower young people in your community to academic excellence. We believe in developing our university students to foster the skills they need to tackle the UK’s biggest social problem (social mobility) and secure exceptional careers. That’s why, once we’ve processed your application and conducted a short interview, we’ll be running master classes and networking opportunities, in partnership with leading businesses and charities, to give you the tools to lead, inspire and excel. The programme runs for 20 weeks, alongside your degree, and an overview of the year is attached, together with descriptions of the roles you can apply for. Last year our programme partners were Teach First and Bank of America Merrill Lynch and next year we will be partnering with even more organisations in management consultancy, education, social enterprise and finance. Places are competitive, so early applications are encouraged. Over the past two years we’ve received over 2,000 applications and some incredible student feedback – 9 out of 10 students said they enjoyed the programme. At Team Up, we think it’s a tragedy that so many young people are still disqualified from leading universities like Cambridge and fulfilling careers, because they come from low-income, socially disadvantaged backgrounds. If you think the way we do, we’d love to hear from you. To apply, click here.” Kind regards, — Jonathan Goggs Programme Officer | Team Up 18 Victoria Park Square, Bethnal Green, LONDON | E2 9PF E: [email protected]| W: www.teamup.org.uk
I am simply reposting the following from The Guardian in the UK because it is important. This is not something I will normally do. It appears that the White House petition to pardon Snowden is still active, and it now has 130,000 signatures. If you are an American (you need to be) I would urge you to sign this.
And here is the latest from Snowden about how the NSA, CIA, FBI is scooping up your Microsoft Outlook, Skype, etc communications with the active cooperation of the software firms. I reiterate my suggestion to try DuckDuckGo as a search alternative to Google.
The Guardian’s excellent live coverage is here. This will also link you through to a live Russian TV feed from Moscow airport if you are reading this soon after I wrote it.
Mr Obama, you are starting to get yourself on the wrong side of history.
More:
Here, via The Guardian’s live coverage from Moscow, is the quote from Snowden today that I like:
<Snowden is saying he wants to remain in Russia and travel, and he wants international organisations to petition the US and EU not to interfere with that.
Referring to Putin’s condition that he can only stay if he stops harming the US, Snowden apparently has said: “No actions I take or plan are meant to harm the US … I want the US to succeed.”
[Snowden] seems to be saying that the only way he can guarantee his safety where he is now, before he heads to Latin America, is to gain temporary asylum in Russia… Ellen Barry of the New York Times reports that Tanya Lokshina of Human Rights Watch, who is in the meeting, says Snowden has said he has received offers from Venezuela, Russia, Bolivia, Nicaragua, Ecuador. He thanks them. He says he accepts all offers, present and future. The offer from Venezuela has been made formally. He wants help in guaranteeing his safe passage to Latin America, she says. He will submit an asylum claim to Russia today, but he plans to go to Latin America eventually, she says.>
Edward Snowden: US officials are preventing me claiming asylum
NSA whistleblower calls meeting with Amnesty International and Human Rights Watch at Sheremetyevo airport
Passengers wait for their flights at Sheremetyevo airport: Edward Snowden has been stuck in the transit zone for over three weeks. Photograph: Ivan Sekretarev/AP
The NSA surveillance whistleblower Edward Snowden has said US officials are waging a campaign to prevent him from taking up asylum offers as he called a meeting in Moscow airport with human rightsgroups.
In a letter sent to groups including Human Rights Watch and Amnesty International, the former intelligence agency contractor claimed there was “an unlawful campaign by officials in the US government to deny my right to seek and enjoy … asylum under article 14 of the Universal Declaration of Human Rights” and invited them to meet him at 5pm local time.
“The scale of threatening behaviour is without precedent: never before in history have states conspired to force to the ground a sovereign president’s plane to effect a search for a political refugee,” he wrote to the groups.
“This dangerous escalation represents a threat not just to the dignity of Latin America or my own personal security, but to the basic right shared by every living person to live free from persecution.”
Reuters quoted an airport official as saying Snowden would meet the groups on Friday afternoon in the transit area of Sheremetyevo, where he has remained since flying to Russia from Hong Kong on 23 June.
The 30-year-old former NSA employee is trying to negotiate asylum elsewhere to avoid facing charges in the US, including espionage, for divulging details about US electronic surveillance programmes.
“I can confirm that such a meeting will take place,” an airport spokeswoman said.
Reuters said Amnesty and Transparency International had been invited to meet Snowden, with the former confirming it would attend.
Sergei Nikitin, the head of Amnesty International Russia, said: “Yes, I have received a brief email. It said that he would like to meet with a representative of a human rights organisation – there was not much information there. I’m planning to go.”
In the emailed letter – which Lokshina said she could not independently verify as coming from Snowden – the former intelligence worker said he had been “extremely fortunate to enjoy and accept many offers of support and asylum from brave countries around the world”. He added: “These nations have my gratitude, and I hope to travel to each of them to extend my personal thanks to their people and leaders. By refusing to compromise their principles in the face of intimidation, they have earned the respect of the world.
“Unfortunately, in recent weeks we have witnessed an unlawful campaign by officials in the US government to deny my right to seek and enjoy this asylum.”
The email ends with an invitation for rights groups to meet him at the airport at 5pm (2pm BST).
Snowden is still believed to be weighing up his options. Late on Thursday, Venezuela’s foreign minister said the country had yet to receive a formal response to its offer of asylum.
“We communicated last week. We made an offer and so far we haven’t received a reply,” Elias Jaua told Reuters during a regional foreign ministers’ meeting in Uruguay.
Venezuela is one of three countries to offer asylum to Snowden, along with Bolivia and Nicaragua.
In a separate email to Reuters, Snowden confirmed that the meeting with human rights groups would go ahead but said it would be closed to the press. He said he planned to speak to the media later.
The letter told the groups to bring identification and meet at 4.30pm at Sheremetyevo airport in Terminal F, “in the centre of the arrival hall [where] someone from airport staff will be waiting there to receive you with a sign labelled G9”.
Excellent piece in The Guardian about Da Americun Armee’s efforts to prosecute Bradley Manning into non-existence and how Sly Stallone, or whoever their lawyer is, ain’t making the case so well. If the prosecution team needs a new job after this, they could fit right in in Italy.
Meanwhile the Ecuadoreans claim to have found a bug in the London embassy where Julian Assange has been living for almost a year. Brave Dave Cameroon, we are told, does not comment on security matters, because if he did he might have to admit to being a bit of a tosser. The Ecuadorean Foreign Minister put it more diplomatically: ‘We are sorry to say so, but this is another instance of a loss of ethics at the international level in relations between governments.’
And Evo Morales was ‘kidnapped by imperialism‘ cos they thought he was giving Snowden a lift to La Paz.
Who needs Ian Fleming books, or Mike Myers or Johnny English movies, with all this going on?
BTW, have they managed to catch the guy below yet?
Later:
Philip Stephens in the FT (sub needed) has a sensible opinion piece to offer. When the FT concludes ‘whatever his motives, Mr Snowden has done the rest of us a service’, I don’t exactly feel out on a limb. Meanwhile, what is the betting that tomorrow’s Economist will be to the right of the FT? Now there is a thing…
This guy (below) from City University in Hong Kong knows what he is talking about, relates Snowden’s place in US society to the development of institutions in Hong Kong.
I’ll be in the US next week and look forward to asking various government people what they plan to do about the fact that James Clapper lied to congress. I am not clear why it is taking so long to prepare the warrant for his arrest. (Have a look at the Guardian on this, and the Washington Post.)
It’s pretty clear what Obama needs to do: pardon Manning and Snowden and put Clapper in the can for six months to send a message to anyone else having Nixon-like ideas about how to run America. He don’t even need a cigarette on the roof of the White House to think this one through. Of course Obama should also send the message that any more leaks are likely to lead to decades of prison. The big cats on Iraq and cyber surveillance are probably already out of the bag.
What Snowden can teach the Occupy Central movement
Wednesday, 19 June, 2013, 12:00am
Comment›Insight & Opinion
Surya Deva
Surya Deva says civil disobedience has a rightful place in the democratic playbook, and Hong Kong’s Occupy Central movement can learn a thing or two from Snowden’s approach
Since Edward Snowden first broke cover in Hong Kong, many people have been puzzled about his choice of this city to take on the US government. Despite being wedded to the rule of law and having independent courts, Hong Kong is not a “safe haven” against extradition to the US by any means. Nor is the Hong Kong government known for treating asylum claims or refugees very humanely.
Snowden’s initial explanation that he chose Hong Kong because of its “strong tradition of free speech” also could not be the tipping point; there are many other jurisdictions with similar or even higher levels of protection of free speech.
If used properly, civil disobedience can achieve what judicial reviews and elections may not accomplish
So why Hong Kong? Was it to embarrass the US about its own human rights record? After all, human rights defenders – like the blind activist Chen Guangcheng – have looked to the US for protection from repressive and authoritarian regimes.
Snowden’s recent interview with the Post brings more clarity on his rationale for choosing Hong Kong. He said: “I am not here to hide from justice; I am here to reveal criminality.”
What Snowden is seeking to do resonates clearly with civil disobedience, and Hong Kong is not a bad place to practise this. The idea of civil disobedience has been popularised here of late by the Occupy Central proposal. Nevertheless, the debate in the media about its propriety has generally shown a lack of a clear understanding of this concept.
Over the years, many renowned thinkers and political activists – from Henry Thoreau to Mahatma Gandhi, Martin Luther King, John Rawls and Ronald Dworkin – have articulated the contours of civil disobedience or practised them. Although their ideas vary, in my view the following six key conditions should determine whether civil disobedience is a justified device in a democracy:
It must challenge an unjust action (a law, decision or policy) of the government. The action may be regarded as “unjust” with reference to a higher authority, such as one’s conscience, or furthering justice, human rights or any other core constitutional value.
The unjust action should be a matter of wider public interest, rather than affecting the interests of only a selected few. This condition will, in turn, imply a certain degree of public support.
Civil disobedience should be pursued with the objective of pressuring the government to change the unjust action.
Civil disobedience aimed at challenging an unjust action should be announced openly and publicly with advance notice.
It is vital that civil disobedience is peaceful and the people taking part are willing to bear all legal consequences of breaking what is perceived to be an unjust action.
Finally, civil disobedience should generally be employed as a last resort.
When considered within these boundaries, civil disobedience can strengthen the rule of law and constitutionalism, rather than being a threat to them. In fact, it is arguable that people in a democracy not only have a right but also a duty to resist unjust, albeit legal, measures taken by the government in certain circumstances.
I believe Snowden’s action and rationale fall within the above contours of civil disobedience. It appears that the National Security Agency has been exercising sweeping surveillance powers without many checks and balances. This, in turn, has unreasonably curtailed several human rights.
In view of the extraterritorial reach of the surveillance measures, the matter is of global public interest. Snowden’s disclosures are apparently driven by a desire to change the status quo rather than securing monetary benefits or cheap publicity. There can hardly be any doubt about the peaceful nature of his actions.
By declaring his identity and whereabouts, Snowden is willing to face the consequences of breaching US laws if a fair trial can be guaranteed. Nevertheless, it is legitimate for him to seek asylum under international law and/or contest before the local courts his extradition to the US to avoid persecution for political reasons.
It is true that Snowden did not give advance public notice of his disclosures. But is it reasonable to expect advance notice in such special circumstances? Perhaps not.
Could Snowden have tried something else first? It is unlikely he could have succeeded in exposing (and potentially changing) the surveillance system while remaining in the US or by complaining to higher authorities. The US courts have not proved to be a robust guardian of human rights amid the “war on terror”.
What could the Occupy Central organisers learn from Snowden? First, they need to identify more clearly the unjust action the proposed civil disobedience seeks to assail. They should also engage the public in diverse settings and without setting artificial limits on their participation.
On this front, too, Snowden played a master stroke by expressing his intention to rely not merely on the courts, but also on “people of Hong Kong to decide [his] fate”. Snowden is trying to secure what is necessary for successful civil disobedience: mass support for a public cause.
Moreover, the Occupy Central organisers should articulate exactly what it wants to achieve, how people would benefit and why the fears expressed by the pro-establishment camp are groundless. Apart from ensuring the peaceful nature of the movement, the organisers have to explain which other means they considered to achieve genuine universal suffrage before embarking on the Occupy Central path.
The civil disobedience discourse also has advice for governments. Dworkin, for example, argues that the government should show tolerance and act with caution. If there are prosecutions, Rawls contends that courts should take into account “the civilly disobedient nature” of the protest and reduce or suspend legal sanctions.
Chief Executive Leung Chun-ying has said Occupy Central is likely to be unlawful and non-peaceful. In other words, the government will not tolerate it.
It is time to recognise that civil disobedience, within well-defined boundaries, can play a constructive role in controlling power and furthering constitutional objectives. In fact, if used properly, it can achieve what judicial reviews and periodic elections may not accomplish.
How the Hong Kong government and its courts deal with any US extradition request for Snowden, and how they treat people participating in Occupy Central, will define not only the future of Hong Kong’s autonomy, but also its status as the bastion of freedoms and the rule of law within China.
Surya Deva is an associate professor of the school of law, City University of Hong Kong
Here is the best-known signature campaign to pardon Snowden. 85,000 signatures already. 15,000 more by July 9 and Obama will have to make some kind of formal response. I am not signing at this point because I think it ought to be 100,000 Americans who sign (Be helpful and post a comment if you know whether non-Americans can sign).
The manning signature campaign has been less well organised, less well-worded. Here it is.
So UKIP (full name ‘UKIP if you want to, we are going to set this cross on fire’) has won 100+ council seats.
To me it is a symptom of a less inclusive, more unequal society fomenting a brew of angry old and ignorant people (and old and ignorant people) that the Conservative Party can no longer accommodate because they have become too angry and prejudiced even for the Tories.
In America they call this sociological phenomenon the Tea Party and I am surprised the press is not going for more of an ‘ooh, we’ve now got one too’ angle. Indeed UK leader Nigel Farage (unfortunate foreign-sounding name, no?) says UKIP is indeed the Tea Party wrapped in a different flag.
The bigger issue at stake here is whether UKIP is more of a problem for the Tories or for Labour. Hopeful Tories say that since they got a quarter of this week’s local election vote, and so did UKIP, together the right has half the vote if it can just, like Humpty, be put back together again. This sounds superficially tremendous, but the US experience suggests it is not, because when the far right of the right-wing becomes so nutty that your mother-in-law starts to seem reasonable, it really benefits the left. If the Labour Party can generate a few sensible policies (a la Obama), and get rid of Ed Balls and other remaining Blair-Brown detritus, it may be set fair for the 2015 general election. A single term of opposition for what Blair and Brown did to their country would be an extraordinarily low price to have to pay…
