China’s response to calls from the West to join an oil embargo penalising Iran for its nuclear programme so far has been to choose the middle course typical of its non-interfering foreign policy of the last 30 years – denouncing sanctions on one hand yet working to protect its national interests on many fronts.

But the decision by India, another major buyer of Iran’s oil, to continue importing from Tehran despite the Western sanctions, will shine uncomfortable light on the powerful nationalist sentiments among the Chinese public and the internal debate raging in China about the future course of its foreign policy.

As Tehran’s largest trading partner and biggest oil customer, China’s position is crucial if the West’s plan to use oil embargo to force Iran to stop uranium enrichment is to succeed.

When the EU announced a ban last week on the 600,000 barrels a day it imports from Iran beginning Jul. 1, the state-owned National Iranian Oil Co. said it “will easily replace European customers.” China, which imports about 20 percent of the Iranian oil and is 50 percent dependent on Middle Eastern oil, has been seen as a natural replacement for the loss of EU purchases.

But Beijing is walking a fine line.

The EU and U.S. sanctions have been widely denounced by a vocal nationalist public that harbours suspicions the West is keen on containing the rise of emerging countries. On Internet forums Chinese netizens have criticised the leadership for “caving in” to western pressure and betraying its allies and true national interests.

“China has been under some sort of U.S. sanctions or other for several decades now,” wrote one. “How can the (Chinese) Communist Party think that abandoning Iran and ganging up with the Americans serves China’s interests?”

Political commentators have noted that the new round of Western sanctions came on the heels of Washington unveiling a new military strategy seeking to counter potential attempts by China and Iran to block U.S. capabilities in areas like the South China Sea and the Strait of Hormuz.

“Beijing has always made the stability of U.S.-China relations the centrepiece of its foreign policy,” says commentator Zhang Liwei. “It is about time that our leadership rethinks this. At a time when the U.S. is clearly trying to contain China, this U.S. focus is not helpful in protecting the country’s global interests and China will lose even more friends. What is happening in the South China Sea should serve as a warning signal.”

Officially, Beijing has shown little enthusiasm for the sanctions. “To blindly pressure and impose sanctions on Iran are not constructive approaches,” China’s foreign ministry was quoted as saying by the state news agency Xinhua, in response to a question on the EU measures.

Beijing modus operandi favours “dialogue and consultation” and Chinese leaders shy from outright public confrontation, bans or military intervention.

Beijing’s strong negative reaction suggests too that despite growing calls internationally for China to become a responsible global stakeholder, it is not ready yet to side with the West on Iran.

“Beijing is in no position to ignore Iran’s position in its energy mix,” says Dr. Harsh V. Pant, professor in the Department of Defence studies at King’s College, London.

“At the moment China’s priorities are energy security and secure oil supplies, especially as the economic climate in China is becoming tenuous. So cooperation with the West on the nuclear issue is not really on the agenda. And often the West forgets that China itself has been one of the biggest proliferators at least until its signing of the Nuclear Non-Proliferation Treaty.”

Moreover, the Asian economic powerhouse has benefited handsomely from the withdrawal of Western companies from Iran by signing a series of contracts in the oil and gas sector worth up to 40 billion dollars.

Other analysts believe that Beijing has been preparing for years for the forthcoming sanctions and a possible military offensive on Iran by shifting some of its Iran oil imports sources to other suppliers like Saudi Arabia.

In a 2010 research with the Jamestown foundation on China’s Iran policy, analyst Yitzhak Shichor argued that the creation of “counter-dependencies” has been underpinning China’s foreign policy since the mid- 1990s. Beijing has worked to offset excessive dependence on other countries, especially suppliers of energy and raw materials, by “offering generous aid programmes, transferring arms, investing in infrastructure and expanding export.

“Consequently, China is not as dependent on Sudan or Iran as Sudan and Iran are on China,” he concluded.

So even as Beijing blasted the European Union’s oil sanctions on Iran last week, it also had a strong warning for Tehran.

During a tour of the Middle East in mid-January, Chinese premier Wen Jiabao voiced firm objection to Iran’s threat to close the Strait of Hormuz – the strategic waterway between the Gulf of Oman and the Persian Gulf through which 35 percent of the world’s oil shipments passed last year. Wen also publicly stated that “China adamantly opposes Iran developing and possessing nuclear weapons.”

Wen’s trip took him to the oil-rich states of Saudi Arabia, the United Arab Emirates and Qatar where he negotiated energy deals expected to boost China’s imports from the Gulf countries. Saudi Arabia is already China’s biggest supplier of oil, selling it 1.12 million barrels per day in December, almost twice as much as Iran.

Chinese fengshui masters have been busy advising edgy followers how to optimise their luck in the auspicious but volatile Year of the Dragon, which according to the lunar calendar begins on Jan.23. In the West though, Chinese superstitions about the precarious nature of Dragon years don’t hold court, and 2012 will arguably mark the largest by far Chinese New Year celebrations in many world capitals and major cities.

Lavish celebrations in London, Liverpool, Hawaii and Vancouver follow long and well established traditions set by large Chinese communities. In recent years though, in a slight nod to China’s rise and its omnipresent clout, the festivities marking the beginning of Chinese New Year are spreading beyond local Chinese communities and becoming hip events to draw diverse crowds.

“Celebrations in London have certainly grown and now claim to be the largest celebrations outside Asia,” says Theresa Booth, director of the London Chopsticks Club, which promotes cultural exchanges between Britain and China. “The celebrations are listed as a special event on the Visit London website, which suggests they see it as a way of tapping into the ever growing interest in China and attracting more tourists to London.”

Five years ago celebrations in London featured only a dragon dance around London’s Chinatown, a concert in Leicester Square and the restaurants doing a roaring trade, Booth recalls. In 2012 there are performances in Trafalgar Square to cater for increasing numbers of people attending, fully supported by the Mayor’s office and a speech by the Mayor, Boris Johnson.

Red lanterns are appearing on Regent Street and Oxford Street – London’s leading luxury shopping destinations. Waterstones – the upmarket British book retailer, now features a Chinese new year selection of books for its discerning customers. Some cities like Bristol are hoping to have Chinese markets emulate the success of Christmas markets in offering a mix of Chinese delicacies and arts and crafts.

Part of the allure of Chinese New Year celebrations in 2012 stems from the association with the Dragon – the only fictional animal in the Chinese zodiac. In the Middle Kingdom the Dragon is revered as the mythical ancestor of ancient Chinese people and often seen as a symbol of China itself.

It is little surprise then that China Post’s decision to issue a special edition stamp commemorating the Year of the Dragon, which depicts the iconic Dragon as a fearsome creature, has drawn fire at home for “scaring” the world.

Stamp designer Chen Shaohua has been attacked for depicting the Chinese dragon as a fang-baring, paw- brandishing creature sending a belligerent message to China’s neighbours and rivals.

The artist, who also designed the 2008 Beijing Olympic Games emblem, has defended his work saying the authoritative image of the dragon was meant to demonstrate a confident and rising China. On his personal blog Chen said that unlike the two previous Dragon years – 1988 when China was in the midst of painful economic reform and 2000 when the country was making still tentative steps on the world stage, China of 2012 is in an entirely different situation.

“As one of the most influential major states in the world, China is rebuilding its national confidence,” he wrote.

But Chen’s bellicose rendition of the dragon as an emblem of 21st century modern China has stirred emotions. Writer Zhang Yihe noted on her popular micro blog she was “scared to death” of the beast while another netizen sarcastically suggested that the dragon stamp should be used as the “foreign ministry’s mascot”.

Many of the critical tweets and micro blogs seem to dwell on the dragon’s history as a representation of Chinese imperial power (emperors used golden insignias of it to signal their authority) while others worry about cultural misunderstanding in the West.

The dragon has long roots in Chinese culture where it is held in high esteem for its power for good. Unlike traditional Western beliefs that it is a ferocious creature bent on destruction, in China it is revered as a source of well-being for the people.

But views in the West have changed too.

Celebrations of the Chinese New Year of the Dragon with their “sentiments of enjoying peace, good luck and good fortune” are the ones people in the West are searching for in these unsettled times of austerity,” according to Dianne Francombe, vice-chair of the Bristol-China partnership, an association which works to link British and Chinese communities in the twinned cities of Bristol and Guangzhou.

“The imperial dragon symbolises strength, solidity and magnificence,” she says, at a time when “the skies are grey and the news headlines are so gloomy.”

The Chinese Ministry of Culture seems to have seized on the mood. At a press conference on Jan. 10 it announced an ever bigger campaign to celebrate the Chinese New Year overseas and use it as a springboard to promote China’s traditional values.

The campaign, titled “Happy New Year”, was first launched in 2010 capitalising on rising global interest in China. This year it will feature some 300 activities in more than 80 countries around the world – the largest in scope by far, reaching destinations in Africa in addition to Europe and America.

Renowned pianist Lang Lang and one of China’s most famous TV anchor women Yang Lan have been chosen as cultural ambassadors for the Happy New Year event.

President Hu Jintao of China made headlines in the early days of the new year saying China and the West were engaged in an escalating culture war, and calling on Chinese people to strengthen cultural production to defend themselves against the assault.

His call has struck a chord with local government officials eager to jump on the culture bandwagon as a new way to spur economic growth. But liberal intellectuals and culture heavyweights have expressed misgivings about Beijing’s new culture blueprint, warning that state promotion of “cultural industries” will lead to a new property boom under the disguise of developing “cultural experimental zones”.

“Culture is perhaps China’s last uncut economic pie,” says Zhu Dake, culture researcher at Shanghai Tongji University. “In a year of leadership transition when everything is politically sensitive, promoting culture is easy and uncontroversial. Everyone is eager to get their share of the pie but big state companies are in for the gain from property development only, and the whole thing is doomed.”

Beijing-based art critic Carol Lu is equally sceptical: “A government drive to promote culture means we will have more physical features of cultural development. There will be a boom in large-scale galleries and other art spaces but this does not necessarily mean we will have high-quality works.”

President and Communist Party chief Hu Jintao first announced the major cultural drive last October at an annual party meeting, which set the policy priorities for the new year. Against expectations that he will announce measures to tackle China’s challenges on the economic front, Hu unveiled instead an initiative to bolster China’s cultural power overseas and make cultural industries a pillar of the national economy.

Reflecting a consensus among the ruling party that China’s cultural power does not match its growing economic clout, the October plenum highlighted the need for culture to be pursued as a “source of national unity” and a “key part of comprehensive national power.”

In his January speech Hu expanded on that theme, warning that “international hostile forces are intensifying the strategic plot of westernising and dividing China…Ideological and cultural fields are the focal areas of their long-term infiltration,” Hu said in the speech published in the magazine Seeking Truth, one of the Communist Party’s flagship publications.

“It is the first time the leadership has put cultural development on equal footing with the economic one,” says Zhang Guoxiang, researcher at the China Cultural Soft Power Research Centre. “We talk of the economy as a ‘hard power’ and worry that without a strong economic base our country will be easily dominated. But now there is a clear understanding that without soft power our country will collapse on its own.”

The party has been unnerved by a series of safety and corruption scandals, and worried about escalating unrest in a year which marks the largest transition of leadership power in ten years. The Arab spring revolutions of last year and online postings calling for a “jasmine revolution” in China have also alarmed Beijing.

Despite appearances though, China’s cultural influence overseas has been expanding steadily. Through state-funded travelling exhibits and performances and with the help of a widening network of Confucius institutes around the globe, Beijing has been promoting the virtues of Chinese traditional culture and the arts.

Nevertheless, party leaders continue to fret about their sway over the hearts and minds of Chinese people. “The international culture of the West is strong while we are weak,” Hu Jintao lamented in his Jan. 2 speech.

But that weakness is self-inflicted, argue Chinese writers and artists, pointing fingers at state censorship. Han Han, a 29-year-old hip celebrity in China whose blog has millions of fans, caused a stir recently when in an essay called ‘On Freedom’ he lectured Chinese leaders on the reasons for China’s failure to emerge as a cultural giant.

“The restriction on cultural activities makes it impossible for China to influence literature and cinema on a global basis or for us, culturati, to raise our heads up proud,” Han Han wrote.

Zhu Dake says censorship is only one side of the complex picture. The party believes in the power of money and is not ashamed in using it to its own advantage. “The party is well versed in using the power of money in foreign policy and firmly believes it can buy the creativity of intellectuals too,” he says.

Yet it is not only a sophisticated exchange of loyalty for perks and benefits to coax the intelligentsia that is underpinning the current cultural drive. Local government officials see more incentives to pursue cultural development than the Ministry of Propaganda, which spearheads the campaign and decides on matters of censorship.

Even before the new cultural blueprint was unveiled in October many localities in China have realised promoting cultural and creative industries could provide a convenient new platform for more real estate development.

According to a survey conducted by the Institute for Cultural Industries at the Peking University, in 2010 already there were 1,300 Cultural Industries Experimental or Demonstration Zones in the country. And despite a circular from the Ministry of Culture calling on local governments to control growth in such zones and promote only those that are truly unique and deserving, the same survey found many of them “uniform and dreary”.

For much of last year world politicians and market watchers dreamed of China coming to the rescue of a stumbling global economy while Beijing mandarins sat on the fence fretting about high inflation and social instability inside their country. As China prepares to greet the Year of the Dragon later this month, many predict more gloom and doom, and some are expecting that the battle to stave off recession will be fought closer to home.

“It is entirely possible that 2012-2013 will see the third chapter of the world economic crisis after the U.S. sub-prime mortgage crisis in 2008 and the EU sovereign debt crisis in 2010-2011,” Mei Xinyu, a well- respected adviser to the Chinese government on trade issues, said at a recent briefing in Beijing.

“The emerging economies could well become the centre of it. They are vulnerable because of their inherent instability but also because in the wake of the recent crisis the economic powers of the day are attempting to contain their growth.”

These fears come as China itself enters a period of slowing growth, with weakening exports (due to depressed demand in the euro area), plunging property prices, heavy debt in local government and widespread public fears over inflation.

Chinese leaders have warned that the world’s second-largest economy will face an “extremely grim and complicated” global outlook in 2012, with the world economy heading towards a “double-dip” recession and the widening euro-zone sovereign crisis making the fate of China’s biggest trade partner uncertain.

Adding to the uncertainty is the change of leadership due over this year and next as China prepares to change control of the Communist party, the organs of government and the People’s Liberation Army. The last leadership change, which took place in 2002-2003, was the first time the communist country managed to stage a peaceful handover of power.

What complicates the current one is the fact that 2012 is a politically sensitive year, which will see transfer of power over the whole of Greater China – on the mainland, Taiwan and Hong Kong. By the whim of fate the United States will have a presidential election this year too, which could potentially alter one of China’s most important relationships.

The year 2012 is also not void of political superstition stemming from Chinese people’s belief that the Year of the Dragon, though generally auspicious, could also sometimes be calamitous. The year 1976 for instance, witnessed China’s most disastrous earthquake in modern history killing over 250,000 in the city of Tangshan. That Year of the Dragon brought the death of China’s paramount leader Mao Zedong too, unlocking the potential for China’s rapid economic change that followed.

Unlike the time of Mao’s rule when the country was controlled by a powerful individual and successions were decided by the incumbent leader, the China of today is run by a team of party apparatchiks, often rivals, and the ruling process relies on consensus-building among those powerful interests groups.

“The next generation of Chinese leaders will be very different,” says Prof. Su Chi, China observer at the Institute of China Studies at Tamkang University in Taiwan. “The power dispersion process is continuing and where in the past power was concentrated in the hands of few strong leaders, now there are up to 400 people in the party elite making the decisions. Taiwan and the whole world will have to prepare for this.”

If President Ma Ying-jeou of Taiwan – who has overseen four years of rapprochement with Beijing, loses to Tsai Ing-wen from the Democratic Progressive Party which is favouring independence from mainland China, that will present a real problem for Beijing.

Similarly, if the presidential elections in the U.S. hand victory to the Republican Party, this could mean a change in climate between the two big countries, with Washington taking a much tougher line with China over trade and currency issues.

But the main challenge for Beijing remains the country’s internal situation. Economic problems such as stubborn inflation and a deflating property market are mounting, and the government is trying to subdue social unrest ahead of the party leadership change scheduled to begin in October.

President and party chief Hu Jintao – who promoted social harmony but stifled political reform – is set to retire along with Wen Jiabao, the premier, a populist leader who has himself described the country’s current economic situation as “unsustainable”.

Both leaders are seen as wary and cautious, lacking both the charisma and the boldness of some of China’s former political figures like premier Zhu Rongji. When Zhu, who in 2001 cajoled China’s entry into the World Trade Organisation through marathon gruelling negotiations, published his memoirs late last year, they became an instant bestseller.

Much of his blunt talk about corruption eating away China’s money and public trust and the lack of change over the last ten years were interpreted as an oblique criticism of the country’s current leaders.

But the new leaders tipped to succeed Hu and Wen are likely to be equally cautious and watchful to eliminate any potential threats to the communist party retaining political control.

Vice-President Xi Jinping – regarded as the anointed successor to party chief Hu Jintao – has just called for tougher measures for ideological control of students and young lecturers. This is the social group that in 1989 led peaceful pro-democracy demonstrations against the communist party rule and suffered recriminations after the armed assault on protesters in Tiananmen Square.

Xi’s call came only days after Hu Jintao published a speech warning that the West is trying to dominate China by spreading its culture and ideology and the party must remain vigilant about the “international hostile forces”.

Young Shanghainese flock to the city's old temple Chenghuangmiao to pray for luck. Credit: Antoaneta Becker/IPS.

By Antoaneta Becker and - -
SHANGHAI, Nov 28 2011 (IPS)

Chinese essayist Zhou Zuoren once wrote that China should be experienced on a small wooden boat slowly gliding on its rivers, taking in its views. But arriving in Shanghai on the country’s most advanced high-speed railway leaves little doubt that slow boats are no longer the way to romanticise China of today.

Young Shanghainese flock to the city's old temple Chenghuangmiao to pray for luck. Credit: Antoaneta Becker/IPS.

“When I go to New York now I keep thinking their iconic buildings look really, really old,” says Yang Jianlong, director of the Urban Cultural Research Centre at Shanghai Normal University. The World Expo that the city held in 2010 was the defining point in the city’s transformation into a city of the future, he says.

But the Shanghai Expo was also “China’s last extravaganza”, counters Zhu Dake, researcher with Shanghai Tongji University. People do not want any more fireworks and elephant projects.

A series of safety disasters since the beginning of the year have taken the pride out of China’s fast, money-intensive and many say reckless economic development. Fast-speed trains have collided, roads have collapsed, and more poignantly, scores of young children have died as a result of greed, corruption and poor supervision.

Until not long ago public displays of wealth and economic power were the criteria to go by when assessing the aspirations of Chinese people. But of late, words like happiness and dignity have been filtering the parlance of officials here. Even the latest five-year plan that Chinese mandarins approved earlier this year as a guide for the country’s economic development has been described as a “plan for happy China”.

After more than 60 years of almost unchallenged monopoly of power sustained through the delivery of constantly rising living standards, the Communist Party is worried that this may no longer be enough for its citizens.

“It is simple,” says Wu Xiaohong, an insurance broker with a language diploma from the UK and an enviable salary at the age of 26. “They (the leaders) worry about the effect of the rat race. Like we all have great jobs, we all make good money but we cannot afford to buy a house here and there are no prospects for great improvement in our lives.”

It is not only the consequence of high inflation and the property bubbles in the big cities that is causing this disquiet. It is also the clash of rising expectations of a more existential type for the young generation and the realities of a politically calcified culture where real success is reserved only for the party elite.

For many people of the older generation simply having the security of a well-paid job would have been enough, but recent surveys have revealed that those that have benefited most from China’s economic reforms are now unhappy and thinking of seeking better lives abroad.

Some 40 percent of Chinese recently polled by Tsinghua University and the magazine Xiaokang said they were not happy with their lives. Another survey by the Hu Run report on the richest people in China and the Central Bank found that 60 percent of the rich were either emigrating or considering leaving the country.

“It is more difficult to make money in the west but once you have some you and your children live a better quality of life than in China,” says Yu Cai who has already settled in the UK and runs a business helping medical tourists from China. “There are good state schools, free healthcare and clean air.”

It is perhaps not a surprise then that Guangzhou – China’s wealthiest city – was the first to unveil its happiness index and declare its officials ready to work towards making their citizens “more happy”. State media has promised that other cities will follow suit.

Meanwhile, China’s old and young are massively flocking to the cities’ once forgotten, then revived and revamped religious temples. On a Saturday morning, the old Taoist temple of Shanghai, Chenghuangmiao, is filled with a young crowd burning incense sticks and paper ingots, and kowtowing to the Taoist deities.

“Spiritual renaissance it isn’t,” says Zhu Dake who studies culture at Tongji University. “It is a much more utilitarian type of religion, a way to escape the pressures of the day. They pray for luck when needed or pray to be spared misfortune.”

Others are finding solace in writing poems about the run-away China. One penned by Tong Dahuan and circulated on the Internet goes like this:

“China, please stop your light-speed footsteps, Wait a while for your people, Wait a while for your soul…”

Excerpt:

Wang Xiaofeng. Credit: Antoaneta Becker/IPS.

By Antoaneta Becker and - -
BEIJING, Nov 24 2011 (IPS)

Who speaks for the Chinese people? With the advent of the blogosphere in China, the Communist party is no longer the uncontested spokesperson for the Chinese nation. A myriad of voices are vying for space and attention, but most of those, according to one of the country’s most famous bloggers Wang Xiaofeng, are just “letting off steam” and indulging a penchant for rant long suppressed in traditional media by the party’s ruthless censors.

Wang Xiaofeng. Credit: Antoaneta Becker/IPS.

Wang Xiaofeng, 44, is the intellectual voice of Chinese bloggers. When Time magazine chose the Internet community as its person of the year in 2006, Wang Xiaofeng appeared on the cover of the magazine as the most representative voice of global netizens. Yet his choice for China reflects the Janus faced nature of Chinese intelligentsia. Wang lives a dual life – as the chief writer and editor of Lifeweek – one of China’s most respected (and state-sanctioned) magazines, and as one of the country’s most prolific and widely read bloggers.

Excerpts from the interview:

Q: How does it feel to have dual identity? Why do you write blogs? A: I feel freer in my life as a blogger than as a writer for a major magazine. My readers are more numerous too. Restrictions on traditional media are so big that sometimes when I see my stuff published in the magazine I do not recognise it. Blogging in China is different from blogging in the West where it is just an additional space to express oneself. In China cyberspace is the only space one can be direct and oneself.

Q: Is China happy? In the past we had a China unhappy with the West for demonising it. Now it seems we have a China unhappy with the way many things are at home. A: To paraphrase Dickens, it is the best of times and the worst of times for China. Foreigners do not understand this country. They think they are dealing with a country rich and powerful. But I see a country where things have gone almost to the point of breaking and there can only be a big crisis and a new beginning after that.

I do not know a single Chinese person that is truly happy. Cheerful for a day or two? Yes, but not happy. Even the wealthy in this country are not happy, as they do not have security for their money and safe milk and roads for their children. Chinese people live miserable lives. They are the best citizens in the world – they never rebel.

Q: Is Internet and the blogosphere going to become a catalyst for political change in China as many in the West predicted in the past? A: No. Chinese culture regards itself as a very strong culture which over the years has assimilated many things from the outside world but always managed to adapt them to serve its own needs and thus resist change.

Take the blogosphere. In China it serves two purposes – for people to express themselves and for people to fight with each other. Whenever there is an issue to discuss there are always two warring factions. How can this lead to a change?

Chinese people can accept that something is black or white but they cannot understand that there may be a third possibility. I say there is a Qin Shihuang (China’s first emperor and famous tyrant) in every Chinese person. I have to dominate, he thinks, I have to impose my view and there is no room for tolerance.

Q: How do you imagine China of 2030? A: I do not dare think of China in the future. It is almost too scary. But for our own sake I hope there is a harsh landing of the economy which shakes our society to its core. We need the shock or we will never change. The worry is that the change does not happen abruptly and we just muddle through. Chinese society is an agricultural society, tied to the land, obsessed with food culture and has immense capacities to survive and recover. If there is a change it will most likely come with an economic crisis. For China to change politically it will take another Gorbachev.

Q: Who or what is China’s worst enemy? A: Seen from here there are only two types of countries in the world: China and China’s enemies. If there are no enemies then China will be the enemy that people will have to target. Chinese people are so easily duped.

But our main enemy in fact is the lack of spirituality. We do not believe in anything. If the Cultural Revolution (1967-1976) destroyed the surface of our culture, then the reform and opening up destroyed its roots.

Excerpt:

By Antoaneta Becker and - -
SHANGHAI, Nov 19 2011 (IPS)

Europe has its Greece moment and China has its Wenzhou crisis. When European leaders were calling on China to step in and provide a lifeline to the eurozone by investing in its bailout programme, voices inside China were saying Beijing should save Wenzhou and forget about Europe.

Though small in the big China canvas, the city of Wenzhou could have the same effect on its economy, some alleged, as Greece has had on the eurozone.

But unlike the Greece fallout, the Wenzhou crisis may still turn out to be a blessing in disguise for China, argue others. As the birthplace of private enterprise in communist China, Wenzhou – often reviled and broadly admired for its devil-may-care businessmen – could now become a trigger for genuine banking reform that will transform China.

“Give Wenzhou a chance, let it rely on what it understands best – the way market works, and then we will have a case when not China saves Wenzhou but Wenzhou saves China,” Wang Wei, secretary of the China Private Equity Investment Association, wrote in the China Times.

A city in the Yangtze River delta some 350 km from Shanghai, Wenzhou has for years been synonymous with self-made wealth. As a former treaty port from where many Chinese went abroad in search of work, Wenzhou has entrepreneurial roots dating back centuries.

Despite recurrent campaigns against capitalists in the communist era that lasted until the mid-1990s, Wenzhou prospered as family businesses set up factories in the 1980s making shoes, garments, buttons and plastic toys. Excluded from the stock markets and ignored by state banks, those businesses opened up clandestine private banks and lent money to each other or borrowed from relatives abroad.

“It is how I made it from Wenzhou to Shanghai and abroad,” Yuan Suquan, a producer of home interior accessories like tassels, highly sought after by furnishing houses in Europe, tells IPS. Yuan, in Shanghai to seek orders from domestic clients, borrowed from a private lender to expand production when orders began to come first from France and then from Sweden.

He first borrowed at 2 percent but says interest rates have gone up in recent years while orders have decreased. “Now it is more like 7 or 8 percent and more even if you know the lenders,” he says. “I’m still okay because my stuff is quite specialised but others who made lighters or buttons are now losing to factories in Cambodia and Vietnam, and are squeezed to pay back their debts.”

Shanghai is the playground for those Wenzhou businessmen that became really rich. Here they flaunt their wealth driving fancy cars, sipping champagne on the rooftop lounge of Roosevelt House on the historic Bund and indulge in brand shopping in the arcades below.

“The Shanghai property market was inflated by them,” says taxi driver Liu as he speeds along the city’s elevated roads where the vistas rival the celebrated skyline of Hong Kong. “People like me cannot afford to buy a place here because Wenzhou traders speculated in Shanghai property.”

This however was true before stories of runaway Wenzhou bosses, bankrupt companies and even suicides started coming from the city. Since summer Wenzhou has made headlines with some notorious cases of loan-sharking, prompting Premier Wen Jiabao to pay a visit in October and urge banks to lend more credit support to family and small businesses.

As the European economic crisis is beginning to bite and small companies are struggling with higher wages and the appreciation of the Chinese yuan, some companies have indeed run aground. Economists have begun talking about the Wenzhou crisis as the tip of the iceberg of a widespread shadow financing system that could imperil the real economy.

Zhang Qi, researcher with the Shanghai New Finance Research Institute disagrees. He says the Wenzhou crisis is a reflection of the relentless attack of state businesses on private capital, or what is known as ‘Guo jin Min tui’ in Chinese, and the way the business and financial environment for the private sector has deteriorated.

“What these Wenzhou companies need is not for the state to rescue them,” Zhang says. “They need for private lending to be legalised so that they can be financially independent and cope with the changes in the global economy.”

Last week Beijing signalled that it may be finally relaxing its control on funding for the private sector, and is considering legalising private lending in some of the forms that has taken root in Wenzhou’s private banks.

A central bank official told the Xinhua news agency that Beijing is exploring ways to support small and medium private companies by legalising private lending at rates that do not exceed four times those of bank loans.

“This is real progress after many years of Beijing trying to squash underground banks and eliminate private lenders,” says Zhu Dake, researcher at Shanghai Tongji University. “It is also perhaps a sign that the demands of the interest groups representing China’s private capital are becoming more difficult to ignore by the communist party.”

Excerpt:

By Antoaneta Becker and - -
SHANGHAI, Nov 16 2011 (IPS)

As China’s financial centre and a pinnacle of domestic wealth, Shanghai could have been in the forefront of a home-grown movement against income disparity of the like sweeping New York’s Wall Street and London’s City.

Instead it remains a metaphor for China’s potential to become the new economic superpower and coin new rules. Its white-collar workers are often compared at home to an “ant tribe” which pulls in long hours of work, obediently creates more value for the Chinese economy and cares little about social justice.

Asked if an ‘Occupy Wall Street’ movement could develop in Shanghai, financial broker Zhao Hui seemed perplexed: “Why? Bankers are not the most hated people in China. Corrupt officials and state companies tycoons are those that have the most money and need fear people’s anger.”

Yang Jianlong, professor at Shanghai Normal University who studies Shanghai’s “trade port” culture, says the city is steeped in a mercantile tradition of entrepreneurship and will not rally behind a populist movement like ‘Occupy Wall Street’.

“Shanghai people do not bow much to authority but their money-making mentality is too strong,” he tells IPS. “They will protest against a commercial project they think will harm the environment but the city is not likely to become a centre for political activism.”

Instead, the street movements of New York and London have found bigger resonance with the residents of inland Chinese provinces like Henan historically regarded as hotbeds for peasant rebellions. People there have staged short-lived symbolic protests in support of their “ideological brothers in the West” in the fight against capitalism.

Chinese intellectuals have been divided in their views on the waves of populist movements that have swept the U.S., Europe and the Middle East since spring.

The new leftists who hold that egalitarian China under Mao Zedong’s rule (1949-1976) was a better realisation of the socialist ideal than the current money-spinning and greedy China unleashed by Deng Xiaoping’s market reforms in the last 30 years, have been cheering for the street movements around the world.

But the liberal left has been circumspect. For many old enough to remember the political surges of the Cultural Revolution (1966-76), the street clashes resemble the radical campaigns of young communist China that pitched children against their parents and students against their teachers.

While the radicalised youth, the Red Guards, were battling in the streets, the real political battles were happening in the political corridors of Zhongnanhai, headquarters of the communist leadership. Chairman Mao used the campaigns to squash opposition to his rule and consolidate the party’s grip over the intelligentsia.

With the quick speed of developments across the globe, Chinese analysts have been reluctant to pronounce a verdict on populist movements, but some have warned that these may be hijacked by powerful interest groups.

In a lengthy article on the Arab spring published this month in the China Times, Middle East expert Ma Xiaolin took a swipe at the “limitations and the superficial character” of Arab movements, which have made them easy prey for western forces to manipulate. The final result – the triumph of Islamic parties across the board – may have been unplanned by the powers of the day but very logical, he said.

“This is how a colourless movement geared at empowering people and pursuing social justice became a colour revolution,” Ma concluded.

For China – currently marking the 10th anniversary of its entry into the World Trade Organisation – and which spent a painful decade adjusting to free trade and learning the rules of globalisation, the growing momentum of populist movements making countries look inwards is somewhat scary.

Having accepted that interdependence is an unavoidable price to pay for economic growth, China is now beginning to contemplate the economic and political fallout of populist movements that may reverse that trend.

Xu Xiaonian, professor with the China Europe International Business School, criticised U.S. President Barack Obama’s support for the populist movements as a “pre-election ploy”. “This is a clumsy gesture of a politician aiming to please voters,” Xu said in a recent speech. “This type of response cannot resolve the real problems of the day.”

Excerpt:

By Antoaneta Becker and - -
BEIJING, Nov 8 2011 (IPS)

If Chinese detractors of liberal democracy and unbridled market development ever needed more fodder for their attacks on the West, then last week’s Greek farce provided plenty. But behind the headlines announcing “the collapse of Europe” there is little sense of ideological triumph. Instead Beijing is busy drawing up contingency pans for the break up of the eurozone and absorbing the lessons of welfare state excesses.

Beijing – often at the receiving end of criticism that in its attempts to preserve social stability above all it often tramples on civil rights, did not miss a chance to deride Brussels for its “mantra of stability”.

“The collapse of Europe is irreversible,” declared an editorial in Monday’s 21st Century Business Herald. Rather than admitting that Greece was bankrupt and would never be able to repay its debts, it said Europe had instead “thrown its principles out of the window.”

“Stability prevails over principle” was just another sign of the “degradation of the European spirit,” the editorial said.

Not long ago it was Brussels that lectured Beijing on its economic management, but now Chinese leaders see it as their duty to admonish the European Union. Even before last week’s Cannes fiasco and its public display of the EU’s inability to follow through on the rescue plan of the eurozone it had painstakingly designed, Chinese premier Wen Jiabao had issued some stern warnings.

“The most urgent task is to take decisive measures to prevent the debt crisis from spreading further and avoid financial market turbulence, a recession and fluctuation in the euro,” Wen told European Council President Herman Van Rompuy in a phone call two weeks ago. In marked contrast with Beijing’s repeatedly voiced confidence that Europe can overcome its problems, Wen’s comments sounded sobering.

“Apart from urgent measures to address these problems, the key is to undertake systematic and fundamental fiscal and financial reform,” Wen said, according to a report on the Chinese Foreign Ministry website.

But after the Cannes meeting Beijing seems to have lost its confidence that Brussels has what it takes to undertake the fundamental reforms needed. The Cannes G20 summit originally designed to put the final touches to Brussels eurozone rescue plan and entice emerging economies like China to dip into their foreign currency reserves and provide capital for Europe’s bailout fund unravelled with the Greek prime minister’s announcement then that he needed a national referendum to approve the bailout programme.

The summit concluded last Friday without any concrete results. Even though Greek Prime Minister Papandreou withdrew his referendum idea later, and after he won a parliamentary vote of confidence, the damage had been done. The political uncertainties meant that neither China nor any other country could agree to join the European bailout.

To say that Chinese analysts have been perplexed at what transpired at the G20 Cannes summit is an understatement.

“If a small country like Greece with an economy that accounts only for 3 percent of the EU’s economy can derail the whole union and kidnap a summit of the world powers, this says something about the deficiency of the EU’s political and economic integration,” says current affairs commentator Xia Wenhui.

Comparisons were being made with the unification of the Chinese empire under the first Chinese emperor Qin Shihuang (259 BC – 210 BC), pointing out that he first unified the different warring states politically before imposing a common currency. The comparisons were not flattering to Europe.

While before the Cannes summit the focus here was on the pros and cons of China buying more euro debt, now attention has shifted to crisis prevention. TV commentators are warning that if a new “financial tsunami” is coming, China should be busy strengthening its dykes and bracing for the onslaught of a new recession.

Beijing’s export-led model of economic growth depends on European markets, and the euro bloc’s crisis has already taken a toll on Chinese factories churning out goods for export. The impending recession in Europe would mean more pain for Chinese manufacturers.

China holds about a quarter of its 3.2 trillion dollars of foreign exchange reserves in euro assets. If the eurozone collapses, Beijing’s stake in its biggest trade partner would be at peril.

But the Greek crisis has also provided Beijing with some valuable lessons on how to proceed with its own social welfare reform.

“We have to be mindful that with our population size and the huge number of retired people in the future, the pensions have to be adequate,” said one government official who spoke on condition of anonymity. “If China’s economy falters and we are not able to pay those social benefits, then the crisis here will be of much bigger scope than what we see in Greece.”

Excerpt:

By Antoaneta Becker
LONDON, Oct 2 2011 (IPS)

The European Union’s economic alliance may be embattled and on the verge of collapse but in some parts of the world its integration model is still a beacon. Experts from both sides of the Taiwan Strait – one of the world’s potentially most explosive areas – are studying the conflict resolution experience of the European Union in the hope of taking the precarious relationship between China and Taiwan forward.

Taiwan, which has de facto independence but is considered a rebel province by communist-ruled mainland China, is facing contentious presidential elections in January – just months before the communist party in Beijing is to undergo a leadership handover.

While relations between the former arch-enemies, which once fought a civil war, have improved significantly over the last three years mainly through facilitated trade, the raw issue of Taiwan’s future has been left in limbo.

China seeks ultimate unification with the island and has never renounced the use of force should Taiwan declare formal independence. Taiwan’s current rulers – the KMT or the Nationalist party – have betted on economic rapprochement with the mainland, preferring to leave the festering problem of political talks for the future.

But experts warn this may not work in the long run. At a recent London conference on drawing lessons from the EU experience many pointed out that the EU has achieved integration on unprecedented scale based on mutual recognition.

“There are certain conditions for the EU model to work,” Thomas Diez, professor of political science with the University of Tubingen, Germany, told the conference. “In regard to the Taiwan Strait – unless you find your framework and address the sovereignty issue you risk spoiling the whole process of reconciliation.”

Prof. Dai Bingran with the Centre for European Studies at Shanghai Fudan University disagrees. “The sovereignty issue should be left for the future generations to solve,” he argued, pointing out that if the European Union is taken as example, sovereignty becomes less and less an issue over time. “In 40 or 50 years there may not exist an issue of sovereignty,” Dai suggested. “There will be so many multilateral international agreements in place, and the truth is that each time we sign an international agreement we give up a little bit of our sovereignty.”

Since the Nationalist Party’s candidate Ma Ying-jeou took office in Taiwan in May 2008, he has based his mainland policy on the principle of “mutual non-denial” where neither side insists on the other side recognising it formally. The KMT argues this has created room for both sides to compromise and move forward cross-strait relations, which under the previous rule of the pro-independence Democratic Progressive Party (DPP) were stagnated.

Prof. Su Chi, senior adviser to Ma Ying-jeou, thinks the concept of sovereignty – though fervently guarded by many in Taiwan, is outdated. “It is a very European concept and the Chinese adopted it from Europe in the beginning,” he said. “But the concept has evolved and if we think of it as a water tank, this tank is now leaking. The Europeans being its original creators should now work to revise it to suit the world’s new realities.”

Some EU scholars are in fact already talking about the concept of ‘Taiwanisation’ in a European context.

“Beijing does not favour the turning of the cross-strait relations into a model because it is afraid of external interference,” Bruno Coppieters, professor of political science at the Free University of Brussels told IPS. “But the EU has recently discussed the cross-Strait relations as a model of engagement policies without recognition that may perhaps be applicable in places like Georgia and Abkhazia for instance.”

Under Ma’s so-called “diplomatic truce”, 15 agreements have been signed between Beijing and Taipei, establishing direct trade, transportation and postal services. People-to-people communications and academic exchanges have thrived, with some 1.6 million mainlanders visiting Taiwan just in 2009.

The opposition DPP party though, has remained sceptical, arguing that closer economic and trade cooperation between the two sides will inevitably lead to political unification on China’s terms. The DPP presidential candidate in January elections, Tsai Ing-wen, says the KMT is moving too far and too fast in its bid to improve relations with China, threatening Taiwan’s de facto independence in the process.

Ma Ying-jeou has been vague on the possibility of unification talks, conditioning the negotiations on China’s removal of the estimated 1,300 missiles it has aimed at Taiwanese targets. But a U.S. diplomatic cable released by WikiLeaks has cited Taiwan’s Vice-President Vincent Siew as saying that if re-elected for a second term next year, Ma Ying-jeou will open political talks with China.

As cross-Strait relations have followed the “easy things first, difficult things later” principle in the last few years, experts warn that sooner or later Taipei and Beijing will run out of easy options and will have to face to the raw matter of unification.

China’s remarkable rise is another factor, which adds uncertainty to the future outlook. The question how long China will be willing to tolerate Taiwan’s efforts to expand its international space without reciprocation on Taipei’s side looms large.

“The speedy rise of China’s comprehensive power has dramatically changed the context of its national interests,” Chen Hsin-chih, associate professor with Taiwan’s National Cheng Kung University told IPS. “The low-profile strategy adopted by mainland China in the past has become outdated now that the country has become an international power to be reckoned with.”

Excerpt:

By Antoaneta Becker
TIANJIN, Aug 2 2011 (IPS)

When the old Astor Hotel reopened to great fanfare from the local city fathers here in 2010, it marked more the return of the “Grande Dame of Tianjin” to the city’s growing collection of luxury hotels. It was a travel back to the future. It manifested the city leaders’ eagerness to embrace and rebrand the colonial heritage as a way of boosting Tianjin’s modern identity.

The past is rebuilt on the riverbank at Tianjin. Credit: Antoaneta Becker/IPS.

But Tianjin’s former mayor Dai Xianglong had a vision. When he assumed leadership of the city in 2003 he brought along the pragmatism and the skills learned during his post as a governor of the central People’s Bank of China. He saw the potential of the city’s colonial past as a magnet for tourism revenues and economic capital to even the race with fast-developing Beijing nearby. Through his links with the central leadership he also brought the investment needed to give Tianjin a makeover.

“There was a turn in the historical discourse, which saw Tianjin no longer presented as a victim of foreign humiliation,” says Chen Song-Chuan, who researches Tianjin’s history at the University of Bristol, the United Kingdom. “The money was coming in and they had to resolve the conundrum of Tianjin’s conflicting identity. Tianjin no longer wanted to be seen as a backwater in Beijing’s shadow. The city decided to delve into its history to reinforce its local identity.”

Political intrigue, salacious affairs, betrayal, greed and treachery along with decadent opulence were the old Astor’s signature mark. Chinese warlords and starlets mingled with western diplomats and devil- may-care adventurers.

Set up by a British Methodist missionary in 1863, the hotel gradually became the prime venue for all diplomatic and social activity in Tianjin. The last Chinese emperor Pu Yi and empress Wan Rong used to dance in the hotel’s ballroom. The father of China’s republic, Dr. Sun Yat-sen, presided over the country from the Astor for some time.

When the old Astor reopened after substantial renovation last year, it premiered a little museum to the hotel’s history, which calibrates much of Tianjin’s turbulent past. Between 1860 and 1945, Tianjin was the site of nine national concession areas granted to foreign powers in the wake of China’s defeat in the Second Opium War in 1860. Though treaty ports were effective in creating trade with China, the privileges and extracted concessions given to foreigners bred resentment towards western imperialism.

But the Astor museum eschews the typical approach of presenting the colonial past as national shame. Tianjin’s colonial legacy is rebranded and flaunted as a unique feature of the city’s history.

Menus on display list the gourmet experiences that hotel guests, both Chinese and foreign, used to indulge in. Chinese warlords who owned villas in the foreign concessions, and western luminaries get equal attention in the array of life-size paintings and memorabilia. A whole corner is devoted to the exploits of Hebert Hoover, later 31st president of the U.S., a regular patron of the hotel and Mandarin speaker who after his stint as an engineer at the Kaiping mines of Tianjin allegedly left China fabulously rich.

Outside the hotel gates, an array of stately buildings line the banks of the Hai River. Some resemble Bavarian castles; others bear faint resemblance to the Houses of Parliament in London. When asked about them, taxi driver Liu who awaits customers in front, shrugs and says: “They are all new. From the Dai (Xianglong)’s era.”

Under Dai’s rule, the city’s former foreign concessions were renamed Italian or German style “scenic neighbourhoods”. Their foreign character was deliberately emphasised but also claimed as part of the city’s “Chinese heritage”. Expansive plans for redevelopment of the areas where former colonial powers once held court were re-directed towards sprucing up the colonial architectural legacy.

The enthusiasm to capitalise on the past went as far as to attempt to replicate many of the old originals. Tianjin’s streets were dotted with facades ranging from the neo-classical to the Art Deco. This drive continues even today though the city has a new mayor and an established reputation as the only city in Asia with more than 800 Western-style villas.

The results have left some China experts critical. “In the end, the main objective of such ‘urban regeneration’ is the creation of upmarket commercial precincts: scenic spots with a ‘historic’ flavour that are primarily comprised of hotels, bars, restaurants etc…” notes Italian researcher Maurizio Marinelli in a piece on Tianjin published in the China Heritage Quarterly. He deplores the triumph of consumerism over true preservation and the livelihoods of thousands of families that had been relocated to allow for the city’s beautification.

Excerpt:

By Antoaneta Becker
LONDON, Jul 27 2011 (IPS)

The IMF’s new Chinese deputy chief Zhu Min is known by many in the financial capitals in the West for warning as early as 2007 about the dangers of the U.S. sub-prime mortgage market and its dire consequences for the global economy.

“There is money everywhere,” Zhu, at the time still a little-known internationally official at China’s Central Bank, said in a speech. “You can get liquidity from the market every second, for anything. So people are investing in assets with no idea of the risks they are taking.”

Wall Street in New York and the City, the financial centre of London, ignored his warning, which contradicted the official position of the world’s premier financial watchdog at the time. The International Monetary Fund (IMF) has since reversed track on financial derivatives and has also embraced Zhu Min’s wisdom, making him first an adviser and now a deputy managing director.

Zhu Min is the first Chinese to occupy such a high-ranking position in the Washington-based global lending institution. His appointment, though, follows a trend of promoting Chinese economists to the highest echelons of the Bretton Woods institutions that have underpinned the global economic and financial order since the end of World War II.

In 2008 the World Bank appointed Chinese economist Lin Yufu its senior vice-president and chief economist. Both appointments have been received in China and around the world as recognition of the importance of China’s fast-growing economy and political ambitions in the global arena.

Beijing has been careful to portray both elevations as a victory for the emerging economies as a lot, and as part of the reform process of the institutions designed to give bigger say to the developing world.

“We are very pleased with the appointment of Zhu Min as deputy managing director at the IMF by managing director (Christine) Lagarde,” foreign ministry spokesman Hong Lei said when the nomination was announced. “We believe that it signifies a great improvement in the role of emerging countries and developing countries within the IMF, which will be beneficial in improving the structure of the organisation.”

The China element has been underplayed in official pronouncements but some analysts point out that Zhu will play the China card by doing what Chinese international players are known for doing best – exerting influence behind the scenes.

“Contrary to some beliefs, the biggest role Zhu Min can play at the IMF will not be to have a say in how the money is distributed,” argues Mei Xinyu, a well-respected adviser to China’s commerce ministry. “His task should be to surreptitiously and gradually push for a change in the way the IMF thinks and operates so that we can see new, more realistic economic decisions and pronouncements.”

Writing in the China Securities Journal, Mei reminded everyone that China has the largest foreign reserves in the world and is unlikely to be in need of financial bail any time soon. He said China had already absolved the IMF somewhat of its tasks in Asia by pushing for the creation of an Asian Monetary Fund.

Mei is one of many Chinese economic mandarins who believe that despite China’s increasingly important contributions to the global economic structure, the IMF is prejudiced against it.

Beijing has been greatly annoyed with IMF’s recent admonishments that the Chinese currency, the yuan, is underrated and in need of quick readjustment. The People’s Daily, the mouthpiece of the communist party, published a lengthy refute of the IMF’s Annual Appraisal Report last week.

In response to IMF’s nudge to Beijing to alleviate its risks of inflation and the real estate bubble by appreciating the yuan, the paper argued that the debt crisis plaguing western countries is to blame for pushing up inflation in China.

“The IMF’s proposals cannot help China to effectively deal with imported inflation because as long as the United States and Europe continue to suffer debt crises, more hot money will flood into China, leading to high inflation and continued expansion of the money supply,” it said. It suggested that the IMF continues to close its eyes to the tribulations of the West while zooming on China.

It is this type of what the Chinese call “West-centric” views at the IMF that Beijing hopes Zhu Min will be able to help change. Perceived as a soft-spoken negotiator among his Chinese counterparts, Zhu is credited with knowledge of the game in both Chinese and international financial circles.

Zhu, 59, has held various positions at the Bank of China and worked as an economist at the World Bank before being appointed as a special adviser to the IMF in 2010.

Excerpt:

By Antoaneta Becker
LONDON, Jul 20 2011 (IPS)

Growing concerns about the slow death of the dollar rather than a saviour’s goodwill are underpinning China’s widely publicised purchases of European government debt, according to experts. But as the Eurozone debt crisis spreads from Greece and Portugal to countries like Italy and threatens the very survival of the euro, China’s finance mandarins and keepers of the country’s 3 trillion dollars foreign reserves are looking yet again at gold as the anchor of stability.

Yu Yongding, a former adviser to the Central Bank of China and strong critic of U.S. treasury bonds, an asset in which about 1.2 trillion dollars of China’s foreign reserves are invested, has been calling on Chinese rulers to diversify as much as possible of China’s holdings to guard against a weaker dollar.

Speaking at a global economic forum in Beijing this month Yu said the U.S. debt and its ratio against the country GDP were rising, and predicted trouble for all U.S. assets and the global economy.

Yu is in company of big banks like Goldman Sachs predicting a slow and steady decline of the dollar. Yu believes that from 1929 to 2009 the purchasing power of the greenback has declined by 94 percent. Goldman Sachs forecasts it will lose 15 percent of its value against the British pound over the next 12 months alone.

Investors all over the world have begun moving their cash reserves into other currencies to cut exposure to the U.S. dollar in the belief it will continue losing in value.

U.S. President Barack Obama had to step out last week and defend the debt-ridden U.S. economy, insisting the country was not in the same dire straits as “Greece or Portugal.” With Standard & Poor’s and Moody’s, two major ratings agencies, threatening to downgrade U.S. top credit status, fears are growing whether the country can continue paying interest to its creditors, principally the Chinese.

With the dollar slowly going out of fashion, China has in the last three years turned its attention to the euro – another beleaguered pillar of the international monetary system. Last year Beijing helped stave off a full-blown euro debt crisis by buying Greek bonds in return for a 35-year lease on Piraeus harbour in Athens. It later bought 1.4 billion dollars of Spanish bonds, giving a boost to market sentiment about Spain.

During Chinese premier Wen Jiabao’s visit to three European countries last month, reports emerged that Beijing has shown keen interest in buying a stake in the EU’s euro bail-out fund. China’s largesse towards Europe has prompted the European Council on Foreign Relations, an influential think tank, to warn that China’s “scramble for Europe is damaging the EU’s interests”, threatening to compromise EU values in return for investments.

Some Chinese experts, though, see investing in European government debt as a necessary risk. “Saving Europe with money is not at all a bad thing,” Ming Jinwei, a financial affairs commentator wrote in the Economic Observer.

“America’s credit ratings and the depreciation of the dollar can no longer be ignored. By getting closer to Europe China is taking a step forward in liberating itself and the global financial system from dependency on the U.S. and the U.S. dollar,” Ming argued.

While Beijing has never been shy about its desire to have the Chinese yuan eventually replace the greenback as the global currency for trade, its efforts to expand the yuan’s sphere of influence have actually been producing the opposite effect of late.

China’s efforts to make the yuan the international currency have continued apace with Beijing signing more and more members into the renminbi trading club.

Over the past two years Brazil and China have organised several currency swaps between their central banks to allow trade to be conducted without the dollar. Similar deals have been agreed with India, Argentina, Russia, South Africa and a host of other countries. In the first quarter of this year about 7 percent of China’s trade was settled in its own currency, a 20-fold rise from a year earlier.

But rather than reduce China’s dependence on the dollar, the rapid yuan internationalisation is actually having an opposite impact, according to Yu Yongding. In their belief that the yuan is set to appreciate, people outside of China are keen to accept yuan payments while at the same time being reluctant to pay for goods with yuan. The process is causing China to pay for more and more imports in yuan, leaving it saddled with a growing pile of foreign currency.

In June Xia Bin, an adviser to China’s Central Bank said the country’s reserve strategy needed an “urgent” overhaul. Instead of buying government debt from the West, China should invest in strategic assets and accumulate gold by “buying the dips”, he was quoted as saying. So far Beijing has admitted to have doubled its gold reserves to 1,054 tonnes or 54 billion dollars, and said it has plans to raise it to 8,000 tonnes.

Excerpt:

By Antoaneta Becker
LONDON, Jul 13 2011 (IPS)

Prime property in the Georgian architectural gem town of Bath? Check. Luxury brand shopping on London’s Bond Street? Check. A seat on the fine art auctions? Check. The wish list of Chinese visitors to the UK is endless, and their aspirations and wealth are reshaping the property, retail and art treasures market here in ways unforeseen a few years ago.

While Chinese buyers are awarded VIP treatment in any sale room around the UK, at home growing voices are heard that high-spending outbound tourism is hurting the country’s economy, impeding growth of domestic consumption and depriving national coffers of some 50 billion dollars of revenues.

“Do not let foreigners earn China’s big money!” called an editorial in the Economic Observer this month. It suggested China should lower its high tariffs on imported luxury goods to reverse the flow of outbound money, and spur domestic consumption. Unlike the United States where consumer spending accounts for around 60 percent of the gross domestic product, private consumption in China last year was only 37 percent of its GDP.

But for Luo Xinmiao who calls herself a “brand addict”, shopping for luxury goods should only happen in their place of origin. “I don’t trust the Burberry and the Gucci in China,” she says. “I doubt even the brand shops in Beijing and Shanghai because I think many of their goods are now made in China. And they are much more expensive than in London.”

Thousands of Chinese shoppers like Luo are flocking to European capitals hunting for their favourite brands. Last year some 57 million Chinese tourists travelled abroad spending a whopping 48 billion dollars in cities from London to Paris and Milan, according to figures from the National Tourism Administration.

While in their first years of travelling to Europe, Chinese tourists were somewhat coy, opting for perfumes in France, watches in Switzerland and shoes in Italy, their shopping habits have now changed. More brand conscious and wealthier than just a few year back, they are now regarded as the big spenders, shopping with confidence and in bulk.

The World Luxury Association reckons that last year Chinese consumers spent four times more on luxury brand goods in overseas markets than at home mainly because of the large price differences between luxury goods sold in China and abroad.

Property may not come as cheap as luxury goods but it is yet another hot item on their list. The increase in the value of the yuan over the past five years has given mainland Chinese consumers more purchasing power, which coupled with the sharp depreciation of the British pound has made investment in UK property a favourite for many.

Mi Wenxia who studies architecture at Bath University says she was given the task of finding a suitable property to park a chunk of the family fortune by her father, and is doing the city rounds with real estate agents.

“There are more Chinese students coming here, and my father thinks it could be a real good investment to buy a place to let,” she told IPS. “It could help pay my tuition fees and I could afford to travel too.”

The combination of good university with great Georgian-era architecture and Roman hot spring baths designated a UNESCO World Heritage Site have placed Bath in the west of England firmly on the map for Chinese property buyers, say experts.

“We have seen more investors from China in the last two years,” says Vicky Collins who runs an estate agency in the city. “There are those who look for student lets but we have had the odd ones that want to buy preserved Georgian houses costing a couple of million pounds and above.”

Mainland Chinese buyers will account for 5 to 10 percent of the residential property sales in London this year, according to the real estate consultancy CBRE. They are also a popular addition to any auction room in the UK, bidding fervently for art treasures and often breaking pre-sale estimates.

But as much as the Chinese shopping frenzy is a welcome relief from the austerity climate here, it is raising brows back home. Economists worry that exporting Chinese real estate speculation abroad may distort overseas property markets and raise the spectre of the “China threat” again.

Calls to lower high import tariffs on luxury goods, once seen as spurring conspicuous consumption and aggravating the income gap, are now being seriously considered by Ministry of Commerce officials in Beijing.

They think the pros of redirecting 50 billion dollars spent by Chinese consumers overseas last year towards the domestic market and boosting consumer-led growth in the country far outweigh the importance of collecting the high import duty tax. Those calls are resisted by finance officials worried about the impact of slashed import duties on the national coffers.

The mouthpiece of the communist party, the People’s Daily, described recently how the Ministry of Finance and the Ministry of Commerce were battling out deciding the future direction of Chinese consumer capital. With the country’s international travel market projected to reach 230 billion dollars by 2020, dealers across the board in Europe are holding their breath.

Excerpt:

By Antoaneta Becker
LONDON, Jun 29 2011 (IPS)

For a populist premier like China’s Wen Jiabao, the irony of landing in a European capital celebrating the art of one of the Chinese communist party’s most outspoken critics who had been imprisoned by Beijing for months was never lost.

Four days before the Chinese premier arrived in London, Beijing released on bail the artist and provocateur Ai Weiwei, claiming the government critic had confessed to tax evasion. With three exhibitions of Ai’s works in London, the UK capital had been the place to celebrate courage and freedom of artistic expression during the three months that the Chinese artist was detained.

“I’m sure they (the Chinese) must have known what a selling point Ai’s detention has been for all of his art exhibitions in London,” said Theo Edwards, who was visiting Ai’s public sculpture in the courtyard of Somerset House last week.

After drawing thousands of visitors to the Tate Modern last fall, ten tons of Ai’s million handcrafted porcelain sunflower seeds returned to the gallery this month arranged in a cone-shaped heap. A dedicated show of Ai at Lisson Gallery consists of 31 Han Dynasty vases that the artist had splattered with industrial paint.

The most popular of all has been Ai’s rendition of the famous Chinese zodiac that once adorned the summer palace of the emperor Qianlong outside Beijing, which in 1860 was ransacked by French and British troops.

Unlike the exquisite bronze originals that were designed and modelled by the Jesuit missionary Giuseppe Castiglione, Ai’s 12 animal heads are oversized and rather crude, displayed as prey on bronze pikes around the courtyard fountain. The originals were looted, and while some of them have since returned to China, the whereabouts of five are still unknown.

“It is so critical of us, the British colonial invaders, by presenting in a mocking way what we tried to steal from China,” said Alice Jones, another visitor to the show. “It is a jab at our historical consciousness. And it does us credit for displaying it.”

Having set a political tone with Ai’s release before its start, Wen’s visit to Britain was full of symbolism as it progressed.

Ai’s release from detention on Wednesday was followed by the discharge of political activist and blogger Hu Jia from prison on Sunday, after completing a three-and-a-half year sentence on subversion charges. Both men have been fearless critics of the country’s human rights record before their detention. Now free, they have reportedly said they will remain quiet.

With the critics released but silenced, premier Wen visited Shakespeare’s birthplace in Stratford-upon- Avon and made an impassioned plea for more understanding between Chinese and British people, and more respect between the two countries.

“It is important for political leaders to respect the creativity of the people of other countries,” he said, marking the beginning of a charm offensive aimed at asserting China’s softer side to international audiences.

While Chinese state leaders are not much given to publishing opinions in the western media Wen Jiabao took the unusual step of writing in both the Daily Telegraph and the Financial Times.

Wen pledged that the China of tomorrow will be a country that “fully achieves democracy and the rule of law.” The country is on a journey that will inevitably mean granting its huge population “freedom, equality and human rights,” he said.

But he cautioned that change will be a “long and arduous task” and that China’s democracy may not resemble that of the West, as freedom will be “achieved in different ways and forms in different societies and countries.”

“This time’s visit is more about political gestures than about business,” said Wei Tao, a Chinese entrepreneur in London who went to the Royal Society in London in anticipation of seeing the premier. “China is under a lot of pressure for its behaviour in the South China Sea and for its handling of protests at home. Wen needs to do something about it. Besides he is retiring next year and this will be his legacy.”

China and Britain announced business deals worth 1.4 billion pounds (2.2 billion dollars). But even as Wen appealed for more openness to Chinese investment, he chose carefully the message his visit was sending to UK businesses.

He attended the UK launch of the new MG6 Magnette car at the Longbridge, Birmingham plant which was bought by the Shanghai Automobile Industry Corporation four years ago. The car, which is designed in the UK, manufactured in China and assembled at Longbridge, is seen as a model of how British and Chinese businesses can work together.

The tough message was left to the Chinese ambassador to the UK to deliver. Liu Xiaoming said negative UK media coverage of Chinese investment and restrictions on visas were forcing Chinese companies to look away from Britain.

“Chinese businesses will compare – why should they invest in the UK, not France, Germany or other economies?” he told reporters on the eve of Wen’s visit Jun. 25-27.

Excerpt:

By Antoaneta Becker
LONDON, Jun 23 2011 (IPS)

The Chinese Communist Party likes claiming credit for the success of the country’s model of steady rule and economic prosperity. But as it prepares to celebrate its 90th birthday on Jul. 1, the party has seen the attractive China brand lose appeal with once enthusiastic followers abroad and being outright rejected by violent protests at home.

Two years ago, at the height of the financial crisis sweeping Wall Street, liberal capitalism was losing credibility and China’s model of one-party rule and state-driven investment was on the ascent. Scores of economists were predicting the end of the Washington consensus era and the dawn of the Beijing consensus century.

But things have changed. China has been plunged into a cycle of violent protests, revealing raw anger with the communist rulers not only among the disgruntled ethnic minority groups living in the border regions of the country but also in the heart of China’s economic powerhouse. After Inner Mongolia, riots have broken out in the prosperous manufacturing hub of Guangdong and in other provinces populated with ethnic Hans that dominate Chinese society.

“There has always been more doubt than consensus about the China model,” Prof. Wang Hui who studies Chinese intellectual thought at Tsinghua University in Beijing told IPS in London. “It should be said that the praise for China’s development model came mainly from abroad while at home among the intellectual circles there has been a lot of criticism. When you add all the questions that have been raised about it you will see that the so-called model almost disappears.”

After a trip to China last week, Nitish Kumar, chief minister of India’s Bihar state, applauded the achievements of his Chinese hosts but said it was impossible for democratic India to replicate the communist country’s development model.

“Be it the industries, railway or agriculture, China is supremely developed in these sectors,” Nitish told reporters on his return from China. “But we are a democratic nation developing in our own ways. It is not possible for us to adopt the process and technology China has used.”

In Africa where the Chinese footprint is growing there is also growing awareness that the continent cannot replicate the China model and needs a different economic paradigm to suit its own realities.

At the 49th session of the African Commission for Human and Peoples Rights in April in the Gambia a declaration proclaiming the birth of the African consensus was adopted. It called for a bottom-top growth model driven by businesses built on village-level with the involvement of both governments and NGOs.

“China’s experience is unique because of the central apparatus that can make a decision at the top and see it through all the way to the bottom. This cannot be replicated in its entirety anywhere else,” says Lawrence Brahm, activist and writer who attended the conference in Banjul, Gambia. “The African consensus recognises the importance of growth from the grassroots.”

In the early years of China’s reform and opening up Beijing developed special economic zones to support manufacturing and attract foreign investment. With more than a hundred such areas by date, China has begun exporting its experience to Africa. It is now in the process of constructing similar special economic cooperation zones on the continent with the aim of attracting Chinese firms and improving infrastructure and services.

Such zones are now being developed by the Chinese in Africa – in Egypt, Ethiopia, Mauritius, Nigeria and Zambia. The experiment has drawn a lot of praise from African politicians.

But observers warn that transplanting the China model has its risks especially because Beijing is seen to be preoccupied with satisfying African countries’ governments while ignoring social groups.

“China’s potential pitfall in Africa remains how to handle the civil society and village stakeholders,” says Brahm.

It is the same risk factor that is now undermining China’s economic miracle at home. In the last three decades the communist party has presided over an enormous transformation of the country, creating a vibrant society of entrepreneurs and lifting millions out of poverty.

But as recent riots have shown, people’s happiness is not always measured by the accumulation of material gains alone.

When protests rocked the semi-autonomous region of Inner Mongolia in May they brought memories of the unrest that racked the Muslim province of Xinjiang in 2009 and the violence that swept Tibet in 2008. Though brutally suppressed, protests by ethnic minorities have flared again on and off, invalidating Chinese presumption that economic growth is more important than ethnic diversity and local identity.

More alarming to party leaders, though, as they ready for the communist party’s 90th anniversary celebrations, are the protests that have erupted in China’s inner provinces. From Guangdong to Hubei and Jiangxi provinces people have risen to protest the lack of justice and the arbitrary rule of local leaders. They have vented their anger openly, clashing with paramilitary police, burning cars and ransacking shops and government offices.

The leadership’s crackdown on protests and the jailing of agitators for a China-style Jasmine revolution display a sense of insecurity haunting the party even as it claims the title of the largest and most successful ruling communist party.

“Insecurity displays the need for China to change its development model if there ever was one,” says Wang Hui.

Excerpt:

By Antoaneta Becker
BEIJING, Jun 16 2011 (IPS)

The novelty of the super-fast ride on China’s bullet train never seems to wear off. On board of the inter-city train connecting the capital with the port city of Tianjin 117 km east you can buy an arm-long model of China’s prestige train and more than two years since its launch there are still many enthusiastic takers.

The changing speed of the train displayed on an electronic screen in the coach still elicits exciting shrieks from those first-time travellers as it reaches and hovers around 330 km/h.

“People said it was not possible for such fast trains to be put into mass production and use. But China is proving them wrong,” says Miao Li, a business women from Tianjin bound for a shopping trip in the capital. The bullet train has reduced travel time from 70 to 30 minutes.

Later this month China is to launch its much-hyped high-speed railway line between Beijing and Shanghai. With a total length of 1,318 km and at a price tag of 34 billion dollars, this will be the longest and most expensive high-speed rail connection in the world, which will almost halve the travel time between China’s two metropolises from ten hours to about five hours.

“In just a few years China has built more high-speed railways than the rest of the world combined has built over half-a-century,” the liberal Southern Weekend paper noted proudly recently. “For a nation whose modern history started with the railways and went through decades of humiliation (at foreign hands), this is a praiseworthy turn of events.”

But there is a snag. Recent high-profile corruption scandals in the industry have thrown unflattering light on piles of debts accumulated by what is described here as China’s “high-speed rail leap forward”. Just as Beijing is preparing an ambitious expansion overseas cautionary tales of rail boom and boost are being heard.

“The expansion of China’s high-speed railway has been funded by state banks, which essentially means Chinese citizens’ hard-earned savings,” says Li Hongchang, a transportation researcher at Beijing Jiaotong University. “If the bubble bursts there will be an enormous social cost.”

China began construction of its high-speed rail network in 2005. By the end of 2010 it had more than 8,000 km of high-speed track and declared plans to double it by 2015. It has aimed to rival the fastest trains of high-speed rail majors like Alstom SA and Siemens AG, setting a goal of more than 500 km/h.

The breakneck expansion of domestic public infrastructure is merely the beginning of publicly declared ambitions for expansion overseas. China’s cut-price bullet trains are the country’s hot latest export and Chinese train makers have begun lobbying governments all over the world to supply the goods.

In South Africa the China Railway Group is proposing to build a 30 billion dollar high-speed railway project between Johannesburg and the eastern port city of Durban. In the UK Chinese diplomats have launched a charm offensive to supply rolling stock for a new high-speed line between London and Birmingham as well as bidding to land the 1 billion pound train order for London’s commuter and suburban Crossrail.

In Saudi Arabia China Railway Engineering is already building a 350 km/h high-speed system linking Mecca and Medina through Jeddah.

More importantly, China’s ambitions to expand its high-speed rail network internationally are part of a broader plan to gain access to valuable natural resources. Adding infrastructure capacity in return for a share of the country’s energy and mineral resources is already a pattern of Chinese overseas investment across the globe.

Beijing has plans to construct high-speed rail lines through Asia and Eastern Europe linking to the existing infrastructure in the European Union as well as building additional lines into Southeast Asia via Singapore. Negotiations are afoot with some 17 nations with Beijing providing financing for the project and partnering nations expected to deliver natural resources to China.

The sheer scale of infrastructure spending has provided ample opportunity for graft. The railway expansion programme suffered a setback in February when the head of the railway ministry Liu Zhijun was removed from his post on suspicion of a “serious breach of discipline” after spearheading the network expansion for nearly eight years.

Chinese newspapers are talking about the “rule of Liu” era when safety on trains was sacrificed in order to achieve higher speed limits and construction was rushed through.

Even the short-track high-speed railway between Beijing and neighbouring Tianjin regarded as the prototype of all consequent lines is deeply in debt. Services are running full but since the opening in 2008 the line has accumulated losses of 700 million yuan (109 million dollars).

The new Hexie, or Harmony, bullet train from Beijing to Shanghai expected to launch at the end of June has been criticised as a “train for aristocrats” with prices costing roughly three times as much as conventional trains. A coach class ticket will cost 555 yuan (86 dollars) and a premium class ticket up to 1,750 yuan (273 dollars).

Railways Ministry officials have switched into damage repair mode, cutting the maximum speed of the Hexie train from planned 350 km/h to 300 km/h and lowering ticket prices to affordable levels. But they have refuted reports that Beijing was planning an overhaul in the expansion programme and has axed 200 billion yuan in high-speed rail investment this year.

“China is not applying the brake to its high-speed network development,” Wang Yongping, a spokesperson to the ministry told the Beijing Times last week.

Excerpt:

By Antoaneta Becker
BEIJING, Jun 7 2011 (IPS)

Jasmine blossoms’ fall from grace in the Chinese flower industry is not the only blow Chinese businesses have suffered as a result of the North African and Middle Eastern democratic uprisings this spring. China is evaluating the impact of the Jasmine revolution on its overseas investment and outward business expansion strategy.

Africa – once considered the lab for Chinese companies’ reach outside – is being relegated into a destination with too many risk factors. Safer political destinations and countries closer to home are likely to benefit from the shift.

The readjustment has been in the works for some time but the uprisings in Tunisia, Egypt and Libya have made those subtle shifts more pronounced.

“North Africa’s unrest and Libya’s situation in particular are testing China’s ‘go out’ strategy,” says Wang Jinyan, research fellow at the Beijing Foreign Studies University. “This will have a definite impact on the future direction of our overseas investment.”

According to press reports, China’s Ministry of Commerce new five-year plan, which is being finalised at the moment, makes Asia and the new emerging economies the centrepiece of the country’s “go out” investment strategy.

“The political risk aside, investment in Africa is no longer what it used to be,” the Economic Observer quoted an unnamed official from the ministry in May. “Opening a mine there is not so easy any more, now you need to take into account the environment, local employment and benefits to local economy.”

By contrast, Asia is perceived as a mature market full of economic potential and fewer political risks.

Determining the direction of China’s future investment remains a full-time occupation of analysts the world over. Flush with cash from years of exports-driven economic expansion and sitting on top of the world’s largest foreign exchange reserves, China has been on a shopping spree of late for commodities, oil, energy and agricultural land.

A study released in May by the Asia Society in New York forecast that by 2020 China’s overseas direct investment could reach 2 trillion dollars. Last year the United States’ foreign investment amounted to 300 billion dollars.

The financial crisis of 2008 has provided Chinese companies with impetus and opportunities to channel some of their money into most remote corners of the world, snapping minerals, securing oil fields and acquiring stakes in major companies.

But before spreading their wings further afield many companies, including major state oil firms like Petro China, have used Africa as their testing ground. Entering as contractors to build railways, roads and telecommunications, Chinese companies now boast a sizeable presence on the continent. By the end of 2010, some 2,000 Chinese companies operated in Africa with an accumulated investment of 32 billion dollars.

Last year China became Africa’s largest trading partner, and its march into the continent seemed unstoppable. Not surprisingly, this has been met with criticisms by some that China is acting as a neo- coloniser, stripping Africa of its rich resources.

But the Arab spring has cast doubts over this relentless expansion. The figures of China’s economic losses suffered during the civilian unrest in North Africa and Libyan conflict are beginning to emerge, giving officials cause to pause.

In Libya where China’s involvement is quite recent, the losses suffered and the cost of repatriating some 36,000 Chinese employees is set to surpass 3 billion dollars. Since 2007 Libya had contracted some 50 engineering projects to Chinese companies, including several image projects to mark the 40th anniversary of the 1969 revolution.

Although China’s role as a contractor has limited its exposure to direct losses in the unrest, some Chinese assets like Sinopec refineries in Libya were raided and destroyed. Experts say that on the whole Beijing has been left to deal with a messy aftermath of compensation claims, third party debts and the re-employment of all returned workers.

And Libya’s fallout is only one piece in the big picture of Arab revolutions that have derailed Chinese business interests.

At a working conference in Shanghai in May, Sinosure, China’s official export credit insurance agency, revealed that in the first three months of 2011 its reported loss claims from North Africa and the Middle East have risen by 167 percent over the same period of last year.

According to figures from the Ministry of Commerce, new Chinese contracts in North African countries in the first quarter have dropped dramatically, by 70.8 percent in Algeria and by 46.9 percent in Libya over the same period of last year.

The civil unrest and safety concerns have made the Chinese even more invisible in Africa, adding fuel to accusations that Chinese contractors are isolating themselves from the local population behind high walls, and remain aloof to local grievances.

But even as Beijing takes a closer look at its investments in Africa, China’s involvement there is far from over.

“You may not see the Chinese but you can see the stadiums and the roads and everything they have built,” says Lawrence Brahm, a Beijing-based political columnist. “The jury on their role in Africa’s development is out. I still think that the great game between China and the West will be played out in Africa.”

Excerpt:

By Antoaneta Becker
LONDON, May 29 2011 (IPS)

The sex scandal in the top couloirs of the IMF and the power struggle to find a successor to Dominique Strauss-Kahn has fascinated the Chinese. Rife speculations about political intrigues and shadowy deals behind the scenes have spilled into cyberspace and the usually restrained media.

But despite calls and expectations that China will play a prominent role in determining the new chief of the International Monetary Fund, Beijing has been reluctant to comment publicly, and it appears far from ready to take its battle for global recognition to the high echelons of the IMF.

China has indeed given its backing to an effort by emerging nations to break the tradition of a European always heading the IMF. In a joint statement with Brazil, Russia, India and South Africa earlier China slammed Europe’s renewed push to lock the IMF top job, calling its stranglehold “obsolete”.

By a convention dating back to its 1945 founding, the head of the IMF has always been European while the World Bank president has been a U.S. citizen. But in the aftermath of the financial crisis some of the pillars of the Bretton-Woods system of monetary management established by world powers after the end of World War II have been repeatedly criticised in China as antiquated.

Prominent Chinese scholars like Xu Guoping who runs a think tank for developing nations in Geneva have called for an end to the “colonialist or neo-colonialist dogma” that guarantees an international candidate should be a U.S. citizen or a European.

“People from developing countries should be given an equal chance, particularly because the GDPs of these countries are growing ever bigger as a share of the global economy,” Xu wrote in a commentary in the Economic Observer. Not to be forgotten too, he said, was the fact that many of these countries, China in particular, had huge foreign exchange reserves.

But the domestic consensus seems to be that the current IMF is not the IMF that a Chinese would like to head. Moreover, experts hold, Beijing is not ready to launch a bid for the top job yet, not the least because China’s financial system is not fully fledged.

China has not forgotten that during the financial crisis the IMF sided with detractors in the West accusing Beijing of mismanaging its current account, manipulating its currency exchange rate and causing the “global economic imbalance” that triggered the crunch.

“The IMF turned a blind eye on the imbalances existing in the U.S. economy and the lopsided financial sectors of the developed countries,” said an opinion piece published on the Xinhua net. “Even now grave economic concerns like the ‘easy money’ policies of the U.S. and Europe and the unhinged flow of multinational capital across borders are being blatantly ignored by the monetary body.”

While China is eager to see changes in the way the IMF is run and the policies it supports, Beijing is likely to take the back seat in choosing the successor to Strauss-Kahn.

This cautious attitude has something to do with Beijing’s adherence to dictums stipulated by the late patriarch of economic reforms Deng Xiaoping, who advised a low profile in international affairs, and biding one’s time. But there is also recognition of the fact that with a currency which is not yet fully convertible and a financial industry that is not fully liberalized, China is unlikely to win support to lead the IMF.

“No matter how big our banks are or how much reserves we have, the truth is that China’s financial sector is not entirely open and does not operate according to market rules only,” says Wu Xiaoqiu, finance and securities researcher with China People’s University.

Wu is predicting that China will be ready to take on U.S. dominance in the financial world by 2020 – earlier than the more commonly expected year 2025 when the size of Chinese economy may rival that of the U.S.

For now China is said to be supporting the candidacy of French finance minister Christine Lagarde – something that France has alleged but Beijing has refrained from confirming. The Chinese foreign ministry said this week the choice of the new chief of the IMF should “better represent emerging markets and better reflect changes in the world economic structure.”

China is likely to be one of the first stops of Lagarde’s international tour to drum support for her candidacy beyond Europe. Countries from the European Union hold about 31 percent of the votes at the IMF, and the U.S. almost 17 percent. In 2012 China’s share of votes will rise to more than 6 percent, giving it more clout than before.

“China should concentrate on achieving leverage in the IMF rather than bagging the top agency job,” argues economic affairs observer Qiu Lin.

Two Chinese names have been floated as possible number two in the IMF hierarchy. Zhu Min, a special adviser to Strauss-Kahn, and Zhou Xiaochuan, China’s current central bank governor, have been talked about in the Chinese press as possible candidates for the post of first deputy managing director of the IMF.

Excerpt:

By Antoaneta Becker
BEIJING, May 17 2011 (IPS)

The glamour of the UK royal wedding is slowly disappearing from China’s photo spreads, but it seems to have opened the door to a debate on the allure of old Britain’s soft power and what makes an aspiring China lacking of it.

White bridal lace and the full array of British royal regalia seem an unlikely starting point for soul- searching by a nation living in the fast speed lane and striving for recognition as a superpower in the Internet age.

In blogs and articles the Chinese have written admiringly about the numbers of television viewers that the wedding of Prince William and Catherine Middleton attracted (2.4 billion, and reportedly many of them Chinese). They have written about the ability of British businesses to translate the fascination with the young royal couple’s marriage into an array of collectibles, souvenirs, tourist revenues and, most importantly, a lingering spot in the global limelight.

“I was glued to the TV and to my computer for the day,” says Maggie Wu, a real estate agent who always dreamed of studying in the UK. “It was just like in those Taiwanese soaps that we watched in university night after night where the common girl gets the son of the tycoon. But this was real.” Maggie says the savings from her commissions will be spent on her first trip abroad, and not surprisingly this would be to the UK.

China Times wrote in length about the “royal wedding economy”. China Business Journal invited experts to appraise the effect of the royal wedding as “commercial driving force for the digital era.”

“Apart from being an occasion for the royal family to promote its name abroad, what a great opportunity for the UK to show that there is more to it than Harry Potter,” noted the women’s magazine Femina.

More daring media probed further. The Life weekly devoted a ten-page report on the enduring soft power of the “old empire”, delving back in history and trying to shed light on the reasons behind the undying interest in the royal family.

On just one of the Chinese Internet sites which had set up a royal wedding page, Kaixin net, there were more than 1.6 million visits on the day of the marriage, and some 110,000 comments.

“I think it made so much impression on Chinese people because it showed that the British embraced both past and future and were equally proud of both,” suggests Li Guangdou who comments on Chinese celebrities and what he terms the “China national brand”.

The UK’s royal wedding came at a time when China is attempting to magnify its own soft power. But it appears uncertain what image it wants to project. Earlier this year China launched a massive PR blitz running a promotional film on six huge, billboard-size screen in New York’s Times Square.

The beaming images presented the ancient nation through portraits of 50 modern Chinese celebrities – largely unknown overseas, ranging from rocket scientists to TV presenters. Visibly missing were the faces of Chinese artists like Ai Weiwei who have been recognised for their talents in the West but have irked the Chinese communist leaders with advocacy of human rights in the mainland.

Beijing is also in two minds about the role history should play in its charm offensive to win hearts and minds.

A recent attempt to give China’s ancient sage Confucius a place along with modern China’s communist founding fathers was quickly shelved. A colossal statue of Confucius which appeared in January in Tiananmen Square – the political heart of Beijing where the body of chairman Mao Zedong lays embalmed – disappeared in April.

It is unclear if the statue was removed as a result of public backlash to the idea of China as a Confucian state or as a consequence of an internal debate among the communist circles after scores of people were seen day after day kowtowing to the statue in reverence.

According to the Global Times newspaper, 70 percent of 220,000 people questioned in an online media poll by people.com.cn. declared themselves opposed to the statue.

Asked if the statue should return to the square, Yi Dong, a web designer who was there with his family to enjoy the May celebrations, was quick to disagree.

“Confucius belongs to his temple, he is a sage and people should contemplate his teachings in peace and quiet. I don’t think his statue can represent what modern China is all about,” Yi says.

Overseas, the outreach of China’s new soft power, which began in earnest before the 2008 Olympic Games, is gathering speed. Chinese performing art and drama are featuring prominently in two of the UK’s prestigious arts festival this year – in Edinburgh and Salisbury. China is also the theme of the London Book Fair next year.

Speaking at the China Association in London last month, the Chief Executive of the British Council, Martin Davidson, reckoned that in terms of budgets and human resources involved, China’s efforts to project soft power have already matched and even surpassed those of the UK.

The British Council, which has been promoting the teaching of English language and the popularisation of the UK’s finest cultural traditions since the late 1930s, now has teaching centres in some 42 countries. In just seven years since its creation, its Chinese equivalent – the Confucian Institute, has opened branches and teaching rooms in more than 80 countries.

Excerpt:

By Antoaneta Becker
BEIJING, May 6 2011 (IPS)

The United States’ most vilified terrorist foe has been dead only a week but China is already haunted by the phantom of the next big U.S. enemy. Almost simultaneously with the spread of the news of Osama Bin Laden’s death in a covert U.S. operation in Pakistan, Chinese analysts had begun the guessing game of where Washington will focus its attention next.

“Why didn’t they catch him alive?” speculated military affairs analyst Guo Xuan. “Because he was no longer needed as an excuse for Washington to take the anti-terror war outside of the U.S. borders. It is because of Bin Laden that the U.S. were allowed to increase their strategic presence in many places around the world as never before. But Libya and NATO’s attack there have changed the game. They (the U.S.) no longer need bin Laden to assert their authority.”

Even before bin Laden’s death, Beijing had expressed concern that the U.S. strategists are diverting their attention from the war on terror to containing the rise of China and other emerging economies.

A long article on Libya stalemate published by the editor of Contemporary International Relations magazine, Lin Limin, argued that the U.S. has been unwilling to take the lead role in the Libya conflict because it has “finally woken up to the fact that its main reason to worry are the emerging countries.

“If the U.S. position on Libya is not only a tactical stance but a strategic one and they have really come to understand that they should not waste military power and energy in numerous directions ‘spreading democracy’ all over the world but should begin focusing their attention on the rise of emerging countries, then we do have a reason to worry,” Lin argued.

The U.S. presence in Afghanistan has always been a controversial one for Chinese politicians. China joined the global war on terror because bin Laden’s political agenda of setting up an Arab caliphate and sponsoring terrorism presented a direct threat to its restive Muslim north-western region of Xinjiang. But Beijing has been suspicious of the U.S. intentions, worrying that Washington is pursuing a broader agenda for long-term presence in the region, which China regards as its backyard.

Beijing officially hailed the killing of the terrorist leader by the U.S. as “a milestone and a positive development for the international anti-terrorism efforts.”

“Terrorism is the common enemy of the international community. China has also been a victim of terrorism,” foreign ministry spokesperson Jiang Yu was quoted by the official Xinhua news agency as saying after bin Laden’s death.

She was referring to Xinjiang, where Muslim separatists have been waging a bloody insurgency against Chinese rule. Beijing had linked the global war against terror with its struggle to quell separatist sentiments in the Muslim region, insisting insurgents are aided from outside.

Chinese public reaction to the news of bin Laden’s death has mixed reluctant admiration at the success of the secret mission played out reportedly on screens in front of U.S. President Barack Obama with outright fear over what comes next.

“The whole thing seemed like an intelligence operation lifted straight out of ’24 hours’ (a TV series about U.S. counter-terrorism agents),” said Huang Mei, a TV producer with barely concealed awe. “How advanced and confident they must be to ask their President to watch the killing mission on screens live!”

But some see bin Laden’s demise as a blow to efforts to promote a school of Anti-American thought.

“The great anti-America fighter bin Laden was murdered by the U.S.! How sad!” wrote one commenter on Sina’s popular Weibo micro-blogging site.

“Is this real? Excellent!” wrote another of the news. “Now the only terrorist left is the United States!”

Commentators have begun analysing the political capital reaped by President Obama and preparing for the possibility that he may win a second term in office. Writing in Beijing’s Xinjing Bao, commentator Chen Bing predicted the U.S. will exploit the death of bin Laden to expand its influence in the Middle East and bring the Arab spring to an end.

“What a great way to issue a warning to all anti-American politicians in the region,” Chen said. “And a declaration that it (the U.S.) intends to mould the Middle East according to its own design.”

Excerpt:

By Antoaneta Becker
LONDON, Dec 9 2010 (IPS)

The Chinese boycott of the Nobel Peace Prize, which this year was awarded to a jailed Chinese dissident, has evoked unflattering associations with brutal regimes that imprisoned political opponents and refused to acknowledge their popular sway.

But despite an ingrained obsession with its international image, China has not flinched at the adverse publicity. By contrast, Beijing has waged a tenacious diplomatic campaign to dissuade diplomats from attending this week’s prize ceremony in Oslo.

It has used old-fashioned communist propaganda methods to smear the name of the democracy activist Liu Xiaobo and present the peace award process as a plot to subvert rising China.

“The Chinese authorities genuinely see this as a very serious conspiracy, a plot to undermine China’s peaceful evolution, and they want to demonstrate that they are willing to pay the price to protect their interests,” says Joseph Cheng, professor of political science at the City University in Hong Kong.

But the intensive counter-offensive suggests much more than just the communist leadership’s intolerance of international criticism of its human rights records and its vulnerability at home. It reveals Beijing’s determination to take on universal values in the belief that it has the mandate to chart its own terms of engagement with the world.

Beijing has now publicised the launch of a new, home-grown peace award – the Confucius Peace award – to counter the choice of Liu Xiaobo as the first Chinese national to win. The prize was created “to interpret the viewpoints of peace of the Chinese people”, the new quasi-government award committee said in a statement released to agencies in Beijing.

The first to be honoured is Lien Chan, Taiwan’s former vice-president and the honorary chairman of its Nationalist Party, for having “built a bridge of peace between the mainland and Taiwan”, said the statement. The committee decided to award the prize Thursday, a day before the Nobel honour for Liu Xiaobo.

“The new (Confucian) prize is a very good example of the dilemma the current Chinese state faces – how it wants to participate in the existing international order but according to its own interpretation of it,” says Rana Mitter, professor at the Modern China Institute for Chinese Studies at Oxford University.

“The new prize is actually a variation of the international peace award. Nobels are regarded as a matter of international prestige and the Chinese want to have a say in (the selection process) of which Chinese person wins this prestige,” he adds.

The Nobel Peace prize committee describes Liu Xiaobo as the “foremost symbol” of the human rights struggle in China. A key figure of the 1989 Tiananmen democracy movement, Liu was among the people that drafted Charter 08 – a call for multiparty democracy and political reform in China. He is serving an 11-year sentence for “inciting subversion”.

The Nobel committee decided to honour him for his “long and non-violent struggle” and his belief that there exists a close link between human rights and peace. Beijing says Liu is a criminal and describes the award as a “blasphemy”.

Supporters of this year’s Nobel peace prize are “clowns” perpetrating a farce, the foreign ministry said this week. They are fundamentally opposed to China’s development and want to interfere in the country’s politics and legal system, the ministry’s spokeswoman Jiang Yu said at a regular press briefing. “We will not change because of interference by a few clowns,” she added.

The announcement of Liu Xiaobo’s prize on Oct. 8 appears to have divided the international community too. The number of countries that have declined the invitation to attend the award ceremony on Friday has risen from the initial six a few weeks ago to 19 including China, the Norwegian Nobel committee said.

“China has been arm-twisting behind the scenes to stop governments from attending the Nobel Prize ceremony, using a combination of political pressure and economic blackmail,” said Sam Zarifi, Amnesty International director for the Asia-Pacific.

Last month Beijing delivered a stark warning to all countries. Cui Tiankai, a deputy foreign minister, said countries that chose to take part in the “political game” over Liu Xiaobo will have to “bear the consequences”.

Among the countries that will be absent from the ceremony are long-time regional allies like Pakistan and ideological allies like Venezuela, business partners Saudi Arabia and Iran and countries dependent on China’s diplomatic support like Sudan.

Since the Nobel announcement, Liu’s wife, Liu Xia, has been put under house arrest, and police have kept tight control over the movements of his relatives and other dissidents. Last month Liu’s lawyer was stopped from flying to Britain, and other prominent liberal intellectuals have been stopped from leaving the country in a campaign aimed at making sure not a single Chinese attends the ceremony.

The gold medal, diploma and 1.4 million dollar prize can be presented only to Liu Xiaobo or to close family members under the rules of the Norwegian Nobel Committee. If the committee fails to present the medal and diploma, it will invite comparisons with its refusal to do so when Carl von Ossietzky, the German journalist and concentration camp prisoner, was banned by the Hitler regime from travelling to Oslo in 1935.

Yang Jianli, a former Chinese dissident, now the liaison to the Nobel committee on behalf of Liu, wrote a letter to communist party chief Hu Jintao: “I do not want the image of an empty seat at the Noble Prize Ceremony to become the symbol of China in the 21st century.”

Liu is one of only three people to receive the Peace prize while imprisoned by their own governments. The others are Carl von Ossietzky and Aung San Suu Kyi, the Burmese opposition leader who was awarded the Nobel in 1991.

Excerpt:

By Antoaneta Becker
LONDON, Nov 24 2010 (IPS)

In times of inflationary pressures the price of patriotism too goes up. The news that an 18th century Chinese porcelain vase sold for a record-breaking 68 million dollars at a London auction to a mainland China buyer this month did not go down well either with Chinese government regulators fretting about asset bubbles or with a Chinese public angry about income inequality.

Speculation that the delicate vase may have been among the treasures looted by British troops when they sacked the imperial palaces in Beijing during the second Opium War from 1856 to 1860, did not stem a flow of criticism on Internet forums and in the usually more restrained official media.

“These relics were smuggled, stolen or looted in wars,” Li Jianmin, archaeology expert at the Chinese Academy of Social Sciences told people.com.cn. “If we offer huge sums of money to buy them back, it is legalising these illegal activities.”

A “second pillage” is how the Peoples’ Daily online described the auction that took place at Bainbridge’s, a relatively small London auction house where the vase dated from the period of the emperor Qianlong went under the hammer.

Outraged that some British media have cast a sarcastic eye on China’s “porcelain patriotism”, netizens and cultural commentators have been virulent in their attacks.

Buying back looted relics with money will be of no help teaching the British “to bear their shameful act in mind,” said the Peoples’ Daily opinion signed by Yan Meng. “Instead, this will make the British more and more intoxicated in their barbaric and singular enjoyment from money.”

The bidders, nearly all said to be Chinese, and the final mainland buyer, were all subjected to character assassination.

“Pawns in a game of gambling and ostentatious display of wealth,” said the Beijing News. “A gang of wealthy Chinese collectors with dubious motives,” said the Nanfang Daily online.

Some have pointed out that the money could have paid the basic healthcare cover for 25 million poor Chinese peasants.

In the past Chinese tycoons who purchased stolen antiquities and returned them to China were described as dutiful patriotic sons and daughters. Chinese experts hold that over 10 million Chinese relics were taken illegally out of the country before the communist revolution in 1949.

Nursing a national scar from what it calls the “100 years of humiliation” the country suffered at foreign hands, Chinese leaders have encouraged the return of lost national treasures through private capital. They have also nurtured the rise of domestic antique buyers in the hope that local prices might come to match those in New York and London.

But a recent boom in Chinese antiques sales and the record prices paid for them have regulators concerned about the creation of yet another bubble. On the same day that the Qianlong vase was auctioned off, a Beijing collector reportedly paid 4.3 million dollars for a seal that belonged to the Qianlong emperor at a Bonham’s Sale of Fine Chinese Art in London.

With stock markets falling rapidly and overheating property sectors in main cities, investing in art and antiquities has become an increasingly appealing alternative. China’s nouveau riche are flush with cash and eager to diversify out of China’s inflated asset bubble.

They have taken to auctions far more eagerly than anticipated, pushing up prices for art and artefacts both at home and abroad. The price of the vase sold by Bainbridge’s exceeded a record for Chinese antiquities set just last month in Hong Kong when another Qianlong vase sold for 34 million dollars.

Regulators are concerned such buying masks problems in the broader Chinese economy. Banks are swimming in deposits and continuing to lend vigorously to sustain economic growth and employment rates. Beijing is now taking no chances that creeping inflation may disappear by itself. Rising food prices and swelling public discontent have the Chinese leaders fixed on protecting the most vulnerable.

Consumer prices rose only 4.4 percent in October, but Beijing has declared a war on speculators and hoarders.

In the current economic climate the sale of a 16-inch vase dusted out of a London attic for 68 million dollars sends the wrong signal. In the bidding frenzy that reportedly stunned even the auction organisers, the Chinese bidders were said to have raised their bidding prices each time by not less than a million.

“This has nothing to do with patriotic feelings,” says university lecturer Yan Nong. “It is a contest of wealth and a very ostentatious one.”

Excerpt:

By Antoaneta Becker
BEIJING, Nov 19 2010 (IPS)

When ‘Soho Xiaobao’ magazine suddenly announced in October that it was ceasing publication, it marked a huge setback for privately funded efforts to breathe fresh air into contemporary Chinese culture.

Such publications have thrived almost undercover and away from the glare of publicity, existing uneasily with the state-backed drive to re-establish China as a cultural heavyweight.

During the nine years of its life, ‘Soho Xiaobao’ had become much more than just a hip in-house magazine published by one of China’s wealthiest and most savvy real estate developers – Soho China.

Distributed free to a closed list of privileged readers, it was thus unconstrained by state censors’ meddling. ‘Soho Xiaobao’ had pioneered a style of reporting like the U.S.- based ‘New Yorker’ magazine, mixing commentaries and personal diaries and continuously toying with the taboos in print Chinese media. Some of China’s most famous names in fiction and media have contributed pieces to it.

“The magazine is a bit like me, having two identities,” says Meng Mei, a well-known French literature translator and one of the regular contributors to ‘Soho Xiaobao’. “I have a day job as a management consultant but my night job and my passion is translating and writing.”

Behind what was styled as an elite magazine intended for consumption by the wealthy Chinese socialites, ‘Soho Xiaobao’ had managed to in sneak discussions about racism and the intelligentsia’s role in China’s liberalisation, and about political reform and the unmentionable days of 1989 pro-democracy demonstrations in Tiananmen Square.

One of the magazine’s issues in 2010 was devoted to the theme of happiness in China’s years of economic boom. The articles eschewed clichés like the government’s happiness index and the obvious clash between rising wealth and spiritual dearth.

Oblivious to the political correctness of the day and the simmering territorial tensions in the region, the magazine had instead opted to probe what people in Japan, whose economic boom preceded China’s, think about happiness. Then it had offered the view from Taiwan with musings on the subject by famous mainland writers and essayists.

Hong Ying, a successful author with a long track record of translated novels overseas, is one of those who had regularly penned essays and commentaries for the monthly over the years.

Asked if money was the incentive to write for the magazine, she smiles. “They could afford me, yes. But it was also the attraction of having a definite readership which I knew had refined tastes and strong views and which I knew would for sure talk and think about my essays,” she says.

Never too shy about its aspirations of aiming for the cultural elite, ‘Soho Xiaobao’ had been regarded as a harbinger of a culture nurtured by private capital outside the state’s umbrella.

The social appeal of the power couple behind the Soho China Real Estate development company has greatly aided the magazine’s success. Zhang Xin and her husband Pan Shiyi have fashioned themselves as patrons of avant-garde architecture, rather than real-estate developers. And while not everyone is in awe of its sleek skyscrapers and minimalist, modern vision for Beijing’s urban development, the couple’s leverage as a cultural trendsetter is beyond doubt.

This is what invites questions as to why the sudden closure of the publication. The magazine’s editors have been tightlipped about the reasons for its demise. Internet forums have been abuzz with speculations citing the advance of digitisation in publishing and the revenge of the state censors as possible reasons.

For many years now, Beijing has spearheaded an ambitious drive for cultural renaissance, investing in new museums, opera houses and art venues, and injecting money into expanding the reach of China’s television, newspaper and film industries.

In published guidelines for the development of the cultural industries, Chinese leaders have let it be known that they now see the ascent of China’s cultural products as the next step along a path marking the country’s transformation from developing nation to global power.

The reactions to this campaign, however, have been mixed.

Earlier in 2010, China’s most famous blogger Han Han made a speech at Xiamen University discussing ‘Why China cannot be a cultural power’. The speech became an instant hit after being posted on Internet forums.

“When our writers write, they are self-censoring themselves every second,” he said. “How can any presentable works be created in such an environment? If you castrate all written works like you do with news reports and then present them to the foreigners hoping they would sell, do you think the foreigners are such morons?”

“You can’t have a cultural renaissance initiated by the state,” pointed out Julia Ju, who writes on mainland cultural affairs for several Hong Kong newspapers. “Creativity is individual and basically the whole concept of a state-backed cultural revival is an oxymoron. If there are new and interesting things happening in China’s culture, it is all due to individual efforts and not because of state policies.”

The success of ‘Soho Xiaobao’ as a cultural enterprise outside of the state mission was all the more special for its growing readership. By the time the magazine put out its last issue in October, it had 25,000 readers. The number, however trifle in the bigger picture of the Chinese publishing industry, is noteworthy given the sorry state of many other literary monthlies.

Bearing the mandate of the Communist Party for promoting orthodox literary works, those magazines lost droves of readers once their state funding dried up with China’s market reforms. Many have since closed down while others survive, after transforming themselves into more popular and consumer-oriented outlets.

Excerpt:

By Antoaneta Becker
LONDON, Nov 13 2010 (IPS)

The poppy argument between Chinese and UK politicians this week may not have escalated into a serious problem to derail British Prime Minister David Cameron’s first official visit to Beijing but it was symbolic of how 150 years after the Opium wars the two powers are still talking across each other.

Cameron was leading the largest ever UK trade delegation to China in hope of doubling bilateral trade in the next five years. But when he and the accompanying four cabinet ministers turned up adorned with red poppy flowers meant to commemorate Britain’s war dead, the Chinese saw an uncomfortable reminder of the Opium wars in the 19th century, which they fought and lost against the British.

Then as now the British wanted access to the lucrative Chinese market. Instead of guns, this time around they came fortified with sizeable trade mission, described in the Chinese press as the most “lavish” in history. Leading representatives of the UK finance, low-carbon technologies and innovation industries sectors featured prominently. Chinese business newspapers claimed the output of the companies making up the prime minister’s trade entourage accounted for 60 percent of Britain’s GDP.

Cameron lauded China’s astounding success of transformation over the last 30 years but warned Beijing mandarins to open their markets or risk their burgeoning economic might becoming a liability to world prosperity. Pointing out that the country has regained its place as the most important economic power, Cameron said it was now time for China to show leadership in trade.

Offering to champion Chinese access to European markets Cameron asked in return of China to be “open to Europe.”

While Cameron was issuing these warnings in Beijing, the European Union was considering blocking access for Chinese companies bidding for publicly- funded contracts unless businesses from Europe get the same access in China they claim have been denied to them by far. While China’s public procurement market has tripled over the past eight years, foreign businesses have been largely locked out of the boom due to Beijing’s policy of requiring local authorities to buy only Chinese goods and services.

The Chinese were appreciative of the size of the UK delegation, which they saw as recognition of China’s surging economic might. The education agreement, which set a target for a tenfold rise of qualified Mandarin teachers in England, reaching 1,000 by 2015, was interpreted as the right step forward on the UK side in deepening its understanding of China.

“In the past they (the British) looked down on us,” Ma Zhengang, former Chinese ambassador to the UK told the 21st Century Economic Herald. “Later on when China began rising and the ‘China threat’ theory spread, they feared us. Now they are entering a new phase when they are truly trying to understand China.”

In formal pronouncements Chinese officials talked at length about the complimentary character of the UK and Chinese economies but promised little. No longer a country of sizeable manufacturing industries, the UK is now looking to China as a market for its low-carbon technologies, wind turbines and high-end products. But in many of these areas China has ambitious plans of its own that could easily blow a hole in Britain’s industries.

In the area of renewable energy alone, China expects to generate 150 gigawatt of power from wind turbines by 2020. That is six times the British target. In 2009 China overtook Germany to become the country with the second largest installed wind power capacity after the United States, according to the China Wind Energy Association.

According to the Global Wind Energy Council, last year only 17 Chinese turbines were exported. Yet there are nearly 100 domestic turbine manufacturers, including three of the world’s largest, and many of them are eager to expand overseas.

Hua Rui and Jin Feng wind power companies are among the Chinese producers that are eyeing the expansion of wind power offshore where most of the large projects are being built and where Britain currently holds the crown.

“The government helped nurture the domestic manufacturers by shielding them from competition and delivering ready markets for them while all the while we have been sitting outside the fence. It is an unfair playing field for foreign firms,” said one frustrated European entrepreneur working in the green energy business in China.

If the development of other renewable energy industries is a guide, then the plight of the German solar industry, Europe’s largest, is indicative. German manufacturers were hard hit by the plunging price of solar panels last year due to as some allege dumping by Chinese rivals who can produce the same products for much less.

European labour unions have complained that Chinese companies are seizing big chunks of Europe’s markets from green-energy technologies to sophisticated telecommunications equipment thanks to Chinese government tax breaks and cheap state loans.

China has steadfastly denied charges that it unfairly subsidises its industries, arguing that Europe’s allegations are a cover for its own protectionism.

But Cameron delivered a warning to Beijing that keeping its trade walls up may endanger even China’s seemingly invincible economy. Arguing that no economy could insulate itself he said that a “dangerous tidal wave of money” from west to east was threatening to drown the global recovery from recession and all countries could lose out.

Excerpt:

By Antoaneta Becker
LONDON, Nov 6 2010 (IPS)

The western world sees China erecting trade walls. But China sees a throwback to an era of plundering and forceful western politics that followed the Opium wars of the 19th century and precipitated the collapse of the Chinese empire.

The international furore over China’s grip on rare earth metals has yet again pitched against each other two starkly different views of China as a belligerent new world power and a victim of international bullying.

Just as demand for rare earth elements needed to produce sophisticated electronics is exploding, China, which has a monopoly on supply over the metals, is cutting back on exports, citing industry restructuring and environmental concerns.

Beijing slashed export quotas this year by around 40 percent from 2009 levels, saying it must protect its reserves that have been recklessly exploited over the past 20 years. Government officials contend that with one-third of the world’s known reserves of rare earths, China has satisfied more than 90 percent of the world’s need for those elements.

“China is the land of rare earths in the same way that the Middle East has oil and Australia has iron ore. But China has not enjoyed the handsome profits that those countries have ripped from their control over precious resources,” said an editorial in the 21st Century Economic Herald newspaper last week.

Beijing holds that its former lack of industry oversight and low environmental standards have led to rampant exploitation, smuggling and undervaluation of the rare earth metals mined in the country.

Some of the metal ores have been undervalued on global markets by a large margin due to the operation of unauthorised Chinese mines where the cost of complying with environmental standards is low or non-existent. Smuggling has been another factor.

According to Chinese media reports, in 2009 some 20,000 tons of rare earths were smuggled out of China, accounting for nearly one-third of its exports that year.

Industry officials are indignant that China is being pressured by western nations and Japan to relax its export controls while it is trying to put its own house in order. They say plans to standardise the industry have been afoot since 2004. The government has published guidelines for the industry development, which require the gradual reduction of annual exports by 10 percent every year beginning 2006. “China’s rare earths face the awkward situation of being carved up by the world’s big powers,” said an editorial in the International Business Daily, the mouthpiece of the Ministry of Commerce last week.

The mood in the press has been one of defiance, with some opinions talking about “the war in commodities” and urging the government to stand up to the West’s bullying and “say no” to demands for lifting the export controls.

But to many it is not simply a case of industry restructuring as inexplicably exports this year were slashed by as much as 40 percent, leaving many companies on the receiving end stranded. Disruptions of shipments to Japan, in a territorial row with China, have raised the prospect that Beijing is using its monopoly on supplies for political leverage.

Economic nationalism has been palpable in recent statements by trade officials too. “The government should use our advantages in resources and production of rare earths as a sally port to establishing China’s pricing power in global commodities markets,” Mei Xinyu, a senior official with the ministry of commerce regarded as China’s guru on international trade was quoted as saying.

The importance of these rare metals for every aspect of 21st century life is said to have been spotted long ago by Deng Xiaoping, the mastermind of China’s economic reform. “The Middle East has oil, China has rare earths,” Deng said during a tour of China’s export zones in 1992 while still charting the country’s path to becoming the world’s manufacturing workshop.

The group of 17 metals with magnetic, luminescent and other properties are vital for the production of a range of modern gadgets and for the advance of green technologies. They are to be found in i-Pods, smart phones, wind turbines and electric cars. Some of the metals like samarium are used in missile guidance systems.

China lacks the technology necessary to produce many of these high-end products and inside the country the metals are used mainly for permanent magnetic materials.

Beijing’s export curbs have drawn speculation that they are meant also as a tool to force foreign companies to move production of sophisticated electronics to China. The blueprint for China’s next five-year economic plan focuses on how the country can move up the production chain.

Beijing has repeatedly denied that it would use its dominance of this crucial industry as a “bargaining tool” with rival nations. Hillary Clinton, U.S. secretary of state, said last week in Hanoi that she had received assurances from her Chinese counterpart, Yang Jiechi that Beijing had “no intention of withholding these minerals” from the world market.

Nevertheless, the issue will feature prominently on the agenda of the G20 summit of major economies in Seoul next week. Business lobbies from the United States, Japan and other rare earth consumers have urged the G20 group to make unfettered access to valuable rare earths “a top priority”.

Excerpt:

By Antoaneta Becker
HYDRA, Greece, Nov 4 2010 (IPS)

The clichés of the China man in Greece are quickly unraveling. The cheap clothing trader and the small Chinese restaurant owner are still there. Chinese masseuses are still trawling the beaches in search for customers. This familiar crowd, though, is increasingly overtaken by throngs of picture-snapping and cash-dolling Chinese tourists.

They spill off the boat cruises on the cobbled streets of Hydra island buying silver jewelry, copper ware and sipping frapuchinos (ice coffees) in small taverns overlooking the picturesque harbour. They marvel at the maze of narrow alleys and honey-coloured buildings in Venetian and neo-classical style. The more adventurous hire the only available transport here, donkeys, to climb the steep rocks hanging above the jumble of the noble town.

Feng Yixing from Shanghai spent 15,000 euros chartering a 50ft yacht and a skipper to sail the Saronic islands with his family. Feng brought his wife, two children, parents and a maid to help with looking after the elderly and the children. The yacht, equipped with five cabins, kitchen and a lounge, is proudly moored in the harbour while the family is out exploring the town. The maid is seen hanging colourful washing on the deck blowing in the wind like medieval banners.

“They are the new Russians,” says the yacht’s skipper, “they love luxury and have the means to afford it”.

Rich Chinese tourists are quickly becoming the new wave of income for Greek tourist officials, yacht owners and small businesses. They were not put off at the least by the anti-austerity riots and deaths that shook the Greek capital this summer and scared away many European tourists. By contrast, they saw it as an opportunity to get some bargain cruise deals and tour packages.

“I have been wanting to go to Greece ever since I watched their Olympic Games opening ceremony (in 2004),” says Li Hui, a diminutive business woman from the central Chinese city of Wuhan. “I have been to many places in Southeast Asia but Europe always seemed too expensive and I had to wait for the right moment.”

The right moment came this year when Greece’s piles of public debts came to light and the pain of fiscal retrenchment plunged the country in turmoil. Many foreign visitors cancelled trips after the deaths of three people, including a pregnant woman, in rioting in Athens on May 5 against government cuts imposed to secure a European Union and IMF bailout worth 110 billion euros.

Tourist arrivals in Greece fell 1.3 percent in the first seven months compared with the same period in 2009, according to the Association of Greek tourism Enterprises. Germans and Britons who make up about a third of about 15 million annual visitors to Greece were among those with the most cancellations.

Greek tourist officials did not waste time to turn the downside into an opportunity. In May they worked together with Turkish tourist agencies to attract Chinese tourists to the region with a plan for 25 offices in Istanbul and Athens all aimed at Chinese visitors.

In June, Greek Culture and Tourism Minister Pavlos Geroulanos travelled to Beijing to promote Greece’s beaches, temples and culture. There was a momentum to build on. According to a survey, in 2005, the year after Greece hosted the Olympic games, the country was voted China’s favorite tourist destination.

Unlike going to Western Europe where Chinese tourists tend to hop from country to country in quick succession, shopping and sightseeing in a whirlwind packaged tours, Greece makes for a trip on its own.

“Greece is less about shopping than about enjoyment,” says Cheng Ziying from the eastern Shandong province who is on her honeymoon trip in Hydra. “I love its classical beauty and the small towns on the islands are really romantic. It is simply perfect for a honeymoon.”

The numbers of Chinese tourists are still small compared to the traditional tourist sources. About 50,000 Chinese visited Greece last year, but Greek tourist officials hope this year they will have ten times more.

“I have to say, during Chinese national holidays, sometimes all you see in the streets of cities and islands in Greece are Chinese tourists,” Elena Mitraki, director of the Greek National Tourism Organisation’s Beijing office said last month. “And we are very pleased with this fact,” she told the China Daily.

Panayotis Makridakis who owns a curio shop on the harbourside in Hydra greets Chinese tourists at his place every day during the tourist season.

“Chinese people love Hydra,” he says. “They are amazed we have no cars and can’t stop photographing the donkeys that carry stuff around. Many have lots of money to spend but don’t know what is valuable. We value every stone and brick but they keep asking me what the point of displaying these old things is.”

Excerpt:

By Antoaneta Becker
LONDON, Oct 29 2010 (IPS)

When China’s new ambassador to Bulgaria assumed his post in mid-September he made headlines reminding the nation of a fact that may have been intentionally neglected by Bulgarian governments in the post-communist years of reform. Bulgaria was only the second country after the former Soviet Union to recognise the People’s Republic in 1949, and that historical legacy was destined to endure.

“China is a like a bullet train and you should catch it,” Guo Yezhou told Trud, one of Bulgaria’s main daily newspapers. He said his main mission in the country over the next four years will be to bring the political dialogue between both sides on a par with the existing economic cooperation.

It is a mission now mirrored by China’s diplomats all over the former Eastern bloc. Beijing perceives the region not only as one of its new frontiers for exports expansion but also as a strategic entry point for the wider European market.

The countries formerly under the Soviet umbrella — well inclined to forget the communist ideological heritage that links them to China — are finding now that those bonds are coming in handy. After years of looking to their western neighbours for investment and business opportunities, the Eastern European economies are these days turning towards China. Sitting atop 2.5 trillion dollar foreign exchange reserves, China emerged from the financial crisis almost unscathed.

Bulgaria’s poor infrastructure, inefficient courts and rampant corruption have put serious western investors off. But its relative fiscal stability and corporate taxes of 10 percent — the lowest in the EU, are deemed attractive to Chinese investors.

A snapshot of Chinese companies’ involvement in Bulgarian post-communist economy shows presence in all range of areas.

Telecommunications champions Huawei and ZTE are upgrading Bulgaria’s nationwide network. China’s largest sports utility vehicle Great Wall Motors has completed a new 80 million euros automobile factory in the northeast of the country. China’s Insigma Technology has signed an agreement for the construction of de-sulphurisation facilities with Bulgaria’s biggest power plant, Maritsa East Two. It is the company’s first de-sulphurisation project in Europe.

Bulgaria has the potential to become the gateway for the transfer of Chinese technologies and investments to the European Union, Stoyan Stalev, head of the Invest Bulgaria Agency said earlier this year.

This was echoed by China’s commerce minister Chen Deming.

“China is looking for a country which could be the major bridge between it and the countries from the EU,” Chen declared during his meeting with Traicho Traikov, Bulgarian economy minister during his visit to the Shanghai Expo in July.

China’s foray into Bulgaria is repeated in all Central and Eastern European economies. Up north in Romania Chinese companies are negotiating to build new wind power generators. In Poland up till 2007 China had an accumulated investment of 70 million euros but in 2010 its investment is projected to reach 500 million euros.

In Hungary Chinese companies are now given the red carpet with government funding going towards training Chinese businessmen in Hungarian.

This rapid infiltration has annoyed German companies, which have traditionally looked at the region as their turf. They have complained about Chinese state-owned rivals’ underhand practices deployed allegedly to gain a foothold in the Eastern European economies.

German industry’s Committee on Eastern European Economic Relations warned last week that China seems driven by geopolitical rather than economic goals when competing for contracts in Eastern Europe. The report identified “price-dumping, aggressive financing and generous risk- guarantees” from Beijing as the methods used by state Chinese companies to undermine their European rivals in the region.

Some of the complaints referred to projects in Poland and Serbia where Chinese companies landed the contracts either by aggressively undercutting the other bids or through lucrative state-backed loans. The committee said there appears to be a “direct correlation” between Chinese banks’ risk assessments of potential foreign projects and “the strategic interests of the political leadership in Beijing.”

Peter Doran, senior analyst with the Centre for European Policy Analysis in Washington, reckons that as Chinese investments in Central and Eastern Europe begin to yield fruit Beijing is likely to leverage these commercial relationships to bolster political ties with national governments.

“However, in Central Europe’s post-crisis economic environment, lingering fallout from the global recession could inadvertently magnify the importance of Chinese interests,” Doran wrote in a recent report.

Chinese analysts counter that perceptions of China’s advance in Eastern Europe are clouded by Cold War thinking.

“The west has always considered that part of Europe as their trophy for winning the Cold War,” says Zhang Zuqian, researcher with the Chinese Association for European Studies. “But the war is over and this is no longer their exclusive domain. It is also usually those European companies that lack competitive edge that complain about Chinese businesses and spread the ‘China threat’ theory”.

Excerpt:

By Antoaneta Becker
BEIJING, Oct 25 2010 (IPS)

China’s imperious behaviour in recent territorial spats with its edgy neighbours has touched a raw nerve. Anxiety about its intentions and the future outlook loom large as leaders of the 16-nation East Asia Summit gather this weekend in Hanoi to discuss regional matters.

As tensions up north between Beijing and Tokyo show few signs of abating, many are voicing fears that China’s surpassing of Japan as the world’s second largest economy has put into fast forward its ambitions about fulfilling its dream of unification through reclaiming lost territories.

Some even say that the restoration of an international order where the Middle Kingdom gains supremacy in the region and beyond is on the agenda of the Chinese leadership.

An October article in the online edition of the U.S.-based ‘Foreign Policy’ magazine claimed that Beijing has abandoned its philosophy of a “peaceful rise”. It argues that China is harking back to a Sino-centric view of the world where it sits atop the political hierarchy and other sovereign states are seen as lesser entities in deference to the Middle Kingdom.

Disquiet about the revival of a Sino-centric mentality among the Chinese ruling elite has surfaced even in hardcore nationalistic media outlets like China’s ‘Global Times’ newspaper.

“China’s success is the result of reform and opening up but success has not brought a more open mind. On the contrary, it has caused the return of a self-centred ideology,” said a signed opinion piece on Oct. 11. “The cultures around China have, historically, worried about being engulfed by other powerful civilisations. Now they feel uncomfortable with …China’s over- emphasis on its own civilisation,” it said.

In September, the same paper emphatically stated that China’s claims over the disputed Senkaku/Diaoyu islands are part of a broader claim to the Okinawa prefecture, which it said Japan snatched from the Qing dynasty that ruled China in the early 19th century.

When disputes over the rocky isles claimed by both China and Japan boiled over in September, Beijing cancelled diplomatic meetings with Tokyo, cut off the export of rare earth materials upon which Japan depends, and demanded an apology after Tokyo gave in to its demands and released the detained crew of a Chinese fishing trawler.

Beijing also reacted with fury to comments by the Japanese foreign minister describing its retaliatory action as “hysterical”.

Beijing’s anger was palpable too when China’s growing assertiveness over the disputed territories in the South China Sea was countered earlier this year by the United States with arguments about the area being “maritime commons”.

At a July security meeting of Association of South-east Asian Nations (ASEAN) countries, U.S. Secretary of State Hillary Clinton stressed the importance that the United States attaches to the freedom of navigation in the South China Sea, calling it a U.S. “national interest”. In those busy international shipping lanes, there are islets like the Spratlys and the Paracels that are claimed in part or in full by not less than six countries.

Chinese Foreign Minister Yang Jiechi retorted that Beijing considers the South China Sea a “core national interest” and that “China is a big country and other countries are small countries and that is just a fact.”

China’s recent territorial rows have occurred mostly on sea, which illustrates the country’s new push to increase its development space and seek new energy and mineral resources.

In August, Beijing announced that it had dispatched a manned submarine beneath the South China Sea to plant the Chinese flag on the seabed and begin a search for valuable undersea mineral deposits. Not coincidentally, the Senkaku/Diaoyu islands in the Yellow Sea are believed to be sitting on underwater deposits of natural gas too.

China’s emphasis on sea rights is not new, having occurred under the rule of late economic reform architect Deng Xiaoping. Unlike Mao Zedong who waged wars with neighbouring countries on land, Deng stressed the importance of China’s sovereignty and sea rights.

As China’s economy continues to grow at staggering pace, straining the country’s resources and energy supplies, sea exploration and development is acquiring a new urgency. In recent years, China has taken steps to strengthen its maritime defence, streamline its complicated system of sea management rights and build up a modern China Coast Guard parallel to those of the United States and Japan. From Beijing’s point of view, the escalation of recent territorial disputes is entirely due to the United States’ high-profile “re-engagement” with the region. In September, U.S. President Obama held a summit with leaders of the 10-member ASEAN and pledged that the United States will play a “leadership role in Asia”.

“Already Clinton’s declaration about the South China Sea as maritime commons was meant to announce the return of the United States to Asia,” says Liu Ming, Asia researcher with the Shanghai Academy of Social Sciences. “The U.S. (government) wants to internationalise an issue that is meant to be resolved between China and relevant parties on bilateral basis. This is not a multilateral matter. Going the U.S. way would make things in the South China sea only more complicated.”

Some are already warning that the re-emergence of the U.S. factor in the region will rob ASEAN of the opportunity to speak with its own voice. The fifth East Asia Summit on Oct. 30 is expected to invite the leaders of Russia and the United States to participate in it starting from 2011. But to Beijing, this welcome extended to “big powers” like the United States and Russia to the region’s decision-making table is a poorly thought out attempt to counterbalance the rise of China.

“The United States is trying to sow mistrust between China and ASEAN,” says Ma Ying of the Shanghai Institute for International Studies, cautioning that the region may become entangled in the battle for influence between the two superpowers.

Excerpt:

By Antoaneta Becker
BEIJING, Oct 17 2010 (IPS)

The headlines of the day’s newspapers strike passersby as being strangely out of sync with today’s events: ‘China’s quick deployment in the war with India astonishes the world’. Or ‘Corruption dealt with the bullet by Mao Zedong’, and ‘The true reason why Stalin repeatedly postponed Mao Zedong’s visit to the USSR’.

Newspapers with old historical news are selling well. Credit: Antoaneta Becker/IPS

They are a hot commodity among both young and old, says the kiosk girl. The editions look old, the paper feels old but the content is a novelty in China, where historical narrative is fossilised and the truth about many events is censored.

The publication of such papers is just one facet of China’s new fad with revisiting history, says Yang Jisheng, a journalist and writer who recently published a book on one of China’s best kept historical mysteries – the man-made famine during the 1958-1961 ‘Great Leap Forward’.

“Many things in our recent history have been covered up. What we do know is actually a kind of twisted truth,” he said. “People who witnessed those events and read the papers at the time want to know what actually happened. Young people want to read things that are not available in their history books.”

‘Old News’ newspaper, for instance, carries items that run the gamut from the politically important to the curiously piquant.

Along with articles that tear the veil of secrecy off relations between late top communist leaders, there are gossip columns about Mao Zedong’s insistence on being served live carp during his 1957 visit to Moscow and a full-page feature about the extraordinary measures taken to keep secret the age of Chiang Kai-shek’s wife, Song Meiling.

Unlike the stiff jargon used by the Communist Party’s flagship newspaper, ‘The People’s Daily’, the narrative in the ‘old news’ publications is fictionalised. The venerated communist leaders of the past are made to appear approachable, almost like the neighbours next door.

Is this a jab at the current communist leadership’s aloofness and continuous secrecy?

“People are hungry for the truth about their leaders both in the past and now, but we cannot write such stories about current leaders,” said Yang. He humorously describes himself as a reporter who has gone from reporting the ‘new news’ for the state-run Xinhua news agency to writing the ‘old news’. He now edits the magazine ‘Yanhuang Chunqiu’, which chronicles Communist Party history through the personal accounts of its veterans.

But while the veil of secrecy on many past issues may have been partially lifted, there are limits to the topics that can be probed.

Some tragic events in China’s recent history that the Party worries about are not to be found in any of the ‘old news’ papers. The most glaring omission is the massacre of unarmed civilians during the Jun. 4, 1989 crackdown on pro- democracy demonstrations.

Likewise, no articles probe into the true reasons for the Great Famine, which going by different accounts killed between 30 and 45 million people. Other omissions include the Communist Party’s internal struggles that led to the violent political campaigns of the 1950s and the Cultural Revolution.

Instead, the choice topics of ‘old news’ publications include current events.

At the height of China’s row with Japan over the Diaoyu/Senkaku islands, the papers ran stories about the two countries’ historical disputes.

With Beijing increasingly assertive about its claims in the South China Sea, some of the papers are tracing back the history of China and Vietnam relations. The text of a 1958 declaration by the Vietnamese government allegedly recognising China’s claims over the disputed territorial waters is prominent in the 79th edition of ‘Old News’. “It is great to have the big picture of history and understand a bit why things happened this way and not differently,” said Xie Yan, who regularly buys the periodicals. Asked if he believes that they carry the whole truth about history, he smiled whimsically: “It is the one that does not contradict the government’s view of history.”

Still, writers and independent filmmakers are increasingly pushing the boundaries of what is deemed permissible for historical study by the Communist Party.

Yang Jisheng’s book on the famine, ‘Tombstone’, arguably the first systematic account by a Chinese author of the mass starvation that Mao’s collectivisation policies caused, was published in Hong Kong in 2008. Banned in mainland China, thousands of copies have been smuggled in, and pirated copies exist too.

Feng Xiaogang, an epitome of commercial success in China’s film scene, has produced a film about the country’s most disastrous earthquake, the 7.8 Richter-scale temblor that flattened the entire Tangshan city in 1976, killing at least 300,000.

‘Aftershock’ is a rarity not only because it deals with an event that casts unflattering light on the Communist Party’s response to the disaster, but also because the truth about what went on in Tangshan at the time was kept secret from the outside world for many years after.

As the survivors in Tangshan used their bare hands to dig through the rubble of their homes, stacking the corpses of their loved ones in the streets, the Party refused all international aid and told its citizens to rely on themselves.

Lu Chuan, a director who made 2009 shocker film ‘City of Life and Death’ about the horrors of the 1937 Nanjing Massacre, claims that many Chinese intellectuals are now ignoring the party’s taboos and looking into the reasons for the Tiananmen massacre. “Many, many people in China quietly and systematically research June 4th, as well as the Cultural Revolution, and collect historical documents to preserve the memory of those events,” Lu said after a screening of his film in Beijing.

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By Antoaneta Becker
LONDON, Oct 12 2010 (IPS)

China’s display of largesse towards debt-ridden European nations has divided observers, inviting comparisons on one side to a Chinese Marshall plan for Europe, and to a Chinese communist takeover of the continent on the other.

During his week-long tour of European capitals Premier Wen Jiabao spearheaded an intensive Chinese diplomacy seeking to win sceptics and defuse fears of Beijing’s growing international clout.

On his stops in Greece, Belgium, Italy and Turkey he held talks about bolstering market access for Chinese companies into Europe, signed investment deals and talked long-term action plans for China presence in European countries. The message delivered was unequivocally that China is now an important player on the European financial and economic arena.

Veronique Salze-Lozac’h at the Asia Foundation compared China’s “rescue plan” for struggling European economies to the Marshall Plan of the 1940s, saying it marked a turning point in recognising China as a key world player.

“Like the Marshall Plan in its time, China’s offer to help Greece is not about altruistic solidarity, and is far from selfless philanthropy,” she wrote in a report last week. She said it amounted to “a clever and enlightened economic and financial strategy.”

On his very first stop in Athens, Wen pledged renewed commitment to Europe’s financial stability and described the European Union and China as “passengers in the same boat”.

“We hope that by intensifying cooperation with you, we can be of some help in your endeavour to tide over difficulties at an early date,” Wen said in a speech to the Greek parliament. “China will not reduce its euro-bond holdings and China supports a stable euro.”

Wen Jiabao offered to buy more Greek government bonds when Greece returns to borrowing on the international debt markets. He also proposed to set up a 5 billion dollar fund to support the upgrading of Greece’s merchant fleet with Chinese ships, and pledged to support more Chinese investments in the Greek economy.

This comes on top of existing agreements to lease and operate the country’s main port for 35 years and to build a logistics terminal to connect with south-eastern Europe. As Greece is preparing to sell off state assets to raise much-needed cash, China is discussing further investments in the country’s railways, telecom and construction sectors.

Beijing’s foray into Greece has raised hackles, with some observers reviving the phantom of a China threat.

“It was Winston Churchill and Harry Truman who took steps to prevent a communist takeover of Greece; it is Wen Jiabao who now makes the running by promising to buy Greek bonds when they are once again offered on world markets and to help that bankrupt nation’s recovery with investments in its economy,” Irwin Stelzer, director of economic policy studies at the Hudson Institute wrote in the Sunday Times in Britain.

Greece is hardly the only European country where officials are looking at China as the possible underwriter of their countries’ economic recovery. Earlier this year Beijing bought 400 million euros of Spanish government debt. Portugal and Ireland — both threatened with debilitating debt or bailout costs — are also said to be courting Chinese lending.

By wooing individual indebted European countries China is seen by some as implementing a “divide and rule” strategy in Europe where talk about coordinating a new united EU policy on dealing with the economic giant have so far failed to produce a coherent policy framework.

“They (the Chinese) complain that it is too difficult to deal with Europe that speaks with so many different voices but in fact they have managed to use this to their own advantage, playing different members off one another,” said one EU official based in Brussels.

Chinese experts say Europe has the same reasons for deepening relations with China as Beijing.

“For Europe China is a bargaining chip that increases its clout versus the U.S.,” says Zhang Guoqing, pubic policy researcher with the School of Government at Beijing University. “Europe is clear that while some people in Washington are preparing to wage a trade war with China, this is their opportunity to boost trade and investment from China.”

Zhou Hong, director of the Institute of European Studies at the Chinese Academy of Social Sciences, says China meant well in Europe but acted rashly.

Beijing acted “without thinking through the reactions from the European side,” she said in an e-mailed comment. Before rushing into these investments, China should have consulted Brussels, mindful that such Chinese investments may be regarded as “an intrusion into the European rules of the game.”

But China is “almost always condemned whether it does something or if it does not,” says Duncan Freeman, researcher with the Brussels Institute of Contemporary China Studies. Whether seen as a Chinese Marshall plan or as a communist takeover both are an exaggeration of what China has done in Greece and of the effects its investments will have in the country, he asserts.

“It is not China but the European Union and the IMF that hold the real power of making and breaking Greece,” Freeman says.

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By Antoaneta Becker
LONDON, Oct 8 2010 (IPS)

Europe delivered a lesson in universal values to outraged Beijing on Friday, awarding the world’s most prestigious peace prize to a jailed Chinese dissident, who had boldly called for political reforms in the communist country.

The announcement of the Norwegian Nobel Committee provided an upset ending for a week of public diplomacy by China in Europe. Chinese Premier Wen Jiabao had toured European capitals showering goodwill and lucrative investment deals for cash-strapped European economies.

But if there was ever any speculation that the allure of China’s burgeoning market and its development model can make the West forego universal values such as freedom and democracy, it evaporated with the award given to one of China’s most courageous dissident Liu Xiaobo.

Liu won the 2010 Novel Peace Prize in recognition of “his long and non- violent struggle for fundamental human rights in China,” said the announcement. By highlighting Liu’s peaceful fight for democracy the committee rebuked China’s ruthless suppression of political dissent, and reminded Beijing that “China’s new status must entail increased responsibility” in safeguarding basic human rights.

Liu Xiaobo, a 54-year-old scholar and writer, is a thorny reminder for the Chinese communist party of its tarnished and unredeemed past. In 1989 he was one of the protesters who staged a hunger strike in the ceremonial heart of Beijing, Tiananmen, attempting to avert a violent end to the peaceful pro- democracy demonstrations.

Liu is also a symbol of China’s still flickering democratic movement, which after years of suppression continues to hold out hope that those universal values will prevail over the country’s authoritarian system.

In 2008 just months after Beijing staged a dazzling Olympic Games, Liu was the leading figure among hundreds of liberal intellectuals who published an online manifesto calling for sweeping political reforms. The petition was modeled on Charter 77, which became the rallying call for the human rights movement in communist Czechoslovakia in 1977.

Released on the 60th anniversary of the United Nations’ Universal Declaration of Human Rights, ‘Charter 08’ delivered an unmistakable rebuke to Beijing’s efforts to assert its own values and for it to argue that Chinese people prefer affluence to freedom.

China faced a choice, the manifesto argued, of maintaining its authoritarian system or “recognising universal values, joining the mainstream of civilisation and setting up a democracy.”

Liu was detained immediately, and after being held in custody for a year jailed for 11 years for “inciting subversion of state power.” Some 12,000 people have put their signatures to the petition since.

Beijing reacted with fury to the announcement. A statement on the Chinese Foreign Ministry’s website called the award a “desecration” of the Peace Prize and a choice that goes against the aims of the award. It called Liu a “criminal who has been sentenced by Chinese judicial departments for violating Chinese law.”

In the weeks before the award was announced Chinese diplomats had been issuing warnings about diplomatic trouble if the prize went to Liu. The statement Friday warned the choice of Liu as winner will hurt China’s relations with Norway, the country where the Nobel committee is based.

Inside the country there has been a total news blackout on the fact that the prestigious award has been awarded for the first time to a Chinese citizen. Liu’s choice is particularly hurtful to Beijing because China has a “Nobel Prize” syndrome, always sulking that its illustrious civilisation and rising stature on the global scene have not been properly recognised.

“Every year around this time there is so much speculation whether China will be finally recognised with a Nobel Prize,” said Zhao Hongli, a Beijing intellectual who took part in the 1989 Tiananmen demonstrations and remembers Liu from those days. “The news will quickly filter through and I hope there will be a revival of the Tiananmen legacy.”

Catherine Baber, Deputy Asia-Pacific Director at Amnesty International, said the award can only make a difference if it “prompts more international pressure on China to release Liu, along with the numerous other prisoners of conscience languishing in Chinese jails for exercising their right to freedom of expression.”

Beijing’s fury at Liu’s choice mirrors the time in 1989, the year of the Tiananmen Square massacre, when the Nobel Peace Prize went to the Dalai Lama, the exiled Tibetan spiritual leader. The Dalai Lama won the prize for his peaceful pursuit of genuine autonomy for Tibet, sparking accusations by China that the West supports what Beijing calls his “separatist cause”.

The Dalai Lama was among the first to congratulate the jailed Chinese dissident for winning the prestigious award. “Awarding the Peace Prize to him is the international community’s recognition of the increasing voices among the Chinese people in pushing China towards political, legal and constitutional reforms,” the Dalai Lama said in a statement on his website.

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By Antoaneta Becker
BEIJING, Oct 8 2010 (IPS)

In the rich depository of Chinese expressions dealing with the issue of unrest, none is more sensitive than the word ‘qiyi’ or rebellion. After all, Chinese imperial dynasties have lost mandates because of peasant rebellions and the mere mention of the word in China brings associations with calamitous change.

Chinese ask where equality is, as the gap grows between the have and have-nots. Credit: Antoaneta Becker/IPS

On a recent autumn afternoon, while the cream of China’s nouveau riche was clinking champagne glasses with visiting U.S. billionaires Bill Gates and Warren Buffett in a French- style chateau in Beijing suburbs, peasants from the villages around were grumbling about their lot.

“They have taken our land to build this mansion. Land is all we had but they don’t count their money and houses,” says Xiong Shaoping, who repairs bicycles for a living. “People are angry because this is a communist country and we should be equal. If things don’t change, there will be a rebellion and people like me would want to have their share too.”

Xiong does not feel the need to elaborate as to who “they” are. China’s new rich have no qualms about flaunting their wealth. They drive Rolls Royces and Bentleys, live in gated compounds, buy luxury watches in bulk and can be seen flanked by bodyguards.

There are 875,000 millionaires – in U.S. dollars – in the communist paradise with an average age of just 39, according to an annual Rich List compiled by the wealth analyst Hurun. China has the world’s second largest population of millionaires after the United States. About 130 Chinese rich are worth more than 100 million dollars.

Nowhere is this wealth seen more clearly than in China’s skyrocketing demand for luxury goods. In 2010, the People’s Republic overtook the United States to become the second biggest market for the luxury sector, and by 2015 it is expected to overtake Japan.

Most of this money was made during the past 30 years, after China embarked on economic reforms. The rich got richer as Mao Zedong’s egalitarian society evolved from a society based on shared wealth to one where money is concentrated in the hands of a few.

Bitterness toward the rich is palpable in China these days. Whether they belong to the red capitalists – the offspring of communist revolutionaries and senior party officials – or the new rich, the economic elite is regarded with suspicion and resentment.

Reports in domestic media outlets suggest that 0.4 percent of the country’s 1.2 billion population possess 70 percent of the nation’s wealth. What is more, the economic elite are believed to be hiding grey income amounting to 9.3 trillion yuan (1.39 trillion dollars), an amount equal to 30 percent of China’s 2008 Gross Domestic Product.

Wang Xiaolu, economist with the National Economic Research Institute in Beijing who conducted the grey income study, holds that such income comes from bribes, embezzlement of public funds and favours from businesses and industries.

There is no limit to the appetite of the new rich. Chinese business newspapers feature investment advice for people who want to purchase chateaus with vineyards in French Bordeaux and guides to prime properties on the market in London and New York.

But those who sell these newspapers earn a meagre 900 yuan (134 dollars) a month, and are quick to give their verdict on the current state of society. “Guofu Minqiong – rich government, poor people”, says Er Ni, peeping out of the window of her small kiosk in downtown Beijing. “Those who have money can buy any favour and for them everything is possible. We can only read about some things in the papers.”

This reality of cheating and paying for favours is made plain at one of Beijing notary offices, where a woman eager to skirt the bureaucratic maze in registering her third property says: “I’m only afraid of things that one cannot buy with money.”

Increasingly, the belief that everything needs to be aided with bribes is corrupting just about everyone’s psyche. One can no longer simply assume that public officials on duty will do their job unless they are persuaded to do so.

“I used to bring boxes of mooncakes (traditional pastries to celebrate the Mid-Autumn Festival) around at this time of the year to get things done,” says Chen Xueli, a real estate agent queuing at the notary office with her clients. “Now I need to bring envelopes with cash.”

A lot of the social tension in Beijing stems from the grudge that ordinary people have about not being able to afford to buy housing. In the last two years, property prices in first-tier cities have skyrocketed, driven by excess liquidity and lack of investment alternatives.

A recent survey by the Chinese Academy of Social Sciences (CASS) found that 85 percent of urban families could not afford an apartment. But a small proportion of the population owns several houses and is engaged in feverish property speculation.

“It is not only property they are gambling on. There are now speculative bubbles in the art market and in the antics too,” says Mary Huang, who works in the auction business. “If we now hold a small-scale auction, we can easily earn 400 million yuan (59.7 million dollars). I think it is too unrealistic to last.”

After flooding the economy with stimulus money to ride out the financial crisis, authorities seek to limit the damage and minimise the risk of asset bubbles bursting, lest a collapse in property prices drag the economy down and cause mass unrest.

Some observers say reversing that the trend of widening income gap and averting an uprising should be top leaders’ foremost priority.

In September, President Hu Jintao said China supports the concept of “inclusive growth”, first pioneered by the Asian Development Bank in 2007. Unlike China’s rapid since the 1980s, inclusive growth must benefit the poor and allow income redistribution.

But measures to squeeze wealth from the rich are likely to be met with harsh resistance from different interest groups.

“In the West, they say the rich are powerful. But in China those in power are in fact those in possession of the biggest riches,” argues Ding Xueliang, political scientist at Hong Kong School of Humanities and Social Science. “How do you go against such a powerful group of people that control all resources in the country?”

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