China and its Discontents

Travelling through Sichuan made me realize I still had old copy lying around from previous travels that I had never published. The next couple of posts will be those. Here’s the first. Reflections on Chengdu and Emei Shan will follow.

In Xinjiang, cultural politics mixes with oil politics. Every time the Chinese government squashes Uyghur expressions of independence or solidarity, the West reacts with outrage. ‘The people of Xinjiang (and by extension, Tibet) must have rights of self-determination,’ they shout. The West fails to recognize China’s priorities. China’s desire to foist a nationalist identity on Uyghurs and create a unified China is a secondary concern; it only exists so that they can extract as much oil as they can from Xinjiang.

Karamay is Xinjiang’s oil capital. 15 years ago, it was a patch of the Gobi Desert. Now it is a city of 290,000. It has cost billions of yuan to build – a river was even diverted from the mountains to make it livable. Just recently, a billion yuan was spent to build a major park downtown, featuring a spectacular water and laser light show at night.

Surrounding Karamay for a hundred kilometers are oil fields. You can drive along the highway next to the Taklamakan Desert and never stop seeing them; oil derricks stretch beyond the horizon. It was the first oil field discovered and tapped in post-revolutionary China, and the fourth largest, after those in the Northeast and in the East China Sea. 6.3 million tons of oil flows out of Karamay every year. In the US, you would expect an endeavor like this to be built by private enterprise. But this of course is China, and the Karamay oilfield is owned by the state-run China Petroleum.

Karamay isn’t just one of China’s biggest oilfields – it’s also a major conduit for oil and natural gas to and from Kazakhstan and the rest of the Central Asian “stans”. In this regard, the pipeline is the most important resource in Xinjiang. Even if all the oil dried up today, the city would still exist because of this connection. China could actually be drilling more oil in Karamay, but it’s harder and deeper to get to. They don’t need to spend the capital to invest in more expensive technologies, however, because the oil in Kazakhstan is simply cheaper.

Xinjiang is known for its “one white, two blacks”: cotton, coal, and oil. Of lesser geopolitical importance is its “one red”: tomatoes exported to Italy. Although the vast wind fields, solar power plants and hydropower dams are impressive, they are not as significant, because they are only used to supply energy to Xinjiang itself. Oil and coal, however, power the rest of China.

Too many China scholars view China’s insistence on the territorial integrity of Xinjiang as culturally or historically based, as if the Chinese would “lose face” if the barbarians in the West seceded and overturned their tributary relationship. This is mistaken. Opposition to Uyghur independence is not primarily a matter of nationalism, the unification of all minzu (nationalities or ethnicities) under common citizenship, and certainly not about pride. It’s all about oil.

The New York Times’ recent article on the nature of Hezbollah’s current existential predicament was extremely instructive – mainly because many people don’t view Hezbollah’s problems as an issue over its very existence (but it is). The best quote, unfortunately, was wedged toward the bottom:

“Hezbollah doesn’t want to control the government or country, even though they could if they wanted,” said Anis Nakkash, director of the Aman Research Center here in Beirut.

The article identified the problem; that is, Hezbollah can’t consolidate power. But this quote says why: Hezbollah doesn’t want to claim total power. The real reason behind this being, Hezbollah is a militant group, and ruling governments by definition cannot fill the same role as a militancy. An institutionalized Hezbollah is no longer the same Hezbollah that once existed, and the leaders of the group don’t want to lose sight of their original goal: vengeance and destruction upon Israel. Now this is not to say that states that employ terror do not exist. They do. But they generally operate dysfunctionally and are rejected by the global community (Iran, North Korea, China at its worst, etc.).

Hezbollah is on a very shaky path right now. It simply does not have the requisite credibility among the international community to act as a real, normalized stakeholder in any Lebanese government. But it’s also true that we need Hezbollah to become legitimate more than anything – to shake off some of its radical roots, cut off ties with Iran (which might already have happened), and take over some responsibility in representing Lebanese’ interests on the world stage. This outcome is possible, but it will require a careful dance by US diplomats. As for Hamas – well, Hamas is another story. They’re really off the deep end.

While WikiLeaks made the trove available with the intention of exposing United States duplicity, what struck many readers was that American diplomacy looked rather impressive.

Is this really true? I don’t believe it!

No seriously, what did people expect? That we have amateurs representing our interests on the world stage?

President Dmitri A. Medvedev, expressing continued wariness over the prospect of military cooperation with his country’s former cold war adversaries, warned on Tuesday that a failure by Russia and the West to reach an agreement on missile defense could provoke a new arms race.

This is why the New Start Treaty needs to be ratified before the end of the year. We need the Russians to be on our side. Medvedev has staked Russia’s good relations with the United States, and any future nuclear negotiations, on the success of the treaty. New Start and missile defense are not just related – they are inseparable. Without a resolution on one, the other will languish. If we let New Start go, our priorities with Russia across the board falter. If we don’t deal with missile defense, then the Russians will back out of New Start.

I’m very happy to see John McCain coming out of a long, dark election season and finally articulating a position that makes sense: supporting the passage of New Start and encouraging Jon Kyl to follow suit. It’s too bad that some politicians can’t stand up to pressure from within their own party (but at least he’s here right now).

I think ratifying the New Start treaty and the successful inclusion of the Russians in a joint-NATO missile defense plan would be an unqualified success.

Over an official lunch in late February, a top South Korean diplomat confidently told the American ambassador, Kathleen Stephens, that the fall would come “two to three years” after the death of Kim Jong-il, the country’s ailing leader, Ms. Stephens later cabled Washington. A new, younger generation of Chinese leaders “would be comfortable with a reunited Korea controlled by Seoul and anchored to the United States in a benign alliance,” the diplomat, Chun Yung-woo, predicted.

That is a bold prediction – and the Guardian (here and here) is much more direct than the New York Times in claiming this. I agree with Stephen Walt that in regards to China and North Korea, the embassy cables are much more of a wash than they are portrayed as (what an ambassador says to another ambassador is not necessarily the discussion the Politburo Standing Committee is having). Even assuming Kim Jong-eun or the military cabal is somehow incapable of successfully negotiating the power transfer, there would need to be some pretty astounding diplomacy for China to be comfortable with a unified Korea. The entire idea behind supporting a divided peninsula from China’s perspective is that, regardless of how odious the North Korean regime is (and it is a serious headache to China), any unbalancing of the status quo will ultimately hurt China’s interests. Any US or NATO military presence above the DMZ and the floods of North Korean refugees, as the article notes, would be untenable. But that’s not all.

An ascendant, unified Korea could not be a benign ally of the US, according to certain Chinese viewpoints. Already, China is boxed in on all sides by countries closely-partnered with the US: South Korea (of course), Japan, the Philippines, Indonesia, Australia, and India. Unification means a great deal psychologically. A unified Korea would have subtle, but greatly-expanded persuasive powers on the international stage. I hope that, as the Guardian suggests, younger leaders are no longer concerned about this, and want to work with both Korea and the US in a mutually beneficial manner. But that’s not a given.

The goal, then, is to make unification in China’s interest. China might not be able to prevent it – the regime might slide so quickly as to be unsalvageable (and China certainly is never going to war over North Korea again). But the US and Korea should want China to recognize the unified state on its own terms. Not consulting the Chinese would harm our relations with them on all fronts. Incentives for Chinese investment in Korea would help – so would significantly paring back American military presence on the peninsula. (Why, in a post-North Korean world, would we even need military bases there? Is war with China a realistic threat in this day and age? And besides, we always have Japan) We could even couple some of the things China wants with some of our own priorities (on trade, fiscal policy, climate change, energy policy, you name it). I have a feeling that this is not a zero-sum negotiation in which China and the US negotiate, tit-for-tat. Instead, an outcome in which both sides are satisfied can only be positive.

I’m having a hard time imagining how painful the reunification process would be. The North Korean state, if it did merge with the South, would probably go down in flames. The state is already a wreck with food shortages and the like, but without even minimal state assistance many more would probably starve. The military would suddenly be a loose cannon – and the nuclear material currently lying around Yongbyon would be up for grabs. Of course, South Korea and the United States have certainly drawn up coordinated response plans to rush into the vacuum when needed, and have practiced plenty of military scenarios (the current exercise with the two countries’ navies being conducted right now included). But it still boggles the mind.

From Steve Clemons:

Information has reached me that some USAF personnel have been put on 24 hour deployment alert with regard to North Korea. I don’t know how regular or irregular that is — but know that despite a lot of tension in the country since 9/11, my sources have not been put on such alert before. The USAF has denied that it has changed its alert status in comments to other journalist friends of mine — but the actual personnel beg to differ.

When I first heard the news that North Korea had shelled an island across the DMZ, I thought this disturbing provocation seemed more serious than previous attacks. Let’s hope this does not escalate.

Meaning to get to this for a while.

How big is the rift between China and the US?

Administration officials speak of an alarming loss of trust and confidence between China and the United States over the past two years, forcing them to scale back hopes of working with the Chinese on major challenges like climate change, nuclear nonproliferation and a new global economic order.

And David Shambaugh calls China “an increasingly narrow-minded, self-interested, truculent, hyper-nationalist and powerful country.” Ouch.

You can see this especially in Obama’s latest trip to Asia and his support for elevating India to the Security Council. This article was published before the trip and the midterm elections, and I definitely feel like some of the fear-mongering associated with the election has tempered slightly in the past few weeks. For a while, Blue Dogs and Tea Partiers alike were really shredding our precious guanxi (if there is one Chinese word you should know, it should be guanxi, or relationship). But the political system has now let out some steam.

There’s not much more analysis I can add that isn’t already covered excellently in the article (see below), only to say that we should neither disparage China’s (and our) growing calcification nor try to take an even harder-line to our relationship. This is simply a natural, and predictable reaction by the American public (and in reaction to them, Congress) to rather distressing bilateral economic policy conducted by both countries over the past decade.

To round out, here’s an especially pertinent section of analysis:

Political factors at home have contributed to the administration’s tougher posture.With the economy sputtering and unemployment high, Beijing has become an all-purpose target. In this Congressional election season, candidates in at least 30 races are demonizing China as a threat to American jobs.

At a time of partisan paralysis in Congress, anger over China’s currency has been one of the few areas of bipartisan agreement, culminating in the House’s overwhelming vote in September to threaten China with tariffs on its exports if Beijing did not let its currency, the renminbi, appreciate.

The trouble is that China’s own domestic forces may cause it to dig in its heels. With the Communist Party embarking on a transfer of leadership from President Hu Jintao to his anointed successor, Xi Jinping, the leadership is wary of changes that could hobble China’s growth.

I was going to post this next week when it is in the Trinity Tripod, but it’s relevant right now.

UPDATE: It’s posted on the Trinity Tripod.

This month, the Nobel Committee awarded the Peace Prize to Liu Xiaobo, a Chinese democracy dissident and intellectual famous for negotiating the safe passage of the last few hundred students at Tiananmen Square on June 4th, 1989. He is currently in jail for drafting Charter 08, the most recent major call for democracy in China. The week before that in the U.S., the House of Representatives voted overwhelmingly to impose tariffs on China because the Chinese government is artificially suppressing a rise in the value of the RMB; although the bill is inflammatory, it is unlikely to pass the Senate. And across the country, midterm election advertisements have blamed China as the final link in a chain of economic misery, stealing jobs from hardworking Americans and destroying our way of life. How are these events connected? While we might want Chinese democracy activists to prevail and the Chinese economy to come into balance with the rest of the world, we are actually shooting ourselves in the foot by playing to election-cycle populism.

A common word you hear around foreign policy circles in the Obama administration and the Clinton State Department is engagement. It basically means that the U.S. has a duty to stick to its core values, but that we can advance those values not by lecturing from a bully pulpit, but practically through a combination of defending our interests and appealing to the interests of other countries. This does not mean what political opponents of this administration want you to think it means. It does not mean that we are abandoning our values. It does not mean that we can’t strongly condemn human rights violations. But it does mean that instead of cultivating our national pride and vanity in throwing bombast at China, we’re more interested in results. We should in every circumstance call China out on its politically repressive policies. But its economic policies are different.

We need to stop demonizing Chinese economic policy because it will only lead to more Chinese intransigence. No government wants to be perceived as if it is beholden to the demands of another. This is essentially the application of behavioral psychology to international relations: do we ever want to be perceived as weak and submissive, buckling to the demands of a competitor? No! Political leaders want to project independence, primarily because their constituents want to feel as if they are collectively independent. Government behavior mirrors individual behavior because governments, even non-democratic governments, are at some level accountable to the people. We can better influence Chinese policy by negotiating, and gently manipulating the tug and pull of international diplomacy.

We also need to rid ourselves of some populist notions that say that if only the value of the RMB would rise, a flood of manufacturing jobs would return to American shores and our economic misery would be healed. The artificially low value of the RMB is a problem, but inflating the RMB is not the panacea that election ads make it out to be. It will not directly result in new factories in the Rustbelt – making China wealthier will encourage more Chinese to buy more foreign products generally, not just American products, and there will always be another country to which we can outsource jobs. Even at a doubling of the value of the RMB, the average Chinese factory worker’s salary would be pitifully low, still ripe for outsourcing jobs. Raising the value of the RMB will, however, correct systemic imbalances in the global economy. In order to better understand these imbalances, we need to look at the situation on both sides of the Pacific for the past ten years.

We need to recognize that the U.S. in the last decade has complied with the policy of a cheap Chinese currency – even benefited. Although China’s economic ascent has been rapid, it has not been as rapid as it could have been. In addition to artificially lowering the value of the RMB, the Chinese government has artificially raised the national savings rate. When a Chinese factory produces goods that are shipped to the United States, that factory gets paid in dollars. The proprietors of that factory must then exchange those dollars into RMB at the local bank to pay their costs. If we were looking at the situation in foreign countries, that bank would then invest its dollar reserves in whatever it thought to be most profitable. But under Chinese law, the dollars can’t go to the Chinese bank that exchanged them, but to the central bank, the People’s Bank of China.

Billions of dollars end up in PBOC coffers every day, and every day the PBOC parks the vast majority of its holdings in Treasury bonds, and to a lesser extent, stocks and other investments. This has an affect of improving the American standard of living – our stocks rise in value, bank holdings rise, those banks lend to the average middle-class family using a credit card and sitting on a subprime-mortgaged house, and they purchase more Chinese goods – all in a virtuous circle of consumption. But this policy, which has been tacitly affirmed by both Chinese and American governments, also has a dark side. First, it allows the U.S. government to spend more than it could ever possibly spend without raising taxes; second, it suppresses the living standards of the average Chinese worker.

We already know about the U.S. debt crisis. We’ve spent more and more on wars of folly, unpaid expansions of entitlements (in the form of Medicare Part D), and in addition to a sudden drop in tax revenue, a massive dose of counter-cyclical stimulus in response to the recession. This is compromising our ability to invest in the future and provide a stable platform for future economic growth. What we don’t know is that we’re also stymieing the average Chinese family’s advance in economic prosperity. Every day that the PBOC shuttles a billion dollars back into the U.S. economy is one more day that well-off Americans are borrowing a billion dollars from substantially poorer and worse-off Chinese. The money that has enabled an exploding deficit and a diseased consumer culture is also money that is not being spent in China on schools, infrastructure, and credit extended to Chinese families in the same way it has been extended to us. This is what the “trade imbalance” really means. The end of the imbalance won’t mean an instant economic stimulus in the U.S.; it will however make both countries substantially better off for the future. Why does all this matter for the Chinese democracy movement? China will be much more receptive to political reform when it is integrated into the world economy, not isolated; attuned to movements of global culture, not cut-off; and when individual citizens prosper, not mired in a low standard of living.

Fang Lizhi, a major Chinese democracy activist who fled to the U.S. after Tiananmen, recently wrote a New York Times op-ed claiming that Liu Xiaobo’s Peace Prize should disabuse us of the “dangerous notion” that “the autocratic rulers of China will alter their disregard of human rights just because the country is richer.” This, I believe, is not a fair representation of this view; subscribers to that view don’t believe that the Communist Party will change as a result of economic prosperity, but that individual Chinese will.

A higher standard of living for Chinese citizens will do several things: it will bring more Chinese out of poverty, and into education. This, in turn, will expose them to ideas not sanctioned by the government. Consider this: every major democracy movement in China has been instigated by Chinese students and intellectuals. The 1979 Democracy Wall movement was student-led; the 1989 Tiananmen protests were student-initiated, followed by the support of broad swaths of the Beijing population and people in cities across the country; Charter 08 was written and signed by intellectuals and prominent professionals. This pattern repeats itself over and again.

Rural farmers too, have engaged in protest, not generally for democracy, but against local corruption. When taxes in these rural areas are raised exorbitantly high (nearly wiping out their yearly income), farmers have organized opposition, and in some cases, made minimal reform. But this is not addressing the issue: an unaccountable bureaucracy and an illegitimate authoritarian government. At Tiananmen 21 years ago, the students found support in factory workers, doctors, teachers, and even employees of the Communist Party newspaper, but not rural farmers. Tiananmen was a minimal blip in the minds of most Chinese (if they knew about it at all). The voices for a democratic China must link arm in arm with the poor, rural farmers. Only when more farmers are lifted out of extreme poverty can they truly wipe out corruption. When this happens, the Communist Party will not be able to stop the transition to multi-party democracy.

The Communist Party no longer has a coherent value system upon which policy is based. When capitalism was slowly introduced in the 1980’s, the then party chairman Zhao Ziyang said that China was still in the first stage of socialism, and had to build up its productive forces for 100 years for socialism to be sustained. This was and is a façade. The party currently exists to preserve its own power.

Under Mao, China did have a value system, however violent and repressive. Because the Chinese people are now grasping for something to believe in, they ask – what does it mean to be Chinese? Is it just the pursuit of wealth and the technocratic application of utilitarian economic policy? Millions are turning to religion: Christianity, Buddhism, and traditional Confucian practices. But Chinese democracy activists have for thirty years offered something different. To be sure, the vast majority of Chinese know little of the movement and will have been blocked from hearing about Liu Xiaobo and the Nobel Peace Prize. But it is influential enough that the Communist Party feels threatened. As more and more Chinese rise out of poverty and into the halls of academia and professional life, more and more will desire a real, national set of values. The democracy movement must stand ready to offer that alternative to the newly well-off.

We’ve now come full-circle: we must stop demonizing Chinese economic policy because doing so will not change the situation, which will not solve our debt crisis nor raise the Chinese standard of living; the lack of such an increase in prosperity will ultimately further the repression of political reform in China and inhibit the advance of our interests and human rights globally. We can further our economic desires and the cause of democracy and human rights by taking a reasoned, practical course, and engaging with the Chinese, not cutting them off.

Fair question, Senator Obama.

“At what point do we say: ‘Enough’?”

By now, White House and DoD criticism of the release of the Wikileaks archive has shifted from ‘it harms American soldiers and US military operations’ to ‘it doesn’t tell us anything we don’t already know’ to ‘Wikileaks released the names, hometowns, and families of Afghani informants, which will result in their deaths’. The possibility that Afghans could be assassinated as a result of this leak is reprehensible and probably the worst result of the leak. But is retribution likely?

In an interview with the Daily Beast, Sirajuddin Haqqani, son of the leader of the Haqqani Network, pointedly omitted any reference to retribution, but does talk about the ‘atrocities’ of US and NATO forces, as well as the ‘loss of innocent lives in bombings’. Both the Taliban and ISAF are waging two parallel wars: the physical war with each other, and the psychological war to gain the trust of the Afghani people (this is what the DoD calls psy-ops, or psychological operations). Both are an integral part of the Taliban’s mission, just as much as it is a part of COIN strategy. Retribution is therefore rather unlikely – not simply because the Taliban talks about ‘innocent lives’ (that would be naive), but because it would set them back in the more important psy-ops war.