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Thread: Xi Jinping's historic power grab in China

  1. #76
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    Quote Originally Posted by DOR View Post

    If you had any experience with how business works in China you’d realize that the scary “nearly arbitrary power” has very little impact – if any – on the vast majority of companies. But, someone on Fox News said so, therefore it must be a fact.
    Well, at least you're acknowledging this power. That's an improvement.

    Adding banking, infrastructure construction, real estate development, high technology (really?) and small sectors (whatever that is) at this point is changing the subject because you haven’t got any facts to back up what you started with. I'm not sure what you were on about in the rest of the post, so I'll just stop here.
    LoL, so you can't actually dispute these facts. You realize that what we are talking about is the power structure is the Chinese economy, and that, more than anything, is a structural issue right? That means it's the ownership structure and support structure that matters. There's zero disputable fact there. What, are you going to contend that ICBC, et al are not state owned? That it's all just propaganda? That's a laughable argument and you know it. So, instead, you're taking good data on the retail economy and throwing it up as FUD because you can't confront the core facts that make people say China is still a state run economy to a far greater degree than typical developed nations.

    What is your problem?
    That someone is wrong on the internet. I had some hopes when you posted the retail data that we can dig deeper and understand more about the tension between the state's position at the commanding heights and the private sectors position in the daily life, but this has become a useless pissing contest and I'm so done wasting time.

    Edit:

    Actually you know what, I take back some of my criticism of you, because now I see where there was a miscommunication.

    I think what you meant to say with the data set, was: here is a compendium of published economic data on major sectors of the Chinese economy and as an example, here a a few numbers you tallied up. However, if I looked through the other numbers, they would also support your position that the state is no longer dominant. You did not necessarily mean that the numbers you posted could, by themselves, prove that the economy was not state led.

    Unfortunately, I lost the signal when you launched into your rant about being an economists for 40 years.

    However, my point still stands. The Chinese government the commanding heights of the economy and therefore the direction of the economy. It does so to a much greater extent than occurs on the West. So much so that I consider it to be a state run economy with market economics.

    Let me give you an example:

    Say you are a local government in China and the provincial and central governments and the state railway development corporation decides to run a high speed rail through your area with a new stop at a particular site. The local government then makes land at the site available for "long term lease" to developers, who have back channel connections to the local officials. The local government also creates government associated development corporation who participates as a minority partner in the developments, but whose presence on the venture allows the venture to obtain loan guarantees from the state development bank. That initial guarantee signals implicit state backing for the venture (whether true or not), allowing other private investment entities to pile in with investments. Meanwhile, back channels with the local government allow the developers to evict existing land users, sail through environmental reviews, obtain all permits for any construction work, and build up the assets in Chinese time.

    Now, we look at the result from the perspective of your economic numbers:

    The infrastructure spending isn't clearly accounted so it's missing from the tally.
    The local government investment vehicle is only a minority partner.
    The state development bank just provided a loan guarantee.
    So, by all appearances, the majority of the assets belong to the private sector, the majority of the investments came from the private sector, and the urban jobs that result (retail shops, apartment building managers), are 90% private.

    Yet, it's also pretty clear that the government planned and orchestrated the whole thing. Nothing would have happened without the government's direction.

    Now you might say, same thing with real estate developments in the US. Well, crucial differences: the bank is not state run (the Fed is at least one tier removed), the land is not usually public land, you don't have a massively funded and highly activist state owned infrastructure builder involved, the connection between the local government and the developers are much more structured and under a more rigorous legal framework, and if you had business differences with the local county official you don't run the risk of having the police kidnap you and give you a stern talking to (or worse). In my view, the private sector was just the help. The private sector participants were all replaceable. It was the state sector that was calling all the shots in the example I just gave.

    And we can't really see or understand that from the data in the economics year book. That's why I'm saying it's a structural issue. That's why I think state control over the banking and infrastructure sectors, and state support of high tech companies like Huawei are so important. Those are the linchpins. With the largest players in those sectors under state control, state support or heavy state influence, the government has a deep ability to move the economy.

    Now, I take your point that the private sector activity in China is so large today that the state can't have a grip on it all. That, I think, is true. However, the state still determines the strategic directions of development, and, should it desire, it can assert itself in any sector it sees fit at any time it sees fit with none of the legal and political limitations that Western governments would face.

    Just look at what happened during the recent Chinese stock market crash, or even more recently the heavy handed clamp down on entities such as Anbang. In fact, the An bang shows that large corporations are no less vulnerable to state influence than small ones. In fact, large corporations might be even more amenable to application of state power to greater effect because their well defined management structure lends itself to state takeovers with minimal changes in daily operations. Top level owners and executives are therefore more beholden to soft influence by the state, and just as vulnerable to hard power.

    One look at all of the CEOs and companies railing against the Trump administration in the US tells you that's not the case here.

    Under Xi Jinping, there appears to be a substantive reassertion of state control so that trends that were handing more economic control to the private sector of the Chinese economy appear to be actually reversing. This is not just my own opinion but current conventional wisdom.

    http://www.scmp.com/comment/insight-...ger-role-state

    I think if you want to dispute this, you need to either present why you think these effects are not important, or argue why you think the trend towards more market power is irreversible.
    Last edited by citanon; 04 Apr 18, at 22:17.

  2. #77
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    A few references pertinent to (but not entirely encompassing) the above discussion, specifically encompassing the role of SOEs but missing other ways in which the government influences ostensibly private enterprises:

    China 2030 report prepared in 2013 by the World Bank in conjunction with the China State Council:

    https://www.worldbank.org/content/da...0-complete.pdf

    And the 2018 China Systematic Country Diagnostic by the World Bank:

    http://documents.worldbank.org/curat...n-02142018.pdf

    From the latter, regarding SOEs:

    Despite the expansion of the private sector, China’s state sector still plays a major role in key areas of the economy. China has more than 155,000 SOEs, accounting for 43 percent of industrial assets, 30 percent of revenues, and 15 percent of jobs. By comparison, in OECD countries, SOEs account on average for less than 5 percent of the economy and typically less than 15 percent in most other developing countries. Enterprises managed by the State Owned Assets Supervision and Administration Commission (SASAC) total 102 and are relatively large and cluster around China’s strategic industries. [/B]Forty-seven of such centrally owned SOEs are in the 2014 Fortune Global 500 list. However, most SOEs are smaller and are owned by provinces or municipalities and controlled by the local governments. SOEs still control around one-third of all investments, and the share has been increasing recently. In 2016, state-owned and controlled enterprises’ investments grew at 18.7 percent, compared with less than 5 percent growth for private investments. Part of this wide divergence may have been due to reclassification of private firms to state firms, but the decline of the growth rate of private (minjian) versus SOE investments started as far back as 2012, when private sector investments grew by 27.5
    percent. In addition, the return on assets of SOEs has been below private firms and the gap has widened since the Global Financial Crisis (Figure 1.7). From 2009 to 2013, the average return on assets for state holding enterprises in the industrial sector was 4.4 percent, compared to 12.0 percent average for private enterprises in China.

    Entry into some key sectors remains limited for private firms, as regulatory barriers to competition remain relatively high in China, including in oil and gas, electric power, finance, and telecommunications.
    The OECD’s Product Market Regulations (PMR) indicators measure the stringency of regulatory policy in specific areas on a scale of 0 to 6, with a higher number indicating a policy stance that is deemed less condu-
    cive to competition. The PMR indicators for China are comparable with non-OECD countries, but relatively high on barriers to trade and investment, barriers to entrepreneurship, and degree of state control compared with OECD countries (Figure 1.8). In particular, the services sector appears to have comparatively greater market entry barriers than the manufacturing sector. At present, SOEs account for a much larger share of fixed asset investments in services compared with manufacturing (43 percent in services compared to less than 10 percent in manufacturing), with particularly high shares in transportation, environmental management, and financial service. The government recognizes that further removing market entry barriers would help promote improvements in productivity. In this regard, the National Development and Reform Commission issued a policy document in October 2016 outlining measures to promote private investment, in particular by widening market access to private investments in specific sectors, such as telecommunication, electricity, and oil and gas exploration.
    OECD data on Chinese infrastructure investment compared to the rest of the OECD:

    https://data.oecd.org/transport/infr...investment.htm

    Go to site, select China.

    OECD China survey 2017:

    https://www.oecd-ilibrary.org/econom...ys-chn-2017-en

    OECD reliance of sub-national governments on land revenue:

    https://read.oecd-ilibrary.org/econo...aph17-en#page1

    This chapter has some OECD data on SOEs:

    https://www.oecd-ilibrary.org/sites/...-chn-2017-4-en

    Data on transition from manufacturing to services (note World Bank on SOEs accounting for larger share of service sector investments):

    https://read.oecd-ilibrary.org/econo...raph5-en#page1

    The drivers of growth:

    https://read.oecd-ilibrary.org/econo...017-graph20-en

    SOEs still retain a very large share of corporate debt:

    https://read.oecd-ilibrary.org/econo...aph30-en#page1

    IMF's analysis of perimeter government accounts, ie, off-budget local government financing vehicles in China:

    https://www.imf.org/~/media/Files/Pu...7/wp17272.ashx

    Additional studies and reports

    https://www.imf.org/~/media/Files/Pu...7/wp17272.ashx

    https://www.forbes.com/sites/sarahsu.../#1bf1c444decf

    https://www.adb.org/sites/default/fi...blic-china.pdf

    https://www.imf.org/external/pubs/ft...13/wp13243.pdf

    http://web.worldbank.org/archive/web...13/wp13243.pdf

    https://www.imf.org/external/pubs/ft...16/wp16187.pdf
    Last edited by citanon; 05 Apr 18, at 11:56.

  3. #78
    Senior Contributor DOR's Avatar
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    I have found that there are two interesting ways of explaining things. One is to point to a relevant dataset, pull out a couple of examples, and then let people dig through the rest to discover for themselves what’s what. The other is to do all the work for them, and hope that the sheer volume of the data coming down on one side leads them to admit there might be something to the point you’re trying to make.

    Oh, and every step of the way you have to remind people about GIGO.

    The second method is a bit tedious, so I tend to use the first. But, when there’s lots of politically motivated fake news to counter, maybe it is actually necessary to go through each sector one by one. Unfortunately, I’m not writing a book on the diminishing role of the state in the Chinese economy . . . and, I’m not sure you’d want to read it. Pretty dry stuff.

    The Chinese government can, if, when and where it chooses dominate any part of the Chinese economy. That’s not the same as actually doing it. Yes, Friendship Stores could be the sole retail option available to 1.4 billion people. The first time I visited China, that was the case (everyone hated it). And, if Friendship Stores were the only option, there would be no question that the state dominates retail. But, the state – for whatever reason – chooses not to do so.

    Can the Chinese government dominate the retail sector? Sure.
    Does it? No.
    Can we say the Chinese government is able to control every aspect of economic life? Sure.
    Does it? No.

    Local municipal governments have in the past use locally registered companies to take an equity stake in economic development projects. That’s pretty much run its course, so it isn’t all that great an example these days. Xi Jinping has enormously recentralized things, so there is a whole lot less leeway than there used to be.

    But, on the basis that the government builds infrastructure – what a notion! – we cannot simply say, “the state runs everything.” Much, much too simplistic. Yes, the government orchestrated the whole thing, and it wouldn’t have happened without the government’s direction. The same is true of Highway 80 between Chicago and San Francisco. Replace SOE bank funding with government guarantees and bonds. Substitute regulatory codes for cadre oversight. Repeat as necessary.

    The Chinese state structure dominates China. We don’t disagree on that. But, when you look at bits and pieces, and recognize that such enormous power isn’t always and everywhere uniformly applied, well it gets a whole lot more interesting.

    And, if Xi Jinping decides to go back to the 2030 report – it’s been abandon – things will get a whole lot more fun.
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  4. #79
    Senior Contributor DOR's Avatar
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    Freedom of the press in Hong Kong, RIP

    This is at least as much due to the rise of Xi Jinping as it is to something originating in Hong Kong

    The Government of the Hong Kong Special Administrative Region of the People's Republic of China effectively suspended freedom of the media in the city. Victor Mallet, the long-time Financial Times correspondent in Hong Kong, was acting president of the 75-year-old Foreign Correspondents' Clubin August this year when it offered a speaking platform to pro-independence advocate Andy Chan.

    This week, Mr Mallet was denied a routine renewal of his press visa.

    Over its storied history, the FCC has hosted numerous prominent speakers, including Hong Kong Democratic Party Chair Albert Ho, controversial Mainland publisher Bao Pu, labor leader Han Dongfang, and the governors and chief executives of Hong Kong.



    Ramzy, Austin, “Hong Kong plans to expel a Financial Times editor,” The New York Times, October 5, 2018, https://www.nytimes.com/2018/10/05/w...ial-times.html

    Lam, Jeffie, Cheung, Tony and Sum Lok-kei, “Backlash as Hong Kong denies visa renewal for Financial Times journalist Victor Mallet,” SCMP October 5, 2018, https://www.scmp.com/news/hong-kong/...st-who-chaired

    Cheng, Kris, “Hong Kong rejects visa renewal for foreign press club vice-pres. who chaired independence talk,” Hongkong Freepress, October 5, 2018, https://www.hongkongfp.com/2018/10/0...pendence-talk/
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  5. #80
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    Xi Jinping's global dreams hit a wall amid growing backlash against China

    Hong Kong (CNN)With the shock election of anti-globalist Donald Trump to the US presidency still fresh in their minds, international leaders watched with anticipation as Chinese President Xi Jinping stepped up to the podium at Davos in January 2017.

    Xi's speech in favor of globalization and free trade was met with praise by governments and businesses across the world.

    "This is a very important speech at an important moment," World Economic Forum founder Klaus Schwab said afterward.

    Two years later, that international optimism has soured and Beijing faces an increasingly chilly reaction in parts of the world.

    In the past two months alone, Turkey has denounced Beijing's mass detention centers in Xinjiang, the United Kingdom has accused the Chinese government of widespread hacking and the US has ramped up its campaign to limit Chinese influence worldwide.

    At the same time, multiple countries have threatened to cut relations with private Chinese technology giant Huawei over concerns its 5G network will provide Beijing with a backdoor to a global spy network.

    Steve Tsang, director of the SOAS China Institute, said the backlash was the result of an unexpectedly aggressive foreign policy led by Xi. But he warned Beijing's stance was unlikely to change.

    "Xi Jinping has changed the politics in China. He cannot afford to, or would prefer not to show, any signs of weakness," he said.

    China threat 'panic' in the US

    As China's economic and military might have grown in the past decade, the US has generally tried to maintain a policy of cordial engagement with Beijing.

    But a fierce speech by US Vice President Mike Pence in October signaled the beginning of a shift in Washington, as he bluntly accused Beijing of technology theft, "predatory" economics and military aggression.

    The speech represented exasperation over Beijing's controversial island-building program in the South China Sea and China's demands for American companies to hand over their technology.

    Washington also believes the Chinese government's programs issuing of billion-dollar loans to developing nations are being used as economic blackmail for political gain when repayments can't be made.

    The Chinese Foreign Ministry has repeatedly called such claims "ridiculous and absurd."

    "Unlike the United States, China has absolutely no interest in controlling other nations' politics. The global community is very clear about that," Foreign Ministry spokeswoman Hua Chunying said Wednesday.

    But in the months following Pence's speech, multiple US indictments have been unsealed against Chinese actors accusing them of espionage.

    High-ranking US security officials have lined up to appear before US Congress and at prominent events, warning of the threat China poses not only to their country, but to the world.

    "Through fear and coercion Beijing is working to expand its ideology in order to bend, break and replace the existing rules-based international order," Adm. Philip Davidson, the commander of US Indo-Pacific Command, said in Washington Tuesday.

    Meanwhile, the Trump administration has engaged in a raging trade war with Beijing, slamming billions of dollars of tariffs on Chinese goods. A deadline for a deal is fast approaching on March 1.

    Susan Shirk, chair of the 21st Century China Center at UC San Diego, said a bipartisan consensus had hardened in Washington against Beijing over the past year.

    "There's a panic about the China threat," she said. "There's a kind of rushing to erect walls, in a way that I see as an overreaction."

    The US vs Huawei

    Since the beginning of this year, Western concerns about China's growing influence -- and its intentions -- have increasingly centered around one company: Huawei.

    The Chinese technology juggernaut is a symbol of China's economic rise, growing over just 30 years to become one of the world's leading 5G network providers, in the process signing major contracts in countries on every continent.

    Increasingly, the US has been pressuring allies to avoid using Huawei technology, citing the company's potential links to Beijing's security services.

    During his Europe trip on Monday, US Secretary of State Michael Pompeo gave countries a thinly veiled ultimatum: it's the US or Huawei.

    "If that (Huawei) equipment is co-located in places where we have important American systems it makes it more difficult for us to partner alongside them," he said.
    Since the beginning of this year, Germany, Poland, the Czech Republic, Lithuania and the United Kingdom have all voiced concerns about Huawei. In November, New Zealand banned Huawei from being used by a major telecommunications company, while British telecommunications giant Vodafone last month suspended its use of Huawei technology in Europe.

    Huawei has rushed to reassure customers that their data would not be handed over to the Chinese government. In a rare interview in January, founder Ren Zhengfai said the company would "never harm" its customers.

    But US allies believe concerns over Chinese digital spying are well-founded.

    Last December, Jeremy Hunt, the British foreign secretary, claimed the Chinese Ministry of State Security had worked with a group known as APT 10 to target intellectual property and sensitive commercial data in Europe, Asia and the US.

    "This campaign is one of the most significant and widespread cyber intrusions against the UK and allies uncovered to date," Hunt said.

    China's furious response to the arrest of Huawei's chief financial officer, Meng Wanzhou, in Canada last December has not helped quiet fears over the company's ties to Beijing. Meng was arrested for possible extradition to the US on charges of violating Iran sanctions.

    Since then, multiple Canadians in China have been detained -- and one citizen was rapidly retried on drug charges then sentenced to death.

    "What they have utterly failed to see is that by their very strong, overt response ... they are confirming for the first time that Huawei is not a normal company, that Huawei enjoys a special place in the eyes of the Chinese government," Tsang said.

    "And that provides justification for Western governments to revise how they deal with their approach to Huawei."

    Xinjiang outrage grows

    China's human rights record has also come under fire in recent months, as major regional and trading partners with large Muslim populations grew uncomfortable with Beijing's Xinjiang policies.

    They join an increasingly loud chorus of countries, including the US and Australia, calling for the closure of massive "re-education" camps in the western region of Xinjiang, believed to be holding 2 million Muslim-majority Uyghurs.

    China claims the camps are "vocational education centers" and an important part of its deradicalization strategy, but former detainees claim to have been tortured and report having seen people die there.

    It was the fierce denunciation by the Turkish Foreign Ministry of Beijing's Xinjiang policies on February 9 which signaled a new shift against the Chinese government.

    "We call on the international community and the Secretary General of the United Nations to take effective measures in order to bring to an end this human tragedy in Xinjiang," the Turkish statement said.

    While Turkey made the boldest denunciation of China so far, other Muslim majority countries have been steadily losing patience.

    Despite close trading ties with Beijing, and connection to Xi's Belt and Road initiative, the Indonesian government said it had summoned China's ambassador to demand an explanation in December.

    In Malaysia, government lawmaker Charles Santiago on Thursday called for an international fact-finding mission to Xinjiang to investigate the treatment of Uyghurs. "I am not prepared to believe what the Chinese governments says," he said.

    Opposition to China has been growing on multiple fronts in Malaysia, where major Beijing-backed construction projects have been accused of saddling the country with excessive debt.

    "At the larger level, we see Chinese involvement in Southeast Asia in a predatory way," Santiago said. "Clearly, there is a price to be paid -- especially when dealing with China."

    Disquiet grows within China

    As concerns have been raised around the world about China's conduct, Beijing has repeatedly responded with indignation and fierce denials.

    This belligerence is fueling disquiet, and not just outside China. Questions have been raised behind closed doors in the Chinese government over the aggressive tone of Chinese foreign policy under Xi.

    Some Chinese officials believe his "over-the-top" remarks on issues such as trade and the South China Sea have caused the Washington backlash.

    In a major speech in March, Xi threatened to fight a "bloody battle" against China's enemies to ensure the country takes its rightful place in the world.

    Tsang, the China expert, said if Beijing returned to the less aggressive foreign policy of Xi's predecessor, Hu Jintao, it could help defuse current international tensions.

    "It would actually take some wind out of the sails of the Trump administration's approach," he said. "It is by China feeling that it has to respond in an assertive combative way that it is confirming the Trump administration's approach is justified."

    But Tsang said Xi couldn't back down on his aggressive stance without undermining his power.

    "It would be an admission that he's wrong, and that his policy backfired," he said. "How can he be wrong? He's the man to outline China's vision all the way up to 2049. If he's wrong then his vision for the future is less credible."

    That only leaves China one option: to spiral further into its aggressive foreign policy.
    Politicians are elected to serve...far too many don't see it that way - Albany Rifles!

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