The succession is well underway in NorKo

FT full-page "analysis" on recent going-ons in NorKo, as bodies continue to wash up in this succession crisis.

Gist:  Kim Jong Il is clearing out his politburo to stock it with loyalists for his son, Kim Jong-eun, the "young general" (as he is now touted) who needs military "victories" to prove his worth--hence the recent sinking of the SouKo warship.

But since all the major players (SouKo, China, US) are loath to confront Kim on what will likely become a lengthy pattern of increasingly provocations, we should expect them to continue for quite some time.  

And with the ludicrous public promise of making NorKo a "mighty and prosperous nation" by 2012 hanging out there, foreign demons will have to be slain to explain the inevitable shortfall.

The only real variable in the equation is China becoming unhappy enough with these shenanigans to stop using its UN Security Council veto to shield the regime.  Other than that, we're waiting on the Romanian scenario, by which a cabal of senior NorKo officials move against Kim Jong-eun once the old man dies.

The Chinese dream by way of a generation of rising "little emperors"

Pu Yi--not the last little emperor capable of wreaking havoc in China.

FT op-ed by Geoff Dyer on the Me Generation of single children in China, "who want more from their lives than their parents could dream of."

Dyer contextualizes the recent labor unrest as part of a generational shift.  Past generations may have been willing to "eat bitterness," but the upcoming crop is not.  Long gone are the 18-year-old females just off the farm who will take any abuse the system heaps on them--just to hold onto that factory job.

According to Chinese economist, Andy Xie:

Today's young adults and their parents may as well be from different centuries.  They want to settle down in big cities and have interesting, well-paying jobs--just like their counterparts in other countries.

Remember that when you're sold the Chinese threat of--as Robert Kaplan so eloquently put it--a "literate peasantry" hell-bent on conquering the world for its resource needs.  The generational shift described here doesn't sound like a cohort willing to sacrifice all that much.  Instead it sounds like one ready for its due entitlements up front.

For the tens of millions of young Chinese graduates, buying a flat is a central part of their plan to live a modern, middle-class life. Young Chinese men feel the social pressure the most. The first time someone told me his chances of getting married would be ruined if he could not buy an apartment, I thought he was joking, yet it is a refrain one hears constantly. Chinese mothers-in-law to-be, it seems, can be an unforgiving bunch.

Yes, when poked, these angry young men will sound off in the most nationalistic ways, but don't assume that translates into a willingness to march on Beijing's call.

... it is not a contradiction for young people to be more patriotic, but also more demanding and individualistic.  Modernisation has unleashed powerful forces--pride and confidence in China's achievements but also high expectations about the life that can be lived. The signs of restlessness among young Chinese make for a less predictable political future.

Whenever I've had the chance to lecture before Chinese college students, I've always come away impressed by the fierceness of their Kantian mindset: they fervently believe that China can have a good life and never be forced to fight any ways to defend it. I think that's naive, but I also think it shows how little stomach exists within this Me Generation for fighting their way to the top.

In short, the 5GW struggle has already been won.

The outdated rule-set that governs the most important trade relationship in the world

FT "analysis" full-pager on US-China trade by Alan Beattie. Starts by noting China's slight loosening of the yuan's peg and says this won't change the relationship all that much.

Then the key point:

With discontent rising across American business, fuelled by incidents such as the Google China censorship spat, Washington is recognising to its intense frustration that it lacks the instruments to conduct international trade policy in a modern economy.

“China is distorting global trade and investment patterns with a web of state-sponsored industrial policies,” says Jeremie Waterman of the US Chamber of Commerce. “The tools the US government has are inadequate to cope with this interlocking web.”

The old-fashioned architecture of US trade policy largely reflects the metal-bashing economy of the past. It is predicated – as is the focus on the exchange rate – on its manufacturers competing head-on with Chinese companies, particularly in the American market.

The US has a panoply of “trade defence” instruments – antidumping, countervailing duty and safeguard measures – that allow it to block imports it deems unfairly priced, state-subsidised or flooding in too rapidly. One such tool was used in September last year to restrict Chinese tyre imports, provoking a storm of protest from free-traders.

But the goods to which the US applies such measures are mainly basic, low-margin industrial components in which American competitiveness is being eroded against many countries. The list hit with trade defence protection in recent months does not read like a tour of America’s economic future: drill pipe, phosphate salts, coated paper.

Francisco Sánchez, undersecretary for international trade at the Commerce department, notes such products cover less than 3 per cent of US trade with China. Yet because the industries are long established and often have powerful labour unions, they exert disproportionate control over trade policy. When China joined the World Trade Organisation in 2001, the negotiators’ focus was on goods such as these, and particularly the eternally controversial area of garments and textiles.

The problems started after China joined the WTO and the the government protectionists were given more free reign under Hu and Wen, who, when they came to power, saw that few Chinese companies were predominant in the high-tech local markets and wanted to change that.

From the piece:

Beijing says it is merely trying to do what other countries have done – modernise its economy, ascend the value chain and ease away from dependence on foreign companies for investment and technology.

But US companies say “indigenous innovation” goes way beyond familiar problems with software and movie piracy, and amounts to a full-blown system of government manipulation of large swaths of the economy.

Procurement is used to favour Chinese companies. Idiosyncratic technical standards such as a home grown wireless technology – “Wapi” – are given a clear run by denying licensing to more familiar international standards. Information, communication and technology companies complain about restrictions, such as requirements for products to be certified and tested in government laboratories, and for businesses to disclose source code.

Alarm about this is rising to the point where business representatives are increasingly prepared to criticise policy publicly. “We are feeling less and less welcome in China, which is why you are seeing more people speaking out and reconsidering their futures in China,” says John Neuffer of the Information Technology Industry Council.

Last week Jeffrey Immelt, chief executive of GE, expressed his growing concern about Beijing, telling an audience of Italian executives that “I am not sure that in the end they want any of us to win, or any of us to be successful”.

So the question for the US is, How to keep China's markets reasonably open for US company penetration while China seeks to fence those areas off for its own national flagships?--not exactly a new trick, I would add. Our trade instruments don't cover that scenario, the article argues.

How about suing China in the WTO?

But this strategy costs time and effort, and is not a cure-all. After the two or three years it can take to bring and win a case and an appeal, the remedy often comes too late. In the car-parts case, US business experts say, the delay gave Chinese industry more time to develop and American industry to weaken, foiling the goal of allowing US car-parts companies export significant quantities to China. Mr Neuffer notes that dispute settlement is even slower for high-tech industries, where product lifecycles can be less than a year.

In the end, no easy answer avails:

There are no strong rules about promoting competition in markets in WTO agreements. There is an agreement whereby governments commit to put public purchases of goods and services out to international tender but China has never signed.

“Government procurement in China is actually much more important to the American and European economies and companies [than issues such as textiles], but much less effort was put into getting China to join,” Mr Horlick says. China says it will make an offer to sign up this month but appears to have ruled out including regional and local government and state-owned enterprises, thus punching huge holes in any new commitment.

Debbie Stabenow, Democratic senator from Michigan, has proposed a bill that would cut China off from US government procurement if it does not open its own market. But few investors seem to think that would make a tremendous difference. Rules such as the “Buy American” provision already restrict China from bidding for some government contracts, against which Beijing has in turn complained.

So expect this relationship to remain tense as we seek to increase our exports in the face of Chinese efforts to dominate their own domestic market.  It would seem that the only way we're going to correct a trade imbalance with China is to restrict their exports--a tricky path with someone who owns so much of your debt.

Chart of the day: China shoots up ranks of pharma markets

From FT story on how Japanese pharma Eisai has penetrated China's growing market well before its national competitors.

Reason why is that China is rapidly moving up the ranks from 10th place in 2004 to third, after Japan and the US, by 2014.

Usual bottom-of-the-pyramid reality:

Emerging markets, particularly China, are becoming increasingly important for drugmakers, which have to deal with slowing growth at home.

The big driver in China?  The gov's $125B overhaul of the country's weak health system.

Love--Chinese style

WAPO story on Dating Game-like TV show that has the morality police incensed.  Lady pictured above was an audience fave.

"If You Are the One" is a Chinese television phenomenon, one of many popular matchmaking shows on which young people seek mates amid ribald jokes from the host and occasional racy comments from guests.

Audiences loved all the titillation, until last month -- when Chinese government censors came down hard. After a contestant indicated she was angling for a wealthy man with a flashy car, government nannies ordered all matchmaking shows to cut the sexual innuendo, uphold traditional values and ban any talk of women "gold digging."

The censorship is the latest and most public example of the government's new crackdown on vice and perceived immorality. It comes even as China becomes more freewheeling and open, with people increasingly pushing the boundaries in matters involving taste, sex and money -- and the intersection of the three.

As China moves toward more affluence, it'll get far harder for the government to police this sort of thing. Same thing happened to America in its "rising" 1950s, particularly with cars going mainstream.  And we didn't even have the Internet!

If every Chinese bought just one . . .

NYT story by Keith Bradsher raising the usual bugaboo about China's middle class dooming the planet to environmental ruin--if it replicates the West's consumption trajectory.

My usual reply is that it cannot, simply because China won't be able to acquire enough energy to power all that growth unless it is channeled differently--i.e., you can't get there from here.

The basics:

Premier Wen Jiabao has promised to use an “iron hand” this summer to make his nation more energy efficient. The central government has ordered cities to close inefficient factories by September, like the vast Guangzhou Steel mill here, where most of the 6,000 workers will be laid off or pushed into early retirement.

Already, in the last three years, China has shut down more than a thousand older coal-fired power plants that used technology of the sort still common in the United States. China has also surpassed the rest of the world as the biggest investor in wind turbines and other clean energy technology. And it has dictated tough new energy standards for lighting and gas mileage for cars.

But even as Beijing imposes the world’s most rigorous national energy campaign, the effort is being overwhelmed by the billionfold demands of Chinese consumers.

Chinese and Western energy experts worry that China’s energy challenge could become the world’s problem — possibly dooming any international efforts to place meaningful limits on global warming.

If China cannot meet its own energy-efficiency targets, the chances of avoiding widespread environmental damage from rising temperatures “are very close to zero,” said Fatih Birol, the chief economist of the International Energy Agency in Paris.

Aspiring to a more Western standard of living, in many cases with the government’s encouragement, China’s population, 1.3 billion strong, is clamoring for more and bigger cars, for electricity-dependent home appliances and for more creature comforts like air-conditioned shopping malls.

As a result, China is actually becoming even less energy efficient. And because most of its energy is still produced by burning fossil fuels, China’s emission of carbon dioxide — a so-called greenhouse gas — is growing worse. This past winter and spring showed the largest six-month increase in tonnage ever by a single country.

I learned this first in my workshops with Cantor Fitzgerald:  with energy use doubling (or more)  across China in a generation's time, it gets awfully hard to shift those percentages of coal versus gas versus renewable, etc. You race like crazy just to stay in place.

In many ways, this is why it's impossible for America to dream of overtaking China on alternative energy: we just don't have the same vast necessity that they face. Simply put, the world needs China to become the global leader in this realm, because nobody but China can afford to make it happen in China.

When you want SysAdmin bad, you get it bad

NYT story on shabby construction efforts as we drawdown in Iraq:

After two devastating battles between American forces and Sunni insurgents in 2004, this city needed almost everything — new roads, clean water, electricity, health care.

The American reconstruction authorities decided, however, that the first big rebuilding project to win hearts and minds would be a citywide sewage treatment system.

Now, after more than six years of work, $104 million spent, and without having connected a single house, American reconstruction officials have decided to leave the troubled system only partly finished, infuriating many city residents.

The plant is just one of many projects that the United States has decided to scale back on — or in some cases abandon — as American troops who provide security for reconstruction sites prepare to leave in large numbers.

Even some of the projects that will be completed are being finished with such haste, Iraqi officials say, that engineering standards have deteriorated precipitously, putting workers in danger and leaving some of the work at risk of collapse.

The American officials give many reasons for their decisions to scale back or drop some projects before more troops leave, including that they discovered in some cases that the facilities diverged from Iraq’s most pressing needs, or that the initial work — overseen by American contractors and performed by Iraqi workers — was so flawed that problems would take too long to fix.

Reconstruction officials point out that they have completed the vast majority of the $53 billion in projects they planned throughout Iraq, from bridges to honey-bee farms.

And the officials, along with the United States Embassy in Baghdad, say they are aware of only isolated concerns about the quality of reconstruction work now under way in the country, or about projects being left undone.

“I am not aware of the Iraqis having any sort of hard feelings that we will not finish current projects and award projects we said we would,” Col. Dionysios Anninos, head of the Army Corps of Engineers office in Iraq, wrote in an e-mail message. “We will finish strong!”

But some Iraqis have compared the current hurried reconstruction effort to the haphazard American withdrawal from Vietnam in 1975. In Diyala Province, northeast of Baghdad, Iraqi officials said they found that construction standards had slipped so drastically that they ordered an immediate halt to all American-financed projects, even though American inspectors had deemed the work to be adequate.

The Americans had told local authorities they were speeding up projects because a nearby United States Army base was scheduled to close this summer.

Shaymaa Mohammad Ameen, who works with reconstruction officials as a liaison for the Diyala Provincial Council, said American officials frequently threatened to leave when Iraqis questioned engineering standards and brought up other safety issues.

“They constantly tell us that if we do not approve, they can always move the allocated funds to projects in other provinces,” she said.

In Baghdad and Salahuddin Provinces, local officials say Americans have simply walked away from partly completed police stations, schools, government buildings and water projects during the past several months without explanation.

And in Dhi Qar and Babil Provinces, there are complaints that roads and buildings recently completed by the Americans do not meet basic construction standards.

I've said for years, given our mindset toward exiting, and China's mindset for wanting to own resources in the ground, we would have been much better off subcontracting the entire reconstruction effort to the Chinese.

Hard to see how it wouldn't have cost far less and accomplished far more.

Another point I've made in the brief for close to a decade now:  the SysAdmin is necessarily more rest-of-world than just the United States.  We are not good at everything and shouldn't try to be.

The Politics Blog: Seven Things to Remember When We Talk to the Taliban

 

Is your stomach churning yet? The occasionally salacious but usually accurate Guardian is reporting that Team Obama is signaling that it's ready to negotiate with the Taliban. Through "trusted" intermediaries like the Pakistanis and Saudis, naturally, and via plausibly denied channels, of course, but... really? Is this what a peace-in-your-first-term, Nobel Prize-winning president looks like? If we're going to reconcile ourselves to this kind of indecent proposal — the last one led to the bloody Swat Valley offensive — the U.S. had better not lose site of reality. Here's how. If it's not too late.

Read the entire post at Esquire's The Politics Blog.

The long hard slog that is China's attempt to placate the Uighurs in Xinjiang

pic here

Pair of FT stories by Kathrin Hille on Xinjiang one year after the outbreak of Uighur riots.

Beijing's response has been two-fold:  install all sorts of officials through Xinjiang and push social programs designed to make the locals feel less squeezed out of economic opportunities by the influx of Han Chinese settlers.  Good example: the government checks all families and if it finds one that has everybody out of work, a job is automatically arranged for one member.  Another:  gov plans to make Kashgar (prominent city) a special economic zone.

Kashgar is sort of a gateway city to Central Asia--part of the old northern Silk Road.

Beijing is now promising "leapfrog development" for the region: per capita GDP raised to the national average by 2015 and more revenues from oil and gas development.  The north side of Xinjiang has done well with O&G, but the south has not benefitted particularly, and that's where the Uighurs are concentrated.

What is this but domestic pre-emptive COIN?

Can Kashgar become a vibrant SEZ?  That would require creating or tapping local markets, and the question is, will Beijing risk all that connectivity with Muslim Central Asia?

You should begin to see the strong overlap of US and Chinese security/economic development interests for Central Asia.  We're there because of 9/11, and the Chinese are increasingly there because of their restive West.

The silent LLP between the PRC and the USA

 WAPO story on a long-favorite theme of mine here and in the brief:  the limited liability partnership between China and the US--as in, we do the Leviathan and pay for virtually all of the up-front SysAdmin work, but China cashes in nicely on the backside economic integration.

China didn't take part in the U.S.-led invasion of Iraq or the bloody military battles that followed. It hasn't invested in reconstruction projects or efforts by the West to fortify the struggling democracy in the heart of the Middle East.

But as the U.S. military draws down and Iraq opens up to foreign investment, China and a handful of other countries that weren't part of the "coalition of the willing" are poised to cash in. These countries are expanding their foothold beyond Iraq's oil reserves -- the world's third largest -- to areas such as construction, government services and even tourism, while American companies show little interest in investing here.

The Chinese are risk-tolerant on economics, just not on the pol-mil.  And they cannot become a superpower until they get such risk-tolerance in the kinetic realm.  And that can't come until they go multiparty, because the CCP cannot afford even a single loss of face.  And if you can't afford to lose, then you can't afford to wage war.

So oddly enough, the longer we put up with this LLP, the longer we keep China in its pol-mil place.

WPR's The New Rules: U.S. Must Expand its Pool of Allies in Afghanistan

 

With his recent selections of Gens. David Petraeus and James Mattis for command in Afghanistan and Central Command respectively, President Barack Obama signals his understanding that his previously established deadline of mid-2011 to begin drawing down combat troops in the “good war” cannot be met.  The two were co-architects of the military’s renewed embrace of both counterinsurgency operations and the associated nation-building project that by necessity goes along with it. Neither flag officer can be expected to preside over a Vietnam-like exit that once again puts troubled and untrustworthy Pakistan in charge of Afghanistan’s fate.

Read the rest of the column at World Politics Review.

China will be working its Gap for a while

WAPO story on how much farther China must go to shrink the Gap of its interior West.

China's economic boom had largely left the west behind. Spreading the wealth was as important politically as economically -- it was a way of increasing domestic stability and cementing the government's control.

Chinese officials rattle off all the statistical measures of the program's success: Highways were constructed. Houses were built. Nomads were resettled in "model" villages. Millions of people have electricity and clean drinking water. A rail line links Beijing in the east to Lhasa on the Tibetan plateau. And annual economic growth in the west is about 12 percent, higher than the national average.

But beneath the barrage of official statistics lies another reality. China's west -- defined as the dozen provinces and "autonomous regions" stretching from Inner Mongolia to Xinjiang and Tibet -- remains the poorest, least-developed and least-educated part of the country.

The massive investment, critics say, has mainly benefited state-owned companies that build the roads and railways and mine the minerals. There is little indigenous industry and scant foreign investment. Hundreds of thousands of people have been displaced from their homes, and nomads have been resettled into villages where they have no livelihood. Locals complain that China is primarily interested in extracting minerals to keep the factories back east running.

My point: China is treating its own internal Gap the same way it treats much of the Gap at large. That's why it's crucial that we offer them real competition instead of just criticism, because what we teach China in this regard is crucial to its own internal coherence.

That's also why I view any local blowback to China's embrace to be a good and useful development for all involved.  China's influence is simply too vast and too crucial for such evolution not to occur, so the more trouble it gets into overseas, the better.

Chinese gamers--unite!

pic here

Bloomberg Businessweek technology blurb.

China has 400m internet users, with at least a quarter of them avid gamers.

But the government is wary of such activity that it cannot easily control or understand, and so it's trying to limit individual activity, pushing rules to limit perceived "unhealthy" activity.  

This was tried in 2005 WRT minors playing online, but kids just got around that by using the IDs of older friends.  Now the new rules say gamers must register using their real names.

None of this, of course, helps Chinese companies trying to muscle their way into the global gaming biz, so each time the gov announces such rules, big Chinese gaming companies like Tencent and Perfect World and Shanda Games lose share price.

Beijing can't have it both ways:  trying to regulate individuals' activities in the industry while trying to promote local flagships.  But it will try, as in so many other spheres of activity, despite the obvious self-limiting outcomes.  If you want a creative population, you've got to let them explore and stop playing nanny all the time.

The buy/sell on US-China trade

Bloomberg Businessweek story on how to move forward with China on trade.

The five ways?

#1) really crack down on the China trade a la Krugman;

#2) declare an emergency a la Nixon 1971;

#3) use the WTO on China big time;

 #4) keep up the jaw-jaw-jaw on as many fronts as possible; and 

#5) get our own house in order.

My sense?  It will be a combination of all five in some measure.

What really attracted me to the piece was the weird chart above and realizing what a strangely low-tech trade we have with China--in terms of what's been growing the most over the last decade.  We send beverages and tobacco, ag and livestock, waste and scrap and some basic industrial commodities.  They send chemicals, computers and electronic products, paper and transportation equipment.  Pretty basic really.  I mean, when the growth is highlighted, what's the big difference our trade with China and Brazil's trade with China?

Do as I say, not as I do

Economist piece on China’s proposed sale of nuclear reactors to Pakistan, the argument being it will only intensify a nuclear rivalry.

Our problem:  by winning an exemption from the Non-Proliferation Treaty for India under Bush-Cheney, we’re now not in the position to do anything about China’s supplier relationship with Pakistan.

America argued that India had a spotless non-proliferation record (it doesn’t) and that brining it into the non-proliferation “mainstream” could only bolster global anti-proliferation efforts (it didn’t).  The deal incensed not just China and Pakistan but many others . . .

What particularly riles outsiders is that American did not get anything much out of India in return . . . India has since designated some of its reactors as civilian, and open to inspection, but other still churn out spent fuel richly laden with weapons-usable plutonium . . .

Pakistan suffers no such uranium shortage and is determined to match India . . .

China is trying a legalistic defence of the sale of the third and fourth reactors at Chasma.  But its real point is this:  if America can bend the rules for India, then China can break them for Pakistan.

Pakistan hopes that it will eventually get a deal like India’s.

I personally would describe such a scenario as just this side of crazy-town, but I wouldn’t rule it out either.  Some in the Obama administration are said to favor this, to win Islamabad’s help on the Taliban.  You just know how such a deal would work out:  nice show from Pakistan as they continue to build nuclear devices and buy fighter jets—or pretty much what the Pakistanis have done to us since 9/11 triggered the great money flow.

Again, I choose India every single time I can in this equation—not to hedge against China but simply to do the right thing.

Or we continue to pretend we can make two fake countries (Af-Pak) become real ones, stiffing New Delhi in the process.

Obama seems to be traveling down that second path, and I think we’ll all regret it soon enough.

Keynesianism comes with the same dangers for state capitalists

WAPO story detailing the "genius" that is economic planning in the obviously superior Chinese economic model.

Unlike in the United States -- where President Obama's large stimulus plan became the subject of protracted congressional wrangling and was shaped to include tax cuts and aid to states -- Chinese leaders followed a simple mandate: Spend and build.

Forget the tax cuts; in China, it was infrastructure, infrastructure and more infrastructure.

China was already awash in big-ticket construction projects. The stimulus allowed China to speed up some projects, begin digging on others and extend the building boom to less-developed areas in the country's west and north. The result, 18 months after the stimulus was introduced, is an astonishing frenzy of building -- highways, subways, airports, bridges, high-speed rail lines and even new cities constructed, literally, in the middle of nowhere.

Hmmm.  Impressive.

Now the truly scary parts.  First, what do we know of these economic "geniuses"?

Several economists said it was difficult to determine the worth of all the spending because there is no official, centralized list of projects -- making it difficult to untangle whether projects are funded from stimulus loans, from local governments floating bonds or from some combination of the two.

"It's a black box financed by black laws," said Xu Xiaonian, an economics professor with the China Europe International Business School. "There's not enough information to make any sensible judgment."

Second, our stimulus was set up by federal spending.  In China, cities and provinces aren't allowed to take out loans like that, so they set up dummy investment entities that assume the loans. The result, despite this infinite cleverness (indeed, is it not a NEW ECONOMIC MODEL?):

As a result, economists said, local governments are now sitting on a total potential debt bomb of 7 trillion to 11 trillion yuan.

"There's tens, or hundreds, of Dubais waiting in the pipeline," said Xu, referring to the debt-laden Persian Gulf emirate. "It was a panicked reaction to the global crisis. So they rushed out to spend money wherever they could. They borrowed from me -- and from every Chinese." He added another ancient proverb: "You eat your dinner at noon, you have to starve at night."

No question the stimulus worked both here and there, but the price tags are similar--as is the Keynesian "genius."

Ain't no such thing as a free lunch, I believe Prof. Xu said.

Chart of the day: Taiwan-China trade

Economist chart gives you some sense of why Taiwan's leadership, if not its people, was so eager to sign the Economic Cooperation Framework Agreement.  Taiwan's exports top its imports by roughly 4-to -1.

Yes, it's always been the case that Taiwan had a trade surplus with the mainland, but the explosive growth in exports over the past decade changes things quite a bit.

First, Taiwan came to realize how big the China opportunity is for its export-driven growth as an island economy. Second, Taiwan needed to move to protect that slice as China enters into free-trade agreements with others in Asia.

Taiwan simply could not be left behind.

How afraid of the Chinese people is the CCP? Let me get back to you on that, sir!

Interesting Economist story on how the Party uses the press to do all sorts of special reporting on the masses that only the Party elite gets to read.  So Xinhua journalists are simultaneously real journalists and spies on their own readers. 

From the story:

Many of China’s main newspapers also have classified versions covering news considered too sensitive for public consumption.

In America, the press publishes classified stuff and love leaks.  In China, it’s the reverse.

Which is a superior system?  Do I even have to ask?

Great closing line from the newspaper: 

In the realm of the censored, half-censored content is king.

Why workers' unrest in China is just beginning to rear its ugly head

Newsweek story on the growing number of Chinese white-collar workers NOT living the Chinese dream.

Liu and Vlaskamp, two good journalists, call it "an unprecedented and troublesome development in China:  a fast-growing white-collar underclass."

Since the 90s, college admissions have doubled, but jobs for professionals have not.

Beware when the "ants," as they are called, start marching.

Yet another reason to fear Chinese failure more than its successes.

Ah, the "genius" that is state capitalism!

Graphic here

Couple of FT stories.

First one details how the Chinese government has decided to consolidate the steel industry "in a renewed campaign to save energy and reduce pollution."  Beijing wants 10 mills to control 60% of production.  Some industry analysts doubt the goals will be achieved.

My point: interesting how we assume that government bureaucrats in Beijing can figure this all out on their own, mandating the most efficient change.  History says a bunch of guys sitting around the table aren't all that smart at directing entire industries.

But, of course, the Chinese are so different from past attempts at this, because  . . . you know, they're Chinese!  All inscrutable and such.

But it's weird how, when booms come, like the one detailed in the second story on housing, the Chinese are given to same grubby corruption that afflicts every other industry when government tries to do too much.

Meanwhile, the shortage of cheap housing is one of the reasons firing up workers at factories, leading to labor unrest.

But, of course, the Chinese bureaucrats are so amazingly clever in their all-knowiing mastery over the economy, it's like they've reinvented the whole universe (I'm told this often by all sorts of knowing and famous sorts in the US, so it must be true), so I'm certain they'll figure all that out in such a way as to propel the Chinese economy to the leading position in the world!  Because, again, if a bunch of guys sitting around a table in Beijing want that, then surely it can be done.

Maybe if we just lured some of their geniuses over to our side, we could set up a table in DC and then vault past the Chinese--just like that!

It's really all so simple, when you think of it.  Get a table, some Chinese guys, and then rule the world.  It's just so stupid that nobody thought of this before now.