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Xi Jinping wants China’s armed forces to be “world-class” by 2050

Economist - Wed, 06/26/2019 - 19:40

OVER THE past decade, the People’s Liberation Army (PLA) has been lavished with money and arms. China’s military spending rose by 83% in real terms between 2009 and 2018, by far the largest growth spurt in any big country. The splurge has enabled China to deploy precision missiles and anti-satellite weapons that challenge American supremacy in the western Pacific. China’s leader, Xi Jinping, says his “Chinese dream” includes a “dream of a strong armed forces”. That, he says, involves “modernising” the PLA by 2035 and making it “world-class”—in other words, America-beating—by mid-century. He has been making a lot of progress.

Organisational reforms may be less eye-catching than missiles that fly at Mach 5, unmanned cargo planes and electromagnetically powered superguns (all of which China has tested in the past year). Yet Mr Xi has realised that there is little point in grafting fancy weapons onto an old-fashioned force. During the cold war the PLA evolved to repel the Soviet Union and America in big land wars on Chinese soil. Massed infantry would grind down the enemy in attritional battles. In the 1990s Chinese leaders, alarmed by American prowess in the Gulf war of 1991, decided to focus on enhancing the PLA’s ability to fight “local wars under high-technology conditions”. They were thinking of short, sharp conflicts on China’s...

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A fly-on-the-wall account of what China tells American bigwigs

Economist - Thu, 06/20/2019 - 16:51

A BIT LATE, China’s leaders are starting to accept that their trade war with President Donald Trump is only one element of a larger crisis in relations with America—and not the most dangerous one. The leaders understand that their critics within America’s foreign-policy and national-security machine—meaning aides to Mr Trump, members of both parties in Congress and officers in the State Department, Pentagon, spy agencies and beyond—want China to change its ways. They also believe (or hope) that Mr Trump wants something different, and perhaps less painful for them: to show voters the spectacle of China losing a trade fight with him.

China’s rulers now accept that they face more than a Trump problem. They concede that bipartisan suspicion of China in America will intensify in the run-up to the elections of November 2020, and will continue afterwards, whoever wins. They absorbed that message during visits by high-ranking Americans, including Mr Trump’s officials, business bosses and veterans of Republican and Democratic governments. Dismayingly, they show no sign of accepting that China’s own actions are in any way to blame.

Chinese leaders believe that America’s policy machine wants them to change principles that have guided China’s rise for 20 years. They protest that these demands cut to the heart of China’s model of...

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A policy U-turn puts Hong Kong’s leader in a precarious position

Economist - Thu, 06/20/2019 - 12:33

JUST AS HONG KONG was digesting the impact of what may well have been its biggest street protest since China took over the territory in 1997, another far bigger one happened. Organisers said 1.9m people joined the second of these demonstrations—a turnout that was all the more remarkable given that the government, less than a day earlier, had made a humiliating U-turn to placate the protesters. Critics of the Communist Party’s tightening grip on Hong Kong feel they have gained a rare advantage. The leadership in Beijing has suffered an embarrassing blow.

Hong Kong’s embattled chief executive, Carrie Lam, says she will give up—at least until next year—her efforts to secure the passage of legislation that triggered the unrest: a bill to allow criminal suspects to be extradited to the Chinese mainland. But the scale of the second massive protest, on June 16th, showed that many Hong Kongers deeply distrust both her and the regime that pulls her strings.

There will be more unrest. As The Economist went to press, a deadline passed for the government to respond to demands made by student unions. They had asked Mrs Lam to scrap the bill and make it clearer that a smaller protest on June 12th that escalated into violence, with police firing tear gas and rubber bullets, was not, as the police called it, a...

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Rare earths give China leverage in the trade war, at a cost

Economist - Thu, 06/13/2019 - 16:26

IT LOOKS AT first like a classic Chinese painting: water-soaked paddies nestled against endless green hills. But then the brown begins. Abandoned brown pits on the hilltops. Brown gashes down their sides. Brown sludge in the streams. Ganzhou, until a few years ago, was southern China’s mining country. The damage done in the name of economic growth involves an industry that has given China leverage in its trade war with America. The rocks extracted are rich in rare-earth minerals, used in everything from planes to smartphones. It is a dirty business that China dominates.

Rare earths, covering 17 elements on the periodic table, are in fact common. But China holds two-fifths of global reserves. In 1992 Deng Xiaoping quipped that “the Middle East has oil, China has rare earths.” The chemicals used to extract them from the ore create toxic run-off, and for years China was more willing to bear that cost than other countries. By the early 2000s it accounted for almost all the world’s production. “There were no laws back then and everyone here was digging up the ground,” says Xie Yizhen, a local who worked in mining for 18 years.

Crucially, China has translated its control of the raw materials into dominance of the valuable next steps: turning oxides into metals and metals into products. To extend Mr Deng’s comparison, it is as...

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Debating contests teach Chinese students an argument has two sides

Economist - Thu, 06/13/2019 - 16:26

WHEN THE Chinese government first sent students to America in the late 19th century, it could not decide whether their goal should be to acquire specific technical knowledge or to absorb new ways of thinking. More than a century later, a third of a million Chinese students are enrolled at American schools and universities. Yet folks back home remain divided about what an American degree means.

Attending an American university is a good career move. It is also scorned as a soft option for well-off kids, scared of the gaokao, China’s brutal university-entrance exams. Yet many bright Chinese youngsters explain the appeal of an American education in remarkably idealistic terms. One place to hear such dreams, on a recent smoggy Saturday morning, is an English-language debating tournament in the central city of Wuhan. It follows a format popular at high schools across America, known as “Public Forum Debate”. On this occasion 182 teenagers are taking part.

At first sight, the event reeks of privilege. It uses the classrooms at a bilingual private boarding school in Wuhan with its own golf course and an ice-hockey team coached by imported Russians. But the debate is not for big-city elites. It is run by the National High School Debate League of China, a company founded by two young Americans in 2011. It...

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Once again, China’s richest region is pulling ahead of the others

Economist - Thu, 06/06/2019 - 16:34

MOTIVATIONAL SLOGANS do not get much blunter than the one hanging over the sewing machines in Li Zhiguo’s factory: “Work hard here to make money, don’t be disliked by your family”. He proudly holds up one of his products, a red chiffon dress with ruffled sleeves. Dozens more are wrapped up, awaiting shipment.

It is a scene that, on the surface, should please Chinese leaders. Mr Li’s factory is in Baiguan, a poor town in the central province of Hunan. The government has long wanted to spur growth deep inside the country, in part by getting low-end industries to leave the prosperous coast and move to places like Baiguan. The money, managers and machines in Mr Li’s factory are almost all transplants from the coast. “There’s advantages to being here. It’s easier to find workers,” he says.

But scratch a little deeper, and problems appear. Mr Li aims to have enough orders to keep a hundred workers busy. But business is so slack that he has only hired half that many. When Baiguan launched its industrial park three years ago, the government billed it as a new home for China’s textile industry. Today, the zone is pockmarked with vacant buildings. Workers may be paid less than on the coast, but they are more expensive than their counterparts in Cambodia and Bangladesh. The roof over the park’s sales office has partly...

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A belt-and-road court dreams of rivalling the West’s tribunals

Economist - Thu, 06/06/2019 - 11:18

THREE WORDS—Fairness, Professionalism, Convenience—form a mission statement for the China International Commercial Court, which held its first public hearing in Xi’an on May 29th. When Chaguan attended the session, alongside foreign diplomats and representatives of China’s Supreme People’s Court, that three-word promise in English and Chinese shone from a digital screen dominating the bronze and marble entrance hall of this, China’s newest judicial institution.

It is built to impress, for it has large ambitions. It was founded to buttress the railways, roads and fibre-optic cables of the Belt and Road Initiative—a globe-spanning scheme launched in 2013 by President Xi Jinping—with something less visible: a distinctively Chinese vision of how laws should govern globalised commerce. The court has two tribunals. The one in Xi’an is in a symbolic spot. The city was the historic terminus for jingling, snorting camel trains on trade routes later dubbed the Silk Road. Its sister tribunal in the southern boomtown of Shenzhen will hear disputes relating to maritime routes of Mr Xi’s project. Yet for all the pomp, the new court has an uncertain future, clouded by doubts about how many firms will agree to use it—though its remit now extends to large disputes involving foreign businesses, not just belt-and-road deals. The doubts are related to a...

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Hong Kong wants to build massive artificial islands

Economist - Thu, 05/30/2019 - 11:03

HONG KONGERS have less residential space than the people of any other big city: 15 square metres each. That is barely double the size of a standard prison cell in Hong Kong. The Chinese territory is also the world’s most expensive property market. The average price of a home is $1.2m, around 40% higher than the nearest competitor, Singapore. To be fair, 45% of Hong Kongers live in government-subsidised housing. But the average waiting time for such flats is five-and-a-half years.

Carrie Lam, Hong Kong’s chief executive, has taken note. Last year she unveiled a colossal project, called Lantau Tomorrow Vision. It involves reclaiming 17 square kilometres of land off the coast of Lantau, Hong Kong’s largest island. That is about five times the area of New York’s Central Park. It is the biggest infrastructure project ever proposed in the city (see map). Housing on the artificial islands would accommodate up to 1.1m people, about one-seventh of the current population. The new flats would be bigger than average and 70% of them would be subsidised. On May 25th Hong Kong’s quasi-parliament, the Legislative Council, approved the launch of a feasibility study. Reclamation work is unlikely to start before 2025.

The estimated price tag, including the cost of transport links, is at least HK$624bn ($80bn), officials say. That is...

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Many Chinese know little about the bloodshed in Beijing 30 years ago

Economist - Thu, 05/30/2019 - 11:03

THREE DECADES after troops used murderous force to clear protesters from Tiananmen Square and central Beijing, covering up that crime has become a bit of a chore. China’s security machine is ready to censor, arrest and imprison those who speak too candidly about events in 1989. But 30 years on this work of repression is carried out with cold, bureaucratic efficiency—a far cry from the terrors of June 3rd and 4th when soldiers and tanks shot and smashed their way into the ceremonial heart of Beijing, as loudspeakers metallically intoned that the army “loves the people”.

The most recent jailing linked to the Tiananmen protests occurred on April 4th this year. A court in the south-western city of Chengdu sentenced an activist, Chen Bing, to three-and-a-half years in prison for “picking quarrels and provoking trouble”. His offence: labelling bottles of baijiu alcohol with the iconic image of the lone protester who stared down tanks near the square. That picture, and any other reference to Tiananmen in 1989, is politically taboo in China. Each year, as the anniversary approaches, the relatives of those killed by the army, including the mothers of school pupils gunned down in cold blood, are placed under surveillance or taken on enforced trips out of town.

The cover-up is a headache for internet and...

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China is getting tough on those who fail to pay their debts

Economist - Thu, 05/30/2019 - 11:03

THE CASE of Mr Ke, a carpenter from the eastern city of Taizhou who fell deep into debt, may one day be noted in histories of China’s financial evolution. On May 9th a local court announced that it had arranged for Mr Ke’s liabilities to be written off. This was made possible by what state media described as the country’s first ever regulations concerning the clearing of personal debt. Sadly, for now, they only apply in Taizhou.

Mr Ke—the court did not reveal his full name—had fallen victim to fraud eight years ago. By last year the 54-year-old’s debts totalled 480,000 yuan ($70,000), owed to three banks. But the court took account of Mr Ke’s predicament. He has no income, a home with only one room and less than 100 yuan in savings—the equivalent of what he would earn in under seven hours on the local minimum wage.

In America, Europe and many other countries Mr Ke’s problems would have been swiftly handled according to national regulations on bankruptcy. China, however, still has no such rules for discharging penniless people’s debts. Officials in Taizhou say Mr Ke is the first beneficiary of a procedure the city’s own judiciary devised for dealing with such cases. It is modelled on China’s law relating to the winding-up of insolvent firms.

For an individual in China, it is easy to fall into debt without being...

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