Advertisements

Badiucao: One Love, One China

From China Digital Times: In recent cartoons for CDT,  puts a Valentine twist on President Trump’s emerging relationship with President Xi Jinping, which took a step forward in a recent phone call:

Valentines, by Badiucao:

img_20170215_142812_397-820x1024

A second drawing focuses on Trump’s effort to patch up relations with Beijing by acknowledging the “one China” policy, which declares that Taiwan is part of China. Trump had earlier stated that he was “not committed” to the longstanding policy.

One China, by Badiucao

one-china-1-756x1024

Since his inauguration in January, President Trump’s policy toward China has been elusive and unpredictable. He ignited a firestorm of controversy soon after taking office by accepting a phone call from President Tsai Ing-wen of Taiwan and later saying that he may choose not to adhere to the “one China” policy, which has defined the U.S.-China-Taiwan trilateral relationship for decades. These actions seemed to indicate that he would live up to campaign rhetoric to take a tougher line on China than his predecessors. Yet after two weeks of silence between the two leaders, Trump switched tacks by promising to uphold the one China status quo in a phone call with President Xi Jinping. From Simon Denyer and Philip Rucker of the Washington Post:

In a statement issued late Thursday, the White House said the two men had held a lengthy and “extremely cordial” conversation.

“The two leaders discussed numerous topics and President Trump agreed, at the request of President Xi, to honor our one-China policy,” the White House statement said.

In return, Xi said he “appreciated his U.S. counterpart, , for stressing that the U.S. government adheres to the one-China policy,” which he called the “political basis” of relations between the two nations, state news agency Xinhua reported. [Source]

The call has been taken by many as a sign of acquiescence by Trump to Xi, as he acknowledged that his mention of the “one China” policy was at Xi’s request. From Jane Perlez of The New York Times:

But in doing so, he handed China a victory and sullied his reputation with its leader, Xi Jinping, as a tough negotiator who ought to be feared, analysts said. Read the rest of this entry »

Advertisements

Smoke Rises from Overturned Jeep in Front of Tiananmen Square

tiananmen_crash

Videos are currently circulating online of a mysterious car crash that occurred earlier today in Tiananmen Square.

The footage shows an overturned military jeep emitting smoke on the road right in front of the iconic Gate of Heavenly Peace with its portrait of Mao Zedong as police try to push onlookers back.

Currently, not much is known about the incident, which occurred at around 7:20 a.m. this morning. While there are rumors of a planned attack and explosion, Chinese state media has called the incident a “vehicle rollover” in which a driver and cyclist were injured.

And it appears that the situation at the square has since returned back to normal. Read the rest of this entry »


[VIDEO] WSJ’s Strassel: ‘I Don’t Remember Protests, Lawsuits, when Obama Paused Iraqi Immigration to U.S. in 2011’

empty-streets-obama-protestsc3fc85uuoaax9ei

Trent Baker reports: On Sunday’s “Meet the Press” on NBC, Wall Street Journal columnist Kimberley Strassel reminded viewers that nobody protested or filed lawsuits in 2011 when former President Barack Obama suspended Iraqi refugees from entering the United States for six months over terrorism fears, although President Donald Trump has received much criticism for temporarily suspending visas for “immigrants and non-immigrants” from Syria, Somalia, Sudan, Libya, Yemen, Iran and Iraq.

“Look, this is also not unprecedented, by the way,” Strassel said. “I mean, Barack Obama put a pause for six months on refugees coming from Iraq back in 2011. I don’t remember protestors and I don’t remember lawsuits. So I think the bigger question if this is a temporary pause, which is designed for us to improve and look at our vetting processes, and indeed temporary, I don’t necessarily think that’s an outrageous idea. Read the rest of this entry »


[VIDEO] Why China And Taiwan Hate Each Other

0

 

 


Lunar New Year Celebrated with Prayers, Fireworks 

china-ny

BEIJING (AP) — Chinese are heading to temples and fairs to wish for an auspicious start to the Lunar New Year.

Thousands gathered at Beijing’s major temples on Saturday, the first day of the Year of the Rooster. Wearing heavy winter coats, they lit incense sticks and bowed as they prayed for good fortune and health. As many as 80,000 people were expected at the Lama Temple in central Beijing, state television reported.

Beijing’s sprawling spring festival temple fair opened at Ditan Park, where empty tree branches were festooned with red lanterns and traditional goods and foods were for sale. Read the rest of this entry »


In Era of Journalism Cutbacks, a Chinese ‘Robot Reporter’ 

chinese-robot-journalism

More Chinese newsrooms are starting to use so-called “robot reporters,” but developers say their capabilities remain limited.

Te-Ping Chen reports: China has found itself in the midst of a full-blown robot obsession in recent years, with everything from robot monks to robot waiters grabbing headlines.

Now, the robots are writing the actual headlines, too — in certain newsrooms, anyway.

Last week, the Southern Metropolis Daily published its first-ever report written by what the newspaper describes as a “robot reporter.” The story, clocking in at just over 300 words, summarizes what train tickets are most in demand bn-rt602_robot_cv_20170124041448over the Lunar New Year holiday, during which millions of Chinese workers travel home to see their families. It discusses which routes are selling out fast and advises travelers to buy tickets soon, cautioning that for certain routes, all seats are sold out.

“You’ll have to stand the whole way, the route will be more exhausting,” it advises. The Southern Metropolis Daily story is bylined “Xiao Nan Robot,” or ‘Little South’ robot and accompanied with a picture of a white, rotund robot riding atop a thick black pen.

So far, though, the scope of robot reporters is limited, says Wan Xiaojun, a computer-science professor at Peking University who worked to develop the newspaper’s program.

Mr. Wan explains that Xiao Nan is currently programmed only to analyze train-ticket sales, which accounts for the somewhat monotonous nature of its reporting. “There Are Still High-Speed Rail Tickets From Guangzhou to Numerous Destinations for Lunar New Year’s Eve,” ran one robot-produced headline today. “Hard-Seat Tickets on the 26th From Guangzhou to Zhengzhou Are Still Available,” ran another yesterday.

[Read the full story here, at China Real Time Report – WSJ]

Sports are another fertile area for robot coverage: another robot-reporter program Mr. Wan worked on was used by news publisher Toutiao during the Rio Olympics last year, producing more than 400 news briefs, he said. Those briefs were built off published game statistics or summarized the transcribed narration of sports broadcasters, seeking out keywords such as “goal,” “red card” and more. Read the rest of this entry »


[VIDEO] The U.S. Navy is Moving at Warp Speed to Develop Super Lasers 

Mike Fabey and Kris Osborn report: The U.S. Navy is moving at warp speed to develop lasers with more lethality, precision and power sources as a way to destroy attacking missiles, drones aircraft and other threats.

“We’re doing a lot more with lasers,” Rear Adm. Ronald Boxall, director, Surface Warfare Division, said earlier this month at the annual Surface Naval Association national symposium.

The Navy plans to fire a 150-kw weapon off a test ship within a year, he said. “Then a year later, we’ll have that on a carrier or a destroyer or both.”

That’s quite a jump from the kw AN/SEQ-3(XN-1) Laser Weapon System (LaWS), which deployed in 2014 on the amphibious transport dock USS Ponce.

And the kind of power needed to power such a weapon won’t come with a simple flip of a switch.

“The Navy will be looking at ships’ servers to provide three times that much power,” says Donald Klick, director of business development, for DRS Power and Control Technologies. “To be putting out 150 kws, they (the laser systems) will be consuming 450 kws.”

30788669823_f536ee7b49_b

That is more than most currently operational ships are designed to accommodate, at least when they are conducting other tasks. “Few power systems onboard ships can support sustained usage of a high-powered laser without additional energy storage,” noted a recent Naval Postgraduate School paper titled “Power Systems and Energy Storage Modeling for Directed Energy Weapons”.

The paper said, “The new DDG-1000 may have enough electrical energy, but other platforms … may require some type of ‘energy magazine.’ This magazine stores energy for on-demand usage by the laser. It can be made up of batteries, capacitors, or flywheels, and would recharge between laser pulses. The energy magazine should allow for sustained usage against a swarm of targets in an engagement lasting up to twenty minutes.

[Read the full story here, at The National Interest Blog]

The DDG 1000 is built with what’s called a total ship computing environment, meaning software and blade servers manage not just the weapons systems on the ship but also handle the radar and fire control software and various logistical items such as water, fuel, oil and power for the ship, industry officials said.

comic-laser-wings

The ship’s integrated power system, which includes its electric propulsion, helps generate up to 78 megawatts of on-board electrical power, something seen as key to the future when it comes to ship technologies and the application of anticipated future weapons systems such as laser weapons and rail guns. The ship’s electric drive uses two main turbine generations with two auxiliary turbine generators which power up two 35-megawatt advanced induction motors, developers explained.

Ideally, it would charge up as fast as it discharges, allowing for indefinite use (as long as there is ship’s fuel to expend). Low maintenance, high safety, and long lifespan are other desirable characteristics.

DRS Power and Control Technologies is one of the companies which is developing a specialized energy source. “We have enough for well over 100 shots before we go to recharge,” DRS’s Klick said during a break at SNA, pointing out there’s even a mode for continuous recharge. “If you’ve got power this kind of power, you don’t go Winchester.” Read the rest of this entry »


China Cracks Down on Unauthorized Internet Connections 

censored-forbidden-china
Sijia Jiang | HONG KONG – China is reinforcing its censorship of the internet with a campaign to crack down on unauthorized connections, including virtual private network (VPN) services, that allow users to bypass restrictions known as the Great Firewall.

The Ministry of Industry and Information Technology said in a notice on its website on Sunday that it is launching a nationwide clean-up campaign aimed at internet service provider (ISP), internet data centrer (IDC), and content delivery network (CDN) companies.

It ordered checks for companies operating without government licenses or beyond the scope of licenses.

UN-Censor

The ministry said it was forbidden to create or rent communication channels, including VPNs, without governmental approval, to run cross-border operations.

VPNs can be used to gain access to blocked websites.

China has the world’s largest population of internet users – now at 731 million people – and is home to some of the biggest internet firms such as Tencent Holdings, Baidu Inc and Alibaba Group Holding. Read the rest of this entry »


Nervous in Japan: Book Buyers Snatching up Variety of Books About Trump

Books related to U.S. President Donald Trump have increased in popularity as the new leader takes office.

Signs at Yaesu Book Center’s flagship branch in Chuo Ward, Tokyo, read, “Trump inaugurated as president” and “How will the world change?” with portraits of the former businessman displayed near the entrance of the shop.

The special section features about 20 Trump-related books, including collections of his speeches and forecasts on the impact of his presidency on the Japanese economy. Read the rest of this entry »


中国新年: Shanghai Disney Braces for Chinese New Year Holiday

shang-disney

SHANGHAI – As the Chinese New Year approaches, Shanghai Disney said Wednesday it has started bracing for its first-ever Lunar New Year with spectacular entertainment programs for visitors.

In honor of the holiday for the Year of the Rooster, the resort is presenting a spectacular series of entertainment programs, seasonal food and beverage offerings, lucky bags and holiday-themed shopping experiences, it said.

The Chinese Lunar New Year, or the Spring Festival, falls on Jan. 28. Chinese have a weeklong holiday for the most important festival of the year.

Throughout the Spring Festival season, the highlight in Shanghai Disneyland will be the nightly program, “Ignite the Dream: A Nighttime Spectacular of Magic and Light” followed by a special event featuring new year wishes from tourists. Read the rest of this entry »


Bitcoin Value Crashes by Nearly 20%

 bitcoin
Lucas Nolan reports: Bitcoin value took a dramatic dive Thursday with the cryptocurrency’s value falling by as much as 18% to $820 per coin, according to Business Insider.

Bitcoin made headlines earlier this week when the cryptocurrency value surpassed $1000, its highest valuation since 2013, but Bitcoin traders didn’t enjoy the sudden increase for too long as the price began to fall rapidly. By 8AM EST on Thursday a single coin was valued at $892. Read the rest of this entry »


Helen Raleigh: 2017 May Be The Year China’s Chickens Come Home To Roost 

img_7710

While Americans embrace their reinstated confidence in both economics and international affairs, China seems to be going the opposite direction.

Deng probably hoped future Chinese leaders would be humble and restrained, keep a low profile, and instead of broadcasting China’s ambitions or showing off China’s economic or military muscles, quietly focus on overcoming China’s weaknesses, such as economic development. In international affairs, Deng probably would have liked to see China avoid acting like an aggressor. Instead, he would have preferred China conshun either causing any international conflict or serving as a leader of any faction within an international conflict.

[Check out Helen Raleigh’s book “Confucius Never Said” at Amazon.com]

When Deng passed away in 1997, China was still in its first decade of economic reform and its per-capita gross domestic product was less than $800, so the kind of restrained policy approach he advocated made perfect sense. No one knows how long Deng intended for this policy guidance to last. But Deng’s successors, from Hu Yaobang to Hu Jingtao (they aren’t related), pretty much followed Deng’s policy guidelines until President Xi Jinping assumed power in 2012.

No More Humility and Restraint

It seems President Xi has abandoned Deng’s strategic policy guidelines. On the domestic front, he focused on ensuring his power by purging many political rivals through the anti-graft movement. In October, he was declared the “core” leader of the Chinese Communist Party, a title last used by Chairman Mao.

chicken-rooster-china-red

[Read the full story here, at The Federalist]

He coined the term “China dream” to counter “American dream.” While “American dream” is about any hard-working individual living to his or her full capacity in a free society, “China dream” means Chinese people can only live a better life by subjecting themselves to the Communist Party’s absolute rule. Under President Xi, the 51hkz5w3lkl-_sl250_Chinese government has ruthlessly cracked down on dissidents, including Chinese nationals and foreigners, and China has become a much less friendly place to foreign investors and companies.

[Check out Helen Raleigh’s other book “The Broken Welcome Mat: America’s un-American immigration policy, and how we should fix it” at Amazon.com]

On the foreign policy front, China doesn’t lay low any longer. President Xi has been very vocal about China’s ambitions. He seems to believe that China’s rise to replace the United States as the next superpower is unstoppable and the time is now.

He sees at least two trends in his favor. First, there’s a consensus within the Chinese leadership and public opinion that the 2008 economic crisis has produced long-lasting devastating effects to the West: most countries in Europe are still struggling economically while the United States has experienced a very timid recovery. Since China emerged from the 2008 economic crisis relatively unscathed, many people, including Xi, believed that free market economics have reached their end and it’s time to adopt the Chinese-style authoritarian mercantile economic model. Thus, China should replace the United States to set a new economic order.

728477_900

Second, based on a misguided belief that the world is a better place when the United States gives up its power and authority in a global system established since World War II, President Obama has been ready and willing to acquiesce America’s leadership in international affairs in the last eight years. President Xi quickly sized up president Obama as a weak leader, and sought to expand China’s influence and challenge America wherever opportunities rise. Read the rest of this entry »


Counterfeit Electronic Products Worth HK$1.3 Million Seized in Hong Kong

c1t7fvdxeaas9rp

clifford-lo-250Clifford Lo reports: About 200 parcels mailed from the mainland to the United States carrying counterfeit electronic products were intercepted in a three-day joint operation mounted by Hong Kong Customs and United States authorities.

In Hong Kong, about 1,300 fakes including mobile phones, tablet computers and chargers were confiscated in 54 parcels totalling an estimated street value of HK$1.3 million, the Customs and Excise Department said.

The US authorities intercepted 140 shipments and confiscated fake electronic products that could be sold for US$1.1 million there during the operation conducted between November 15 and 17 last year.

It is understood some of the parcels intercepted in the United States were confiscated based on intelligence from Hong Kong customs officials.

Initial investigation showed the fake products were mailed from the mainland and destined for the US via Hong Kong, a source said. Read the rest of this entry »


2017: Year of the Rooster

tumblr_oj3rlpfl5w1som6aeo1_1280

Ruan Hailin, a craftsman from Jiangsu Province, used paint brush to draw roosters on chicken eggs to welcome the upcoming Chinese lunar New Year, which will falls on January 28 this year. Along with the roosters in different postures, Ruan also inscribed some wishes on the eggs to signify an auspicious year. In Chinese culture, there are 12 zodiac animals to represent a year periodically, and 2017 is the Year of the Rooster.


Xi’s Power Play Foreshadows Historic Transformation of How China Is Ruled

bn-ri748_cxijpg_g_20161222155332

Party insiders say president wants to remain in office after his second term, breaking succession conventions.

BEIJING— Jeremy Page and Lingling Wei report: China’s Communist Party elite was craving a firm hand on the tiller when it chose Xi Jinping for the nation’s top job in 2012. Over the previous decade, President Hu Jintao’s power-sharing approach had led to policy drift, factional strife and corruption.

The party’s power brokers got what they wanted—and then some.

Four years on, Mr. Xi has taken personal charge of the economy, the armed forces and most other levers of power, overturning a collective-leadership system introduced to protect against one-man rule after the death of Mao Zedong in 1976.

Shattering old taboos, Mr. Xi has targeted party elders and their kin in an antigraft crusade, demanded fealty from all 89 million party members, and honed a paternalistic public image as Xi Dada, or Big Papa Xi.

Now, as he nears the end of his first five-year term, many party insiders say Mr. Xi is trying to block promotion of a potential successor next year, suggesting he wants to remain in office after his second term expires in 2022, when he would be 69 years old.

Mr. Xi, who is president, party chief and military commander, “wants to keep going” after 2022 and to explore a leadership structure “just like the Putin model,” says one party official who meets regularly with top leaders. Several others with access to party leaders and their relatives say similar things. The government’s main press office declined to comment for this article, and Mr. Xi couldn’t be reached for comment.

[Read the full story here, at WSJ]

Mr. Xi’s efforts to secure greater authority may help ensure political stability in the short run, as an era-defining economic boom starts to falter. But they risk upending conventions developed since Mao’s death to allow flexibility in government and ensure a regular and orderly transition of power.

Concern is rising among China’s elite that the nation is shifting toward a rigid form of autocracy ill-suited to managing a complex economy. China’s array of challenges includes weaning the economy off debt-fueled stimulus spending, breaking up state monopolies and cleaning up the environment.

“His dilemma is that he can’t get things done without power,” says Huang Jing, an expert on Chinese politics at the National University of Singapore. “He feels the need to centralize, but then he risks undermining these institutions designed to prevent a very powerful leader becoming a dictator.”

Chinese President Xi Jinping, left, and Premier Li Keqiang arrived for the opening session of the National People's Congress in March.
Chinese President Xi Jinping, left, and Premier Li Keqiang arrived for the opening session of the National People’s Congress in March. Photo: Agence France-Presse/Getty Image

Mr. Xi’s supporters say he still faces resistance within the party, and needs to modernize leadership structures to confront the slowing economy and a hostile West.

At a meeting of 348 party leaders in October that granted Mr. Xi another title—“core” leader—he railed against indiscipline and warned of senior officials who “lusted for power, feigned compliance and formed factions and gangs.”

Since then, many party members have signed written pledges of “absolute loyalty.” In a speech in October, the party chief of Henan province, Xie Fuzhan, hailed Mr. Xi as a “great leader”—words usually reserved for Mao.

[Read the more here, at WSJ]

Hours before Donald Trump’s election victory, China officially launched its own convoluted process for selecting a new national leadership team, to be unveiled at a twice-a-decade party congress next fall. Up to five of the seven members of the Politburo Standing Committee, China’s top leadership body, are due to retire.

Only Mr. Xi and Premier Li Keqiang would remain if the party observes the precedent, established in 2002, that leaders over age 67 step down. Read the rest of this entry »


China Criticizes Abe’s Pearl Harbor Visit 

Featured Image -- 80854

BEIJING/SEOUL (Jiji Press) — China on Wednesday criticized Prime Minister Shinzo Abe’s visit to Pearl Harbor in Hawaii for his lack of deep reflection on the country’s past.

Noting that Japan waged a war of aggression against China and other Asian countries, Chinese Foreign Ministry spokeswoman Hua Chunying told a press conference, “Reconciliation between the inflicters and victims must and can only be based upon sincere reflection and apology from the inflicters.” This is the only way to realize “a genuine and lasting reconciliation,” she said. For victimized countries in Asia, “one sincere apology” is more important than “dozens of smart shows,” Hua said.

honolulu-jp

The People’s Daily newspaper of the Communist Party of China said in its Wednesday edition that the Pearl Harbor visit is criticized both in Japan and the United States because Abe made the trip before apologizing to war victims in Asian countries that Japan invaded during the war.

Meanwhile, a South Korean Foreign Ministry official, touching on Abe’s pledge never to wage war again in the speech, said that Japan, based on a correct understanding of history, should strive further to promote reconciliation and cooperation with neighbors that fell victim to its wartime militarism. Read the rest of this entry »


Chinese Shopping Mall Marks Year of the Rooster with a Giant Statue of the Bird Sporting Donald Trump’s Infamous Hairdo

Trump Bird

China gives Trump the bird

A Chinese shopping mall is ringing in the Year of the Rooster with a giant sculpture of a chicken that looks like US president-elect Donald Trump.

China has gone cuckoo for the cartoonish pastiche — complete with orange pompadour — of the billionaire politician in Taiyuan, capital of the northern province of Shanxi.

The scowling statue is one of many roosters popping up around the country as it prepares to celebrate the lunar new year at the end of January.

gold-trump

With its tiny wings parroting the distinctive hand gestures of Trump (who is often mocked for his allegedly small digits) replicas of the bird are available on the Chinese shopping site Taobao for as much as 12,000 yuan ($1,700) for a 10-metre version. Read the rest of this entry »


Japan: Annual Births Set to Fall Below One Million for the First Time 

births-japan

The annual number of births in the country dipped below one million during 2016 for the first time since records became available, an estimate by the Health, Labor, and Welfare Ministry shows.

The number stands at 981,000, the lowest since 1899, according to the demographic statistic estimate released Thursday.

The ministry’s analysis showed the number of women in the age group of those giving birth is decreasing. The government is expected to urgently take further measures to address the declining birthrate.

The annual estimate shows that the number of people who died stands at 1.296 million, which is 6,000 more than last year. The number of deaths is thus expected to exceed that of births for 10 consecutive years. The gap, or the natural decrease in the population, is expected to hit a record high of 315,000.

The number of births has been declining since peaking at more than 2 million during the second baby boom from 1971 to 1974.

When the total fertility rate for 1989 hit a record low of 1.57, the situation was called the “1.57 shock” because the figure was even lower than in 1966 — a year in which giving birth was generally avoided in Japan due to a superstition. After that, measures to address the declining birthrate started being considered as important. Read the rest of this entry »


[VIDEO] Dr. K: Obama ‘Is Trying to Nail Everything to the Floor So It Can’t Be Moved’

Oil Drilling ‘Ban’ Still Allows Production Outside America

“This is so egregious, it’s perfectly revealing of the fact that Obama as he leaves the White House, he’s trying to nail everything to the floor so it can’t be moved. Of course, it can be moved. First of all, he’s interpreting this 50, 60-year-old law, in a wildly different way. It was intended to protect the feeding areas of the walrus. It was supposed to be specific, narrow, small tracks, not this gigantic locking away.”

TheHammer

“Second, they can’t even defend it in its own terms. The idea that because we’re not going to drill here, the oil and natural gas is not going to be produced, is ridiculous. It’s going to end up being produced in Nigeria, places all over the world, where the standards — environmental standards and protections — are infinitely less than they are in the U.S. So even in terms of the environment, you’re increasing the danger. It’s very obvious that all they’re trying to do is prevent American production of hydrocarbons, and it’s futile. The Indians and the Chinese are opening a coal-fired plant every week. It is not going to stop. What we don’t do, they will do. What we are doing is exporting jobs, exporting the waste, and exporting the danger.”

(read more)

Source: National Review


China Not Following Through on Market Reform Promises, says German Ambassador

german-amb

Michael Clauss hits out at lack of progress in market reforms and a reality that contradicts Beijing’s declared intentions.

wendy-wuWendy Wu reports: China isn’t following through on its market reform pledges as quickly as desired, German ambassador to China Michael Clauss said in an interview.

“I regret to note that the reform initiatives taken at the third plenum apparently have lost momentum,” Clauss told the South China Morning Post in Beijing.

The Communist Party, under the leadership of Xi Jinping, pledged three years ago that China would allow the market to play a “decisive” role in resources allocation. But the promises of adopting more market-oriented changes have mostly been shelved as Beijing beefs up intervention in economic activities, from coal mine operations to capital account controls.

“It seems that preserving social stability and discipline are the order of the day much more than implementing the necessary economic reforms,” Clauss said.

“Officially, China propagates a policy of open markets and unfettered access for foreign trade and investment. However, we note that very often [the] reality on the ground does not correspond to the declared intention of the Chinese government to facilitate foreign direct investment.

“On a long-term perspective, we sense a growing tendency in China towards market closure and favouring of indigenous production,” he said.

At a key policy meeting that ended on Friday, the leadership again highlighted “stability” and “financial risk prevention” as priorities for the coming year, sending a clear message that bold moves in market opening or liberalisation were off the table, observers said.

They are worried that Beijing is also unlikely to make painful cuts in the bloated state sector, for fear of possible social unrest, before the top leadership reshuffle at 19th party congress in the autumn.

[It’s time for China to honour its pledge to open up the market and society – and play fair]

Survey results of commerce chambers of China’s major trading partners have underscored the increasing difficulties of doing business in China, including ambiguous security laws, limited market access and an official favouring of domestic technology.

Last year Beijing launched “Made in China 2025” – a campaign to revamp its manufacturing sector, and establish a home-grown hi-tech powerhouse.

“We wonder whether this is what in the end China 2025 is all about: a future Chinese economy relying on its own, leaving no room for exchanges with its partners,” Clauss said, adding that plans for German companies to expand investment in China had fallen to a three-year low.

Since late last year, Beijing has strengthened controls on individuals and companies transferring funds overseas to stem capital outflows and defend the yuan’s exchange rate. Read the rest of this entry »


As Yuan Weakens, Chinese Households Rush to Open Foreign Currency Accounts

trump-china

Since October, the government has acted to slow outflows by tightening existing measures, such as approvals for foreign currency transfers, and has leant on banks to be stricter, making it harder for companies and individuals to change money and transfer money abroad.

SHANGHAI: Zhang Yuting lives and works in Shanghai, has only visited the United States once, and rarely needs to use foreign currency. But that hasn’t stopped the 29-year-old accountant from putting a slice of her bank savings into the greenback.

“Expectations of capital flight are clear. I might exchange more yuan early next year, as long as I’ve got money.”

She is not alone. In the first 11 months of 2016, official figures show that foreign currency bank deposits owned by Chinese households rose by almost 32 per cent, propelled by the yuan’s recent fall to eight-year lows against the dollar.

The rapid rise – almost four times the growth rate for total deposits in the yuan and other currencies as recorded in central bank data – comes at a time when the yuan is under intense pressure from capital outflows.

The outflows are partially a result of concerns that the yuan is going to weaken further as US interest rates rise, and because of lingering concerns about the health of the Chinese economy.

US President-elect Donald Trump’s threats to declare China a currency manipulator and to impose punitive tariffs on Chinese imports into the US, as well as tensions over Taiwan and the South China Sea, have only added to the fears.

“Expectations of capital flight are clear,” said Zhang, who used her yuan savings to buy US$10,000 this year. “I might exchange more yuan early next year, as long as I’ve got money.”

Household foreign currency deposits in China are not huge compared to the money that companies, banks and wealthy individuals have been directing into foreign currency accounts and other assets offshore.

All up, households had US$118.72 billion of foreign money in their bank accounts at the end of November, while total foreign currency deposits were US$702.56 billion.

But the high growth rate in the household forex holdings are symbolic of a growing headache for the government as it struggles to counter the yuan’s weakness.

Since October, the government has acted to slow outflows by tightening existing measures, such as approvals for foreign currency transfers, and has leant on banks to be stricter, making it harder for companies and individuals to change money and transfer money abroad. Read the rest of this entry »


Capital Crackdown: Companies Face Delays Getting Cash Out of China

sg

New regulations aimed at slowing the yuan’s decline create confusion for multinationals.

French construction-materials company Cie. de Saint-Gobain SA, is finding it harder to take its money out of China.

“The process of authorization is going to become longer now. The procedures will be controlled more strictly.”

— Javier Gimeno, head of Saint-Gobain’s China operations

The conglomerate—like all multinationals operating there—faces new delays in recent weeks as Chinese regulators impose tougher restrictions on the movement of capital out of the country to slow the yuan’s decline.

“The process of authorization is going to become longer now,” said Javier Gimeno, who heads Saint-Gobain’s China operations. “The procedures will be controlled more strictly.”

Nearly 7% of Saint-Gobain’s world-wide group sales come from Asia and Oceania, a large part of that from China. The new rules are adding confusion and anxiety to a process that had been getting much easier over the past year, he said. The shift could cause some multinationals to rethink future investments in a country where once-sure payoffs are suddenly facing an uncertain return, analysts say.

Featured Image -- 77093

As of late November, firms that want to exchange yuan into dollars in China now need approval for any transaction greater than $5 million. They also face tighter limits on amounts they can transfer in and out of bank accounts in China to affiliates in other countries, in a practice known as “cross-border sweeping.”

“We hear a lot questions from corporates about whether they will be able to repatriate their money in the future,” said Alexander Tietze, managing director at Acon Actienbank AG, a German bank that advises companies on Chinese investments. He expects foreign investments in China to slow, and cautioned that foreign takeovers or plans for new joint ventures could fail because of the controls.

With the Chinese economy struggling, multinationals have fewer opportunities to reinvest there, which makes it more difficult for them to do much with money trapped in China.

“A majority of clients are currently consolidating and restructuring their China business,” said Bernd-Uwe Stucken, a lawyer with Pinsent Masons LLP in Shanghai. Some clients are closing down their business, with new investments being the exception to the rule, Mr. Stucken said.

Adding to the confusion: it is unclear where the limits are, because regulators haven’t published official rule changes, but instead have given only informal guidance to banks, according to Daniel Blumen, partner at Treasury Alliance Group, a consulting firm.

Calls to the People’s Bank of China weren’t returned. Read the rest of this entry »


Chinese Rush to Open Foreign Currency Accounts

A teller counts US dollars and Chinese 100-yuan notes at a bank in Hefei, east China's Anhui province on January 16, 2011

The biggest monthly rise in the foreign currency account deposits so far this year came in January when the annual $50,000 conversion quota was reset and individuals rushed to change yuan into dollars.

SHANGHAI  – Winni Zhou and John Ruwitch report: Zhang Yuting lives and works in Shanghai, has only visited the United States once, and rarely needs to use foreign currency. But that hasn’t stopped the 29-year-old accountant from putting a slice of her bank savings into the greenback.

“Expectations of capital flight are clear. I might exchange more yuan early next year, as long as I’ve got money.”

— Zhang Yuting

She is not alone. In the first 11 months of 2016, official figures show that foreign currency bank deposits owned by Chinese households rose by almost 32 percent, propelled by the yuan’s recent fall to eight-year lows against the dollar.

china_corruption_1203

“Banks under pressure to minimize outflows are also offering deals and giveaways for people who voluntarily convert their forex savings back into yuan. Bank of Communications is entering any customer who changes more than $1,000 into yuan the chance to be part of a lucky draw, with various prizes, such as portable printers.” 

The rapid rise – almost four times the growth rate for total deposits in the yuan and other currencies as recorded in central bank data – comes at a time when the yuan is under intense pressure from capital outflows. The outflows are partially a result of concerns that the yuan is going to weaken further as U.S. interest rates rise, and because of lingering concerns about the health of the Chinese economy.

Featured Image -- 82865

“The more you see people converting, reflected in foreign currency deposits in the banking segment, it means obviously there’s pressure on the local currency.”

— Raymond Yeung, chief economist for Greater China at ANZ

U.S. President-elect Donald Trump’s threats to declare China a currency manipulator and to impose punitive tariffs on Chinese imports into the U.S., as well as tensions over Taiwan and the South China Sea, have only added to the fears.

“Regulators have a lot of control over what happens to those deposits, and they can control the rate of inflows into onshore FX deposits.”

“Expectations of capital flight are clear,” said Zhang, who used her yuan savings to buy $10,000 this year. “I might exchange more yuan early next year, as long as I’ve got money.”

Household foreign currency deposits in China are not huge compared to the money that companies, banks and wealthy individuals have been directing into foreign currency accounts and other assets offshore. All up, households had $118.72 billion of foreign money in their bank accounts at the end of November, while total foreign currency deposits were $702.56 billion.

But the high growth rate in the household forex holdings are symbolic of a growing headache for the government as it struggles to counter the yuan’s weakness.

Since October, the government has acted to slow outflows by tightening existing measures, such as approvals for foreign currency transfers, and has leant on banks to be stricter, making it harder for companies and individuals to change money and transfer money abroad.

More measures may be in the cards. Read the rest of this entry »


[VIDEO] Syaru Shirley Lin Discusses Her Book ‘Taiwan’s China Dilemma’

taiwans-china-dilemma_event-image

[Order the book “Taiwan’s China Dilemma: Contested Identities and Multiple Interests in Taiwan’s Cross-Strait Economic Policy” from Amazon.com]


Michael Auslin: China Drone Seizure Throws Down Gauntlet to Obama and Trump

south-china-sea-gaven-composite

Michael Auslin is the author of The End of the Asian Century: War, Stagnation, and the Risks to the World’s Most Dynamic Region,” which will be published by Yale in January. The opinions expressed in this commentary are his.

michael-auslin-headshotMichael Auslin writes: In seizing an unmanned, underwater US Navy drone in international waters off the Philippines on Thursday, China has thrown down a North Korean-style gauntlet to both the outgoing Obama Administration and the incoming Trump team.

While media reports are still sketchy, it appears that a Chinese naval vessel was close enough to a US oceanographic survey ship to launch a small boat to grab the scientific drone as the American vessel was preparing to retrieve it. That would mean a ship-to-ship level of intimidation, and not a snatch-and-grab action in isolated waters.

Like in 2009, when the Chinese harassed the USNS Impeccable in the South China Sea, the latest action comes against a similarly unarmed US research vessel. This time, however, the Chinese flagrantly flouted international law, and unlawfully seized US property while possibly endangering the safety of US military personnel on the high seas.

[Order Michael Auslin’s book “The End of the Asian Century: War, Stagnation, and the Risks to the World’s Most Dynamic Region” from Amazon.com]

Such a dramatic upping of the ante is out of character for China, and American officials should understand that Beijing now appears willing to take increasingly risky actions. This latest provocation may well be at least partly in response to President-elect Trump’s recent comments on China, Taiwan and the One-China Policy.

At the same time, the latest challenge comes on the heels of steadily degrading relations between the Obama Administration and China, including news that Beijing is rapidly militarizing its newly built islands located near the Philippines. On these reclaimed shoals, China has emplaced anti-aircraft and anti-missile systems in what can also be a precursor to fielding offensive weapons capabilities.

[Read the full story here, at CNN.com]

In response, senior US military leaders have made forthright statements about America’s national interest in maintaining open and uncontested sea lanes. These comments have put Beijing on notice that Washington will not sit idly by if China appears be upending decades of peaceful development in Asia’s waters. Read the rest of this entry »


OH YES THEY DID: As Expected, China Installs Weapons Systems on Artificial Islands

U.S. Navy leadership and senior officers from the Chinese People's Liberation Army (Navy) meet for lunch aboard the Chinese destroyer Harbin (DDG 112) marking the conclusion of a U.S.-China counter piracy exercise between Harbin and the guided-missile destroyer USS Mason (DDG 87). Mason is deployed in support of maritime security operations and theater security cooperation efforts in the U.S. 5th Fleet area of responsibility. (U.S. Navy photo by Mass Communication Specialist 1st Class Gary M. Keen/Released)

The Asia Maritime Transparency Initiative at the Center for Strategic and International Studies said its findings come despite statements by the Chinese leadership that Beijing has no intention to militarize the islands in the strategic trade route, where territory is claimed by several countries.

WASHINGTON (Reuters) –David Brunnstrom reports: China appears to have installed weapons, including anti-aircraft and anti-missile systems, on all seven of the artificial islands it has built in the South China Sea, a U.S. think tank reported on Wednesday, citing new satellite imagery.

“It now seems that these structures are an evolution of point-defense fortifications already constructed at China’s smaller facilities on Gaven, Hughes, Johnson, and Cuarteron reefs.”

The Asia Maritime Transparency Initiative (AMTI) at the Center for Strategic and International Studies said its findings come despite statements by the Chinese leadership that Beijing has no intention to militarize the islands in the strategic trade route, where territory is claimed by several countries.

DigitalGlobe overview imagery from June 3rd, 2016 of the Fiery Cross Reef located in the South China Sea. Fiery Cross is located in the western part of the Spratly Islands group. Photo DigitalGlobe via Getty Images.

“These gun and probable CIWS emplacements show that Beijing is serious about defense of its artificial islands in case of an armed contingency in the South China Sea. Among other things, they would be the last line of defense against cruise missiles launched by the United States or others against these soon-to-be-operational air bases.”

AMTI said it had been tracking construction of hexagonal structures on Fiery Cross, Mischief and Subi reefs in the Spratly Islands since June and July. China has already built military length airstrips on these islands.

“This is the first time that we’re confident in saying they are anti-aircraft and CIWS emplacements. We did not know that they had systems this big and this advanced there. This is militarization. The Chinese can argue that it’s only for defensive purposes, but if you are building giant anti-aircraft gun and CIWS emplacements, it means that you are prepping for a future conflict.”

“It now seems that these structures are an evolution of point-defense fortifications already constructed at China’s smaller facilities on Gaven, Hughes, Johnson, and Cuarteron reefs,” it said citing images taken in November and made available to Reuters.

“This model has gone through another evolution at (the) much-larger bases on Fiery Cross, Subi and Mischief reefs.”

Satellite images of Hughes and Gaven reefs showed what appeared to be anti-aircraft guns and what were likely to be close-in weapons systems (CIWS) to protect against cruise missile strikes, it said.

Images from Fiery Cross Reef showed towers that likely contained targeting radar, it said.

AMTI said covers had been installed on the towers at Fiery Cross, but the size of platforms on these and the covers suggested they concealed defense systems similar to those at the smaller reefs.

“These gun and probable CIWS emplacements show that Beijing is serious about defense of its artificial islands in case of an armed contingency in the South China Sea,” it said. Read the rest of this entry »


Japan Throws Down the Gauntlet With Plan for World’s Fastest Supercomputer

objfwgicvikdssalk22w

Officials in Japan have announced a plan to build the world’s fastest supercomputer in a bid to reaffirm the country’s place as a leader in technological advancement.

If all goes according to plan, the processing monster will cost 19.5 billion yen ($173 million) and will be cable of 130 quadrillion calculations per second, Reuters reports.

speedcollar

It is a rare thing to be able to use the word “quadrillion” in a manner that isn’t an exaggeration. Phrased another way, the planned supercomputer clocks in at 130 petaflops, which would decidedly surpass the current fastest in the world—China’s Sunway Taihulight which maxes out at 93 petaflops.

Satoshi Sekiguchi, a director general at Japan’s ‎National Institute of Advanced Industrial Science and Technology, had an intriguingly humble way of saying that it will blow the competition out of the water: “As far as we know, there is nothing out there that is as fast.” Which leaves the imagination to wonder about secret hidden supercomputers plowing through data in hollowed-out mountains.

speed-racer

The move comes at a time when Japan hopes to return to its glory days as top dog in technology. Prime Minister Shinzo Abe has recently pushed for his government to work more closely with private industry to assure that Japan leads the way in robotics, batteries, artificial intelligence and other key areas of growth. Read the rest of this entry »


North Korea Able to Launch Nuclear Warhead on Missile, US Military Official Warns, But Controlling it? Not So Much

northkoreakimjongun

WASHINGTON — North Korea now has the capability to launch a nuclear weapon, a senior U.S. military official said Thursday, adding that while the U.S. believes Pyongyang can mount a warhead on a missile, it’s not clear that it can hit a target.

“It is the threat that keeps me awake at night, primarily because we don’t know what the dear leader in North Korea really is after. Truthfully, they have the capability, right now, to be able to deliver a nuclear weapon. They’re just not sure about re-entry and that’s why they continue to test their systems.”

The official said it appears that North Korea can mount a nuclear warhead on a missile, but may not have the re-entry capabilities for a strategic strike. That would include the ability of the weapon to get back through the atmosphere without burning up and the ability to hit the intended target. The official said North Korea continues to try and overcome those limitations.

The Pentagon continues to revise itscontingency plans regarding a North Korean strike, said the official, who was not authorized to discuss the issue publicly so spoke on condition of anonymity. The military routinely develops plans for all threat possibilities.

“It is the threat that keeps me awake at night,” the official said, “primarily because we don’t know what the dear leader in North Korea really is after. Truthfully, they have the capability, right now, to be able to deliver a nuclear weapon. They’re just not sure about re-entry and that’s why they continue to test their systems.”

U.S. officials have steadily expanded their assessments of Pyongyang’s nuclear abilities. Adm. William Gortney, then-head of U.S. Northern Command, said in March that Pyongyang may have figured out how to make a nuclear warhead small enough to fit on a long-range missile. Read the rest of this entry »


More and More American Companies Think Their Big China Opportunity is Over 

kfc-china

’We have seen a significant drop of U.S. companies going to China…On the contrary, they are coming back here,’ says market expert.

For a long time, a lot of American companies saw China as the world’s biggest business opportunity. But that time may be over.

“If you’re waiting for the booming Chinese consumer…it’s just not on the way. The upside is just not what some consumer firms were hoping for.”

— Derek Scissors, chief economist at China Beige Book International, which regularly surveys Chinese businesses

This week, McDonald’s was reportedly in talks to sell its China unit and license its name to a Chinese company instead, following Yum Brands ‘ decision to do something similar and spin off its China operations into a new firm called Yum China last month.

“The trend is that opening retail business on the ground in China as a foreigner is difficult and expensive.”

Coca-Cola announced plans to sell its China bottling business in November, and International Paper said in March that it’s spinning off its China and Southeast Asia corrugated packaging business.

mcdonalds-china-arches

“We have for years tried to push a lot of our clients not to do that, but instead do what McDonald’s and Yum Brands are doing, which is…monetise your name and your knowledge without actually being the one who does all the work to make it work in China. China is a tough, tough market.”

— Dan Harris, lawyer at Harris Bricken and author of the China Law Blog

“The trend is that opening retail business on the ground in China as a foreigner is difficult and expensive,” said Dan Harris, lawyer at Harris Bricken and author of the China Law Blog.

“We have for years tried to push a lot of our clients not to do that, but instead do what McDonald’s and Yum Brands are doing, which is … monetise your name and your knowledge without actually being the one who does all the work to make it work in China,” Harris said. “China is a tough, tough market.”

McDonald’s said in March it was looking for “strategic partners” for key Asia markets. Last year, Yum Brands said its decision to spin off its China unit followed a “rigorous review of strategic options.”

fastfood-china

Fast food companies were early major entrants to China nearly three decades ago. As individual Chinese grew wealthier, the opportunities for tapping the Chinese consumer market appeared to grow exponentially. But roadblocks appeared: U.S. fast food chains struggled with food safety scandals in China, and other companies have had intellectual property such as trademarks stolen.

[Read the full story here, at South China Morning Post]

“We have seen a lot of U.S companies struggling [with] their China” operations, said Siva Yam, president of the Chicago-based U.S.-China Chamber of Commerce. “The market is much more mature. We have seen a significant drop of U.S. companies going to China. … On the contrary, they are coming back here.”

An annual report from the American Chamber of Commerce in China found last year that 32 per cent of member companies surveyed do not plan to expand investments in China, a percentage that’s higher than during the financial crisis in 2009. Read the rest of this entry »


Cheap, Lethal Chinese Drones Are Filling Distant Skies

china-drones

Lower quality, but they get the job done.

Ryan Pickrell reports: Chinese drones are taking flight in skies beyond China’s borders in great numbers, filling a massive void in a multibillion-dollar industry left by the U.S.

“I believe this is the largest campaign we’ve seen that has been focused on drone technology. It seems to align pretty well with the focus of the Chinese government to build up their own drone technology capabilities.”

— Darien Kindlund, manager of Fireeye’s Threat Intelligence division

While the U.S. is recognized as a leader in the development and deployment of Unmanned Aerial Systems (UAS), it keeps its drone technology close and its armed drones even closer, creating new opportunities for China, which is eager to play a role in the global arms trade.

lijian_uav_1

The U.S. only exports armed drones to a few select allies, such as the U.K., as part of a Department of State decision made early last year. Jordan, for example, requested permission to purchase U.S. drones in 2014 but was rejected.

The U.S. limits its unmanned aerial vehicle (UAV) exports, especially its armed drones, for two main reasons.

One, the U.S. is a member of the Missile Technology Control Regime (MTCR), a multilateral partnership that prohibits the export of missile and UAV technology capable of delivering a 1,100 lb payload at a range greater than 185 miles. Two, some U.S. officials are concerned that regular U.S. drone exports would lead to an increase in drone warfare abroad, creating a less secure international environment.

[Read the full text here, at The Daily Caller]

Unhindered by international agreements and export restrictions, China is moving into the drone export business, creating cheap, yet effective alternatives for countries interested in purchasing drone technology.

Chengdu Pterodactyl I

Chengdu Pterodactyl I

China has been actively developing its drone technology, making great strides in recent years.

Early last month, China showed off its CH-5 Rainbow drone, which it claims can rival America’s MQ-9 Reaper, at an air show in Zhuhai.

[Read more here, at The Daily Caller]

The CH-5 “can perform whatever operations the MQ-9 Reaper can and is even better than the US vehicle when it comes to flight duration and operational efficiency,” Shi Wen, a chief designer of the CH series drones at the China Academy of Aerospace Aerodynamics, explained to the China Daily a little over a month ago.

hackers-china-drones

“Several foreign nations have expressed intentions to purchase the CH-5, and we are in talks with them,” he added, signaling China’s interest in selling the new CH-5.

The CH-4referred to as the “AK-47 of drones,” preceded the CH-5. Read the rest of this entry »


China Complains After President-Elect Trump Speaks to Taiwan Leader Tsai Ing-wen

China12-553x360

Beijing (AFP) – China protested to Washington Saturday after US President-elect Donald Trump broke with decades of foreign policy and spoke with the president of Taiwan.

“It was not immediately clear whether Trump’s telephone call with Tsai Ing-wen marked a deliberate pivot away from Washington’s official ‘One China’ stance, but it fuelled fears he is improvising on international affairs.”

It was not immediately clear whether Trump’s telephone call with Tsai Ing-wen marked a deliberate pivot away from Washington’s official “One China” stance, but it fuelled fears he is improvising on international affairs.

xmubuilding

Xiamen University

Zhang Wensheng, of Xiamen University, was more circumspect, dismissing Trump’s use of the term ‘president’ as ‘personal greetings’ that ‘do not reflect a political position whatsoever’.

China regards self-ruling Taiwan as part of its own territory awaiting reunification under Beijing’s rule, and any US move that would imply support for independence would likely trigger fury.

[ALSO SEE – Commentary: Trump, Taiwan and China – punditfromanotherplanet]

During Friday’s discussion, Trump and Tsai noted “the close economic, political and security ties” between Taiwan and the United States, according to the president-elect’s office.

trump-taiwan-china

Even before the call with Taiwan, Trump’s unorthodox diplomatic outreach had raised eyebrows, and, for some critics, in extending his hand to Taiwan, Trump crossed a dangerous line.

“President-elect Trump also congratulated President Tsai on becoming President of Taiwan earlier this year,” it said.

Beijing on Saturday offered a robust response.

“We have already made solemn representations about it to the relevant US side,” the Chinese foreign ministry said.

“There is no change to our longstanding policy on cross-Strait issues. We remain firmly committed to our ‘One China’ policy,” she added. “Our fundamental interest is in peaceful and stable cross-Strait relations.”

— National Security Council spokeswoman Emily Horne

“It must be pointed out that there is only one China in the world. Taiwan is an inalienable part of China’s territory,”ObaMao

China also urged “relevant parties in the US… to handle Taiwan-related issues with caution and care to avoid unnecessarily interfering with the overall situation of Sino-US relations.”

Trump, who had come under fire for the telephone call, hit back — on Twitter.

“Interesting how the U.S. sells Taiwan billions of dollars of military equipment but I should not accept a congratulatory call,” Trump tweeted.

– ‘How wars start’ –

President Barack Obama’s White House said the outgoing US administration had not changed its stance on China-Taiwan issues.

“There is no change to our longstanding policy on cross-Strait issues,” National Security Council spokeswoman Emily Horne told reporters. Read the rest of this entry »


Xi’an, China: The Great Tower of Textbooks

china-book-tower

A café in the central Chinese city of Xi’an has become a place of pilgrimage for students after its owner installed a giant artwork made of books as a symbol of the crushing workload that many of China’s schools impose on youngsters. At 7.5 meters tall with a diameter of 1.5 meters, the hollow edifice is made of over four tons of unwanted textbooks bought by Li from a nearby university. Read the rest of this entry »


Socialist Self-Deception: Einstein and the USSR to Bernie Sanders and Venezuela 

einstein_patentclerk

Even socialists who traveled to the Soviet Union and saw its immense poverty with their own eyes could not be shaken from their faith.

To explain our insane fascination with socialism, I have pointed to a growing body of academic research, which suggests that we are, by nature, envious of and resentful toward people who amass “disproportionate” wealth and power.

Moreover, research suggests that we find it difficult to comprehend, let alone appreciate, what Friedrich Hayek called extended order — or the use of specialization and trade to create “an information gathering process, able to call up, and put to use, widely dispersed information that no central planning agency, let alone any individual, could know as a whole, possess or control.”

Our minds have evolved to deal with issues faced by our hunting and gathering ancestors (e.g., an exchange of meat for favors), not to deal with issues facing us today (e.g., outsourcing the assembly of the iPhone to China to make it more affordable in America). The extended order, in other words, has evolved in spite of, not because of, our best efforts.

Today, I want to address another reason behind the persistent appeal of socialism: the power of self-delusion, or our ability and willingness to go on believing in things that are patently not true.

Soviet Five-Year Plan propaganda poster.

Soviet Five-Year Plan propaganda poster.

Consider the following two examples. In 1985, my Czechoslovak aunt Kate visited the USSR. She was a committed Communist Party member all of her adult life, and, as a reward, she was given a chance to spend a couple of weeks in the workers’ paradise. When she returned, I impetuously asked her if she had brought me anything. “Nothing,” she replied much to my disappointment, “the USSR is a very poor country.” Yet Kate never wavered in her commitment to the principles of communism and remained a party member until 1989, when her entire value system came crumbling down along with the Berlin Wall.

[Read the full story here, at Foundation for Economic Education]

Some ten years later, an American college professor of mine recalled his own visit to the USSR. In 1970, he and his wife spent two weeks in Leningrad, Moscow, and Kiev. During their stay in the communist country, he was shocked by the poverty and inefficiency he saw. (From Kiev, he wrote a letter to his parents in New York, which I have transcribed, with his permission, below.) All the other tourists that he met expressed similar sentiments.

When he returned to the United States, however, he kept on reading reports in mainstream publications, including Time magazine and The New York Times, which maintained that the Soviet economy was working. These reports were written by people who lived in the USSR, spoke Russian and had Soviet friends. As such, he concluded that the impressions he had made during his stay in the USSR were not valid.

If the above two examples failed to convince you of the power of self-delusion, consider our Nobel Prize-winning physicist from Ulm.

Einstein was a self-declared socialist. In 1949, he even published an essay titled “Why Socialism?” In it, Einstein wrote, “The economic anarchy of capitalist society as it exists today is, in my opinion, the real source of the evil [of human suffering]… I am convinced there is only one way to eliminate… [this evil], namely through the establishment of a socialist economy.”

It is striking that the most brilliant scientist of the 20th century, who escaped from national socialist Germany (Hitler called his party “socialist” for a reason) and moved to the capitalist United States, published an essay castigating capitalism and calling for socialism — while Stalin was still alive and busy butchering millions of Soviet citizens. Read the rest of this entry »