Government, energy & environment

Bamboozled by China

To even attempt to make sense of the press about China in a relatively short article is practically impossible. In fact, the sheer volume of disparate information is a metaphor for the diversity of China itself: one cannot generalise about China or the Chinese. Journalists grapple with so many topics: Is China going to rule the world? Are our fears of China overblown? Is China in the grip of moral confusion? How strong is its economy, really? What will happen to the old people? And finally, what are the economic prospects for China – and by extension, the rest of us?

Perhaps the most interesting place to start is by reading a Chinese author, rather than accounts from the West about what is happening in China. Yu Hua, in his book, China in Ten Words, uses ten chapters with one-word headings to describe his experience and view of China. One of them, ‘Copycat’ attempts to describe what he considers to be another kind of cultural revolution – the revolt against official control and moral confusion through counterfeiting, deception and caricature.

Copycat brands have mushroomed into every part of life, copycat stars appear in imitation shows; are the Chinese simply mocking the way they copy western capitalism? But China’s breakneck development has not been even; on the contrary it is thoroughly lopsided. It was Mao Zedong, during the Cultural Revolution, who said: “To rebel is justified”. Copycatting may well be another form of rebellion.

We often look to writers and artists to be provocative but a recent book, The future will be … China, suggests artists are reticent about their country and do not believe there is any Chinese threat to the western way of life. In fact, they sound just as scared about the future as anybody else: “I wish the China of the future will no longer worry about the future of China”, said one. Another writer in the press says America is overly worried about China, in the same way it feared Russia or Japan, and fails to recognise there can be a slow transition to democracy and autocracies are not as invulnerable as they may seem.

Signs of fear of China’s power abound in lengthy articles about the Chinese economic slowdown, the weaknesses inherent in its aging population, the real estate bubble, and overinvestment in machinery, buildings and infrastructure.

The Economist says there are three possibilities for China in the next few years. First, China will keep expanding, continuing to invest and, even if those investments are not always profitable, they will contribute to the economy. Second, China will be overwhelmed by the imbalance created by its high rate of investment and credit to keep growth going will eventually fall. Third, China is resilient and can handle any losses that come from unwise investments. If the investment rate dips, they will need another source of demand, whether it is household or government consumption.

It is common to make comparisons between China and America, but China will most probably overtake America in 2017 as the world’s largest economy. The striking difference is in demographics. America’s population is forecast to rise 30% in the next 40 years while China’s will peak in 2026 because of its low fertility rate, forecast to be 1.51 in 2015-20 compared to America’s rate of 2.08 and going up. China’s median age will be 49 by 2050, compared to America’s median of 40, and 26% of China’s population will be over 65 compared to a forecast 13% in America.

Rapid aging has led to the 4-2-1 phenomenon: each child is responsible for two parents and four grandparents. The Chinese tradition of looking after your elders is starting to pall – and there will be strong growth in aged care, combined with fewer people in the workforce to offer it. China is likely to be importing all types of workers by 2030.

As China faces continuing ‘problems of prosperity’, such as pollution, traffic and obesity, some have dreamed of a return to the ‘bicycle kingdom’, the time when China had more bikes than anywhere else on earth. The bike may even be a good metaphor for China itself: they are stable only as long as they keep moving.

Ref: The Week (UK), 6 October 2012, Our fears about China are overblown. M Pei.
Financial Times (UK), 25-26 August 2012, China’s great wall of doubt. P Aspden.
Prospect Magazine (UK), September 2012, Copycat China. Y Hua.
The Economist (UK), 26 May 2012, Pedalling prosperity: Special report China’s Economy. Also, How strong is China’s economy? Anon.
The Economist (UK), 21 April 2012, China’s Achilles heel, also New homes for the old. Anon.
China in ten words by Yu Hua. Translated by Allan H. Barr, Pantheon Books, 2012.
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Search words: cheap labour, real estate bubble, Arab Spring, art, Ullens Center for Contemporary Art (UCCA), copycat, Mao Zeong, brands, Beijing Olympics, piracy, slander, Cultural Revolution, bamboozle, machinery, infrastructure, interest rates, lending, saving, military spending, demography, fertility, population, median age, America, old people, pensions, guanxi, bicycles, growth, investment, exports, land, state, surplus, misinvestment, consumption, state owned enterprises (SOEs), private investment, total factor productivity, deposits, interest rates, development.
Trend tags: BRICs

Who will rule the world?

The idea of ruling the world persists, whether it is a way of keeping people scared or just some patriarchal idea that someone has to be top dog. But a recent report by the EU, Citizens in an interconnected and polycentric world, suggests there will be no one ruler. By 2030, there will be a few different centres, spreading influence among large and middle powers, and the economic hub will move towards Asia.

China will be the largest economic power and India will follow, with both countries generating the largest shares of middle class consumption in the world (23% in China, 18% in India). Economic power is not everything; soft power and military modernisation also contribute. The US will remain the military leader and, with China, will remain the most influential, although the EU can play a major role if it does not fall apart. Middle powers, like Indonesia, Turkey and South Africa, will come to the fore while Canada and Australia will maintain their roles. Pakistan, Nigeria and Egypt may also become middle powers in their regions. Regionalism will be a ‘power multiplier’, for countries like Brazil, Indonesia and South Africa.

With the diffusion of power, what does this mean for global governance? China is likely to have a huge impact here. Beijing already contributes to international organisations and multilateral forums, IMF and World Bank, G20 and is involved in the ASEAN+3 process. For this reason, the EU wants to collaborate more fully with China on climate change, resources depletion, Reponsibility to Protect (R2P) and human security.

By 2030, the information revolution will be all over the world and is forecast to empower citizens to have a say in their future and understand that their concerns are widely shared. They will be focused on their fundamental freedoms, economic and social rights and concern for the environment. How they will react to the polycentric nature of power is an interesting question. It will also become clear that governments cannot deliver what their citizens expect, and this could be a source of conflict. See our next story, Sorry, we just don’t trust you.

Ref: China Daily Europe, 8-14 June 2012, Global trends and China’s future. A Vasconcelos and N Casarini.
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Search words: world power, plurality, middle class, economic, political, US, China, Russia, Japan, Indonesia, Turkey, South Africa, Nigeria, Egypt, regionalism, information revolution, global citizen, government, IMF, BRICS, multilateralism, EU.
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Sorry, we just don’t trust you

On both sides of the Atlantic, and beyond in Australia, people have lost faith in their governments. A recent survey by Pew Research in America found trust is almost at an all-time low. Its citizens are deeply frustrated and, for the first time, a majority of the public says the federal government threatens their personal rights and freedoms.

In the UK, only 29% of the British public in a survey by Edelman are confident the UK government is making the right decisions and slightly more, 38%, trust business but not CEOs. A mere 12% think the government is managing its economic affairs properly and few trust what politicians say.

It seems there is a widening chasm between what citizens expect of their governments and what they receive. In 15 years, US citizens have continued to be frustrated with their governments. Only once has a majority said they were ‘basically content’ with them – and that was two months after 9/11. Today, only a quarter say they can trust the government always or most of the time, while nearly three quarters say they can trust government only some of the time.

In Australia, only 32% trust government leaders to tell the truth, and 52% blame poor performance and incompetence as their main reason for trusting them less. Some 32% believe CEOs don’t say anything credible.

In Britain in 2008, government reputations suffered when they rescued the banks but after a couple of better years, they lost credibility again in 2011. This was because of broken promises and poor leadership, political paralysis in the EU and partisanship of US politics, according to Edelman.

Governments are not the only casualties of people’s trust. Banks and financial services are the least trusted and, in Germany, France and Italy, as low as 20%. But the winners are the technology companies, who are the most trusted. So what does this tell us about people’s faith? Have we given up on people and decided to put our trust in machines?

Ref: Pew Research Center (US), 31 January 2013, Majority says the Federal Government threatens their personal rights. M Dimock et al.
Huffington Post (UK), 24 January 2012, Trust in government is in the toilet Edelman UK boss says, P Guest.
Source integrity: Various
Search words: trust, government, US, UK, rights, freedoms, Democrats, Republican, Congress, guns, debt, lawmakers, Hispanics, blacks, young, economy, CEOs, banking, IT.
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Invitation to the post-liberal party

In our last issue, Why we don’t come to the parties?, we found people are more likely to be members of the Royal Society for the Protection of Birds than a political party. The director of Demos, David Goodhart, believes we need a new party, one that goes beyond the same-old mix of economic and social liberalisms. He calls it ‘post-liberal’ because the two liberalisms (social and economic) have dominated for too long and the consequences were too harsh.

Social and economic liberalism have emphasised lack of constraint and encouraged excesses, like overpaid CEOs, the financial crash and London’s riots. Meanwhile, there has been no emphasis on making the two liberalisms interdependent, and too much reliance on meeting financial targets. Philosopher Michael Sandel wisely says: “In our public life, we are more entangled, but less attached, than ever before”.

The beneficiaries of these liberalisms are the international, ‘mobile, secular, graduate elite’. Yet nearly half of people born in the UK live within 5 miles of where they lived when they were 14 – hardly mobile or international. The lower and middle classes are also tired of paying taxes, particularly when big corporates like Google get away with not paying them, and when taxes are used to support people who are seen as ‘undeserving’.

Only 28% believe government should spend more on benefits through higher taxes, compared to 58% in 1991. More than half think people should learn to look after themselves. A YouGov poll found 74% of voters wanted welfare payments cut (200 billion pounds were spent on benefits and pensions in 2011). If the system were more contributory – what you spend is what you get out – then perhaps people would be more accepting. Some kind of state and private insurance combined could work.

It is been said that British politics since Margaret Thatcher (just passed away), is a combination of the right winning the economic argument and the left winning the cultural one. Perhaps it’s time for the reverse – Blue Labour, Red Toryism – a blend of market-friendly social democracy and respect for nation, faith and family. Perhaps that could restore faith in governments. See We just don’t trust you, above.

Ref: Financial Times (UK), 12-13 May 2012, Welcome to the new world of the post-liberal majority. D Goodhart.
Financial Times (UK), 29-30 September 2012, Goodbye Beveridge – the end of British welfare approaches. D Goodhart.
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Search words: politics, Conservative, loyalty, liberalism, post-liberal, excesses, financial crash, riots, freedom, institutions, elite, tax, welfare state, deserving, contributory principle, inequality, Blue Labour, National Health Service, welfare cuts, scroungers, unemployment, benefits, social security, insurance.
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Global governance for the planet

Global warming is a global concern, but many scientific schemes proposed for global cooling do not have the same effect all over the world. These schemes must be able to block the sun’s incoming heat or increase heat loss from the top of the atmosphere. In doing so, we should be wary of creating a worse mess than the one we are currently in through what is innocuously called ‘geoengineering’.

Wikipedia describes it as “deliberate and large-scale intervention in the Earth's climatic system”. Some schemes include whitening clouds by spraying salt mist; squirting sulphuric acid into the stratosphere, putting mirrors into space, fertilising the oceans, spreading cloud-seeding bacteria and releasing microballoons. The most promising, it seems, are using ships to spray salt to whiten marine clouds; and ‘solar radiation management’ (SRM) - filling the atmosphere with a haze of sun-reflecting fine particles (5 million tones), such as sulphur dioxide. Volcanoes already do this brilliantly.

Met Office researchers want strict global governance for such radical schemes after studies showed how heavily they could affect some of the world's most vulnerable people. After studying volcanic eruptions in Mexico and Alaska, scientists discovered a link between volcanic eruptions in the northern hemisphere and droughts in Africa.

In the northern hemisphere, if we injected 5m tonnes of sulphate into the stratosphere each year from 2020 to 2070, it would cause severe drought in Niger, Mali, Burkina Faso, Senegal, Chad and Sudan, and remove almost all vegetation. But in the southern hemisphere, it would bring rain to the Sahel (terrible drought in 1970s-90s created 10 million refugees) and make it green again while reducing rainfall in north-eastern Brazil.

Matthew Watson leads the Spice project (Stratospheric Particle Injection for Climate Engineering) at Bristol University and voiced his concern this way: “How do you get a consensus with seven billion-plus stakeholders?” Our biggest concern is that a consensus is rarely needed. For example, who is standing in the wings to manufacture and pump sulphur dioxide for $US10 billion a year?

Ref: The Guardian (UK), 31 March 2013, Earth-cooling schemes need global sign-off, researchers say. I Sample.
New Scientist (UK), 22 September 2012, Cool it. S Battersby.
Source integrity: Various
Search words: carbon dioxide, global warming, geoengineering, sulphuric acid, sun, heat, space parasols, ocean, fertilization, cloud-whitening, Met Office, Stratospheric Particle Injection for Climate Engineering (SPICE), drought, Africa, volcanoes, solar radiation management’ (SRM).
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