The organisers took pains to follow all the traditions established in 30 years of Communist rule. As usual it was a triumphalist manifesto, particularly an assertion of China’s military might. You’d have thought that displays of rocketry aren’t necessary in a world where interdependency is the G20’s new buzz word, but in China – even in today’s China which is not officially very warlike – tradition is important. The whole choreography was still that of the Cold War, patent Moscow 1949. Bright blue and green tanks it had to be.

The procession of floats, meanwhile, showed the ideal China that is envisaged in Hu Jintao’s doctrine of ‘Scientific Perspective and Harmonious Society’. China’s conquests of Space was there for all to see, as well as its other achievements in the areas of industry, transport, energy and agriculture. That’s the scientific perspective. Harmony could be seen in the happy tableaux of minorities as each province filed past the country’s leaders, symbolically offering their tribute and allegiance.

While they did so, the President, Hu Jintao, remained as remote and Kremlin-faced as his predecessors, making the jerky waves and robotic responses expected. “Tongzhimen hao” …”Tongzhimen Xinku” like a metronome. It was all very imperial – and imperious – as Mao, with his instinctive understanding of symbolism, had designed it to be.

Hu only smiled once, when a parade of goose stepping female militia passed by in their short skirts and white and black booties. There was a universal sigh of relief around the world. So the Chinese Emperor was human after all….

I shouldn’t make cheap cracks. It was a grand, uplifting spectacle – as dazzling a choreography of human beings en masse as during the Olympic opening last year. It would be churlish for a foreigner to make any criticism of an event that was so appreciated by the people it was designed for. It reflected real pride in the country, as well as satisfaction for the Chinese Government, which, uniquely in the world has an 85% approval rating.

But – for the non Chinese observing it – the whole thing was – well, rather odd. First, it was not totally inclusive. The audience, apart from the diplomatic and foreign delegates, was entirely made up of Communist Party members. There were very few entrepreneurs from the private sector invited, only a token delegation from the Government-run Federation of Industry and Commerce. Nor was any industry outside the narrow State sector included on the floats (this despite the fact that the private sector now employs 78% of China’s workforce and accounts for 60% of its GDP).

Then there was the extraordinary security that surrounded the event. Certainly we live in an age of terrorism, and China has had problems in Xinjiang only months ago, but, even so, wasn’t it a little over the top to evacuate every building in the centre of the city that was in viewing distance of the show? One would have thought they would be bringing in people from far and wide to wave flags – at least vetted communists from round the country, but no, the streets were empty. The only observers outside Tiananmen itself were snipers on the roofs. It was a parade through a ghost city.

I stress that none of my Chinese friends complained, but many foreigners watched with bemusement and concern, and not a few journalists broadcast around the world that the People weren’t invited to their own birthday party because their government was afraid of them.

But why the paranoia, if such it was? On every objective piece of evidence China should be celebrating more than just its anniversary. Its achievements this year have been remarkable.

The Economy

The economic crisis has thrust China onto the world stage. It has awe-inspiring credentials. We’ve all seen the statistics: it’s the fastest growing economy in the world, it’ll soon have the second largest GDP, by next year it’ll be the world’s largest exporter, it is the largest FDI destination on the planet, and it has by far the largest foreign reserves. No wonder if in public speeches some boastful Chinese officials preface Zhongguo with Weida: “Mighty China” – there’s no other market in the world which can compete in size for commodities as diverse as cement, coal, steel, cell phones, autos. It’s even on the way to becoming the world’s largest market for luxury consumer goods.

And it has fulfilled what was thought to be an impossible target and achieved an 8% growth rate when every other country is reeling after the Economic Crisis.

Its stimulus package is having a positive effect in areas as diverse as infrastructure and health care; China has been hurt by a loss of exports but the economies of its inland provinces are growing, and on the international stage, China is more prominent than it has ever been, recognised as a world power comparable to America. For many people China is the country that will lead the world out of its crisis.

When investors, halfway through this year, recovered some of their confidence again, China was the first place which they considered. FDI inflows are growing again at a sharp pace. Few other countries in the world can make the same claim.

But is that the whole story? Actually there are some disturbing undertones to this undeniable success. There are questions that are being asked about the sustainability of the stimulus package and abuses in its implementation, charges of crony capitalism between the distributing banks and the recipients of the government money, mainly SOEs. Only a very small portion of the Government-pledged 4 trillion Renminbi has been made available to the private sector that, as we’ve said, provides 78% of China’s employment and 60% of its GDP. It is China’s state companies that have benefited and many have been given more money than they need for the projects for which the funds are specified.

At the same time, banks, until they were finally reined in by the Government in about June, had been lending on their own account in huge quantities – again to SOEs and often more than was actually needed. It is more than a coincidence that during these nine months automobile prices have surged, house prices have soared, and the stock market has had record highs. This can only mean that a huge proportion of the stimulus money has been diverted into ‘other’ activities.

Good money has indeed gone to good – in a developing economy like China every new mile of road or rail, every new school, every pipeline is an engine of growth – but a lot of the GDP growth – who knows what percentage? – has been the result of speculation or luxury investments. This has led to concerns, within the Chinese government and outside, that much, much more needs to be done before the corner is really turned.

Keeping inflationary and deflationary trends at bay will be a continuing task and one requiring constant adjustment. This year retail prices, after a dip at the beginning of the year, have been steady around the 15% mark, and inflation is under control, but a major problem that has emerged is the realisation of the extent of overcapacity in almost every sector of industry due to lack of planning and controls in the past. A major rationalisation is required if growth is to be maintained.

And that’s the main concern. GDP growth so far has been entirely the result of the stimulus package. With China’s huge reserves – as we’ve said, the largest in the world – there is enough in the government kitty to establish another stimulus package and another – but the object is to kick start the economy so the GDP increases on its own steam rather than by government spending. This has not happened.

In mid October, Vice President Xi Jinping met German Chancellor, Angela Merkel, in Frankfurt. During a surprisingly frank discussion, the Chinese Vice President told Chancellor Merkel that the problem with China’s present economy is that it is “unsustainable, unstructured and unbalanced.” Other Chinese leaders have been making similar statements of concern. Whilst most of the Chinese populace is complacent (so far only those coastal areas affected by collapse of export orders have been directly affected by the economic downturn) clearly China’s leaders are worried. They fear that the 8% growth they have achieved with such effort, may not in fact be able to be maintained without continued spending for years and years to come. Otherwise it would fall back to 6% again.

Now some of us might think that this would be a nice problem to have – a 6% growth would be a dream in any other part of the world – but time is not on the Chinese leaders’ side. They know what major problems they will still have to face with or without the economic crisis: an ageing population, climate change, water shortage, food shortage, energy shortage, pollution. To keep the great machine of China going to a point that it can one day be in a position of strength to solve these problems depends on keeping high growth now.

Social Stability

China’s leaders are showing a confident face to the world – but sadly President Hu and his team just haven’t the luxury of being able to concentrate solely on the economy, despite their consensus and their massive support from the people. For any Chinese administration there is one thing that is even more important than economic well-being and that is social stability – and unfortunately this government sees too many live and present dangers surrounding them. Hence all the security during the National Day parade.

The riots in Xinjiang earlier this year rocked the Communist Party to its core. Tibetan unrest last year in the run up to the Olympics had already alarmed them (that’s when the tightened security in China really began). The July 5 Urumqi riots in Xinjiang this year were traumatic for them, not only in the number killed and injured, 197 and 1,721 respectively, but also because it led to the dismissal of the Urumqi Party Boss, Li Zhi, when popular protest erupted against the high handedness of the overall Party Secretary of Xinjiang, Wang Leqian. That a Central Politburo member could be called to account BY THE PEOPLE! In political terms nothing quite like it has happened since 1989.

Nor did the matter end there. A few weeks later a bout of horrific needle attacks led to more riots and more deaths. Clearly there is a fear that what happened in one outlying part of China may one day occur closer to home.

This is against a background of an increasing number of group protests taking place all over the country, 85,000 in 2005, more than 100,000 in 2008 (that’s 300 a day). Most were not at all violent, some were quite small, but all expressed popular discontent of some form or another – over labour issues, land issues, pollution issues, nepotism and corruption. One episode was particularly alarming for the Party because it was in defiance of an order by the government for Tonghua Steelworkers to accept a merger with another mill as part of SOE reform. During the course of the incident the general manager was beaten to death, a rather extreme way for workers to assert rights they don’t believe they have anymore.

So concerned are the Party and the government that they are now taking action against blatant corruption, for this is what strikes the greatest chord of anger among the people and spills over most often into popular protest. The Party Secretary of Chongqing, Bo Xilai, is leading a fight against so-called ‘black societies’ in his city; numbers of senior policemen have been arrested, including the Head of the Judiciary, former deputy head of police, Wen Qiang. No doubt if the action in Chongqing is seen to be a success, there will be similar campaigns in other cities. Clearly it is an enormous matter of concern for the Central Government, adding to their headaches about the economy.

China on the World Stage

I think it is very important for us to remember that these concerns – about the economy and security – are never absent from President Hu’s or Premier Wen’s minds when they fly to Pittsburgh or London for an international summit. It probably explains the urgency and the doggedness with which this last year these two leaders have been fighting China’s corner

Not since the Second World War have Chinese leaders played such an active role in the world’s councils or been recognised as the equal or superior of other world leaders. It was China after America that dominated the recent sessions of the G20, so much so that the sobriquet G2 is now regularly discussed in political and media circles.

Gone are the days when Chinese leaders in the Security Council made no comment or abstained. Hu Jintao and Wen Jiabao, when they take the rostrum, have things to say. Generally they show support for the initiatives of the G20 – China is keen for the moment to appear as a good international citizen – but more and more they are setting the terms.

At the Pittsburgh summit Hu Jintao pushed the agenda for the coming Copenhagen conference on Climate Change with carbon saving demands that will apparently be more stringent than anybody else’s. Wen Jiabao at the World Economic Forum put the blame for the Financial Crisis entirely on the shoulders of the Western powers, blaming them for their negligence in regulatory controls. He demanded that the IMF should strengthen supervision of currency policies. He came up with an idea for a new standard of currency to replace the dollar, he called for increasing representation in world councils of developing countries. These are all points emphasized again and again and ever more forcefully by all Chinese leaders, wherever they travel.

China has taken the moral high ground. Not only will they no longer stand being criticized for human rights but they are also prepared to assert their economic and geopolitical interests at the top table.

They are also intolerant of any trucking with people they perceive to be their enemies, such as the Dalai Lama or Rebiya Kadeer, the leader of Uighurs in exile, or even lowly dissidents. Sometimes this can be very ugly.

We’ve mentioned that Xi Jinping met Chancellor Merkel in Frankfurt in October. He was there to open the annual Book fair that this year had a China theme – but there was nearly a walkout of the whole Chinese delegation when two dissidents, Bei Ling and Dai Qing, attempted to hold a press conference. After bullying the organizers not to allow them to do so, one of the leaders of the Chinese delegation said the following, “We haven’t come here to be lectured on democracy. Those days are over.”

Many people thought of those strident tones as the first preludes of a new Pax Sinica. The people in Asia certainly see it coming. China’s economic and political dominance is already tacitly acknowledged in ASEAN. Many South East Asian countries perceive China’s rise as beneficial to their own interests. They would like their prosperity to rise on China’s tide. While none of them are tributary states, there are signs of the beginnings of a China Co-Prosperity Sphere.

So is it inevitable? Should we really be expecting a new Pax Sinica rapidly to take over the post WW2 order in the next 50, or 20 (as some would have it) years?

Well, it will take China a bumpy ride to get there.

First it will have to control the new nationalism that seems to spout spontaneously out of Chinese campuses or whenever there is a perception that China has been insulted.

Last year Chinese protesters blockaded Carrefour in Beijing and other cities after the riots in Paris around the Olympic torch. A year or so before that mobs besieged the Japanese Embassy after the Prime Minister Koizumi visited the Yasukuni shrine. These riots were not organised or even encouraged by Government, but the rest of the world thought they were, or at least they felt they had grounds to believe that the government was not unsympathetic. And this is dangerous. Even tacit support of such hotheads – none of whom are over thirty or forty years old and who therefore only knew a China on the rise – will only raise doubts about the government’s intentions. It also makes them look weak. Foreign commentators have named nationalism as one of the biggest threats to China’s stability.

There are other areas of potential friction internationally.

Despite the rhetoric and pledges made in the G20, the same protectionism goes on, leading inevitably to trade disputes, whether over tyres and chicken imports in the case of China and America, or steel pipes, shoes, steel wire and bicycles in the case of China and the EU. At least these disagreements are being handled through WTO and other international institutions, and many people see this as a positive sign that China is prepared to engage on accepted international lines.

More disturbing is China’s economic imperialism in South America and Africa. In the struggle for influence over the Dark Continent the US is losing. In countries like Zambia, Nigeria, Tanzania and Angola China’s provision of everything from arms to infrastructure gives them the same sort of influence over their economies that Britain had over South America in its Empire days.

China is moving people into Africa as much as money. It is colonialism by other means. In a world of shrinking resources it is a new Great Game. Yet from China’s point of view it has no choice but to play it. Its survival depends on securing oil, minerals and coal.

And it will make friends with the world’s political pariahs to do so. There is a dawning understanding that this new member of the Club of Nations shares neither Western aspirations nor its values.

China’s secretiveness and lack of transparency causes suspicion, often intensified by its prickly and sometimes vindictive protectiveness of what it perceives as its interests. The arrest of a RTZ employee in Shanghai after Chinalco was thwarted of its purchase shocked the business and diplomatic communities. And the issue is still to be resolved. Those congressmen in America who see China as a threat to our values have more than enough ammunition to fuel their suspicions.

But what the world sometimes forgets is that actually the suspicions go two ways. It is worth recalling that China less than 35 years ago was totally isolated from the rest of the world, its economy was tiny and the whole population lived in poverty. There was a folk memory, intensified by communist propaganda, of 100 years exploitation by foreign powers and they were still engaging in a Cold War in which the West was their enemy. This was the world in which the present generation of leaders grew up. It was this, as much as the chaos of the Cultural Revolution that formed them. They have been programmed to be as suspicious of the West as die hard liberals in America are anti Communist. And they too find no difficulty to identify the evidence to fuel their suspicions.

Everybody remembers the Unocal case, when the US Congress refused to let China buy a small US oil company.

Last year, China’s launch of a sovereign fund led to accusations that this $US 200 billion fund, of which only a third was earmarked for spending overseas, was a vehicle to effect Chinese state policy by other means.

Increasingly over the last few years China has become more defensive. It really seems to believe that the West is out to contain them.

Sad to say in the last year, tensions have been rising between China and its maritime neighbours

China is building two naval bases in Burma, in Mergui and the Coco Islands, because they are convinced that the 7th Fleet will one day try and stop their cargoes of oil and resources from going through the Straits of Malacca. The result is that both India and Japan have become concerned that China is doing this to threaten their shipping.

This year, Chinese naval vessels, claiming a violation of sovereignty, have been harassing foreign companies drilling oil wells among the Spratley Islands and other parts of the South China Sea that China believes belongs to it.

On March 8, 2009, the US Navy’s destroyer Impeccable, while monitoring submarine activity 75 miles south of Hainan Island, was surrounded by five Chinese ships. This dispute had echoes of the fracas caused by the forced landing in Hainan of a U.S. spy plane and crew in 2001.

And while we’re about it, we should mention the increased tension in Arunachal Pradesh, the part of the Tibetan plateau occupied by India and claimed by China. The PLA has made border demonstrations there following a recent visit by the Indian P.M.

Every incident like this serves to heighten suspicions, which like seeds, are already waiting there to be germinated.

One World

It is likely to be a long hard road with many misunderstandings and altercations along the way before the West learns to accept China and vice versa.

I am inclined to be optimistic.

With regards to China’s economy, China’s muddling approach has always worked in the past. On any given year in the last thirty, China’s problems have appeared intractable – there has been a veritable industry of ‘The Imminent Collapse of China’ books – but somehow in every case solutions are found and China is left more prosperous than before. There is a momentum about China’s growth that seems unstoppable. Maladministration this year has left the important private sector out of the stimulus equation. Rumours in the Capital are that President Hu is making new policies now to include them. Growth and internal consumption will speed faster in the inland provinces when the private sector is given its head, and once the kick start happens then China’s leaders will be able to relax, knowing that recovery is assured. Then perhaps there might also be a more relaxed attitude to security.

Internationally there will continue to be tensions and mutual suspicions. There is only finite energy resources left in the world. Everybody is committed to the new Great Game – but as China becomes more practised in operating in the world institutions it has now so wholeheartedly joined, its methods and procedures will seem less alien, perhaps there will be more understanding by all sides that while interests may continue to conflict, it is not due to conspiracy theory or a desire to contain.

The world will slowly adjust to its new order. China’s politicians have shown signs of increased maturity and experience over the last two traumatic years. It is likely that cooperation and dialogue will be the preferred means for China to pursue its policy.

There can be coexistence between a Pax America and a Pax Sinica. In a world where global interests force countries to work together for survival, interests will ultimately be aligned…

…On the other hand, as a diplomat friend of mine said to me the other day when I put this view to him. “The China we’re seeing currently might be as cuddly as it’s ever going to get.”

As always, interesting times.

[...] I don’t play golf so having spent twenty years of weekends lying on sofas watching Zena: Warrior Princess or whatever else Star World had to offer, writing a novel seemed an incremental hitch up from slob-dom. One day a friend and I finished watching a TV version of Conrad’s Nostromo at 3 in the morning and whiskey fueled decided that ‘Mowal choice ish whash witing’s all about’ and then and there decided we’d each write a novel to illustrate it.

Twelve hours of hangover later, trying stupidly to walk the Wall from Simatai to Jinshanling, whilst crawling from flagstone to flagstone and dizzying at the precipices, I somehow thought of a plot. It ended up with my friends calling the police to find me, but I had a novel in my head that five years later was published. Publish one they want another, so writing’s become a bit of a moonlight career (on weekends and public holidays of course, if anybody from Jardines is reading this). [...]

Taken from Why I Write: Adam Williams – Interview by JFK Miller in Urbanatomy Shanghai

Editor’s note: we apologise to readers for Adam’s misspelling of Xena: Warrior Princess. His mind must really have been off the boil when conducting this interview because we know for a fact that during this television viewing period of his life he was also addicted to Buffy the Vampire Slayer and failed to mention it.
DS, Rome

Please see photos of the event HERE. If you would like to download images you’ll need to sign up for a Flickr account and then add Adam as a contact/friend.

www.flickr.com _AdamWilliams’ Wedding Photos photoset

Rhodri, besides exhibiting his work widely in Britain and Italy, has also published two collections of photographs:

Made in China With introduction by Hong Ying

Return / Yn Ôr With introduction by Wales’ National Poet, Gwyneth Lewis

For more information on Rhodri Jones, please visit his website at www.RhodriJones.com

Photo shows, in addition to Hong Ying, Adam and Dr Curti, bridesmaid Sybil (Adam and Hong Ying's two-year-old daughter) and Adam's daughter by his first marriage, Clio.

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Adam, Hong Ying and Sybil

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Adam and Hong Ying's Wedding in Force, Italy

England-Kazakhstan football match

Kazakhs are charming, softspoken and rather gentle people and this particularly came out during the England Kazakhstan soccer match. The Kazakh team was gutsy and energetic, fighting to the end and at first the crowd roared with delight at their oh so near goals against the English titans. But they were no match for the machine like English team whose sheer skill – arrogant, almost effortless, inexorable (I was reminded of the murderous bowmen of Agincourt and Crecy) meant there could be only one result. Four Nil. But the crowd showed no resentment. Rather the opposite. They cheered when David Beckham came on and every time Wayne Rooney scored a goal. I think they were just thrilled that such superstars were gracing their pitch. There was no animosity throughout the evening and they all went home with happy smiles and claps on the backs for lone Englishmen like us sitting amongst them. (The 3000 official English fans were meanwhile penned at the furthest end of the pitch out of harm’s way guarded by 60 British policemen flown over for the occasion. To their credit they behaved well and there were no incidents).

Almaty Football Match

The men and women of the foreign press experienced China’s history and development; its convulsions and upheavals; revolutions and wars. They had front row seats at every major twist and turn in China’s fortunes. They reported on the Opium Wars and the Taiping Rebellion; saw the Summer Palace burn; endured the Boxer Rebellion; witnessed the Qing Dynasty’s death, the birth of a Nationalist China and its struggle for survival against rampant warlordism. They followed the rise of the Communists, total war and then revolution. When the Unequal Treaties were signed, the foreign press were there; when foreign troops occupied and looted Beijing in 1900 they were present too; they saw the Republic born in 1911 and an increasingly politically strident China assert itself on May Fourth 1919. Foreign journalists stood in the streets witnessing the blood letting of the First Shanghai War in 1932 and then were blown of their feet by the bombing of the Second Shanghai War in 1937. They tracked Japanese aggression from the annexation of Manchuria, the fall of Shanghai and the Rape of Nanjing through to the assault on the Nationalist wartime capital of Chongqing as they cowered in the same bomb shelters as everybody else. They witnessed the fratricidal Civil War, the flight of Chiang Kai-shek to Taiwan and the early days of the People’s Republic. The old China press corps were the witnesses and the primary interpreters to millions globally of the history of modern China and they were themselves a cast of fascinating characters.

Like journalists everywhere they took sides, they brought their own assumptions and prejudices to China along with their hopes, dreams and fears. They weren’t infallible; they got the story completely wrong as often as they got it partially right. They were a mixed bunch – from long timers such as George ‘Morrison of Peking’; glamorous journalist-sojourners such as Peter Fleming and Emily Hahn; and reporter-tourists such as Ernest Hemingway and Martha Gellhorn along with numerous less celebrated, but no less interesting, members of the old China press corps. A fair few were drunks, philanderers and frauds; more than one was a spy – they changed sides, they lost their impartiality, they displayed bias and a few were downright scoundrels and liars. But most did their job ably and professionally, some passionately and a select few with rare flair and touches of genius.

About the Author

Paul French has lived and worked in Shanghai for many years as a founder and the Chief China Representative of the research consultancy Access Asia. He is a widely published analyst, writer and commentator on China. This is his fourth book. His first was One Billion Shoppers – Accessing Asia’s Consuming Passions (written with Matthew Crabbe) followed by the well-received North Korea: The Paranoid Peninsula. In 2006 he published his biography of the legendary Shanghai adman, journalist and adventurer Carl Crow – A Tough Old China Hand: The Life, Times and Adventures of an American in Shanghai, described by the Financial Times as a ‘captivating narrative’.

Endorsements

Opium-addict, concubine, missionary, spy – Paul French brings to life the larger-than-life personalities of a bygone China foreign press corps. Reading Through the Looking Glass makes me wish I’d become an old China hand a century earlier.

Melinda Liu, who first began reporting on China 25 years ago. Liu is Newsweek’s Beijing Bureau Chief and former president of the Foreign Correspondents’ Club of China.

Through the Looking Glass is wonderful and layered. On one level, it is a delightful insight into the antics of the foreign press corps in an exotic land – a bit like “Scoop”, but true. On another, it is a historical treasure trove; we learn how Hemingway and Marx saw China, and we revel in the story of Queen Victoria’s Pekinese dog, “Lootie”. Lastly, it holds a “looking glass” up to the imperfections of perspective that is as relevant now as ever.

James Kynge, Former Financial Times Beijing Bureau Chief and author of China Shakes the World

Enthralling. With a fascinating cast of characters and a dramatic narrative of events, this book provides a new window on to this tumultuous period of Chinese history as well as showing how journalism really works on the ground, for good or ill.

Jonathan Fenby, Author of the Penguin History of Modern China and China Director at Trusted Sources Research

Paul French’s latest publication is a fascinating hybrid of a book. It’s part wonderfully useful reference tool (detailing who covered China when for which newspaper), part irreverent and gossipy behind the scenes look at journalism during an eventful period of Chinese history (filled with cheeky asides about famous, infamous, and once-famous but now forgotten writers), and part thoughtful meditation on the curious hold that the world’s most populous country has long had on the Western imagination. Though focusing on the past, it has much to offer anyone interested in the twists and turns of contemporary Western media coverage of the PRC. As French notes, after all, this is not the first time that people around the world have become fascinated by and concerned about Chinese developments–nor even the first when celebrity writers (Hemingway and Isherwood during World War II, Thomas Friedman and Dave Barry during the Beijing Games) have found it alluring to spend a stint working the China beat.

Jeffrey Wasserstrom, Professor of History at UC Irvine, co-founder of “The China Beat” blog, and author, most recently, of Global Shanghai, 1850-2010.

Through the Looking Glass Speaking Tour

Shanghai

Sunday June 7 – Book Launch – The Glamour Bar

Through the Looking Glass – China’s Foreign Journalists from Opium Wars to Mao

The Glamour Bar, 6/F, No. 5 The Bund (corner Guangdong Road)

4pm

RMB 65, includes a drink

To book: 6350-9988 or reservations@m-onthebund.com

http://www.m-restaurantgroup.com

Suzhou

Monday June 8 – The Suzhou Bookworm

Through the Looking Glass – China’s Foreign Journalists from OpiumWars to Mao

The Suzhou Bookworm, Gunxiufang 77, Shiquan Road, Suzhou

7.30pm

RMB30, includes a drink

http://www.suzhoubookworm.com/

Beijing

Tuesday June 16 – The Beijing Bookworm

Through the Looking Glass – China’s Foreign Journalists from Opium Wars to Mao

The Beijing Bookworm, Building 4, Nan Sanlitun Road, Chaoyang District, Beijing

7.30pm

RMB20 (members); RMB30 (non-members)

http://www.beijingbookworm.com/index.php

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Wednesday June 17 – The Bookworm at the Yin Yang Community Centre

“Girl Reporters” in China

The Bookworm at the Yin Yang Community Centre, The First Courtyard, Hegezhuang Village, Chaoyang District, Beijing

Tel.: 6431.2108

Email: contact@yinyangbeijing.com

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Thursday June 18 – The China Foreign Correspondents’ Club

Through the Looking Glass – China’s Foreign Journalists from Opium Wars to Mao

http://www.fccchina.org/

Hong Kong

Monday June 22 – Hong Kong Foreign Correspondents’ Club

Through the Looking Glass – China’s Foreign Journalists from Opium Wars to Mao

HK FCC, 2 Lower Albert Road, Central, Hong Kong

Time: 11.15

Tel: 852 2521 1511

http://www.fcchk.org/

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Friday June 26 – Royal Asiatic Society of Hong Kong

Through the Looking Glass – China’s Foreign Journalists from Opium Wars to Mao

City Hall, 5 Edinburgh Place, Central, Hong Kong

6pm

Contact: http://www.royalasiaticsociety.org.hk/

Chinese novelist, Hong Ying, at the Ennio Morricone concert.

Italy wowed China last night when the great composer Ennio Morricone conducted an Italian orchestra in a concert of his film music. The venue could not have been more prestigious: the Great Hall of the People next to Tiananmen Square in the centre of Beijing. Chinese film directors like John Woo and authors like Hong Ying had come to pay their tribute, along with a full house audience, cramming the rows of desk seats in the huge auditorium usually used by delegates of the National People’s Congress and the Chinese Commmunist Party.

The 81-year-old Morricone, looking as spry as a man in his sixties, started with Legend of 1900 merging into Once Upon A Time in America, followed by more medleys ending on an extraordinary combination of violin and voice. He left the stage and brought in The Voice herself; a stunning brunette half draped in red velvet. And then he gave us the theme tune of The Good the Bad and the Ugly. I wept, recalling when I was in my teens and had been swept away by his music for the first time. I wasn’t the only one moved. There were yells of appreciation from the largely Chinese audience and the atmosphere at times was more like a pop concert.

Ennio Morricone on stage in Beijing

The concert ended on The Mission, the whole orchestra working themselves up into a surge of dancing instruments, the sound swelled – magic – joy!

Then the first encore. A rousing choral piece. A Standing ovation. And another encore – and another, this time with The Voice herself back and a full choir behind her. Morricone gave us Gold from The Good The Bad and the Ugly. Again I lost myself – but so had the rest of the audience. Hong Ying and the woman on my left were screaming at the ecstatic crescendo.

Back Morricone came again to end on a dignified, elegiac Nuovo Cinema Paradiso. Afterwards he made his final bow and the lights went on – but the audience continued screaming for more. A young man was standing on one of the desks shouting “I love you. Wo ai ni! Don’t go!” The auditorium lights snapped off again. Morricone came back, weeping himself now, and conducted the love song from Once Upon A Time In America he had given us at the beginning! What an evening! Eight standing ovations! Maestro!

Let’s first of all look at the figures. The first point to make is the obvious one, that China has not been immune to the world’s financial collapse and its economic figures show similar shocking declines as you see anywhere. GDP growth declined last year to 9% overall from nearly 13% in 2007. The precipitous nature of the decline is palpable when viewing the macroeconomic statistics from the last few months. GDP fell from 9% in the third quarter to 6.8% by the end of the year.

Naturally the most severely affected area was foreign trade which, taking annual figures had fallen to 17.8% growth from the average 23% growth of which we had become used to in recent years. In sheer amount of trade 2008 was a record year for both imports and exports but that was a result of high growth in the first half of the year rather than the last six months.

There is a point to be made here, in that China’s trade figures were deceptive, or rather, because of so many components that had to be imported to fabricate its manufactures, in the high end electronics and other areas for re-export as finished goods, there has always been a high cost to China’s exports (one dollar out of three in the export figures had been paid out already in imports) and there are those who argue, in the present financial straits, that if China can shift its manufacture to supply internal markets then its profit will be higher – but that said, the decline has been absolute, and by any standards China is suffering now.

There was a sharp fall from midway last year reaching negative yoy growth by November. By February total trade was down minus 25% yoy. It is true that there has been a slight recovery in imports in the last two months but the jury is still out whether it’s a dead cat bounce. It is true that depleted warehouses in the West are replenishing orders and some closed factories are even reopening but it is too early to be too hopeful. It could be the W factor at play, which is common in a recession.

We should not underestimate the devastating effect on coastal provinces like Guangdong, Shandong and Jiangsu where largely the manufacturing for export is focussed. Bear in mind the relatively large proportion these provinces have on China’s GDP growth (Guangdong, Shandong, Jiangsu and Zhejiang between them account for 40%) and one can see immediately how decline in foreign trade has affected the overall economy. The effect already throughout China has been, according to the Academy of Social Sciences a closure of 670,000 businesses with 20 million migrant workers being put out of work. Official registered urban unemployment was 4.2% at the end of 2008 but taking into account the loss of migrant jobs the real unemployment figure could be as high as 9.4%.

The worst hit province is Guangdong, which on its own accounts for nearly 12% of total national growth. Its GDP yoy has fallen to 5.9%, lower than the national average. Like every province in the country it has targetted for 2009 a more than 8% growth rate, but judging from its performance in the first two months of 2009 (no dead cat bounce here, no bounce at all) it is difficult to see how it will manage it, or how there can be a recovery in any real terms for an export orientated province like Guangdong until Western economies recover, and as we all know that is unlikely for years to come.

At the same time imports and exports have been falling, so has the amount of foreign direct investment, which by January was falling yoy by more than 30%. For China it’s been a double whammy on both sides of the external equation. Foreigners, hard pressed at home, have reduced both their trade with and their investment into the country.

So far we have been looking at how the global financial crash has affected China in direct terms as related to trade and investment, but we have not so far taken into account its own internal problems and how they have been playing out in the economy. As we know, China is to a certain extent ring fenced. Its currency is nonconvertible. Its banks have had only minimum impact from the financial meltdown caused by the credit crunch that have decimated financial institutions overseas – but independently they have had problems of their own. Let us recall what was occupying the minds of decision makers at the beginning of last year.

A year ago China’s leaders were mostly worried about inflation and rising prices, and at the 2008 NPC brought in measures to combat it by adjusting interest rates, with dramatic effects. At the same time as the outside world was reaching its crisis, Chinese industry was facing tougher times brought on by their government’s own austerity measures. Wen Jiabao’s measures to combat inflation were partially successful and, over the year, inflation came down dramatically both in terms of CPI and PPI. However, the government was criticised for over reacting and restricting credit too severely, thereby creating a slowdown of the domestic economy that was too sudden.

When the world meltdown occurred in October the Chinese government was quick to reverse the interest rates, but by then the deflationary process could not be stopped and as we came into 2009 we’ve seen the falling off of retail sales and the spectre of recession. This has little to do with the global crisis. It is an own goal of their own.

Amongst other things it broke the bubble in the real estate sector with a dramatic collapse of house prices throughout the country, plummeting from a 7% growth in July last year to negative territory by the end of the year and now prices are still falling to the tune of about -1 % yoy. I’ve heard it explained to me that the loss in real estate value can be calculated as nearly 4 trillion RMB, equivalent to the whole of Wen Jiabao’s stimulus package. Bad news for the real estate and construction industry, and the economy as a whole, which up to now has relied heavily on real estate and construction for its growth figures.

The disasters that still beset China were not only economic. After a year of snow storms, earthquakes and landslides, one of China’s worst ever droughts has hit the north, with almost 43% of the country’s wheat affected – and the drought still continuing.

And naturally all the gloom and uncertainty has caused a frisson of anxiety to ripple through a generation of Chinese who have grown up thinking that economic prosperity had been guaranteed them.

The job market for college-educated Chinese, even those with degrees from top universities here and abroad, has tightened. China’s Human Resources and Social Security Minister has warned of a “grave” employment situation. China has 6.1 million college students due to graduate this year, and another one million from last year are still looking for jobs after they failed to get a job in 2008.

For the first time in decades unemployment is an issue. The government has ordered state-owned companies not to lay people off. About 20 million of China’s migrant workers have returned home after losing their jobs as the global financial crisis spreads. That’s about 15.3% of the 130 million migrant workers in the country. This will have an impact on the income of farmers, since about 40% of their income actually comes from these migrant workers who send a proportion of their pay checks back home.

By any account China is facing severe and unprecedented problems.

One would be expecting China to be entering the same state of despair as anywhere else on the planet – but strangely, it hasn’t. In fact, it’s an odd feeling for those of us who live in China and travel to economies in the West, because the gloom there is so different from the mood in China, where after the first shock at the end of last year, everybody seems to be optimistic. I’d like to have a look at why this might be so.

Firstly, there is strong, confident leadership from the top. There has been none of the hysterical panic that we have seen in some Western Governments

From the first beginnings of the crisis the reaction of the Chinese leadership has been confident and decisive. I remember when I was in Hong Kong in November last year the stock markets were crashing and I felt for the first time the mood of despair that had overtaken the world at large. That same week Prime Minister Wen Jiabao was in Moscow, dealing with Putin on one hand and Europe on the other but he found the time during those few days to oversee a cut in interest rates back home and send off a ten point plan to assist Hong Kong. I remember how impressed I was by his bold handling of crisis, and bold was never a word I had ever associated with either Wen or Hu before.

At the beginning of this year Wen Jiabao led a Chinese delegation to the World Economic Forum in Davos, where he castigated the Western powers for their irresponsibility in not regulating better the world financial system, blaming a relentless pursuit of profits for the worst financial crisis since the Great Depression. During the same trip he travelled to Great Britain and gave a speech at Cambridge University. All the press focussed on the student who threw a shoe at him, an incident the Chinese Prime Minister brushed off with dignity – but the content of his speech was actually much more interesting. It was the first time that I have ever heard a Chinese leader describe China as a great power. Usually China’s leaders refer to it as a developing nation. Also interesting was his clear exposition of how China was reacting to the crisis and what measures it was taking for recovery. The framework in which his words were couched was one of morality and responsibility.

Since then China has been standing confidently on the world stage, addressing the rest of the world from a new position of moral authority, playing a decisive role in the G20 summit in London and being accepted without reservations at the top table that had been denied it before. Just recently China has been suggesting that there should be new financial order with a new currency to replace the dollar as the world’s benchmark. Never before has China taken on the mantle of a great power, matching its actions to its rhetoric. Whatever else the financial crisis has resulted in, there has been a strong shift in international power, with China’s leaders rising to the opportunity and responsibility. The latest catchword in foreign affairs discussions is G2 (although China to its pragmatic credit disavows any such ambition.)

Despite all its economic problems China has been quietly sorting out diplomatic issues in its own back yard. In a dramatic new turn in troubled Straits relations, the most senior visit ever was made by a Chinese official to Taiwan, resulting in deals on direct flights and a complete shift in a previously intractable relationship. This again is a sign of strength and maturity. China has also offered to take some of Taiwan’s exports previously directed elsewhere. This gesture I found on a recent visit to Taiwan was much appreciated.

Similar maturity and confidence was very evident in the celebrations of the 30th anniversary of its reform and open door policy when it used the occasion to to affirm its continued participation in the global order, with strong commitment to free trade and warnings against protectionism, directed at the USA.

Since then China has been putting its financial muscle into action. The trade minister, Chen Deming, recently took a buying delegation to Europe and signed contracts of 13 billion dollars. Chen Deming said this was only the beginning.

Meanwhile China’s sovereign funds and its resources companies have set off on an aggressive bid to purchase mines and oilfields abroad. China’s aluminium company, Chinalco, is bidding for assets of Rio Tinto to the tune $19.5 billion. The proposed deal would be the largest overseas investment by a Chinese company in history.

China National Petroleum Corp (CNPC) announced that it has signed a deal with the Iraqi government and is going to be starting a US $3 billion project. It is bold expansion on several fronts.

China, far from being cowed by crisis, is being opportunistic. The falling prices of commodities around the world has given China the opportunity to buy strategic resources, and while the container shipping business around the world is stricken, bulk carriers in the last couple of months have had a bonanza shipping vast quantities of nickel, copper and other minerals to China’s ports. Oil tankers are following in their wake and, as China takes advantage of the low price of oil, storage facilities are expanding in Dalian and other ports.

This is not the behaviour of a country rattled by the global crisis. It is the well calculated policy of a country playing on its strengths rather than its weaknesses.

And these strengths are many.

The economic statistics we have looked at earlier are dire, but there are several factors that indicate that China is uniquely capable of dealing with the crisis.

First of all, its financial management over these last few decades of growth have left it with a strong exchequer. While other nations have been squandering their resources accumulating large public sector deficits, China has been prudently growing its foreign exchange reserves. Last year they stood at 19.5 trillion USD. And it is not saddled by national debt.

True, much was invested in American paper and China has made losses as the dollar has declined against the Renminbi, but it has not withdrawn its money, rather it has invested more because it sees its own self interest as well as its responsibility to bolster the international financial system as much as it can – and it has plenty of reserves to spare so can afford to do so and deal with its own national problems.

Another thing, China’s banks after all the reforms and settling of non performing loans after the Asian Crisis of 1998 has left its financial institutions in good shape. One of its banks, ICBC, is now the largest in the world, with no harrowing debts, and money to lend.

And that’s true of most of China’s other banks. While the rest of the world is suffering from a liquidity problem, China’s banks are in a position to fuel growth in the economy, and will play their part in the stimulus measures that China’s government has launched to rescue its economy.

Indeed, it is the State-owned banks who are providing the financing for the 4 trillion RMB stimulus package announced by Wen Jiabao at the end of last year. The Government will fund only 30 per cent of the plan itself. It is early days and it will take some time to see the effect of it but compared to other stimulus packages being announced in other parts of the world, I believe there is a strong likelihood that it will succeed.

First, the money is available and coupled with each province’s own separate stimulus plans the eventual sum is likely to be much higher, some say as much as 18 trillion RMB, although it will be months before all the plans are revealed. There are also ample reserves for additional stimulus packages in the future.

Another thing going for the plan is that the money is to be spent in areas where it will have an immediate effect on GDP growth – infrastructure in particular, for China is still a developing economy and every new road and every new rail track will have an effect. I remember a China Railways official once telling me a statistic that keeps him awake at night because of its implications: China has 25% of the world’s rail track and is carrying 50% of the world’s goods. That shows the necessity for expansion. Whatever money is spent will grow the economy over time. This is not by any stretch of the imagination good money going after bad.

The biggest results from infrastructure spending will come in over the next few years as new economies are created in inland areas. More important in the short term is to generate consumption through services, and here the money being planned for health and education are key. The stimulus package is already after only three months showing signs of an effect in inland provinces, but what is disappointing to the government, despite all their high profile propaganda efforts to get peasants to buy white goods through discounts etc, is that in these inland provinces renewed growth is not yet being translated into increased consumption.

China’s conservative population are the highest savers in the world (savings now stand at 50%). This is because it is in the psyche of the nation, in the absence of any welfare programmes, to keep money for bad times to come. Until recently a serious illness could bankrupt a family. A national system of healthcare and health insurance, however, will release that anxiety and allow savings to come into the economy. In the same way, those saving for education and a hope of a future will spend more on other things if education can become free or subsidized. This is precisely what the government is planning in rural areas. The aim is to effect a major unlocking of wealth. (And by the way, the Chinese populace still has their wealth intact. There have been no mortgage spirals and borrowing on the never never here.)

Affordable housing is also important. I earlier mentioned the decline in housing prices but really this loss has been in the high end sector. There is still more demand than supply in the public sector. Like education, a house for their children is seen by Chinese families as an aspirational investment for the future. Money spent on housing the poor will reinvigorate construction and bring stimulus to the economy.

A third factor worth mentioning is that the Party, which we saw micromanaging disaster last year, is behind this plan. The one advantage of a totalitarian state is that it can get things done quickly and effectively (we saw it in action during the Sichuan earthquake last year). We are now seeing a government and state mobilising all its united resources towards stimulating growth. There is nothing quite like this dynamic anywhere else in the world.

Last month the National People’s Congress was held in Beijing, and in his work report, Premier Wen Jiabao announced with enormous clarity how he expected the stimulus plan to work. The world press, used by now to governments following one ambitious and panicked rescue plan with another, fully expected Wen Jiabao to announce at the Congress a new stimulus plan to follow on the heels of the last one. Wen didn’t make any such announcement. He told the journalists who quizzed him that he first wanted to see the effect of the existing stimulus plan. “Yes,” he told them, “we have other “bullets” or even “cannons” to shoot when the time is right – the flexible usage of high foreign exchange reserves, the low government deficit, the high deposits allowing expanding loans for the economy, all these can come into play – but let’s see first the results of the first quarter and the effectiveness of what we are doing already.”

These are the words of a cool headed statesman. Wen Jiabao also announced goals that surprised many foreign observers by their confidence.

What startled everybody was that he announced firmly that China’s GDP for 2009 will grow by 8% – this after most foreign financial institutions and even the world bank were doubting growth would extend much over 6%. He admitted it would be difficult but he said it was achievable. He expressed, as we’ve said, full confidence in the first rescue package, refinements of which he also announced, describing for example how money supply would increase by 17%, with 5 trillion in additional loans. There would be more money for earthquake recovery and support for small and medium size enterprises, science and technology and employment plans. He again emphasised health and education. He announced that this year the government will spend 293 billion RMB on this alone – a serious amount of money, 17.6% up from last year, including the establishment of a universal health care system.

All in all it was a comprehensive programme by which China could create its own self sustaining domestic economy to counter the losses from reduced trade caused by the world financial crisis, with a boosting of domestic demand as the key. Observers I talked to afterwards who had attended the sessions, even the most cynical, talked of the measures which Wen had described in terms of “pragmatism” and “sureness” and above all “confidence”.

Confidence.

The strangest thing is that, despite all those depressing statistics we saw earlier, most Chinese, and many of the long term foreign residents in China, seem to share the prime minister’s optimism.

There was definitely a catching of breath, and a visible downturn in the months of November and December, but by the Chinese New Year, more and more people began to speak in terms of China’s tsunami having passed. Walking through the streets of any major city in the country, one only sees signs of life going on as before. Real estate touts are back selling apartments, even luxury ones, and people are buying in large quantities, many as investments. One hears stories of big real estate companies, which by rights should be reining themselves in, so stretched and leveraged were they before the crash, instead spending fortunes buying up plots of suddenly cheaper land for new developments. Restaurants are packed wherever you go, with sometimes queues outside waiting for tables. Stores are filled with shoppers. Certainly many of the coastal provinces are depressed (The Pearl River Delta is not a happy place at the moment) but other parts of China, particularly inland, are unaffected, even excited now because the stimulus package promises more business to come.

Now, we can all put on as many caveats as we like and talk of dead cats bouncing and W growth and the like – and who knows, more disasters may happen as the year progresses, the stimulus package may not work as effectively as the government hopes, we probably have not seen the worst – but what is visible, palpable and undeniable is the optimism and confidence in every city among ordinary people – and I don’t think any of those feelings are much to be found in abundance in cities in America and Europe and other parts of Asia. In that respect China is unique. And that is only encouraging.

Click here to read the speech in full.