Transnational Law Blog

The Transnational Law School

Much to my surprise and fascination, Peking University ("Bei Da") opened a School of Transnational Law in the Fall of 2008 that has a curriculum nearly identical to that of a U.S. juris doctor (JD) program and requires three years of study. Even more amazing is that the school is seeking ABA accreditation, the first law school outside of the U.S. to seek such accreditation. There is an excellent article on USC's US-China Institute Blog simply entitled China Legal (h/t China Law Blog) that provides a good overview of the program goals and development. I particularly enjoyed the following quote from the school's Dean, Jeffrey Lehman:

When pressed about whether his school constitutes possibly outsourcing American law, Dean Lehman replied, "I view it less in economics and more in cultural. What we're seeing is the spread and development worldwide of a transnational legal culture where features of different legal cultures and systems are being shared. I think it is good for American society; for American economy if those ideas and principles and systems become part of a shared worldwide vocabulary. The more lawyers everywhere speak American law as well as their own country's law, the better it is for America."

I find this particularly insightful, especially in light of articles like Business Taxes in China. Feels just Like Home from the China Law Blog, which recommend retaining an accountant who understands the tax laws in both your home country and the country where your business is located and adds that these people are few and far between. As the world gets smaller and business becomes more and more transnational, we're seeing an ever increasing need for not only multi-lingual attorneys but also attorneys who are fluent in multi-legalese. Peking University's School of Transnational Law is a large step in that direction.  

Adds Wang, "I'm very confident STL will get ABA accreditation. The Chinese students specializing in America law help maintain the growth of the international trade and business transaction rather than decrease it. The more Chinese people understand American law, the more Chinese know how to talk to Americans, the more business is created. This means more jobs, transactions, and opportunities will be created for paralegals and junior associates in the United States."

Anyone following the development of China readily knows that its modern legal system is very young but evolving rapidly. A common problem I recall from China is finding a PRC attorney who has the analytical and advocacy skills that are the staple of American legal training and practice. By introducing the curriculum of a US law school to Chinese students at the School of Transnational Law, it will greatly increase the caliber of attorneys in China.

Zhang Lining, who graduated with an English degree from Ocean University in Qingdao states, "I was deeply interested and attracted by the school because it gave me chance to use analytical skills. I have an American coach in debating and during training, we analyzed the issues in two different ways. I think in law school, I can be trained as a thinker."

Even if the school never gets accreditation from the ABA, I have no doubt it will make a huge contribution to the educational and legal system in China.  I've commented in the past that the evolving legal system and culture in China is not only generating more business opportunities but is also changing how the Chinese perceive themselves as individuals within the Chinese legal system.

I've written a series of posts entitled A Reason to Have Faith in China's Legal System that comment on the development of grass-roots legal oragnizations that enforce the employment/contractual rights of migrant workers. Dean Lehman has stated that the curriculum of the Transnational Law School spans the entire spectrum of the legal practice, including but not limited to international business. As an example, he said Mark Rosenbaum of ACLU fame will be teaching about public interest advocacy next fall. In a country where we're already beginning to see grass-roots organizations forming such as those mentioned above, I can't wait to see how the students respond to someone like Mr. Rosenbaum! China's young lawyers are China's future and the Transnational Law School is a very exciting contribution to that future. I think it's AWESOME. I honestly can't think of any other way to describe it. Simply AWESOME.    

China's Rising Power and the Hope for a Multi-Polar World

Recently David Pilling of the Financial Times published a thought-provoking article under the title: “Asia Pays Tribute to Its New Superpower,” which discusses how the rise of China during the time of economic crisis has been perceived within the region and beyond. I found the true nature of this article troubling. David Pilling said it right: there is a sense of “trepidation at the rise of China’s power.” Such idea fuels much of my thoughts the past couple of days. Pilling opened his article by a contemplation of a potential multi-polar world.

There has been much chatter about the “G2” lately. But the idea that the US and China can together, and semi-exclusively, take on the world’s biggest problems is overdone. That day may come. For the moment, though, there are limits to how much an authoritarian government presiding over a relatively poor country can contribute to global problem-solving. For now, the rise of China and the relative decline of the US are more likely to mean a multi-polar than a bipolar world.

The article lists some indicative examples to demonstrate how the world has changed its grasp diplomatically toward China. By owning roughly $1,400bn of the U.S. asset, Chinese government had quieted Hillary Clinton on issue related to human rights, Taiwan and Tibet during her visit early this year. During the G20 gathering in London, France’s president, Nicolas Sarkozy, expressed his withdrawal from supporting Tibetan independence. Smaller countries have provided greater service. Vietnam’s prime minister, Nguyen Tan Dung recently spent one week touring China in anxious mode to close the $11 billion trade gap between the two countries. The South Korean warning of the “Beijing Consensus” reported to leave its Korean diplomats in Beijing apprehensive. What’s more? Taiwan is likely to allow China’s Mobile to purchase 12 percent of the Far East Tone, a Taiwanese mobile operator. Such commitment arguably was arranged to earn Beijing’s agreement toward the Taiwanese’s presence at the WHO’s annual meeting. In just a few days, the news was sufficient to boost Taiwanese stock market up nearly 15%  after Beijing announced its consent. 

I sometimes wonder how the political and economic landscape of the world be transformed if China grows to be the second largest economy in the world taking over Japan and the European Union. That day may not be postponed that much further. Nonetheless, despite an impressive rapid growth in the past two decades, at $7,600 per capita, China’s per capita GDP still ranks 107th in the world. The country itself is also facing various internal problems namely food and resource shortage, raising unemployment, social and regional marginalization, as well as a degrading environment that together raise serious question of Chinese economic sustainability. There are much awaiting this nation in the post-crisis period to resolve its internal issue. For now, the idea of a multi-polar world offers me much greater comfort.

 

*Nations with highest GDP (in 2006, trillions of U.S. dollars), figure taken from the Hoover Institue.

Global Internet Rights and Censorship

The Internet has changed the way information is spread around the world. Internet usage has become ubiquitous in developed countries and it is still growing in less developed countries. The ability of populations to get information through the Internet is treated differently by various countries.

Some countries have codified the right to Internet access in law. Witness, for instance, Estonia’s 2000 law declaring Internet access to be a fundamental human right. Internet censorship is a big issue for freedom of information and civil right's groups. Human Rights Watch told the U.S. Congress last year that

Human Rights Watch believes that the Internet is a transformative force that can help open closed societies and provide the near-instantaneous flow of information to inform the public, mobilize for change, and ultimately hold institutions accountable. We have warned, however, that there is a real danger of a Virtual Curtain dividing the Internet, much as the Iron Curtain did during the Cold War, because some governments fear the potential of the Internet, want to control it and the companies that provide the services and products tied to it; and users fear the consequences of using it as a medium for openness and accountability.

This warning was timely because there are some worrying signs that governmental censorship is on the rise around the world. Australian lawmakers have recently proposed a controversial law that would institute a mandatory Internet filtering scheme. This is following a 2007 law that gave Federal police power to block access to any website.

Designed for the laudable goal of blocking access to pornography for children, the plan also has the potential to block websites discussing controversial topics such as euthanasia and anorexia. Citizens would not be allowed to opt out of the filtering (the original version of the bill would have let people contact their Internet service providers to opt out of the filtering.) Not surprisingly, advocates for freedom of information and rights groups have been extremely critical of the plan. One commentator even noted that a list of websites that would be blocked by the Australian law has been leaked, and it "has, in effect, given every 15-year-old in Australia a guide to porn online."

For a discussion of the proposed Australian law, including a defense of the law from a member of the Parliament, click here.

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The country that gets the most attention of Internet censorship is China. China already had the most sophisticated Internet censorship system in the world before last week's news that China has again blocked YouTube because of a video purporting to show Chinese police fatally beating a Tibetan protester. This is not the first time China has blocked access to YouTube; they do so from time to time when there are videos criticizing the Chinese Government.

Other recent Internet censorship acts by China include restricting access to international reporters covering the Beijing Olympics and China pushing the United Nations to curb Internet anonymity by drawing up surveillance and monitoring technical standards. Regarding the anonymity issue, a U.N. document leaked to Columbia computer engineering professor Steve Bollovin stated justifications for the China-drafted Internet standards:

A political opponent to a government publishes articles putting the government in an unfavorable light. The government, having a law against any opposition, tries to identify the source of the negative articles but the articles having been published via a proxy server, is unable to do so protecting the anonymity of the author.

According to a new study by the OpenNet Initiative, state-sponsored Internet censorship is on the rise. Other recent offenders include Burma, Bangladesh, and Turkey. According to Harvard Law Professor John Palfrey, "In five years we have gone from a couple of states doing state-mandated net filtering to 25."

If you are interested in combating the rise in censorship of the Internet, there are a number of groups you could join, including Human Rights Watch, Reporters Without Borders, and the OpenNet Initiative.

Rethinking the Washington Consensus on Trade Liberalization

"‘Stabilize, privatize, and liberalize’ became the mantra of a generation of technocrats who cut their teeth in the developing world and of the political leaders they counseled"- Dani Rodrik, Professor of International Political Economy, Harvard University

Across legal and economic disciplines, there have been many arguments regarding the benefits of free trade on developing countries. At the heart of such discussion is the controversial result of the Washington Consensus “describe[ed] a set of ten specific economic policy prescriptions that … constitute a "standard" reform package promoted for crisis-wracked developing countries by Washington D.C based institutions such as the International Monetary Fund (IMF), World Bank and the U.S. Treasury Department.” (Wikipedia).  According to Dani Rodrik (2006) the ten commandments of Washington consensus were:

1. Fiscal discipline
2. Reorientation of public expenditures
3. Tax reform
4. Financial liberalization
5. Unified and competitive exchange rates
6. Trade liberalization
7. Openness to FDI
8. Privatization
9. Deregulation
10.Secure Property Rights

In an assessment of the literature on the theory and empirical research relating to the benefits of trade liberalization, Deraniyagala and Fine (2001) found that much of the works were flawed, and concluded that the extent to which free trade benefits economic development is unknown. As the result, the past three decades since 1980s found many political economists arguing for a better approach toward trade liberalization in order to minimize its negative impacts of economic backwardness as in the case of Latin American or income distribution and regional polarization as the case of China.

Mexico is an example of a failed economy that followed the conventional wisdom of trade liberalization rigidly. Here, we find that more than one lesson could be learned. The country started its economic reform in 1985. Under tremendous pressure from the U.S. and the IMF, Mexico radically opened up its economy to the world market without sufficient institutional reform to accommodate the economic adjustment. “Import penetration increase from an average of 11.3 percent in 1080-85 to 14.5 in 1986-90. By 1990, import penetration had already reached 17 percent.” (Dornbusch, 1992). The sharp rise in imports, which was not accompanied by immediate gain in exports and foreign direct investments damaged Mexico’s domestic market and defy many infant industries. (Dornbusch, 1992). It is argued that Mexico, as well as Latin America as a whole, did worse than its pre-1980s period, when import substitution, protectionism and macroeconomics populism were enforced. (Rodrik 2007). As Rodrik asserts: “That the region did better with these discredited policies than it has been under open-market policies is a fact that is quite hard to digest within the conventional paradigm.” Such paradox reinforces the importance of a new approach to trade liberalization where country’s institutional and historical background are all too significant to be ignored and total trade liberalization alone may not generate the growth that its creator promised. Here, the role of the government and some forms of targeted protectionism at the beginning of the reform may be useful. South Korea and China offered excellent case studies for its usage of the new trade theory to their economic benefits.

Korea did not play by the orthodox wisdom (nor it has ever accepted the Washington Consensus to be therapeutic during the Asian crisis) when it started to integrate into the world economy. In contrast, the country successful economic reform involves two major key strategies- market orientation coupled with central planning in developing and protecting infant industries while strategically opened up other industries to the world market. During the reform, Korean government, indeed, acted as an entrepreneur to induce desirable private investments toward targeted industries. Korean trade liberalization, therefore, was a selective process instead of being driven solely by global marketization. Many major sectors were deliberately protected and excluded from trade. By using selective export strategy and heavy government intervention, Korea was able to develop many highly competitive manufacturing industries such as automobile, electrical appliances and shipping which respectively hold their own names in the world market.

China started its reform by first rejecting the conventional wisdom of global liberalization and calling its reform “Socialism with Chinese Characteristic.”  Unlike Latin America, Chinese government moved cautiously from central planning to gradual adoption of institutional and mechanism of market economy. Rodrik (2004) argues that China reformed its incentives in a “two-track manner” by grafting a market system on top of a central-planned system, rather than abandoning the latter altogether. The country also underplayed private property rights and relied instead on township-and-village enterprises owned by local governments as well as opened up to the world partially by establishing special economic zones. (Rodrik, 2004). Without following the Washington consensus blindly, the result of Chinese economic progress has been impressive. China’s GDP performance has been consistently stayed at 8-10% growth rate in the past 20 years. Here, China’s success challenged the conventional wisdom total trade liberalization and market orientation.

Despite how countries have been benefiting from trade, there exist multiple issues created by export growth strategy itself such as income inequality and regional polarization. According to Ocampo and Taylor (1998), globalization has intensified the income gap and income distribution especially in countries with comparative advantage in skill-intensive products. The authors offer examples of African economies whose comparative advantage in peasant production has worsened income distribution. Similarly, despite China’s conservative approach toward trade liberalization in accordance with government intervention, the country has been facing serious issues regarding income inequality and regional polarization. Prior to the eruption of the global financial crisis, labor migration had moved rapidly to export processing zone set up mostly along the West coast region of the countries. As the result, wage labor and prosperity appeared to increase drastically faster than the interior regions in which agriculture remained to be the dominant means of production and income creation. Here trade liberalization on its own cannot effectively solve social problems created by export-oriented strategy.

Don’t get me wrong. I am not against free trade or market liberalization. I am wholeheartedly against the IMF’s “one size fit all” formula and see the importance of a thorough understanding of country’s historical and political background before any economic policy is prescribed. Market failures are deeply embedded in economic system, which can’t plainly and ignorantly be corrected by Washington’s 10 commandments.

One may then ask: “So, what is the IMF doing these days given our ongoing financial crisis? Has there been a “new” Washington Consensus?” My next entry on this topic will follow.

*Bibliography with attached pdf files on hyperlinks

Deraniyagala, Sonali, and Fine, Ben, “New Trade Theory Versus Old Trade Policy: a Continuing Enigma,” Cambridge Journal of Economics, Vol. 25, pp. 809-825, November 2001.

Dornbusch, Rudiger, “The Case for Trade Liberalization in Developing Countries,” Journal of Economic Perspectives, Vol. 6, issue 1, pp. 69-85, 1992.

Ocampo, Jose and Taylor, Lance, “Trade Liberalization in Developing Economies: Modest Benefits but Problems with Productivity Growth, Macro Prices, and Income Distribution,” Economic Journal, Vol. 108, pp.1523-46, September 1998.

Rodrik, Dani, “How to Save Globalization From Its Cheerleaders,” KSG Working Paper No. RWP07-38, September 2007.

Rodrik, Dani, “Rethinking Economic Growth in Developing Countries,” John F. Kennedy School of Government, Harvard University, October 2004.

Rodrik, Dani, "Goodbye Washington Consensus, Hello Washington Confusion? A Review of the World Bank's Economic Growth in the 1990s: Learning from a Decade of Reform," Journal of Economic Literature, 44(4): 973–987, December 2006.

Saving the Dragon

In the process of learning about China’s economic development, I often wonder if it was the right policy for China to cut its domestic spending on public services to suppress its currency while exporting most of its capital surplus to the West. Even in pure economic term, shouldn't economic growth equivalent with improvement of social welfare and income distribution? The answer is obvious- there is no promise of such upgrading even in an economy that has been growing at a rapid rate like China. After the Asian financial crisis in the late 90s, the Chinese government together with the rest of the Asia Pacific decided to protect its economy by maintaining a huge amount of reserves in foreign currency and bonds which ended up injecting an enormous capital inflows toward the US and Europe market causing an unprecedented equity bubbles. Ironically, together they became the partial cause of the current global financial crisis.

Last Thursday, Premier Wen Jiabao announced that China expects to meet it goal of 8% growth rate this year despite their declining economic performance. What did he have in mind to secure such ambitious growth rate?

To supplement for the fast decline in exports, the government has allocated $585bn (almost equivalent to 3% GDP) toward domestic spending and investment for the next 2 years. A big portion of this stimulus package will be spent on improving China deteriorating infrastructure especially on the national railway network. “Many economists believe such heavy infrastructure investment will delay the much-needed shift in China’s growth model towards domestic consumption and services, which would be more sustainable in both economic and environmental terms,” said Geoff Dyer of the Financial Times. I have some disagreements with this opinion.

While improving infrastructure will not give Chinese economy a quick boost in domestic consumption, it is of crucial advantage for China long-term growth. On one hand, the plan will enhance long-term development and improvement in the public service by providing transporting access to the remote regions of the country. Investment in heavy infrastructure will also lay a firm foundation to boost domestic consumption in the long term once local economy picks up. Next, improved infrastructure could further attract more foreign direct investment into the interior regions of the country where labor is still abundantly cheap. This will in turn further help to bridge the gap of regional and social differentiation rooted deeply in China's experimenting economic strategy.

Besides, the stimulus bill doesn’t disregard the need to stimulate domestic consumption all together. Some parts of the $585bn are expected to add an additional 24% to education, 38% to health care and 171% in investment for low-income housing this year.

With increasing lay offs from the country’s export processing zones, slumping economy and the tradition of holding high saving rate, it is challenging for the Chinese government to boost domestic consumption in a short term. By allocating money to infrastructure, the government will at least mitigate a portion of workers to construction industry and offset some parts of the growing unemployed labor force. More importantly, improvements of infrastructure and public services are particularly vital for China’s sustainable and long-term development. With much criticism, a part of this stimulus plan appears to hold credible value.

*Image from the Financial Times

A Capitalist Crisis?

Having born and brought up in a communist country as well as reading Marxism over the years in both social and economic disciplines, I can’t help asking myself the question: “How would Marx respond to this financial crisis?” The question lingered for weeks. Yesterday, I finally did a quick search on this subject. Unsurprisingly, there has been a revival of interest in Marx ever since the crisis started. Das Kapital, one of Marx’s most known analyses on the economy of capitalism have once again become the best seller all over the world. Last year, Phillip Collins of the UK Times published an article under “Karl Marx: did he get it all right?”. After a quick scan through Marx’s Ten Steps to Communism, the author gave Marx 3.5 over 10 for his assumed prophetic ability in predicting our financial crisis. Collin stated the obvious: Mark was right about the nature of crisis embodied in capitalism, but not much more.

I found the article a fun read with good review of Marxism, as well as was amused with Collins' British sense of humor. But it did not satisfy my curiosity. What is more? What do our American Marxists think about this issue? Robert Brenner, a Marxist and economic historian of UCLA, seems to offer a solid yet provocative perspective through his interview with Seoul’s economist, Jeong Seong-ji titled "A Way out of the Global Economic Crisis?"

Back in December 2007, Brenner was almost prophetic about the upcoming financial crisis while at least half of the world was still relatively optimistic about economic downturn. By late December 2008, Brenner once again stressed that the crisis is much more substantial than most people expected.

According to the Marxian professor: “The basic source of today’s crisis is the declining vitality of the advanced economies since 1973, and, especially, since 2000.” Brenner contends that capitalists solved the problem of slowing capital accumulation by calling forth to the ever greater levels of borrowing to sustain stability. Thus, our economic system requires the crisis that has so long been postponed since “it’s by way of crisis that, historically, capitalism has restored the rate of profit and established the necessary conditions for more dynamic capital accumulations” said the Marxian historian.

The interview covers controversy issues such as the role of the US’s hegemony in maintaining the world order, Keynes monetary policies as a solution for the crisis, the depth of the Chinese crisis and its role in financing the our debts over the past decades.

In addition, the professor also made a comparison between Obama’s future performance as with Roosevelt’s and how our country can only change the system under a class struggle namely revolving pressure from the workers and unions. He asserts: “like Roosevelt, Obama can be expected to take decisive action in defense of working people only if he is pushed by way of organized direct action from below.”

In responding to Jeong’s question on Korea, Brenner maintains that as deep and troublesome the Chinese crisis is revealing, China may be able to contain the crisis better than Korea due to its low-cost labor force and large domestic consumption. This is due to both Korea and China reliance on globalization for their growth, which turn out to be a weakness at the moment. “It’s not necessarily because Korea is doing the wrong thing,” the author continues, “it’s because I don’t think there’s going to be an easy way out for any part of what has become a truly global, interdependent capitalist system.”

For Brenner, the only way for countries to reestablish healthy capitalism appropriate for growth and further capital accumulation is through strengthening the movement of labor organization. The class struggle promises to balance the distribution of power necessary for readjustment.

“So, again, the top priority for progressives -- for any left activists -- where they should be active is in trying to revive the organizations of working people. Without the re-creation of working class power, little progress will be possible, and the only way to recreate that power is by way of mobilization for direct action. Only through working people taking action, collectively and en masse, will they be able to create the organization and amass the power necessary to provide the social basis, so to speak, for a transformation of their own consciousness, for political radicalization.”

I wonder if one could find a more Marxian solution to our financial crisis than what Brenner contends. On the other hand, this approach has never been so out of reach given the current feeble and fragmented state of our labor unions and the worker’s strength in taking the action necessary to protect their long-term interest.

Robert P. Brenner and Jeong Seong-jin. Photo provided by The Hankyoreh
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Below are a few additional quotes that I also found particularly thought-provoking.

Disputing Keynes monetary policy in effectively changing the landscape of our crisis
"But there is reason to doubt that Keynesianism, in the sense of huge government deficits and easy credit to pump up demand, can have the impact that many expect. After all, during the past seven years, thanks to the borrowing and spending encouraged by the Federal Reserve’s housing bubble and the Bush administration’s budget deficits, we witnessed what was, in effect, probably the greatest Keynesian economic stimulus in peacetime history. Yet we got the weakest business cycle in the postwar epoch."

China and East Asia as the US’s largest creditors
"To have a significant effect on the economy, the Obama administration will likely have to contemplate a huge wave of direct or indirect government investment, in effect a form of state capitalism. To actually accomplish this, however, would require overcoming enormous political and economic obstacles. The U.S. political culture is enormously hostile to state enterprise. At the same time, the level of expenditure and state indebtedness that would be required could threaten the dollar. Until now, East Asian governments have been happy to fund U.S. external and government deficits, in order to sustain U.S. consumption and their own exports. But, with the crisis overtaking even China, these governments may lose the capacity to finance U.S. deficits, especially as they grow to unprecedented size. The truly terrifying prospect of a run on the dollar looms in the background."

The US hegemonic role in maintaining the world order
"I see the elites of the world, especially the elites of the capitalist core, broadly conceived as being very happy with U.S. hegemony, because what it means for them is that the U.S. assumes the role and the cost of world policeman."

Future possibility for the working class to influence our political environment
"The problem is that there is very little organization of working people, let alone any political expression. So, one can say there is this very big opportunity created by the change in the political environment, or the ideological climate, but that by itself is not going to provide a progressive outcome."

Following note: Just as Brenner stresses the capitalist exploitation of labor and social resources as well as insists on  importance of worker's union in order to improve our political and economic landscape. Look at what have just happened here (pdf).

Thinking Through the Year of the Earth Ox

Harvard's political economist, Dani Rodrick, recently posted some new thoughts regarding 2009. In his entry named "Looking Forward To 2009", Rodrick detailed four major determinative tickets that may make the world better or worse in the upcoming year:

    1. Will the U.S. policy response be “bold” enough?
    2. Will Europe get its act together?
    3. Will China hold together?
    4. Will there be enough global economic cooperation?

Other than the first item, the other big three have been major and on going issues being discussed across disciplines in the past couple of years. Yet, during this historical and transitional period, they become ever apparently crucial.

Much of the deliberations in the past months revolved around whether the U.S. is heading toward a Second Great Depression, which may drastically increase the existing international economic, political and social instability. Fortunately, the concern is negated by most economists going from most unlikely to nil. Social scientists are hoping that for as much as we understand how the world functions today, much more than our grandparents did during the Great Depression, we will save ourselves from repeating history. My hunches are followed.

First of all, the Obama administration will response boldly to the current crisis; although, such responses are facing uncertainty as to whether the action  manages to gather enough supports from Americans and abroad as well as if the developed countries (most notably Western Europe and Asia) react consistent with the U.S. policy.

Secondly, the global financial crisis will not cure the division among European countries. In fact, it is appeared worsening, as the “European governments are observing one another with growing distrust,” especially when the European Union cannot continue to prove its necessary existence and leadership to its skeptical members.

As for global cooperation, I suspect that this transitional period will force an increase in global cooperation (can we afford not to?); although, there seemingly exists growing local and regional tensions. Why? I don't know, I just intuitively feel that it is the case. However, with the most recent world events, once may agree that such intuition has validity- Israel arm force attack on the Gaza strip, the India-Pakistani turmoil, reunion set back between North and South Korea. Over all, the Asia Pacific is probably the least unstable region at the moment, which may explain why it has been holding up relatively well during the global financial breakdown.

In regards to China , the Communist Party has now put aside its strategic sustainable development focus to concentrate on maintaining its growth rate. If China growth goes below 8% rate, it is arguable that social upheavals will arrive. Recently, a stimulus package has been announced to supplement job losses and exporting demand from the global market. Yet, the country has already seen a growing amount of social unrest mostly scatter around industrial zone where manufacturing jobs are being cut steadily. I have much hope that the Chinese government will be able to tame social uprising and minimize the impact of the current crisis. Here, the key solution is to create new jobs and stimulate domestic consumption to make up for the exporting decrease and to maintain growth rate. However, placing fiscal stimulus on performance of state owned enterprises (SOEs) as one of the party's major proposed strategies will create tremendous stress on sustainable development causing the issues such as degrading environment, resource shortage, social and regional polarization to explode further. China will face much more complicated setbacks once sustainable development topic comes around the next time, i.e. when the global crisis is resolved.

I am inclined to say that the current global financial meltdown certainly brings China closer to the inherent flaws of its “socialism with Chinese characteristic”, aka, a market system that is centrally planed and governed by one party. However, I don’t think the any political revision will come within the time span of the current financial crisis. Perhaps, not even within the next decade. The country has a huge amount of trade surplus, stable account balance and Asia Pacific has been holding onto the crisis relatively well in which, regional trade will not drastically reduced as it were the case for other regions. Speaking at the press conference during 07 National People’s Conference on March 07, Wen Jiabao asserts, “The Chinese economy still has some major problem, namely it is unstable, unbalanced, uncoordinated and unsustainable”. The communist party and its leaders know much about their internal weaknesses to curb them with external threats.

What the crisis will do is to reveal and to shepherd China closer to its systemic problems. Once the silver veil of a strong economic engine is taken away from the picture, the country’s social, political and sustainable shortcomings are all together unearthed and required to be addressed. I expect the dragon to once again make historians, economists and all of us startled on its next turn before the critical issue of a one party system stirs up the next civil unrest. There is much ahead awaiting this nation and us all.

At the moment, I am not only concern of the intensifying spread of the global crisis but also how we will come out of this after 2009. It is inevitable that this transitional period bears the golden key to our future fortune.

Factory in China Accidentally Makes Free Tibet Flags

A factory in China has been manufacturing 'Free Tibet' flags (h/t Foreign Passport Blog). According to the BBC, the factory owner said the flags were ordered from outside China, and he did not know the flags were a symbol for a free Tibet. The flags are known as the Snow Lion Flag and they have been banned in China. Factory workers discovered the meaning of the flag by looking it up online.

Chinese police fear that some of the flags have already been shipped to Hong Kong and could appear there during the torch relay later this week. Hong Kong is looking like it's going to be another raucous event, possibly starring Mia Farrow of all people.

Thinking of China's Loyal Youth

An editorial by Matthew Forney, former Beijing bureau chief for Time, entitled, China's Loyal Youth, explores some of the reasons why most young Chinese support their government's recent suppression of the Tibetan uprising. Forney's assessment of the next generation of Chinese-- those 30 years of age and under-- is interesting because it gives a cursory look at the future policy makers, lawyers, and businesspeople of the fastest growing economy in the world.

Forney points out that China's youth probably doesn't remember the events of the Tiananmen Square Massacre. They probably don't think of China as a police state since they've reaped the benefits of policies that have brought China more peace and prosperity than at any time in the past thousand years. All of this creates a strong sense of nationalism amongst China's youth, and Forney adds that Westerns are unlikely to find allies amongst China's youth on issues like China's human rights record.

Here is an excerpt from Forney's editorial:

Educated young people are usually the best positioned in society to bridge cultures, so it’s important to examine the thinking of those in China. The most striking thing is that, almost without exception, they feel rightfully proud of their country’s accomplishments in the three decades since economic reforms began. And their pride and patriotism often find expression in an unquestioning support of their government, especially regarding Tibet.

The most obvious explanation for this is the education system, which can accurately be described as indoctrination. Textbooks dwell on China’s humiliations at the hands of foreign powers in the 19th century as if they took place yesterday, yet skim over the Cultural Revolution of the 1960s and ’70s as if it were ancient history. Students learn the neat calculation that Chairman Mao’s tyranny was “30 percent wrong,” then the subject is declared closed. The uprising in Tibet in the late 1950s, and the invasion that quashed it, are discussed just long enough to lay blame on the “Dalai clique,” a pejorative reference to the circle of advisers around Tibet’s spiritual leader, the Dalai Lama.

Then there’s life experience — or the lack of it — that might otherwise help young Chinese to gain a perspective outside the government’s viewpoint. Young urban Chinese study hard and that’s pretty much it. Volunteer work, sports, church groups, debate teams, musical skills and other extracurricular activities don’t factor into college admission, so few participate. And the government’s control of society means there aren’t many non-state-run groups to join anyway. Even the most basic American introduction to real life — the summer job — rarely exists for urban students in China.

Recent Chinese college graduates are an optimistic group. And why not? The economy has grown at a double-digit rate for as long as they can remember. Those who speak English are guaranteed good jobs. Their families own homes. They’ll soon own one themselves, and probably a car too. A cellphone, an iPod, holidays — no problem. Small wonder the Pew Research Center in Washington described the Chinese in 2005 as "world leaders in optimism."

China's smartest and brightest speak fluent English, and they have probably studied abroad. It is more likely than not that anyone working in China will encounter China's loyal youth. When working with them, it is probably best to keep in mind their strong nationalistic pride, and when doing business in China, I'd avoid topics of discussion that will offend the Chinese party's sense of national pride. I've gotten into some heated arguments with people I've met outside of the office regarding China's "internal affairs" and it has taught me to generally keep my opinions to myself.

However, there are ways to delicately challenge anyone's patriotism. Check out this post from the This is China! Blog entitled, The De-Flowering of a Chinese Patriot (h/t China Law Blog).

Seeing The Tibet Situation Clearly: Old Tibet and Democracy for a Future Tibet

There is always two sides to every story and the same is true about the unrest in Tibet. The state operated Xinhua News issued an editorial today entitled, Don't See Tibet Through Tainted Glasses, which argues that Tibet is better now than it was before it came under the control of China. The basic argument is that people who view the Tibet situation through rose-colored glasses intentionally distort facts and deny that Tibet is experiencing its best era of development and stability and Tibetans are enjoying the broadest human rights ever. China Daily also ran an article today entitled, CNN: What's Wrong With You, detailing how the western media has been distorting the facts about the number of people injured during the rioting, the motives of the Tibetan rioters, China's response, and the history of Tibet.

According to the Tainted Glasses editorial, before China took control of the region the Tibetan people were "politically oppressed, economically exploited and frequently persecuted. A saying circulated among serfs: 'All a serf can carry away is his own shadow, and all he can leave behind is his footprints.' It is perhaps safe to say that Tibet's serf system represents the worst systematic abuse of human rights in human history."

Serfs? I had never heard of serfs in Tibet before. Articles like the one on China Confidential entitled, No Shangri-La: Life in Old Tibet, accurately summed up my western idea of old Tibet as a paradise. My musings about old Tibet pictured an idyllic religious retreat in the mountains with pleasant and content people living in harmony with each other and the rest of the world. However, it appears I was wrong. The Tibetan people lived in a feudal system before China took complete control of the region in 1959, and descriptions of life in Tibet before the Chinese occupation portray it as a country that consisted of slavery, oppression, and unimaginable human rights violations.

An article by Michael Parenti entitled, Friendly Feudalism: The Tibet Myth (2007), presents a synopsis of Tibet's feudalism, theocratic despotism, and the Chinese occupation. He gave the following summary of life in feudal Tibet:

Religions have had a close relationship not only with violence but with economic exploitation. Indeed, it is often the economic exploitation that necessitates the violence. Such was the case with the Tibetan theocracy. Until 1959, when the Dalai Lama last presided over Tibet, most of the arable land was still organized into manorial estates worked by serfs. These estates were owned by two social groups: the rich secular landlords and the rich theocratic lamas. Even a writer sympathetic to the old order allows that “a great deal of real estate belonged to the monasteries, and most of them amassed great riches.” Much of the wealth was accumulated “through active participation in trade, commerce, and money lending.”

Drepung monastery was one of the biggest landowners in the world, with its 185 manors, 25,000 serfs, 300 great pastures, and 16,000 herdsmen. The wealth of the monasteries rested in the hands of small numbers of high-ranking lamas. Most ordinary monks lived modestly and had no direct access to great wealth. The Dalai Lama himself “lived richly in the 1000-room, 14-story Potala Palace.”

Secular leaders also did well. A notable example was the commander-in-chief of the Tibetan army, a member of the Dalai Lama’s lay Cabinet, who owned 4,000 square kilometers of land and 3,500 serfs. Old Tibet has been misrepresented by some Western admirers as “a nation that required no police force because its people voluntarily observed the laws of karma.” In fact. it had a professional army, albeit a small one, that served mainly as a gendarmerie for the landlords to keep order, protect their property, and hunt down runaway serfs.

Young Tibetan boys were regularly taken from their peasant families and brought into the monasteries to be trained as monks. Once there, they were bonded for life. Tashì-Tsering, a monk, reports that it was common for peasant children to be sexually mistreated in the monasteries. He himself was a victim of repeated rape, beginning at age nine. The monastic estates also conscripted children for lifelong servitude as domestics, dance performers, and soldiers.