Contradictions (cont’d)

Certain news stories crop up over and over, almost regularly. ‘Japanese invent robot cat/girlfriend/chiropodist to change the way we live’, or ‘Something humans have been doing for thousands of years bad for health, scientists find’. And now, on the front pages of the South China Morning Post and elsewhere, we have ‘a new chapter of cooperation’ and ‘feel-good factor replaces mutual distrust’ between the US and China.

President Hu Jintao gets a full-blown state visit to America, and, encouraged no doubt by the copious amounts of face laid on for him every step of the way, almost manages to smile occasionally. Michelle Obama looks radiant, though her choice of a non-US-designed dress (apparently) may have sent the wrong message to the world’s greatest despoiler of international trade. (To me, the garment looks like someone used a Chinese flag to mop up after spilling some ink; I’m amazed several hundred million hyper-sensitive nationalist Mainland youths haven’t spotted this deliberate slur against the motherland and gone into hysterics. Yet.)

Despite the D’anjou pear salad with farmstead goat cheese at the star-studded White House dinner and the red-carpet trip to Chicago to stock up on US$1.8 billion worth of soy beans, the basic ‘contradictions’ remain. The US is semi-bankrupt, idiotically polarized and pessimistic (47% of Americans think China has a bigger economy). China’s one-party, corporatist and increasingly hereditary regime rests on unsustainable forced economic growth and an alternating PR diet of paranoia and hubris for domestic consumption.

An alien visiting Earth from a distant planet would, after checking things out, probably put his long-term money on the US. The country has a track record of stability, openness, inventiveness; it has resources and space – even the demographics don’t look too bad. Our old friend rule of law, of course. The screwed-up financial system needs fixing.

China, on the other hand, looks scary. Over a fifth of the world’s population, with just 8% or so of its arable land. Remote, self-perpetuating rulers who fear their own people and see all interactions with foreigners as a zero-sum game. Bizarre sex ratios. Slowly evolving state capitalism in which resources are directed to suit favoured sectors and families, a la Mussolini or Nicaragua’s Somozas. Nagging uncertainty over distribution of power among party, military and state. No justice, only force.

Beijing’s obsession with guaranteeing long-term access to natural resources betrays an untrusting, phobic world view. You don’t see Japan or Germany transferring billions to African dictators or Chilean and Australian mine owners and farmers. Those countries don’t foresee a hostile planet starving them of vital supplies, any more than they think buying every soy bean in Illinois will excuse their trade policies. They invest in wealth-creation today and are confident about buying their oil, manganese or wheat – or their substitutes if they run out – at the international market rate when the time comes.

Among Hu’s comments in the US were inevitable references to Taiwan and Tibet as “core interests” of China. Xinjiang, the Diaoyu/Senkaku Islands and the South China Sea have all been given this status, and it is possible that northeastern India’s Arunachal Pradesh will qualify at some stage. A quick look at a map of the Middle Kingdom shows what the word ‘core’ means here: outlying fringe areas to which we have a weak claim. The UK has long since waved Catholic Ireland away, and Russia has cut Kazakhstan loose, but the world has one last empire. It wouldn’t matter except China’s insecurity drags everyone else into it. If Hu and company genuinely believed Tibetans loved Han and the coastline of Vietnam was a real slice of home, they wouldn’t constantly demand that the rest of us recite that it’s so.

When Defense Secretary Robert Gates visited China two weeks ago he declared himself confused about how much the civilians in government knew what the military was up to. By many accounts, the J-20 stealth aircraft test-flown for someone’s benefit at that time is more or less a pile of junk. Maybe their anti-ship ballistic missiles and aircraft carriers will be no better. More important, the personnel expected to operate them will have no combat experience. It is a weak country trying to look tough and increasingly prone to miscalculation. How to forge an alliance of Japan, Korea, the US, Vietnam and India in one easy lesson.

It doesn’t look promising. And yet, and yet… our stock portfolios are bulging with China plays. Maybe the alien is right and we’re fools. Maybe we’re right and the alien can’t think out of whatever they use for a box on planet Zarg.  Or, most probably – seeing things from safe inside our perpetual Panglossian reverie – things will just sort themselves out, calm heads will prevail and we will all live happily ever after.  Yes, that must be it.

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10 Responses to Contradictions (cont’d)

  1. York Hunt says:

    and where is Mrs. Hu ?

  2. Bored says:

    We’re all pretty fed up with your CIA view of China.

  3. Maugrim says:

    York,
    Hu knows?

  4. Longtimenosee says:

    Bored…

    No, we are all rather bored with China’s view of China.

  5. anonymous says:

    Sour grapes aside, “wealth creation” is CUTE: sounds so-o innocent & so-o inclusive. But for an accurate definition, read Hugh Henry: more educational than writings of sour, retired civil servants

  6. anonymous says:

    Sorry, that should be Hugh HENDRY, hedge fund practitioner.

  7. cecilie says:

    I’m not fed up with your views on anything! ‘Bored’ – you’re free not to read this blog if you’re so fed up. And who the hell is “we all”?

  8. PropertyDeveloper says:

    Informative, independent, accurate, witty, insightful, sometimes brilliant — anybody who finds it “boring” is being economical with the truth or must be working for the Politburo.

  9. huwhatwhenwherehao says:

    Dear Hemlock,

    After reading your musings since the early Noughties, this is the post that draws me out of cover. Brilliant!

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