Xi's Kissinger Move

Julian Lindley–French, 03/25/13

At the start of his historic visit to Russia last week newly-installed Chinese President Xi Jingping said that the “two countries spoke a common language.”  If America sees itself as the indispensable global pivot China clearly has the ambition to become the other global pivot in a new bipolar order. Xi’s visit to Moscow last week, just over forty years on from Henry Kissinger’s famous 1971 visit to Beijing, makes it is clear that China is embarked on a grand strategy to balance America on the world stage.  This will be a tumultuous twenty-first century.

Kissinger’s 1971 visit to China was set against the backdrop of a Nixon administration desperate to extract itself from a failing Vietnam War.   Kissinger, the grand architect of Cold War Realpolitik, wanted to force the Soviet Union to look both east and west.  Moscow was already at the time embroiled in a full-scale border war with China, its supposed Communist partner.  In a sense by forcing the Soviet Union to face the prospect of a ‘zweifrontenskrieg’ (two-front war) Kissinger applied lessons from his native Germany’s history to US grand strategy.

Cue Xi.  The aim of Chinese grand strategy is certainly not to trigger a war with the Americans.  However, Chinese strategic logic is still embedded in Sun Tzu; force an opponent to confront so many options over such time and distance that to all intents and purposes they render themselves weak by uncertainty.  And, Xi clearly understands Kissinger’s dictum that “no country can act wisely in every part of the globe at every moment of time.”

Xi’s timing is impeccable.  There are of course perfectly legitimate reasons for close Chinese-Russian relations.  They are partners in the Shanghai Co-operation Organization.  China is the world’s biggest energy consumer whilst Russia is the biggest energy provider.  Trade between the two countries is booming and is now worth some $88bn or €68bn per annum. 

However, Xi’s visit and indeed his vision is grand strategic and must be seen as such. China intends to lead the strategic counter-balance to the American not-so-well led West and to that end will forge relationships that exploit American uncertainty and Europe’s precipitous decline. 

Kissinger famously said that “If you don’t know where you are going, every road will get you nowhere.”  As Xi was speaking to Russian President Putin I was attending a conference in The Hague organized by the excellent Atlantic Commission on the transatlantic partnership.  Set against Xi’s visit to Moscow the extent to which Europe’s political class has completely lost the strategic plot was all too evident.  As Xi talked about a new anti-democracy global balance of power pact with Putin all my fellow Europeans could worry about was Cyprus and trying to blame America and Britain for causing the Eurozone crisis. Not only is that laughably wrong it completely and dangerously misses Xi’s point. 

And there is a link.  The Russian media has been running stories all week about the EU’s attempts to resolve the Cyprus crisis as being anti-Russian.  Given that the deal struck over the weekend will possibly see a levy of up to 20 percent on depositor’s accounts worth €100,000 and more the deal will indeed have a real impact on Russian depositors.  Now, much of that money is of very dubious provenance and it is clear that Germany in particular wants to stop Cyprus being used as an offshore bank haven within the Euro. However, the timing could not have been worse and will simply help push Russia towards a new anti-Western strategic partnership with China. 

That dynamic will be made all the more certain by the strategic denial that now afflicts the Euro-world.  For example, the Chinese are clearly building a blue-water navy and Xi’s comments demonstrate clear intent to use the Chinese fleet as a platform for strategic influence.  Do not worry, I was told by a senior NATO official, because the Chinese do not know how to use such a fleet. Sorry NATO but should you not be thinking about these developments?

Clearly, the West must not fall into the trap of concluding that legitimate Chinese ambitions are a precursor to conflict and somehow a new narrative is needed in the US-Chinese strategic relationship (the only strategic relationship that now matters). Equally, neither Americans nor Europeans can ignore Chinese intent as stated by Xi in Moscow or its burgeoning capability.  In others words the transatlantic allies need a China strategy. 

Sadly that was not the worst of it in The Hague.  A senior European said that in December the European Union will devote a WHOLE session of the European Council meeting to defense.  Whoopee!

Kissinger said that “power is the great aphrodisiac.”  Perhaps he should now add that weakness is the great sedative.

Xi’s Kissinger move – it will not be his last.

Julian Lindley-French is a member of the Atlantic Council's Strategic Advisory Group. This essay first appeared on his personal blog, Lindley-French's Blog Blast.

http://www.acus.org/new_atlanticist/xis-kissinger-move

經改號角響 朱鎔基愛將擔綱

連雋偉, 中國時報, 03/22/13

大陸總理李克強內閣上路，影響深遠的「財經小內閣」組成，包括副總理馬凱、「小國務院」之稱的發改委主任徐紹史、人行行長周小川及財政部長樓繼偉，都是前總理朱鎔基得力助手。分析師稱，這表明中國將啟動90年代以來最積極的經改措施。

李克強昨也在國務院第一次全體會議宣布，新一屆政府開始全面履責，「要說到做到，不能放空炮，不能當太平官，沒做到的要問責。」

朱鎔基於一九九三年出任排名第一副總理，也分管當時由李鐵映執掌的大陸國家經濟體制改革委員會(下稱體改委)，大刀闊斧進行經濟體制改革，舉凡推動國企市場化、建立現代銀行制度，打擊官商勾結利益集團，雷厲風行的硬漢作風，為他贏得「經濟沙皇」稱號。

發改委主任徐紹史在朱鎔基快刀斬亂麻解決沉痾時，擔任國務院辦公廳祕書局長，擔任幕僚；馬凱曾一度擔任體改委副主任；朱鎔基以副總理兼任人行行長時，周小川就擔任副行長；樓繼偉本來就是朱的一員大將，任職財政部副部長九年期間，協助朱改革稅制，確立當今中央地方分稅體制。

這四位財經界老面孔，當時在朱鎔基與體改委領軍下，發動一場驚心動魄、以市場為依歸的經濟改革，雖導致股市暴跌、國企冗員大量遣散，但「雖千萬人吾往矣」精神，至今仍為老一輩改革派津津樂道。

擔任大陸金融部門顧問、總部設紐約的顧問公司MES Advisers負責人馬科斯基透露，多名大陸官員告訴他，新一屆中國政府會啟動結構性改革，大刀揮向國有企業。

來自北京消息研判，最快要等十八屆三中全會(約莫今年九、十月召開)確定最頂層改革方案及改革路線圖，才會執行。方案重點會側重促進收入再分配和刺激民間消費的財稅改革、降低經濟增長對投資出口依賴，及推動內需下一階段的城鎮化建設。

http://news.chinatimes.com/mainland/11050501/112013032200171.html

大陸搶鮮報/朱嘉明：大陸改革進歧途

聯合報/記者林庭瑤, 03/21/13

大陸新政府上路，面臨改革新挑戰。大陸80年代「改革四君子」之一的朱嘉明，在聯經出版的新書「中國改革的歧路」中指出，大陸改革開放已步入歧途，退化到國家資本主義、權貴資本主義，淪為貧富懸殊兩極社會，扭曲社會主義進步價值。他認為唯有回到80年代的改革理念，實施憲政民主，才能還權於民。

朱嘉明是80年代大陸經濟改革開放主要參與者，當時他與中共中央政治局常委王岐山同列為「改革四君子」，參與影響深遠的「莫干山會議」，六四後，朱嘉明流亡海外，昔日同儕王岐山成了中共權力核心。

在朱嘉明的眼中，中國的改革如同一列載著十幾億人的快速列車，沒有時刻表，也不知終點在哪裡，這輛改革列車已駛入歧途，退化到「國家資本主義」、「官僚與權貴的資本主義」，淪為貧富懸殊的社會，扭曲了社會主義高舉的進步價值，受惠者是既得利益集團，而非人民。

朱嘉明指出，在大陸當前體制下，民間企業遇到的困境是，主要行業控制在國有資本、權力家族手中，中小民間企業只能依附在這些國有企業與家族財閥勢力底下，否則很難生存發展。

但對於中國大陸未來的出路，朱嘉明認為應當回到1980年代，透過改革建立新型的市場經濟、開放民主的社會，建立一個容納不同社會階層，包括既得利益集團在內的政治框架，並且在民眾的支持下，逐步走向憲政民主的道路。

【2013/03/21 聯合報】@ http://udn.com/

http://udn.com/NEWS/MAINLAND/MAI1/7777896.shtml

李克強「四個不說」 走自己的路？

聯合報/香港特派員李春, 03/18/13

中共新任總理李克強昨天在人大記者會亮相，他的每一段話都被仔細揣摩。昨天大陸的晚報多拿李克強的警句作通欄大標題；大陸網路上，也有了「李克強語錄」。

李克強記者會上回答了十一個題目，內容堪稱豐富，但有些話沒說，其中有四項「不說」，從中也可揣摩李克強的經濟路線。

首先，李克強「不說」引經據典之話。前任總理溫家寶喜好引經據典，不少人揣度李克強是個博士，學問大，也許會弄點生僻的經典。但李克強不僅沒有引經典，還特別說自己講「行大道、民為本、利天下」九字，不是什麼典籍的原話，是他的心得。

這一「不說」，顯示李克強刻意要與溫家寶畫清界線。未來溫的經濟路線，李克強大概也不會全盤接收。

第二個「不說」，是外交的事。李克強回答四位外國記者問題，兩個是講中國的事，講外交的只講中美關係、中俄關係。而眼前敏感複雜的中日關係、中朝（北韓）關係、中國與南海爭議國如菲律賓、越南等的關係，提都不提。

這說明不會打仗，只會降溫。中日關係緊張，很多人怕會打起來，中朝關係惡化，很多人希望打一下。總理記者會通常是外交表大態的地方，隻字不提，意味著希望降溫。

第三個「不說」，是政治改革。十一個問題至少七個可引到政改上，其中三個問題直接與政改相關，但李克強絲毫不碰。

李克強不提政改，與溫家寶的拚命講政改，區別極大。往壞處想，令人失望；往好處想，就算沒有大希望，起碼不會大失望，因為他不再騙你。他講了幾件事，都是政改的內容，所以他可能「只做不說」。在經濟路線上，大家對他或可期待。

第四項「不說」，是李克強堅決不提房地產的事。溫家寶離任前以房地產大收緊作別，引來大陸全國性市場大亂、人心大亂。很多人想，李克強這時應會表個態，結果一字沒提。

李克強沒提房地產的事，顯示他既不想安撫，又不想表態，更不願承諾。他提都不提，是因那混亂政策，是扔一邊的時候了。李克強有沒有自己的一套，就等著看吧。

【2013/03/18 聯合報】@ http://udn.com/

http://udn.com/NEWS/MAINLAND/MAI1/7767429.shtml

China leaders pledge clean government, less waste

CHARLES HUTZLER, 03/17/13

BEIJING (AP) -- China's new leaders struck a populist tone Sunday as they got down to the painstaking work of governing, promising cleaner government, less red tape and more fairness to enlarge a still small middle class and help struggling private businesses.

In appearances that mark the completion of a months-long, orchestrated leadership transition, President Xi Jinping and Premier Li Keqiang stressed the urgency of reining in runaway official corruption to restore the Communist Party's frayed public credibility.

Li made specific pledges to slash official perks and government extravagance to free up money for social welfare programs at a time of slower economic growth. He said a ban will be put on building new government offices, government payrolls will be reduced, as will spending on banquets, travel and cars -- behavior that has fueled public anger and protests.

"If the people are to live a good life, their government must be put on a tight budget," Li said in his first news conference as premier after the end of the annual session of the national legislature.

Earlier, in addressing the nearly 3,000 legislative deputies in the Great Hall of the People, Xi promised to root out "corruption and other misconduct in all manifestations." He said people's own aspirations must be part of "the Chinese dream" -- a signature phrase he has used to invoke national greatness. "Each of us must have broad space to diligently realize our own dreams," he said.

Though Xi and Li were installed as Nos. 1 and 2 in the party leadership in November, Sunday's closing of the legislature means their government is now fully in place. The legislature appointed Cabinet ministers, named Li premier, gave Xi the ceremonial title of president and thereby relieved their predecessors of office.

The legislature's close -- and their appearances -- also brought a concerted push to burnish the leaders' image before a public that has grown more demanding as it has become more prosperous and better connected by the Internet and cellphones. Expectations have run high in recent months that the new leadership would address social sore-spots:

close a wide wealth gap, curb the often capricious use of official power and clean up an environment degraded by the headlong pursuit of growth.

Both Xi's speech and Li's news conference were nationally televised. In them, they showed personality differences with their predecessors. Xi appeared more commanding and comfortable with his authority than his predecessor, Hu Jintao. Li was more direct and plainly spoken if less sympathetic than the grandfatherly Wen Jiabao, who larded his news conferences with references to classical poetry.

Li also gave a hint of his fluency in English. At one point he corrected a translator for saying "thank you" at the end of a translation when Li had not said it. The 57-year-old also recalled having been exiled to work in a poor rural village in his teens in the 1970s, like many in his generation under Mao Zedong's radical rule, before market reforms and the reopening of universities brought change.

The reforms, he said, "have lifted hundreds of millions of peasants out of poverty and it has changed the life course of many individuals, including me."

Both events were heavily scripted. Questions by Chinese and foreign reporters at Li's 115-minute news conference were largely prearranged and pre-screened. Still, in a system where interactions between the leadership and the media are rare, the premier's sole news conference of the year provides a window into the leaders' personalities and thinking.

"It takes time to see if he can do a good job or not, but the language, logic and way of expression finally rid themselves of the shadow of old times. It's not easy," Xie Wen, a technology entrepreneur, said on his Sina Corporation micro-blog, which has 164,000 followers.

In talking tough about corruption, Li did not mention calls from experts to introduce public disclosure of official assets nor media reports about the huge wealth amassed by the family members of many in the communist elite.

"Clean government should start with oneself. Only when one is upright in oneself can he or she ask others to be upright. This is an ancient adage, but also the truth," Li said. "Since we have chosen government service we should give up the thought of making money. We will readily accept the supervision of the whole society and the media."

More striking was a vision Li outlined of a more limited government and its ties to reducing graft and unleashing the dynamism of entrepreneurs, migrant workers and the middle class. To do so will require taking on vested interests, he said, without identifying by name the powerful state-run enterprises and well-connected businesses.

"The government should be the guardian of social fairness. We need to work hard to create equal opportunities for everyone," Li said. "So that people's hard work will be duly rewarded, and that whatever type of wealth creator you are -- a state-owned enterprise, a private enterprise or individually run business -- as long as you compete on level playing and conduct business in a clean and honest way then you will be able to taste success."

Li said that a government restructuring approved by the legislature is intended to streamline decision-making and limit interference in people's lives. He promised to reduce by at least a third the 1,700 approvals required by the State Council, or Cabinet, for financing of projects and other work.

"We need to leave to the market and society what they can do well, and on the part of the government we need to manage well the matters that fall within its purview," Li said.

China Eclipses U.S. as Biggest Trading Nation

Bloomberg News – 02/11/13

China surpassed the U.S. to become the world’s biggest trading nation last year as measured by the sum of exports and imports of goods, official figures from both countries show.

U.S. exports and imports of goods last year totaled $3.82 trillion, the U.S. Commerce Department said last week. China’s customs administration reported last month that the country’s trade in goods in 2012 amounted to $3.87 trillion.

China’s growing influence in global commerce threatens to disrupt regional trading blocs as it becomes the most important commercial partner for some countries. Germany may export twice as much to China by the end of the decade as it does to France, estimated Goldman Sachs Group Inc.’s Jim O’Neill.

“For so many countries around the world, China is becoming rapidly the most important bilateral trade partner,” O’Neill, chairman of Goldman Sachs’s asset management division and the economist who bound Brazil to Russia, India and China to form the BRIC investing strategy, said in a telephone interview. “At this kind of pace by the end of the decade many European countries will be doing more individual trade with China than with bilateral partners in Europe.”

U.S. Leadership

When taking into account services, U.S. total trade amounted to $4.93 trillion in 2012, according to the U.S. Bureau of Economic Analysis. The U.S. recorded a surplus in services of $195.3 billion last year and a goods deficit of more than $700 billion, according to BEA figures released Feb. 8. China’s 2012 trade surplus, measured in goods, totaled $231.1 billion.

The U.S. economy is also double the size of China’s, according to the World Bank. In 2011, the U.S. gross domestic product reached $15 trillion while China’s totaled $7.3 trillion. China’s National Bureau of Statistics reported Jan. 18 that the country’s nominal gross domestic product in 2012 totaled 51.93 trillion yuan ($8.3 trillion).

“It is remarkable that an economy that is only a fraction of the size of the U.S. economy has a larger trading volume,” Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics in Washington, said in an e-mail. The increase isn’t all the result of an undervalued yuan fueling an export boom, as Chinese imports have grown more rapidly than exports since 2007, he said.

Biggest Exporter

The U.S. emerged as the preeminent trading power following World War II as it spearheaded the creation of the global trade and financial architecture. Protectionist policies in the 1930s had exacerbated the global economic depression. At the same time the U.K., the leading trading nation of the 19th century, began to dismantle its colonial empire.

China began focusing on trade and foreign investment to boost its economy after decades of isolation under Chairman Mao Zedong, who died in 1976. Economic growth averaged 9.9 percent a year from 1978 through 2012.

China became the world’s biggest exporter in 2009, while the U.S. remains the biggest importer, taking in $2.28 trillion in goods last year compared with China’s $1.82 trillion of imports. HSBC Holdings Plc forecast last year that China would overtake the U.S. as the top trading nation by 2016.

China was last considered the leading economy during the height of the Qing dynasty. The difference is that in the 18th century, the Qing Empire -- unlike rising Britain -- didn’t focus on trade. The Emperor Qianlong told King George III in a 1793 letter that “we possess all things. I set no value on objects strange or ingenious, and I have no use for your country’s manufactures.”

Finished Products

While China is the biggest energy user, has the world’s biggest new car market and the largest foreign currency reserves, a significant portion of China’s trade involves importing raw materials and parts to be assembled into finished products and re-exported, an activity that provides “only modest value added,” Eswar Prasad, a former International Monetary Fund official who is now a professor at Cornell University in Ithaca, New York, said in an e-mail.

Last month China’s trade expanded more than estimated, with exports rising 25 percent from a year earlier and imports increasing 28.8 percent, government data released Feb. 8 showed. China’s trade figures in January and February are distorted by the week-long Lunar New Year holiday that fell in January of last year and started Feb. 9 this year.

Data Questioned

Economists from banks including UBS AG and Australia & New Zealand Banking Group Ltd. recently expressed skepticism about China’s export data after the customs administration reported an unexpected 14.1 percent export gain in December. The General Administration of Customs defended the data last month, saying all statistics are based on actual customs declarations, and the Ministry of Commerce said the jump was caused by exporters who hurried shipments before a waiver of inspection fees expired at the end of the month.

The U.S.’s bilateral trade deficit with China, which peaked in 2012, could remain a flashpoint of tension between the two countries, Prasad said.

“This trade imbalance is not representative of the amount of goods actually produced in China and exported to the U.S., but this perspective tends to get lost amidst the heated political rhetoric in the U.S,” said Prasad.

According to O’Neill, the trade figures underscore the need to draw China further into the global financial and trading architecture that the U.S. helped create.

“One way or another we have to get China more involved in the global organizations of today and the future despite some of their own reluctance,” O’Neill said, mentioning China’s inclusion in the IMF’s Special Drawing Rights currency basket. “To not have China more symbolically and more importantly actually central to all these things is just increasingly silly.”

To contact Bloomberg News staff for this story: Michael Forsythe in Beijing at mforsythe@bloomberg.net

To contact the editors responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net; Dick Schumacher at dschumacher@bloomberg.net

http://www.bloomberg.com/news/2013-02-09/china-passes-u-s-to-become-the-world-s-biggest-trading-nation.html?ftcamp=crm/email/2013211/nbe/AlphavilleLondon/product

China, On The Road To High Income Country Status

Kenneth Rapoza, Forbes, 02/23/13

China is expected to join the club of high income nations like Japan within the next 15 years. But to get there successfully, a number of things have to happen first with the government and the economy it manages.

China is currently turning itself inside out. It’s an arduous process of switching from an export driven economy of low wages, to a middle class society driven by local consumer spending power. That shift is still in its early stages. But as it unfolds, China has already become a middle income nation, according to World Bank standards. This is most evident along the highly populated eastern seaboard cities, from Guangzhou to Beijing, where incomes are well over the $12,000 a year needed to be classified by the World Bank as middle income. In those cities, incomes are well over $25,000.

The long-awaited structural shift in China is now under way and may have been underappreciated, says Yiping Huang, an economist for Barclays Capital in Hong Kong. “The Chinese economy is breaking away from its past imbalanced, uncoordinated, inefficient and unsustainable growth model,” Yiping said in his report China: Beyond the Miracle, published last week in its final nine-part installment.

One key trigger of this change is rapid wage growth stemming from the emerging labor shortage. This not only redistributes income from corporations back to households but also improves equality among households in a society that is seeing inequality run amok.

Although rebalancing has so far been driven mainly by changes in Western markets, economic reforms will be critical for furthering change in China, says Yiping. These reforms include removing remaining cost distortions, liberalizing the financial sector and improving China’s very weak safety net.

China is aging much like the United States, but the vast majority of Chinese do not have any sort of livable government pension to count on, let alone health care.

Meanwhile, privatization of government owned entities is probably not feasible in the near term, but the government likely will move steadily toward the creation of a level-playing field by removing input cost subsidies and reducing the monopoly power, allowing for newcomers in the market that can address these gaps.

While it is unlikely that China will adopt Western-style democracy any time soon, Yiping says to expect China’s leaders to implement some political reforms in the years ahead. Such steps may be necessary to ease social economic tensions and facilitate continuous economic growth and could include the gradual extension of direct election to higher levels of government, having more candidates than posts in high-level internal elections, increased tolerance of social media, stepped-up efforts against corruption, and improvements in the transparency of budgetary and other decision processes.

“We don’t think Chinese political institutions have exhausted their potential to foster growth,” says Yiping Huang. “We think political reforms are likely in the coming years.”

Then there is the increased investment in science and technology in China, which has occurred earlier than international experience would suggest. This is probably because of China’s high literacy rate, large market size and proximity to dynamic economies. In fact, China is already among the world’s leaders in research and development spending despite its middle-income status, Yiping notes, despite the fact that a lot of its patents leave little to meet the eye. China is notorious for copying old technology, making minor changes, and calling it a new patent.

However, private enterprises are playing an increasingly important role in China’s R&D activities now than ever before. As China invests more in new products and becomes more entrepreneurial, hitting the high road to high income status becomes more plausible.

Currently, China’s GDP per capita is $6,000. The World Bank’s criterion for high income is per capita above $12,000. China needs to double its real per capita income to get there.

“We think this could happen before 2020 if we assume growth potential at 7% to 8% and modest currency appreciation of, say, 3% a year,” says Yiping.

By then, the Chinese economy would be at least as large as that of the United States. And per capita income will be more like $22,000, putting it on par with Korea’s current income level.

The Club of High Income Nations

Andorra
Aruba
Australia
Austria
Bahamas
Bahrain
Barbados
Belgium
Bermuda
Brunei Darussalam
Canada
Cayman Islands
Channel Islands  
Croatia
Cyprus
Czech Republic
Denmark

Equatorial Guinea  

Estonia Portugal
Faeroe Islands   
Finland
France
French Polynesia
Germany
Gibraltar
Greece
Greenland   

Guam
Hong Kong
Hungary
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China's new leader: harbinger of reform or another conservative?

Terril Yue Jones and Benjamin Kang Lim, 路透社, 01/11/13

BEIJING (Reuters) - When Xi Jinping became the new leader of China's Communist Party two months ago, hopes were high for reform in the giant nation. But despite what appears to be sensitive handling of a strike by journalists and a challenge to Beijing's tight control of the press, signs of change seem tentative.

Xi's commitment to reform, or lack of it, will come into sharper focus over the next few months, in particular after he officially assumes the presidency in March at a session of the National People's Congress, the country's rubber-stamp parliament.

Among the key signposts that analysts say could give Chinese citizens and global investors a sense of the new government's commitment to change: whether the resolution of a standoff at a prominent newspaper leads to an easing of press restrictions; whether the government moves quickly to address the rights of China's migrant workers; and whether Xi follows through on ending the country's notorious "re-education through labor" camps.

Xi himself has fanned expectations of change with rhetoric about "national rejuvenation," vows to crack down on corruption and a down-to-earth public style that stands in contrast to the remote, forbidding demeanor of his predecessors.

From a trip to Guangdong province akin to Deng Xiaoping's famous "southern tour" in 1992 - which re-ignited China's economic opening - to a speech calling for the rule of law in mid-December on the 30th anniversary of China's constitution, Xi has kindled hopes that he might pursue a broad swath of reforms -- economic, legal and political.

"It is evident that the new leaders want to get things done and have done things differently from previous administrations," said a source with close ties to the leaders.

But to date, for all the ostensible desire for change, Xi and the new leaders have precious little to show for it. China has one of the most regimented political systems in the world, and the writ of the Communist Party remains supreme.

At the November party congress in which Xi and his team were officially unveiled, there was talk of reform. But maintaining stability was the over-arching theme.

Xi's defenders argue that expectations of swift, significant change are premature. His prime minister, Li Keqiang, doesn't officially form a government until the parliament session in March.

For now, ambiguity prevails. "In intellectual debate, both the left and the right, conservatives and liberals, think Xi Jinping will be on their side", says Cheng Li, a China expert at the Brookings Institution.

"But in half a year, or one year, I think one group will be disappointed."

Skeptics say there are few convincing signs of even impending change.

"There is a scent of this (reform). Everyone has detected the aroma. But if you ask, is there really rain? Is there really wind? I don't think so," said Chen Ziming, an independent political commentator in Beijing.

ONE GLIMMER

Resolving the strike at the Southern Weekly newspaper in Guangdong, one of China's most respected and liberal, provided a glimmer of reform even as it was clouded in uncertainty.

The protest was against Propaganda Ministry officials who allegedly rewrote an editorial the paper had prepared that called on the government to respect the rights of individuals under China's constitution into one that praised the party.

Sources told Reuters that after the intervention of new Guangdong party secretary Hu Chunhua, the situation was resolved with an agreement from the Propaganda Ministry that it would no longer censor the paper's articles before they are published.

Some analysts believe the decision is an isolated one and holds little long-term significance. But if the agreement holds, it will be a step toward loosening what has been a suffocating censorship regime.

It is unlikely Hu acted without at least the party Politburo's tacit awareness. To what extent, if any, the Southern Weekly episode might herald a somewhat more independent press will now be scrutinized intensely.

OTHER SIGNPOSTS

There are other potential areas for change.

One is the so called "hukou" (戶口) household registration system, that effectively prevents millions of China's migrant workers and their families from receiving health care and schooling in the wealthier regions where they work. Such services are only provided to people in the areas where they were registered at the time of birth.

If the central government is serious about improving the rights of migrants - to which it has long given lip service - it will at the same time have to change the way local governments now finance themselves, which is currently mainly through land sales to real estate developers.

Without creating a broader and more consistent tax base, economists say local governments will not be able to afford the extra costs associated with real hukou reform.

If the central government begins to push provinces to move on local fiscal reform, it will likely be a signal that it also may eventually get serious about change to the hukou system.

Those changes will be complex. For that reason, if Xi and Li are "serious", said University of California San Diego economist Barry Naughton, "reform in this respect has to be started right now."

The new government already appears to be moving on China's notorious re-education through labor (RETL) system (勞改), which allows police to detain people for up to four years without an open trial, in contravention of China's constitution.

Meng Jianzhu, a former minister of public security in Beijing and now the head of the political and legal committee of the National People's Congress, said recently that the NPC seeks "the end of the use of RETL."

Human rights advocates are watching closely whether the government follows through and eliminates the "re-education" system.

As long as the re-education through labor system isn't replaced by something similar, said Sophie Richardson, China Director at Human Rights Watch, "the decision would be an indisputable step towards establishing the rule of law in China."

Taken together these are straws in the wind, "subtle changes but not a coincidence," said the source with ties to the leadership. Xi's goal may be to promote moderate change while maintaining stability.

"Stability still prevails over all else," the source said.

The trick now for Xi is making sure the changes the new leadership allows aren't so subtle that few feel them, but will not risk the stability that is paramount for them.

(Editing by Bill Powell and Raju Gopalakrishnan)

http://news.yahoo.com/chinas-leader-harbinger-reform-another-conservative-210452826--business.html

學者：革命悄悄開始了 大陸剩5年改革

【聯合報╱特派記者陳東旭／北京報導】，11/30/12

大陸貪腐、社會不公、政改緩慢等問題已嚴重影響到社會穩定。多名學者昨天在北京一場座談上談到，大陸還有五年時間可以改革，否則將岌岌可危。

財經「二○一三：預測與戰略」年會，昨天進行「從法制經濟到法治社會」主題時，改革派學者、清華大學社會系教授孫立平表示，現在大陸的問題不是法律健全不健全，哪條法律有無被執行，而是政府還能不能在法制的軌道上運轉，還能不能回到法治軌道的問題。

他說：「一場靜悄悄的革命已經發生。」最簡單的是政府感歎隊伍不好帶，老百姓不好管了，政府說的這些話，老百姓也不信了，這就是逼迫中國進行變化的真正的動力。「無論如何要對這樣的危機和矛盾作出反應，這個反應的過程就是我們改變的過程，就是改革的過程。」

他說，現在的大陸已是一個與法治完全格格不入的國家，且愈走愈遠，其中維穩就是對法治的一大破壞、大倒退。政府為了達到目的（指標）可以不擇手段，叫做「作惡授權」，政府默認甚至鼓勵下屬用違法規則，以違法方式達成任務。

孫立平說，大陸需要轉型，他還舉台灣故總統蔣經國的例子，處理歷史共業，台灣遭遇最大的事件就是二二八。唯一辦法就是攔腰一刀切斷，做一個切割，過去的問題，老辦法解決，新問題新辦法解決。現在大陸的問題就是這個問題，越早回頭，越早切割、越主動越好，否則將來能不能切割都是一個問題。

他說，大陸現在還有切割的條件，但已相當不樂觀。現在民眾還殘存著一點對政府的信任和感情，有時候政府道個歉，有的人還感動的「淚水漣漣」，但是「漣漣」不了幾年了，十年可能到不了，五年可能差不多了。到時，切割的機會已經錯過，唯一的一條路就是武力鎮壓，維一天是一天，但社會要付出極大的代價。

孫立平說這些沉重的話題時，全場近千名與會人員十分靜默，有人點頭，台上的對談嘉賓表情凝重。

中國政法大學終身教授江平也指出，大陸司法改革倒退，公安權力過大是國家不幸，大陸應建立法院權威，給法院權威，才能振奮法治社會信心。其次，要建立制度，例如財產申報制度，已違法十二年的勞動教養制度也應廢除。江平甫說完，掌聲不斷。

第三要深層次的政治體制改革，包括黨政分開、言論出版結社新聞自由等問題，十七屆中央委員失去最好的時機，在總書記第二任內是最好的政改時機，但他很失望，期許下一個五年，若再喪失機會，大陸的前途就岌岌可危了。

President Xi’s Singapore Lessons

Michael Spence, 11/19/12

NEW YORK – China is at a crucial point today, as it was in 1978, when the market reforms launched by Deng Xiaoping opened its economy to the world – and as it was again in the early 1990’s, when Deng’s famous “southern tour” reaffirmed the country’s development path.

Throughout this time, examples and lessons from other countries have been important. Deng was reportedly substantially influenced by an early visit to Singapore, where accelerated growth and prosperity had come decades earlier. Understanding other developing countries’ successes and shortcomings has been – and remains – an important part of China’s approach to formulating its growth strategy.

Like Singapore, Japan, South Korea, and Taiwan in their first few decades of modern growth, China has been ruled by a single party. Singapore’s People’s Action Party (PAP) remains dominant, though that appears to be changing. The others evolved into multi-party democracies during the middle-income transition. China, too, has now reached this critical last leg of the long march to advanced-country status in terms of economic structure and income levels.

Singapore should continue to be a role model for China, despite its smaller size. The success of both countries reflects many contributing factors, including a skilled and educated group of policymakers supplied by a meritocratic selection system, and a pragmatic, disciplined, experimental, and forward-looking approach to policy.

The other key lesson from Singapore is that single-party rule has retained popular legitimacy by delivering inclusive growth and equality of opportunity in a multi-ethnic society, and by eliminating corruption of all kinds, including cronyism and excessive influence for vested interests. What Singapore’s founder, Lee Kwan Yew, and his colleagues and successors understood is that the combination of single-party rule and corruption is toxic. If you want the benefits of the former, you cannot allow the latter.

Coherence, long time horizons, appropriate incentives, strong “navigational” skills, and decisiveness are desirable aspects of continuity in governance, especially in a meritocratic system managing complex structural shifts. To protect that and maintain public support for the investments and policies that sustain growth, Singapore needed to prevent corruption from gaining a foothold, and to establish consistency in the application of rules. Lee did that, with the PAP supplying what a full formal system of public accountability would have provided.

China, too, most likely wants to retain, at least for a while, the benefits of single-party rule, and delay the transition to “messier” governance influenced by multiple voices. In fact, a pluralistic system is already evolving under the umbrella of the Chinese Communist Party – a process that may eventually lead to citizens gaining an institutionalized voice in public policy.

For now, however, those representative elements that have been added incrementally are not powerful enough to overcome the growing corruption and excessive influence of vested interests. To maintain single-party legitimacy – and thus the ability to govern – those narrower interests must be overridden in favor of the general interest. That is the challenge that China’s new leadership faces.

If China’s leaders succeed, they can then have a sensible and nuanced debate about the evolving role of the state in their economy, a debate on the merits. Many insiders and external advisers believe that the state’s role must change (not necessarily decline) to create the dynamic innovative economy that is key to navigating the middle-income transition successfully. But there remain many areas in which further debate and choice are needed.

Lee Kwan Yew in Singapore and Mao Zedong and Deng in China gained their peoples’ trust as founders and initial reformers. But that trust dissipates; succeeding generations of leaders do not inherit it completely, and must earn it. That is all the more reason for them to heed the lessons of history.

China’s new leaders should first reassert the Party’s role as defender of the general interest by creating an environment in which narrow interests, seeking to protect their growing influence and wealth, do not taint complex policy choices. They must demonstrate that the Party’s power, legitimacy, and substantial assets are held in trust for the benefit of all Chinese, above all by fostering a pattern of inclusive growth and a system of equal opportunity with a meritocratic foundation. And then they should return to the task of governing in a complex domestic and global environment.

There are times when muddling through – or, in the Chinese version, crossing the river by feeling the stones – is the right governing strategy, and there are times when a bold resetting of values and direction is required. Successful leaders know what time it is.

Feeling the stones may seem like the safest option for China’s next president, Xi Jinping, and China’s other new leaders; in fact, it is the most dangerous. The only safe option is a radical realignment of the Party with the general interest.

The issue, then, is whether the reformers who carry the real spirit of the 1949 revolution will win the battle for equitable and inclusive growth. The optimistic (and I believe realistic) view is that the Chinese people, through a variety of channels, including social media, will weigh in, empowering reformers to push through a progressive agenda.

Time will tell. But it is hard to overstate the outcome’s importance to the rest of the world. Virtually all developing countries – and, increasingly, the advanced countries as well – will be affected one way or another as they, too, struggle to achieve stable and sustainable growth and employment patterns.

Michael Spence, a Nobel laureate in economics, is Professor of Economics at NYU’s Stern School of Business, Distinguished Visiting Fellow at the Council on Foreign Relations, Senior Fellow at the Hoover Institution at Stanford University, and Academic Board Chairman of the Fung Global Institute in Hong Kong. He was the chairman of the independent Commission on Growth and Development, an international body that from 2006-2010 analyzed opportunities for global economic growth.

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