trade protectionism is a public enemy

Is there any similarity between the scenario of the power shift at the international stage in the 1930's and the current tendency that China seems to be in the position to replace the US as the world economic leader? Harold James, a historian at Princeton University, argues in an essay of FP that it is, and the problem is that the transition from an American to a Chinese model of capitalism will not be easy for the world to accept. 

But Prof. James' argument seems to be rather problematic, as it links China's withdrawal from further investment on Lehrmen Brothers directly to the financial crisis.

The initial stages of the credit crunch in 2007 were managed so apparently painlessly because sovereign wealth funds (SWFs) from the Middle East, but above all from China, were willing to step in and recapitalize the debt of U.S. and European institutions. Between November 2007 and March 2008, the SWFs provided $41 billion of the $105 billion injected into major financial institutions. Had this process continued, the events of 2008 would have included problems with U.S. real estate and a severe stock market decline, but no meltdown of financial institutions.

How strange? It seems to me Prof. James teleologically links China's withdrawal of further investment on buying Lehman Brothers as the major reason for the financial meltdown. He even goes further that 'China Investment Corp's turning back will be held up in the future as a moment when history could have shifted in a different direction.' 

It's hard to believe such a scapegoating approach to the historical discourse, really. Again and again, the argument goes like China is prone to protectionism, but we all know that a major benefactor of the globalization, China surely will advocate open trade policy.  

Otherwise, Prof. James has an objective judgement on the prospect of reforming international institutions that which is 'a key issue in deciding whether the coming geopolitical alterations will be crisis-ridden, abrupt, and disruptive, or whether a more gradual and peaceful path of adjustment can be achieved.'

Seems that there are a lot of uncertainties ahead indeed, as Jonathan Holslag puts in from an European perspective, 

None of this is to say that the Beijing Consensus guarantees a more stable world order. Far from it. A concert of powers is only as strong as its weakest player. If economic turmoil worsens, nationalism in one country or another could reduce the scope for pragmatic bargaining. Overlapping spheres of influence and frozen conflicts could once again lead to major conflict. And if, as some observers expect, China emerges from the crisis as the big winner, it won't be long before zero-sum thinking again replaces win-win cooperation as the order of the day.   

We all know line-shape is not a stable form; triangular shape is. But alas, at this critical moment, EU is still divided from within although a lot of efforts have been devoted to bridge its internal gaps. Criticising the American style stimulus measures as 'the way to hell' certainly is not productive, as it shows that less than one week for the Summit, some European countries still couldn't reach general consensus. It has prompted Timothy Garton Ash to lament on how the EU has wasted 10 years to become a more politically integrated entity. 

Looking back, one begins to see that Europe has spent the best part of 10 years failing to get its act together. A decade that began with ambitious plans for a European constitution ends with the fate of a much more modest Lisbon treaty hanging on a dubiously democratic attempt to persuade the Irish to alter their "no" to a "yes". If we had spent half the time we wasted in that constitutional debate simply co-ordinating our actions better, under the existing treaties, we would be in a better position today. Europe talks the talk but does not walk the walk. 

Putting aside all these power politics, one would see now how danger the world would become if the rich nations turn to protectionism, as today NYT's editorial warns that 'protectionism thrives in economic crises as people seek scapegoats abroad for their troubles and demand protection for domestic jobs.' 

We all should have a watchful eyes on that. 

a super-sovereign currency being considered

Zhou Xiaochuan, the central bank governor of China, has proposed to create a kind super-sovereign currency to replace sovereign currency such as the dollar to minimise the financial risks. The original text is on the website of the People's Bank of China.

It's firstly reported by WSJ and interpreted as the offensive gesture, 'backed by other emerging economies such as Russia in making clear they want a global economic order less dominated by the U.S. and other wealthy nations.'

WSJ report quotes some experts opinions on Zhou's proposal. 

John Lipsky, the IMF's deputy managing director, said the Chinese proposal should be treated seriously. "It reflects officials' concerns about improving the stability of the financial system," he said. "It's interesting because of China's unique position, and because the governor put it in a measured and considered way."

China's proposal is likely to have significant implications, said Eswar Prasad, a professor of trade policy at Cornell University and former IMF official. "Nobody believes that this is the perfect solution, but by putting this on the table the Chinese have redefined the debate," he said. "It represents a very strong pushback by China on a number of fronts where they feel themselves being pushed around by the advanced countries," such as currency policy and funding for the IMF.

While acknowledging the positive side of Mr.Zhou proposal, FT's editorial is a bit nuanced in pushing back the frontline. 

Mr Zhou’s proposal is useful and constructive – but China should still raise domestic consumption. It must not just replace its mountain of dollar assets with heaps of other currencies. ...China has acted wisely in the recession, expanding demand with government spending. Beijing now wants to play an active role in reshaping the world monetary order. This outward-looking view should be welcomed. But China still has work to do at home.

On the benefit of the dollar as the world's reserve currency, this Time's blog is quite frank,

The advantage of having your country's currency as the world's reserve currency is that you don't really have to play by the rules: You can run big deficits financed by the rest of the world, you can spend more than you earn, and to a certain extent you can escape the consequences of your profligacy by devaluing your currency when you run into trouble. The obvious disadvantages are that running big deficits and spending more than you earn aren't really great long-term economic strategies.

So, surely it would not be easy for the US to give up more sovereignty to IMF, because it means the sacrifice of its national interests. 

What can China do then?   

Toosie rolls soothe souls

'Americans worry about the economy in part because of the infusion of hundreds of billions of taxpayer dollars, not in spite of it.' - WSJ 

In Geithner's new strategy to deal with toxic assets, liquidity is the first priority, but WSJ is still quite cautious about it. 

'So in essence this is an attempt at a slow-motion bank workout without a fight over a new resolution agency or having to ask Congress for more money.' 

How to attract private investors, and whether banks will sell enough toxic assets to make difference, are all quite uncertain. The largest risk, as it's been identified, is still to the tax payers, that WSJ warns that 

'the Obama Administration is instead leveraging the balance sheets of the Federal Reserve and Federal Deposit Insurance Corp., which will lend to the new public-private entities to buy the toxic assets.' 

Watchful eyes indeed!

What Obama can do? There is a review on NYT regarding a TV program called 'Frontline: Ten Trillion and Counting', 

'Now it is Mr. Obama who will have to make the case for sacrifice, though the Iraq war is winding down, and the one in Afghanistan is somewhat murky in the public mind.'

But as it's said, 'it's hard to sell a message of pain to Americans'. 

Ghee, is that the US we have perceived in our mind?

Perhaps in such a hard time, sweetie is something that one can turn to for the consolation, as this 'Tootsie Rolls Soothe Souls' indicates. 

Daily political economy! (1)

Quite an extraordinary announcement of Swedish government that it will not bail out the ailing Saab, one of the iconic brands of Sweden. The so-called Swedish model to deal with the crisis in banking section by nationalizing banks, recapitalizing and selling them is treated somehow as a beacon in the US, but its right leaning government certainly doesn't want to interfere too much the market economy. NYT reports, 

'Swedish officials have condemned what they see as protectionism by other European countries that have pledged to prop up their own failing car industries. They have also been scathing about General Motors, Saab’s owner, and the last thing they want is to seem to be bailing out a despised foreign company. '

Meanwhile, the current practice of GM and Chrysler sounds not so healthy as one of FT's comments questions, 

'It is one thing for companies to cut prices and suffer the consequences when they and their competitors are all playing by the same rules. It is quite another when the businesses in question are being kept alive with public money – $17.4bn between GM and Chrysler so far, with much more to come.'

Concerns about globalization and free trade has been raised up again, we all need to be cautious about the trend of protectionism.

“The U.S. is in such great danger of backing away from free trade,” said Kenneth S. Rogoff, a professor of economics at Harvard. “The next two years could be a disaster for free trade.”- quoted from this report. 

On the issue of regulation, while Obama's stand is still mischievous, European leaders have agreed to be pro-regulation either at the pan-European level and at the G20 level. 

'Gordon Brown, UK prime minister, agreed that a stronger system of pan-European financial regulation, based on the report of Jacques de Larosière, the former IMF managing director, be set up. The Europeans will also back action at the G20 level on regulation of systemic risks from hedge funds, private equity and alternative investment vehicles, and closer regulation of credit rating agencies.' -- FT editorial 

The repercussion of AIG case is still on, as Clive Crook of FT laments on the seemingly unconstitutional law the House of Representatives passed to void bonus,

'The US president has vacillated between stoking the outcry and trying to calm people down. He should have condemned the House’s bill of attainder. If his financial repairs are to succeed, the president must foster a more calculating, less self-destructive mood. Regardless, AIG should remain at the front of the government’s mind as it considers longer-term regulatory reform.'

Are you optimistic about such a regulatory reform? 

ECB should do more, Wolfgang Münchau appeals again, 

'As European leaders focus on tax havens and hedge funds, it is hard to detect a sense of urgency in dealing with the wider crisis. They seem to think that they did enough last October, when they issued blanket guarantees on bank debt and offered voluntary recapitalisation schemes.'

On what actions ECB should be taking, he prefers buying up the underpriced bonds of various Eurozone governments to quantitative easing. In another appeal on the demand side, Kermal Dervis argues that  

'Two things need to happen for demand expansion – driven in the past by asset bubbles and US consumers – to resume, but in a more sustainable fashion. In the immediate future, current account surplus countries, including Germany and Japan but led by China, must play a greater role in the expansion of demand. In the longer term, the distribution of income inside countries and worldwide must shift towards less concentration at the top, supporting a broad-based expansion in consumer demand.'

Sounds like a cliche now, the problem is that changing the living pattern of Germany, Japan and China is really a long term issue. It's a cultural issue, instead of economic issue. The change probably can be nudged to some extent, but certainly can not be engineered. 

Farewell, 2008

Time flies,
But I will remember.

love thy neighbour

When a friend of mine asked me to write something about Christmas in China, my first reaction was how I should write. Do I have any special feelings about the day? If there is no such a request, this Christmas might be passed as usual, just like a holiday in which people naturally do traditional things, such as family gathering, exchanging gifts, enjoying the festive time of the year end.

Probably it's also the time to ruminate something special about the past year and to plan something new for the coming year. At least the first idea appeared in my mind about the writing was about a kind annual review of current affairs, so when I was told of some strange commercial promotions appeared in this Christmas season in Beijing, such as decorating a Christmas tree with a Mini Cooper car model as a kind of advertisement, I realized it's the problem of commercializing Christmas.

Looking around, one might find an awful lot of evidences that Christmas in China, especially in the cities like Beijing, Shanghai or Guangzhou, has been largely commercialized. Shopping centers, coffee shops, and book stores are full of joyful Christmas atmosphere. Indeed, a lot of young people are simply seeking fun and pleasure in this festive season, as the Christmas day probably is just an excuse in their daily life, to enjoy, or even to indulge a bit in some extravaganza, like having a luxurious dinner, or a wild party.

But some friends have also told me that a lot of church-goers are seriously treating it as a religious holiday, and they may seek the peace of mind by attending activities in various churches or at their homes.

So, basically we have two kinds of celebrators for this special day, one is the pleasure seeker, and another is the soul searcher. In between, there are a lot of people go neither side of the spectrum, just passing it by as an usual day.

I'm not a Christian, and I once enjoyed Christmas abroad with some foreign friends. The celebration seems to me more like a family gathering, where we shared and enjoyed pleasant time. Fleeting and impermanent as it might be at the superficial level, the sweetness and lightness of those moments has entered into my memory, which in turn reminds me of their existence each year in this season, so does the people I have encountered, acquainted and befriended in my life.

Yesterday, when I mentioned to a friend of mine in my greetings that I was to do some small giving job on the Christmas day, he said it's very Christian. I understand perfectly why he thought so, even though I'm not a Christian. Probably it's because of the date. But does it matter, to be Christian or not in this sense? Isn't the true spirit in being a Christian means 'love your neighbour', which one can easily find the similar sayings in other religions.

Can we say that as long as one's act embodies such a spirit, it doesn't matter whether one is called a Christian, a Muslim, or a Buddhist? Tolerance has been promoted in the secular multiculturalism. Perhaps it's time to promote toleration in various beliefs and religious practices, as long as the central spiritual pillar - ' love your neighbour' is identified in various religious practices.

In an interview with Spiegel, Rabbi Yona Metzger mentioned that his dream is to create an United Religious Nations, which will not only include Islam, Christianity, and Judaism, but also Hinduism and Buddhism. Grand plan indeed, and it's not difficult to understand his benevolent intention. This idea of the holy unity binding together various religions and the totality of the spirit of all human beings are very attractive, and perhaps it is the highest level of the human being's evolution.

As Rabbi Yona Metzger says, religious people speaks the same language. This same language, if one thinks about it, probably is more or less centred around 'love-your-neighbour', with which religious concord might be achieved. Such an ideal has been held by more and more people; but nowadays, its prospect of being realized is still located somewhere beyond the horizon of human being.

To be religious does not necessarily mean that one has to believe in a certain kind of religion, since belonging to a group of people unavoidably raises up the problem of 'Self' and 'Other', therefore it can cause all sorts of conflicts, discrimination, prejudice, and identity politics, which will hinder the formation of total spirit of all human kind - the communion that which would only emerge from the real religious concord. In this sense, humanity as a word can be treated as the signifier for the religious concord as well, so long as it reflects the spirit of 'love-your-neighbour'.

Excessive commercialization of Christmas has been considered by some observers as a vile symptom of contemporary society. Perhaps there is no more typical resentment against such a commercial mood of Christmas than the one made by atheist Richard Dawkins. In a review appeared two years ago in NYT, regarding his book the God Delusion and his attitude toward Christmas, Dawkins stated that,

'Christmas has long since ceased to be a religious festival. I participate for family reasons, with a reluctance that owes more to aesthetics than atheistics. I detest Jingle Bells, White Christmas, Rudolph the Red Nosed Reindeer, and the obscene spending bonanza that nowadays seems to occupy not just December, but November and much of October, too. So divorced has Christmas become from religion that I find no necessity to bother with euphemisms such as happy holiday season. In the same way as many of my friends call themselves Jewish atheists, I acknowledge that I come from Christian cultural roots. I am a post-Christian atheist. So, understanding full well that the phrase retains zero religious significance, I unhesitatingly wish everyone a Merry Christmas.'

Very fine reasoning. I have no doubt that Dawkins has been enlightened as an excellent rational intellectual, and I still remember how I enjoyed reading his Selfish Gene several years ago to defend my atheistic standpoint. Its scientific reasoning is so powerful, that any fantasies of social benevolence might be traversed as a kind of self-gratification.

However, I have started to doubt whether or not such a pure reasoning can answer all needs of human being? There are some historical lessons regarding the promise of the Enlightenment in the period of Romanticism, from which one can tell that the notion of the general individuality of various societies or various states are still partial and the sacrifice of particular individuality thus called for in the name of the general individuality is problematic.

After nearly 200 years, and with so many bloody lessons we have learned, this problem of human being is still there and hasn't been solved. The interdisciplinary study of neuroscience and religious practices has tried its best to decipher the myth of individual enlightenment in a brave new world, but the result is also unclear. For this reason we have to accept the fact that the promise of the Enlightenment is yet to be fulfilled, largely because its initial emphasis on the autonomy of an individual as a rational being is partial, and the fact that in human nature people also has blind passion for communion at various levels can not be ignored.

There is a suggestion that such an irrational aspect of human nature can only be completely civilized if one dedicates oneself to a religious life. So the problem is how such a dedication of personal choice can co-habit peacefully with the secularized social norm. If it's externalized in the public sphere prematurely without the establishment of the religious concord, conflicts between different groups are quite likely to occur.

Therefore, the first principle, I think, for the realization of such a religious concord is that any voluntary religious organizations should not interfere with the issues that which belong to the secularised society, such as obtaining and executing the governing power of people, and any activities of those organizations should follow the principle of the rule of law in a secularised society. Under such a condition, religious people should have their own rights and freedom to enjoy their religious life, no matter what kind of form it is.

In another words, religious organizations under the unifying band of 'love you neighbour' should be always on guard against any temptation of stepping into the power struggle in the secularized society since any form of power struggle unavoidably manifests the Self, which will contaminate the spirit of 'love your neighbour'.

Theoretically, such a self-negation is a must to achieve the spiritual totality of human being, but in reality it is basically impossible to realize since that element of blind passion in human nature can not be eliminated completely, and the history has already manifested how disastrous and tragic the life could be if there is an exterior force to impose such a mandate to the ordinary people in the name of God, or some unfathomable higher orders.

One might argue that it will make a religious person extremely weak. Yes, paradoxically and individually it seems to be so, and it underlies the very meaning of the sacrifice and of being religious, that is, the true belief in 'love your neighbour'. But if every religious person holds this principle dearly, the spirit thus formed in their communion will be very powerful in-its-self.

This choicelessly formed spiritual power shall be the true manifestation of the holy unity of human kind.

mental regression to the Middle Age

Some European leaders who are using Dalai Lama as a kind of political leverage haven't realized that from the perspective of the Enlightenment, his political vision as a religious leader is against the core values of secularization in European/western civilization, as the power game he is in should be treated separately from other concerns about ordinary Tibetan people. 

Is Dalai Lama willing to give up his prestigious religious leadership in entering the sphere of political power structure? I doubt so. As far as I know, among Tibetan Buddhists, which are segregated roughly into four sections, Dalai Lama belongs only to one section. In fact, the way he interferes with the religious life of other sections have caused internal tension and conflicts among TIbetan Bhuddhists. Such a fact is hardly exposed by the western media, which shows either ignorance of current state of Tibetan religious life, or collusion of treating him as a proxy to level against Chinese government.

Some observers have suggested the similarity of Dalai Lama's struggle with the case of Northern Ireland, which I don't think it's valid exactly because of Dalai Lama's identity. Instead of being nudged into a certain mode of thinking unconsciously, one should ask where Dalai Lama's popularity is from. Is it from soothing religious statements as a religious figure that which meet the spiritual needs of ordinary people, or from a politician who is eyeing for the secularized power, or from a representative speaking on behalf of Tibetan people in the name of human rights and liberty?

It's the second aspect of the above-mentioned three facets that Dalai Lama have goes against the principle of the secularism, and for those who have followed him closely, one might have noticed that he's very skillful in addressing those different appeals to different audiences. In another words, he knows what his audiences want to hear under different circumstances, be they politicians, religious practitioners, or ordinary people who want to be enlightened spiritually. 

Isn't his mythic and affectionate aura that has attracted many overseas followers from his own contradictory identity that he is both a 'spiritual leader' speaking nicely on human issues and a 'political leader' fighting for those being repressed and asking for governing power? If Levi Strauss was still alive today, he probably would point out that Dalai Lama is actually a myth created by the post-ideological society.  

No wonder those members of European Parliament would be excited when they are greeted by his congenial smile and witty remarks, which makes what's going on around him in Europe now looks rather like a political farce. One might argue that at the very moment he's greeted with an unanimous applause there, his charming manner as a religious practitioner has conquered parliamentary members. What he said is very simple and plain, and nothing special to those sophisticated politicians of modern world; his persona and his very presence there count as a symbol to satisfy the fantasy of political struggle. 

Struggle? You must be joking. It's very easy for those of us in a secularised society to forget the fact that the prestigious leadership currently he is enjoying as a 'spiritual leader' is granted by the reincarnation system of the Tibetan Buddhism. He probably will reform this system, but that's only the future prospect. 

This is a kind of mental regression to the Middle Age, isn't it? Because he is so different, he must have brought a rare fresh air to the stuffy parliamentary building in Brussels, which is full of endless and lengthy debates in a politically disengaged society largely at the mass level. 

So far, there is no dogmatic political journalists who would follow his statements in various occasions like those in the US do, that any inconsistent views of a prominent political figure would be highlighted to the public. If so, I guess the general impression would be quite different.

But this does not mean that there is no way to look into this murky situation. Instead of being confused by all those extrapolations that have so far appeared in the public sphere, one should stick to the identity issue of Dalai Lama himself from a firmly secularized standpoint, the quilting point that seems to hold everything now regarding Tibetan issues; unless, of course, the coordinates are changed.  

By promoting the very idea that Dalai Lama as a equivalent party Chinese government should deal with on Tibetan governance, which falls into the problem of secularism I mentioned above, European leaders have implicitly endorsed his unique representativeness, which not only reveals their partial understanding of Tibetan religious life, but also betrays their self-centred approach in recognizing the unity of China. This is the true test of the Sino-EU strategic partnership.

However, that is still not a fundamental issue about Dalai Lama. By supporting Dalai Lama regarding the governance of Tibet, European leaders would also give a implausible signal that they are promoting theocracy, which can not be accepted among those progressives. I've found that some European pundits and politicians have ignored this aspect, perhaps because their memories of the Enlightenment movement that is originated from the Europe in the Middle Age are faded, or they are not willing to confront and to reflect, because of the prevailing sentiment about China in the European public sphere. 

The standard argument that Tibetan Youth Congress (TYC) might be more radical to handle if there is no breakthrough in the dialogue when DL is still alive has its own merit, but those countries who silently allow those ethnic Tibetan people, who can speak fluent English, to organize political gatherings and obtain donations from different channels for their radical political activities in doing something against a sovereign country should be held accountable as well. This is similar to the internationally co-ordinated anti-terror strategy.