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News Updates - 15 April 2006 The dark side of China - San Francisco Chronicle US' new ally: India - Washington Post A new generation of pilgrim hits India - New York Times The
dark side of China's
dazzling economic boom The only thing rising faster than China is the hype about China. Hype conceals often sordid reality of government corruption and cronyism. China's economic boom has dazzled investors and captivated the world. But beyond the new high-rises and churning factories lie rampant corruption, rising social injustice and an elite preoccupied with its own survival. In January, the People's Republic of China's gross domestic product exceeded that of Britain and France, making China the world's fourth-largest economy. In December, it was announced that China had replaced the United States as the world's largest exporter of technology products. Many experts predict that the Chinese economy will be second only to the United States by 2020, and possibly surpass it by 2050. But, China's banking system, which costs Beijing about 30 percent of annual GDP in bailouts, is saddled with nonperforming loans (ones without an expectation of repayment that have not yet been written off) and is probably the most fragile in Asia. Although China was one of the earliest socialist economies to begin serious reform, recent data on the country's regulatory system, international trade, fiscal policy and legal structure place China in the bottom third of 127 countries surveyed for economic freedom, below most Eastern European countries, India and Mexico, and all of its East Asian neighbors, save Burma and Vietnam. But China's tentacles are more securely wrapped around the economy than financial figures suggest. For example, Beijing continues to own the bulk of capital. In 2003, the state controlled $1.2 trillion worth of capital stock, or 56 percent of the country's fixed industrial assets. There are only 40 private firms among the 1,520 Chinese companies listed on domestic and foreign exchanges. Today, Beijing oversees a vast patronage system that secures the loyalty of supporters and allocates privileges to favored groups. The party appoints 81 percent of the chief executives of state-owned enterprises and 56 percent of all senior corporate executives. State enterprises are miserably unprofitable. More than 35 percent of state enterprises lose money and 1 in 6 has more debts than assets. China is the only country in history to have simultaneously achieved record economic growth and a record number of nonperforming bank loans. Political savvy and business acumen do not often go together. Because of the party's fixation with high growth, government officials are rewarded for delivering, or appearing to deliver, precisely that. This incentive structure fuels a widespread misallocation of capital to "image projects" (such as new factories, luxury shopping malls, recreational facilities, and unnecessary infrastructure) that burnish local officials' records and strengthen their chances of promotion. The results of these mistakes -- gleaming office complexes, industrial parks, landscaped highways and public squares -- tend to impress Western visitors, who view them as further proof of China's economic prowess. The Chinese economy is not merely inefficient; it has also fallen victim to crony capitalism with Chinese characteristics -- the marriage between unchecked power and ill-gotten wealth. And corruption is worst where the hand of the state is strongest. The most corrupt sectors in China, such as power generation, tobacco, banking, financial services, and infrastructure, are all state-controlled monopolies. None of that is unprecedented, of course. Tycoons in Russia, after all, have looted the state's natural resources. China's politically connected tycoons have cashed in on China's real estate boom; nearly half of Forbes' list of the 100 richest individuals in China in 2004 were real estate developers. Various indicators, pieced together from official sources, suggest endemic graft within the state. The number of "large-sum cases" (those involving monetary amounts greater than $6,000) nearly doubled between 1992 and 2002, indicating that more wealth is being looted by corrupt officials. The rot appears to be spreading up the ranks, as more and more senior officials have been ensnared. The number of officials at the county level and above prosecuted by the government rose from 1,386 in 1992 to 2,925 in 2002. An optimist might believe that these figures reveal stronger enforcement rather than metastasizing corruption, but the evidence suggests otherwise. Dishonest officials today face little risk of serious punishment. On average, 140,000 party officials and members were caught in corruption scandals each year in the 1990s, and 5.6 percent of these were criminally prosecuted. In 2004, 170,850 party officials and members were implicated, but only 4,915 (or 2.9 percent) were subject to criminal prosecution. So, party membership has its privileges. In part, democracy itself has been a victim of the country's economic expansion. However flawed and mismanaged, the country's rapid growth has bolstered Beijing's legitimacy and reduced pressure on its ruling elites to liberalize. Meanwhile, the riches available to the ruling class tend to drown any movement for democratic reform from within the elite. Political power has become more valuable because it can be converted into wealth and privilege unimaginable in the past. Since the Tiananmen Square tragedy, the party has invested billions in beefing up the paramilitary police force (the People's Armed Police) that has been deployed in suppressing internal unrest. To counter the threat posed by the information revolution, and especially the Internet, the Chinese government has blended technological savvy with regulatory might. The emerging social elite, by contrast, is co-opted and coddled. The party showers the urban intelligentsia, professionals and private entrepreneurs with economic perks, professional honors, and political access. For example, nationwide, 145,000 designated experts, or about 8 percent of senior professionals, received "special government stipends" (monthly salary supplements) in 2004; tens of thousands of former college professors have been recruited into the party and promoted to senior government positions. At least for now, the party's charm campaign is working: The social groups that are usually the forces of democratization have been politically neutralized. China has already paid a heavy price for the flaws of its political system and the corruption it has spawned. Its new leaders, though aware of the depth of the decay, are taking only modest steps to correct it. For the moment, China's strong economic fundamentals and the boundless energy of its people have concealed and offset its poor governance, but they will carry China only so far. Someday soon, we will know whether such a flawed system can pass a stress test: a severe economic shock, political upheaval, a public health crisis or an ecological catastrophe. China may be rising, but no one really knows whether it can fly.
Bush's Indian Ally Beyond the invasion of Iraq, few of Bush's decisions have as much potential to shake the international order than his nuclear deal with India, supporters and opponents agree. This agreement was "the big bang," designed to bring historically nonaligned India firmly into the U.S. camp. The debate over the deal has pitted against each other two powerful national security goals -- the desire to stop the spread of nuclear weapons and the desire to counter the rise of China, in this case by accelerating New Delhi's ascent as a global power. At a time when even friendly governments are quick to distance themselves from the United States and its pugnacious, embattled president, India is a strategic maverick. The former firebrand of the Non-Aligned Movement has chosen this moment to forge a close partnership with Washington and to speak up positively about American power in world affairs. India is the new China in the eyes of the Bush administration, which has promised to help this once-slumbering Asian giant develop into one of the world's five or six major economic and political powers. That undertaking has instilled a new sense of security in the Indian capital and erased long-standing tensions. During her appearance before the Senate Foreign Relations Committee -- which wanted to know more about the India nukes deal -- Condoleezza Rice had effusively praised India. "India's society is open and free," the secretary of state said. "It is transparent and stable. It is multiethnic. It is a multi-religious democracy that is characterized by individual freedom and the rule of law. It is a country with which we share common values. India will soon be the world's most populous nation, and America's exports to India have doubled in only the past four years. And of course, India is a rising global power that we believe can be a pillar of stability in a rapidly changing Asia. In other words, in short, India is a natural partner for the United States." Why should India, with a spotless nonproliferation record, be denied access to U.S. civilian nuclear technology for electricity, while China -- which helped Pakistan and Iran in their efforts to acquire nuclear weapons -- can have it? The inequitable structure of the nuclear Non-Proliferation Treaty (NPT) has resulted in built-in discrimination in favor of China and against India that has made it necessary and justifiable for the administration to conclude its civilian nuclear cooperation agreement with New Delhi. Membership in the nuclear 'club' was not based on justice or morality or strategic judgment or politics but simply on circumstance: Whoever had figured out how to build nuclear weapons by 1968 was in." India would be able to buy foreign-made nuclear reactors if it opened its civilian facilities to international inspections -- while being allowed to substantially ramp up its ability to produce materials for nuclear weapons. Under the agreement, India would open 14 of its 22 reactors to international inspections by 2014, with the rest reserved for military use. This was a major diplomatic achievement by U.S. negotiators; in fact, the Manmohan Singh government in New Delhi is being bitterly attacked for accepting a "second class" status that does not apply to China. India is moving from a past of shaking an angry finger in the American face to providing a helping hand for U.S. power in the future. The Senate and House should move expeditiously to set this transformation in motion. US is "probably going to support this" because the downside of ruining relations with India by rejecting the deal is worse than accepting a problematic agreement. A
New Generation of Pilgrims Hits India's Hippie Trail “There ain't nothing like this in the real world. Come to Goa. Change your mind. Change your way.” It's hard to imagine a better jingle for this sandy strip of India's western coast, a venerable Catholic-Hindu enclave where American hippies came to turn on, tune in and drop out in the late 1960's, and where globe-trotting spiritual seekers, party kids, flag-wavers of the counterculture and refugees from the real world have fled ever since. The beer-drinking throng, which appears to include European rock chicks with nose rings, goateed Israeli beatniks, Australian Green Party voters and a miscellaneous coterie of hipster backpackers in every imaginable type of sandal, nods in rhythm as the music resounds along Anjuna Beach. It's a place where the palm trees bear a strange fruit —fliers for crystal therapy, Ayurvedic healing and rave parties — and every road seems to lead to an organic restaurant or massage clinic. At the yoga centers, postures are manipulated by top Indian and international instructors. In clubs, where trance music is the favored genre, D.J.'s carrying myriad passports provide the mix. Bodies receive needle-inked adornments at skin-art parlors; minds seek enlightenment, or at least expansion, at many meditation clinics. Foreigners have flocked to tiny Goa — whose statewide population of 1.4 million is about one-tenth that of Mumbai, 300 miles north — ever since the Portuguese established a Spice Route colony there in the 1500's. The Indian Army reclaimed Goa from Portugal in 1961. But new colonists, the Haight-Ashbury crowd, soon showed up. Seduced by the same landscapes that appeared in Portuguese spyglasses centuries earlier — untouristed beaches, green jungle, dramatic cliffs — the former flower children traveled overland on "magic buses" from Europe and created in northern Goa a free-spirited, budget-friendly new world among the laid-back native Goans. The village of Anjuna became its wildly spinning center, with the quieter communities of Arambol and Vagator emerging as hemp-clad satellites. The result is the globe's most enduring and constantly adapting tropical getaway for alternative living. When the summer monsoon blows past, the world's fringes unite. On a Wednesday in November, a chain of minivan taxis and autorickshaws is disgorging bodies into Goa's most celebrated playground, the weekly Anjuna flea market. Started decades ago by Anjuna's hippie community (for whom it was a vital form of income), the humble local enterprise has mushroomed into a sprawling international affair. Many of the hundreds of closely packed stalls are now run by vociferous sari-clad Indian women in jingling jewelry, but the carnivalesque atmosphere has multiplied. Stalls burst with carved Hindu deities, richly colored textiles and bins of pungent saffron and coriander. Indian women with syringes provide swirly henna tattoos. A white-bearded Australian man passes out fliers for Reiki healing. "It's your pathway to God," he says. Navigating the come-ons is the latest wave of Anjuna's anti-establishment arrivals, from ponytailed Finnish rockers to cornrowed Iranian girls. Mixed within the throng is another curious species: middle-aged European package tourists. (The towns of Baga and Calangute, just south of Anjuna, have exploded into an Indian Cancún in recent years, troubling their northern neighbors.) Sipping cold drinks at a makeshift cafe, a 30-ish couple from Slovenia, Polona Volf and her boyfriend, Bostjan Mohar, survey the pageant. "We wanted to go to Bali," says Mr. Mohar, a special-ed teacher in a tank top and shorts. "But we saw a documentary called 'Last Hippie Standing,' so we changed our plans." "I've been dreaming about coming here since I was 14," says Omri Lauter, a shaggy-haired unshaven Jerusalem native and trance music fan who looks to be around 25. The swirling crowds surround his cross-legged perch on the ground. "This is like an Eden." Come daylight, Goa's dedication to partying is matched by its dedication to the healing arts, the yang to the night's yin. At Purple Valley yoga center, rejuvenation might take the form of ashtanga poses or vinyasa flow exercises, two of the daily courses offered. The leading name on Goa's yoga circuit, the center has brought in pretzel-limbed luminaries from the globe's four corners, including the sometime teacher of Madonna and Sting, Danny Paradise. But Goa's most authentic spiritual experiences require a taxi ride into the past.Snaking south into the lush Goan countryside, the cracked asphalt roads out of Anjuna pass scenes of daily Indian life that seem a world away from the Birkenstock-trod paths behind: fires burning amid roadside shanties; little boys playing cricket in an overgrown field; elderly Hindu women walking barefoot with baskets on their heads; ancient peepul and banyan trees. The succession flickers quickly past the half-lowered window like film images carried by the warm breeze. The heads seem to bow especially low upon entering the Basilica of Bom Jesus in Old Goa (Baroque). The reason for their reverence lies in a deep alcove, where a fabulously wrought silver casket holds the remains of the most famous Western spiritual seeker ever to reach Goa's shores: St. Francis Xavier. A few miles farther south, outside the tiny village of Priol, the faith changes from Christian to Hindu. Wearing colorful saris and Madras shirts, Indian travelers carrying wreaths of orange flowers stream into the 17th-century Shri Mangesh temple and lay down their offerings. The air hangs with incense and quiet muttering. Old women selling bananas work the crowds outside. According to legend, Shiva —Hinduism's supreme creator and destroyer — once played a game of dice against his wife, Parvati, and lost everything. Dejected and unburdened of his worldly things, he did what many have done since: he took refuge in Goa, on the spot of this very temple. Parvati eventually followed and beseeched him to return. He agreed, and they were reunited. Shiva, you might say, came to Goa, changed his mind, then changed his ways. |
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