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The Nicaraguan Canal

26 June 2013

The Nicaraguan Canal

By Gwynne Dyer

On 11 June, the Nicaraguan parliament voted in favour of building a $40 billion canal across the country connecting the Atlantic and Pacific Oceans. Since the country is dirt poor, the money would have to come from international investors. It would be raised by a Hong Kong-based firm, HKDN Group, which in return would get the right to build and run the canal for 50 years. But nobody outside Nicaragua took the plan very seriously.

On 15 June, Nicaragua’s president, Daniel Ortega, and Wang Jing, the owner of HKDN, signed a contract that gives the Central American nation 51 percent of the company’s shares. Wang said the capital could easily be raised from Chinese companies and international banks – but since his only business experience has been in running telecommunications firm Xinwei Telecom, again nobody took much notice.

So on 25 June, Wang went public. Speaking in Beijing, he said that he had already attracted global investors. Work on the canal would start in 2014, and it would be open by 2020. “We don’t want it to become an international joke, and we don’t want it to turn into an example of Chinese investment failures,” he said, adding that returns on the project were “sure to make every investor smile broadly.”

Promoters always talk like that, and there would still not be much reason to take Wang and Ortega seriously if it were not for one fact: Chinese businessmen do not launch projects of this scale without the support of the Chinese government. The risk of embarrassment is just too high.

Wang denies that he has official support, of course: “I am a very normal Chinese citizen. I couldn’t be more normal.” But if Beijing really is behind the project, then it may actually happen. So what would be the implications of a 286-km. (178-mile) waterway connecting the Caribbean with the Pacific via Lake Nicaragua.

For Nicaragua, they would be huge. The Nicaraguan government claims that work on the Great Interoceanic Canal and associated projects – a “dry canal” freight railway, an airport and two duty-free zones – could double Nicaragua’s GDP and triple employment by 2018. In a country that still does not have a proper highway connecting its two coasts, that would change everything.

For Panama, whose existing canal has been the mainstay of the country’s economy for a century, the competition would be very serious. A $5 billion project to double the Panama Canal’s capacity by building a third chain of locks across the isthmus is nearing completion, but it will still be restricted to taking ships of 65,000 tons or less.

The rival canal in Nicaragua would be able to accommodate the new generation of ships ranging up to 250,000 tons, but there will not be enough shipping to keep both canals in business unless world trade continues to expand rapidly. In any case competition in transit rates would be fierce, and it might well come to pass that neither canal was very profitable.

Then there is the environmental question. The new route would cross Lake Nicaragua, the region’s largest fresh-water lake, bringing with it not only pollution but the risk of introducing salt-water species that could disrupt the lake’s ecology. But if it is forced to choose between economic growth and environmental purity, there is no doubt that Nicaragua’s government would choose growth.

The biggest question, however, is strategic. The United States built the Panama Canal and ran it for many years. Two-thirds of the cargo that goes through the Canal comes from or is going to US ports, and American warships still have the right to jump the queue of ships waiting to go through.

As a country with coasts on both the Atlantic and the Pacific, the United States sees control of the fastest way between the two oceans as a high strategic priority. Despite the hand-over of the existing canal to the Panamanian government in 1999, at the moment the US still has that control. It would have far less control over a Nicaraguan canal, and will doubtless do its best to derail the project.

That’s an inevitable strategic reflex, but it is not necessarily the case that a Nicaraguan canal would really lessen the US Navy’s strategic dominance in the region. Nothing is more vulnerable than a canal in wartime, and even in confrontations where force is not yet being used canals are easily blockaded. And although the Chinese navy no doubt enthusiastically backs the Nicaraguan project, it’s hard to see what real strategic advantage it would gain.

The new canal is certainly feasible from an engineering point of view. It may be viable economically, depending on cost factors that have not yet been calculated and on the rate of expansion of world trade. But its fate will probably be decided by the Chinese government’s willingness to back what is, for China, a vanity project.

And that, in turn, will depend on whether China’s economy remains strong enough to afford such an indulgence. At the moment, I wouldn’t bet on it.

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To shorten to 725 words, omit paragraphs 2 and 9. (“On 15…notice”; and “Then…growth”)

 

 

Taiwan: Waiting for China

15 January 2012

Taiwan: Waiting for China

By Gwynne Dyer

The most important thing in Taiwanese politics is always left unsaid. When I interviewed Ma Ying-jeou in 2008, just before he won the presidency for the first time, he was happy to talk about the details of his plans for better relations with the People’s Republic of China: direct flights, more trade, and the like. But ask him about the long-term future, and all you got was platitudes.

Ma has just been re-elected for a second term as president (14 January). “We’ve won,” he told jubilant supporters. “In the next four years, ties with China will be more harmonious and there will be more mutual trust and the chance of conflict is slimmer.” All true, but it still does not address the question of where all this harmony is taking Taiwan.

In his first term, Ma did everything he promised. Direct flights to the PRC resumed in late 2008, a 2009 agreement between Taipei and Beijing facilitated investment flows between the two countries, and a comprehensive trade deal was signed in June 2010.

Ma’s victory this time was smaller than in 2008: then he had a lead of seventeen percentage points; now he’s down to six. But that’s probably due mostly to the country’s slow economic growth and the widening income gap between rich and poor in recent years. There is no evidence to suggest that he lost votes because he was getting too close to China.

So here’s the question. If Ma, like almost everybody else in Taiwan, has no desire to live under Communist rule, then why is there majority support for closer ties with a giant neighbour (about 65 times as many people) that refuses to recognise the legitimacy of Taiwan’s government? Beijing even threatens to attack Taiwan if it ever declares independence from China. What can the Taiwanese be thinking?

This is where it all goes silent, except for the platitudes. But with a little thought you can figure out the logic behind the position of Ma and his supporters in the Kuomintang Party.

They know that Beijing could do terrible damage to Taiwan if it attacked, but they also know that it won’t actually do that unless Taiwan formally declares independence from China. Beijing is willing to live with the present ambiguous relationship for a long time to come, if necessary.

Meanwhile, Taiwan has to make a living, and it has been losing market share to China’s cheaper exports for two decades now. The favoured solution is to invest in mainland industries and subsidise Taiwan’s much higher living standard with the profits. Mainland Chinese investment in Taiwan’s hi-tech sector would not hurt, either. Time for better relations with the mainland, then – but what about the future?

The thinking goes like this. We can cozy up to China now because it serves the interests of a great many people on both sides, and it doesn’t really endanger our de facto independence. Taiwan is not disarming, and China still can’t move an army across the 180-km (110-mile) Strait of Taiwan; its navy isn’t strong enough. As for the long run, it will take care of itself, because the Communist regime in Beijing will not last forever.

Nobody knows when it will end, but most politicians in Taiwan have a fair idea of how it will end. Sooner or later the Chinese economy will stumble into a recession – the enormous housing bubble in China is currently the most likely cause – and unemployment will soar. People’s mortgages will be underwater, banks will fail, and the regime’s credit will run out.

Ideology is dead in the People’s Republic. The regime insists that it gives the people “socialism with Chinese characteristics,” but in fact it gives them “unbridled capitalism with Chinese characteristics” – including a plague of corruption that mainly benefits Communist Party members. All this is tolerable while everybody’s income is rising; it is no longer acceptable when incomes are falling.

China is a capitalist country, and it has not been granted some special exemption from the business cycle. Every once in a while, in capitalist economies, a major recession comes along. This is hard enough to manage in a democracy. It is potentially lethal for a dictatorial regime whose only remaining credibility is its reputation as an economic miracle-maker.

So Taiwan’s best strategy is just to wait. Make deals on trade and investment, keep talking to Beijing to reduce the risk that some hothead will launch missiles at Taiwan, but don’t get into talks about reunification with a Communist-ruled China. It’s not hard to avoid such talks, since Beijing doesn’t recognise the Taipei government as a legitimate negotiating partner.

And wait. The wheel will turn, and eventually there will be a different, democratic China that Taiwan can safely rejoin (though it will certainly still insist on retaining a lot of autonomy). Meanwhile keep the mainland regime sweet, and make some money.

The United States government, by the way, completely agrees with this unspoken strategy. The last thing Washington wants is to be dragged into a war with China by its defence guarantee to Taiwan, and it was quietly delighted to see Ma win the election. So was Beijing. No crisis here.

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To shorten to 725 words, omit paragraphs 3, 10 and 15. (“In his…2010”; “Nobody…out”; and “The United…here”).

 

 

The Mortality of the Dalai Lama

26 June 2009
The Mortality of the Dalai Lama
By Gwynne Dyer

“The Dalai Lama equals non-violence, and without him there would be violence,” said Lhadon Tethong, executive director of Students for a Free Tibet, a couple of months ago. In Beijing, Chinese writer Wang Lixiong agreed: “If…the Dalai Lama does not return to Tibet before he dies, the moment that he dies will see general riots across the Tibetan areas of China.” And he is going to die, probably fairly soon.

The Dalai Lama will be 74 next month, and he has been in hospital three times in the past year. He presumably believes that he will immediately be reborn as soon as he dies, but the traditional search for the child who is his next incarnation could take years. Waiting for that child to grow up and become the Tibetans’ next leader will take several decades. That is a big political problem.

One measure he has already taken to ease the difficulties is to announce that he is most unlikely to be reborn in Chinese-ruled Tibet, which greatly narrows the search area for his successor: there are only 120,000 Tibetans in the diaspora, mostly descendants of the 1959 refugees. Three-quarters of them live in India, and most of the rest live in Nepal (15,000), the United States (5,000), Canada (3,000) or Switzerland (2,000).

But this almost guarantees what was already quite likely: that the Chinese authorities will “find” a rival reincarnation within Tibet and promote him as the next legitimate Dalai Lama. Even if that does not happen, the twenty-year gap while the current Dalai Lama’s successor matures leaves a political vacuum that must be filled one way or another, and he long ago suggested that he might name a regent to exercise his authority during that period.

The core of the problem is that his role as defined by tradition embodies both political and religious authority. Religious questions rarely require instant answers, and Tibetan Buddhism has flourished for many centuries despite these recurrent twenty-year gaps in the highest leadership job. Political decisions, on the other hand, need to be made promptly — so maybe the solution is to separate those two roles.

The Dalai Lama has been raising this possibility for years, only to have it repeatedly rejected by his adoring followers. He brought it up again at a congress of the Tibetan exile community not long after last year’s bloody anti-Chinese riots in Tibet, saying that his moderate, “middle-way” approach to the Chinese authorities in Beijing, seeking only autonomy and not independence for the country, was having no success.

Maybe it was time for him to take a back seat and let the younger generation of leaders in the community deal with that thorny problem as they saw fit, he suggested. The congress rejected the suggestion, reaffirming him as their political leader. They simply could not imagine a uture without him.

The Dalai Lama himself, however, knows that such a future will
arrive. So he has now released a video in which he urges the Tibetan exile community to embrace democracy and stop depending on a political leader who is essentially (at the risk of sounding disrespectful) picked at random.That may serve for religious purposes, but for the material world something different is required.

“The Dalai Lama held temporal and spiritual leadership over thelast 400 or 500 years. It may have been quite useful, but that period is over,” he says in the video. “Today it is clear to the whole world that democracy is the best system despite its minor negativities. That is why it is important that Tibetans also move with the larger world community.”

It’s a nicely crafted statement that does not trample on anybody’s religious sensitivities, but what it means is that political leadership of the Tibetan exile community must move from the Dalai Lama to an elected prime minister. Such an office has existed since 2001, but until now its holder has deferred to the Dalai Lama in all important decisions. That has to stop, says the man himself — so maybe now it actually will.

That is a neat solution to the succession problem, but it has
implications that should concern the Chinese government. A Tibetan prime minister elected solely by the exile community cannot hope to have the political authority of a “living Buddha” within Tibet.

For almost half a century the Dalai Lama has used that authority to restrain Tibetans from open revolt against China, always seeking negotiations with Beijing on Tibetan autonomy and discouraging talk of outright independence. A prime minister elected only by the diaspora could not do that even if he wanted to — which he might not.

China has never appreciated the Dalai Lama’s services, of course. In classic imperial style, it assumes that material improvements in the living standards of its subjects will make them forget their nationalist aspirations. When it turns out that Tibetans have not forgotten them, as was brutally demonstrated in last year’s anti-Chinese riots in Lhasa, Beijing blames “outside agitators” and “plotters” like the Dalai Lama, whom it calls “a jackal clad in monk’s robes.”

In fact, he has been feeding tranquilisers to the Tibetan
population for decades, in the (probably accurate) belief that Tibet cannot win its independence by violence. But a lot of Tibetans would like to try,and Beijing will miss the Dalai Lama when he’s gone.
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To shorten to 725 words, omit paragraphs 3 and 4. (“One measure…that
period”)

China: Trouble in the Colonies

14 July 2009

China: Trouble in the Colonies

By Gwynne Dyer

“The incidents in China are, simply put, a genocide. There’s no point in interpreting this otherwise,” said Turkey’s Prime Minister Recep Tayyib Erdogan last Friday. He was talking about the deaths of at least 184 people in the recent street violence in Xinjiang, the huge province that occupies the north-western corner of China.

A majority of Xinjiang’s people are Uighurs who are Muslims and speak a language closely related to Turkish, so Erdogan’s comments were bound to appeal to his audience in Turkey. The Chinese government, predictably, condemned his charges as “irresponsible and groundless.” The Chinese government was right – but also terribly wrong.

It wasn’t a genocide. The deaths of 184 people, for whatever reason, do not constitute a genocide. Erdogan was claiming that there had been a genocide against the Uighurs, but three-quarters of the people killed in the riots were Han Chinese.“Genocide” is a word that should only be used very precisely, and Erdogan owes Beijing an apology.

Even if the Chinese authorities exaggerated the number of Han dead and understated the Uighur death-toll, as Uighur nationalists abroad claim, there is no doubt that this violence started as an Uighur attack on Chinese immigrants. However, Beijing owes the Uighurs more than just an apology, for it is Chinese policy that drove them to such desperate measures.

The Chinese authorities genuinely believe that the development they have brought to Xinjiang has been for the Uighurs’ own good, even if it has also brought huge numbers of Han Chinese immigrants to the province. But they are certainly not distressed to see this sensitive frontier province that was 90 percent Uighur and Muslim sixty years ago become a place where a majority of the residents are instinctively loyal Han Chinese.

More importantly, they lack the cultural imagination to see that this process will be profoundly a lienating for the Uighurs. It may sound preposterous, but most of the men who rule China simply could not come up with an answer to the question: “Why don’t they want to be Chinese?” So if there are anti-Chinese riots in Xinjiang, it must be “outside agitators stirring up our Uighurs.”

That is how Beijing explained the riots to itself and to the nation. As Xinjiang’s Communist governor, Nur Bekri, said in a televised address, exiled Uighur leader Rebiya Kadeer “had phone conversations with people in China on 5 July in order to incite [the violence].” Beijing explained the even bloodier anti-Chinese riots in Tibet in March of last year in exactly the same way, except that that time the outside agitator was the Dalai Lama.

What’s more, most Chinese believe it. They have been schooled to believe that Xinjiang and Tibet have been an integral part of their country since time immemorial. They also believe the Uighurs and Tibetans who live in those places are (or should be) profoundly grateful for the development and prosperity that have come to their provinces as a result of their membership in the Chinese nation.

The gulf of incomprehension is so vast that it is reminiscent of the gap between the Russian and non-Russian inhabitants of the former Russian empire before the collapse of the old Soviet Union in 1991. Almost all Ru ssians believed that the non-Russians were (or should be) grateful for all that had been done for them, and even resented the fact that they got more investment per capita than the Russians themselves. As for the non-Russians, they took their independence as soon as they could.

The truth is that the Chinese empire first took effective control of Tibet and Xinjiang in the same period when the Russian empire was conquering the other Central Asian countries. Whatever vague claims to “suzerainty” Beijing can dredge up from the more distant past, they do not convince the Uighurs and the Tibetans themselves, who would cut loose from China instantly if they got the chance.

; It’s called decolonisation, and China is the last hold-out. The only way it can ensure a different final outcome to that of the other empires is to swamp the local people with Han Chinese immigrants – and that, oddly enough, is the principal result of its “development” policies. The development creates an economy that the local people are not qualified to work in, and Chinese immigrants come in to fill those jobs instead.

The Tibetan Automous Region still has a large Tibetan majority, but in Xinjiang the Uighurs are already down to 45 percent of the population, while the Han Chinese are up to 40 percent. The Uighurs feel that their country is disappearing in front of their eyes, and they are right.

So they attack innocent Chinese immigrants, which is shameful but all too understandable. Chinese mobs attack them back, which is equally shameful and equally understandable.

It is already ugly, and it’s probably going to get a good deal uglier. The repression needed to hold down Xinjiang and Tibet may lead to increased repression in China in general, and it will almost certainly lead to more violence in the colonies.

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To shorten to 725 words, omit paragraphs 9 and 13. (“The gulf…could”; and “So they…understandable”)