Thursday, March 25, 2010

This is IT

For years, the Chinese Communist Party has benefited from a tidal wave of foreign investment in a slew of sectors, none more dramatic than that in information technology. The cadres had high hopes that IT firms from abroad - unable to resist the lure of "one billion customers" - would come banging on the door of Zhongnanhai, hat in hand and ready to little the information superhighway with whatever tolls or lane restrictions the Communists demanded. Instead, IT may just be the sector that points to the regime's future demise.

It all began with Google, who reacted to the CCP's refusal to address their concerns about censorship and hacking by shifting their search engine base to Hong Kong, where (for now) speech is still largely free, and self-censorship is not demanded (Washington Post). What this means for "one country, two systems" (or, as it has increasingly become, one country, one-and-a-half systems) remains unclear. It's reflection on the business environment in Communist China was far more revealing.

In effect, Google announced to the world that the Communist tyranny was incompatible with its business model. This makes Google arguably the first - and inarguably the largest - firm to make that decision. It shattered the myth that the CCP is a business-friendly regime, while putting a much-needed focus on how the Communists distort the market with their political objectives - to say nothing of their taste for corruption.

Google may not be alone for long. GoDaddy, an internet-domain firm best known in America for advertisements floating somewhere between provocative and bizarre, told a Congressional committee that CCP regulations for domain registration - including one that requires a domain buyer provide photo identification - left them "concerned for the security of individuals" (Daily Telegraph, UK), enough so that they could follow Google out the door.

An even bigger surprise came from India, where Dell is opening up a new computer production plant. According to India's Prime Minister, this could be the start of a dramatic shift (same link):

Mr Singh told the Hindustan Times: "This morning I met the chairman of Dell Corporation. He informed me that they are buying equipment and parts worth $25 billion from China (£16 billion). They would like to shift to safer environment with a climate conducive to enterprise with security of legal system."

. . . According to the Indian media, tax breaks given to Dell make it cheaper for the company to supply the Middle East, Africa and Europe out of India, rather than China.

Read that last line from Singh very carefully: "They would like to shift to safer environment with a climate conducive to enterprise with security of (a) legal system." That is clearly a shot at the Communist tendency to treat the Party card as a license to steal. It appears Michael Dell is getting frustrated with the lack of genuine rule of law in Communist China. If Dell follows through on the Chairman's apparent thinking, it would be the latest and most dramatic example of a growing investment trend away from Communist China in favor of democratic India.

Lest anyone think these are isolated incidents, a new poll from the American Chamber of Commerce revealed that a majority of foreign IT firms are unhappy with the Communist regime, and 37% of them blamed the CCP for damaging their sales. Overall 38% of all foreign firms polled "say they feel increasingly unwelcome to participate and compete in the Chinese market" (Newser).

Not that the Communists themselves are noticing. Mere days after playing the anti-American card against Google (BBC), they resorted to another heavy-handed tactic that makes so many investors squeamish - they tried to burst a housing bubble by banning all land sales (Business Insider).

Clearly, the Chinese Communist Party do not consider "a climate conducive to enterprise" as a top priority. Then again, they never have. What is different today is that many outside investors are noticing, and making decisions accordingly. Those decisions could not only put a crimp in the Communists' corrupt gravy train, but also provide an economic boost to the one rival that worries them as much as America does - India.

The cadres have literally unleashed upon themselves the hallowed (and hackneyed) Chinese curse: they have put themselves in "interesting times."

Thursday, March 18, 2010

Iraq and China

The people of Iraq went to the polls last week, and we are just now beginning to get a picture of whom they elected. The election tells us many things, not just about Iraq, or even the Middle East, but about democracies in general, and whether governing with the consent of the governed is a concept that can take hold in China (hint: it can).

For decades, the Chinese Communist Party has insisted that "Western-style democracy" could not take root in its country. China was just too different, too special, and essentially too unique for such a thing to work. Never mind that the group of islands just across the Taiwan Strait - islands that CCP members insist are as Chinese as they are - have managed to build and maintain a functioning democracy for fourteen years, with not one, but two transitions of power from one party to another. Never mind that Hong Kong actually had a democratically elected City Council in place when it passed into CCP control, and that it was the CCP, not the people of the city, who limited and restricted democracy there. Never mind that with every day these contradictions continued, the notion that "mainland China" was no different from Hong Kong or Taiwan sounded stranger and stranger, compromising the CCP's own nationalist agenda. All that mattered was that mainland China was unsuitable for "Western" politics.

Of course, even the CCP noticed that the above seemed a little weird, so they changed the subject by focusing on other places outside of Western Europe where the people were not allowed to choose their own leaders and holding them up as paragons: the mullahcracy of Iran, the military junta in Burma, the al-Qaeda friendly regime in Sudan, the Ba'athists in Syria, at times even the Taliban itself, and - of course - Saddam Hussein. Every tyranny was another example of the folly of "Western-style democracy" outside of the West.

This is where Iraq's second election comes in.

For years, Iraq's painful experiment with popularly elected government seemed to confirm the CCP's self-serving notions. As prized as the ballot was to Iraqi voters, the politicians seemed to use that power largely to aggrandize themselves, enrich their connected friends, settle old ethnic and religious scores, and generally tear the country apart. Adding to the CCP's macabre glee was the fact that their client regime in Iran was well-positioned to pick up the pieces.

Then something happened, starting about three years ago: Iraq's political process began responding to the people's needs and wants - exactly what critics from the CCP on down insisted it could not do.

It started with the formation of a functioning political opposition (al-Iraqiya, or the Iraqi National Movement) under ex-Prime Minister Iyad Allawi. The rise of Allawi as de facto opposition leader created a dynamic where voters knew they could hold their government accountable without resorting to violence or terror. Within two years, the government was not only responding with better services, but Prime Minister Nouri Maliki himself split off from the religious coalition that helped install him and created his own secular cross-faith coalition.

This month, Maliki and Allawi are far and away the leading vote-getters in Iraq. Which one will lead the country is still unknown, but clearly the Iraqi government has become and will continue to be more accountable and responsive to the people.

What caused it? The rise of an opposition.

That's what the CCP fears; that's what makes "Western-style democracy" a real threat to them; the presence of a competitor for votes that can't be arrested, beaten, or pumped full of pharmaceuticals. In the long-run, it means the end of CCP rule. Even in the short-run, it would force the Communists to attempt honest and responsible government - an anathema to a regime where the Party Card is a coveted licence to steal.

So Iraq is a reminder of how important democracy is, and how dangerous it can be for tyrants. However, we cannot simply declare victory and rest on our laurels. The CCP knows how dangerous democracy can be, which is why they have spent so much time trying to restrict it at home and limit its influence abroad. Tyrants around the world can count on the CCP to help them because the CCP understands that each tyranny that survives give them more time to rule over the Chinese people.

Thus, every democracy is a threat to the CCP, and in response, the CCP has made itself a threat to every democracy, from the oldest (the U.S. and U.K.) to the youngest (Iraq, among others).

Thursday, March 04, 2010

On the State of Play

The Zeitgeist had two more examples of where we are vis a vis Communist China: the threat is understood by most to be real, but perhaps stronger than it truly is. Unfortunately, those who know enough to understand how weak the Chinese Communist regime is still use that fact to ignore - to out peril - the Party's motives.

Our first example is unusual - broadcast television. CBS' NCIS: Los Angeles is a new favorite in the household, with plots usually surrounding your typical crime drama with a military veneer. On occasion, the show ventures into modern geopolitics - almost always regarding the Wahhabist-Ba'athist-Khomeinist War (better known as the War on Terror).

This week, however, the emphasis was on "almost," as viewers were treated to one of the most anti-Communist TV hours since the PNTR debate of a decade ago. An investigation of a naval officer's suicide uncovers an espionage ring of whole families who agree to raise children as intelligence agents in exchange for life in America - and permission to have more than one child (the officer himself was the would-be spy; he took his own life rather than betray the United States).

Now, whether Communist Chinese intel is smart enough (perhaps) and patient enough (absolutely) to hatch a plot like that isn't the point. Here's what is: the major themes of the anti-Communist movement - the danger of CCP espionage, the plight of regime victims bullied into becoming regime agents, the horrifying "one child" fiasco - were aired across the country on a major network for all to see. If even Hollywood is prepared to accept the Communist Chinese threat, Washington can't be that far behind.

Unfortunately, so long as Washington continues to attract the Tom Friedmans of the world, it will be a maddening place in the interim. This is was the Washington Post piece by Steve Mufson and John Pomfret is so helpful - to a point. The former Post correspondents in Communist China detail the holes in the "Chinese century" theory. Among the juicier nuggets . . .

Projections of China's economic growth seem to shortchange the country's looming demographic crisis: It is going to be the first nation in the world to grow old before it gets rich. By the middle of this century the percentage of its population above age 60 will be higher than in the United States, and more than 100 million Chinese will be older than 80. China also faces serious water shortages that could hurt enterprises from wheat farms to power plants to microchip manufacturers.

And about all those engineers? In 2006, the New York Times reported that China graduates 600,000 a year compared with 70,000 in the United States. The Times report was quoted on the House floor. Just one problem: China's statisticians count car mechanics and refrigerator repairmen as "engineers."

In other words, the CCP isn't nearly as strong as so many fear.

Unfortunately, Pomfret and Mufson make an increasingly common mistake:
Some decades ago, Americans were obsessed with another emerging Asian giant: Japan . . . But then something happened. Japan's economy lost its game. The 1990s became a "lost decade," so much so that during the toughest days of the recent financial crisis, Japan was invoked as a cautionary tale, lest we not do enough to jump-start our economy.

Indeed, I remember when fear of a rising Japan seemed to consume America. There's only one problem: Japan was an American ally, a fact that always made the Nippo-phobia (assuming that's a word) overblown and ridiculous.

The CCP, by contrast, is an American enemy. This motive, lost on Mufson and Pomfret but not on the Writers' Guild, makes all the difference.

In the 1970s, European Communism was an economic basket case, too. The Soviet Union had a leader growing more and more detached from reality as his people suffered deeply. Yet the Soviets, like the CCP today, saw these weaknesses as reason to expand their power around the globe (in order to counteract the weakness), and because they came up against an unsure and self-doubting America, the decade that was supposed to spell out their doom turned into their best shot at global domination.

The Chinese Communist Party is in similar desperate straits, and may be facing a similarly distracted and despairing America. The CCP's weakness should reassure us about our position, but not reassure us on the Party's motive.

That last part is still something Washington hasn't quite figured out. That Hollywood - of all places - has is a good sign, but also a reminder of how far we still have to go until China is once again free and America is at last secure.