Monday 30 September 2019

Refuting Brian Kennedy

TL;DR: Brian Kennedy, “China Expert",  presents a false or misleading picture of China. I refute it. 
Disclosure: I am 43 years in Asia, 20 years in diplomacy and trade for the Australian government, 23 years in China business consultancy, corporate business and entrepreneurship.
Below may read as an apologia for Chinese government. It’s not.  I’ve been a stern critic of the Chinese government, eg [31/10/17] [21/11/18] and [2/12/18].   I called out the Uygur imprisonments as soon as I knew of them.
Like Guo Wengui, interviewed by Kyle Bass, I like the Chinese and Chinese culture, but hate the Beijing government, especially Xi Jinping. (Most often I tend to say: “I hate” Xi Jinping).
Still, what we need a clear-eyed hard-nosed take on China. Neither an apologia nor a demonisation. Focus on reciprocity and not being a sucker.
ADDED: some folks ask me why I watch Adams. “Isn’t he a Trump supporter?”  Well, yes, but he’s more than that. As he says, he’s "to the left of Bernie". He has some interesting ideas, provocative. Some quite crazy too, which he’ll admit himself. But I watch him for his interesting takes on life.
The numbers are reference to the minutes in the video above, rounded to the below minute.

Factual errors:

6’  No recourse in China: not so. China is no 18 out of 181 countries in enforcing contacts according to World Bank. Here. It’s a matter of getting your contract right.

9’ China historically no rule of law only warlords:  not so.   The warlord era was during Republic of China.  China has the oldest legal system in the world. Moreover Confucianism sets much store in doing the right thing, being fair.

23’ Keeping HK people as hostages like Uygurs:  not so.  This is a violence to the facts on the ground and we’re on the ground.  China stands out by being hands off.  (so far...)

26’ People can’t see outside media: not so. They can get VPN easily.  I have done so. China visiting friends have done so.

27’ China students in the US is 50-60,000:  not so.  It’s 350,000.  As to whether it’s good, that’s for judgement, but overall people would say it’s good.  Puts a great number of US-friendly people in China.

33’ China defaulted on sovereign debt:  not so.   At least the People’s Republic of China (“Communist China”).  The one that defaulted was Republic of China (aka Taiwan) which the US continued to recognise until 1972. It is they who owe the debt, but presumably their big purchases of US military goods has set it off.  If US criticises it nonetheless, it should recall its own culpability in defaulting on Confederate debt.  (And note that it’s hardly unique. Many countries have defaulted...). Moreover, was not the PRC entitled to feel aggrieved for the US’s support of their enemies, the KMT?
Still, it might be good to use as a surprise bargaining chip.

Dodgy judgements

5’  It’s China that caused the loss of jobs.  Many analyses put the blame more on technology, up to 80%  India is also destination for millions of the jobs offshore, in service industries (China more in manufacturing).

6’ and 11’ China is a bad actor on world stage, a leech: This ignores the times China has helped the world in times of crisis, for example:
  • 1997 : Asia financial crisis China provided liquidity to the region.
  • 2003 SARS in Hong Kong: China helped by injecting cash and increasing tourism.
  • 2008: GFC. China was helpful by buying US bonds. George W asked China to buy US treasuries and promised would not devalue US$. Devalued a week later. China sucked it up.
  • Back in time: China supported allies in both World Wars. China was a haven for Jews during the Holocaust..
22’ What can China do that India can’t:  India is much harder to do business in than China.  I know from personal experience. Also there’s the World Bank assessment that shows India way down from China.  People didn’t go to China because they were doing them a favour.  It was because overall it offered a better deal.

37’ A country score for China: Adams’ suggestion.  This is what the likes of Fitch and Standard & Poor already do

What I would say in answer to the question...

3’  What is the thing that US people should know about China?

My own answer would be that China sees itself as returning to its previous preeminence. Was the world leader, in all ways, for millennia, until Opium Wars.  China entitled to feel aggrieved at the results of Opium Wars, the Hundred Years Humiliation. US deeply involved. [Here].
Now aiming to be regional hegemon.  Mearsheimer / Hugh White debate (Hugh old colleague of mine).  China fears “chaos”. 怕乱。Was heading to more openness until the meltdown of Soviet Union when it decided it had to reassert central control would you rather have millions of Chinese tourists or millions of Chinese refugees.
China’s rise to regional hegemon will inevitably mean static and friction between them and the US.  That’s just the way it is. Not Chinese perfidy.
Hong Kong problems include housing expensive. Main reason for that is cheap money which is a US policy.

22’ Decoupling from China. Can go to India? My experience with DFS when we did an assessment that China was way better than India. No competition. And India place on WB business ranking, below China.  People didn’t go to China to do a favour to China. They go there because they offer a better deal. And, by the way,  80% of loss of jobs in the US was tech related, by most accounts.

Things I agree with 

16’ Reciprocity: I agree 100%.  I’ve always supported full reciprocity. It would solve myriad problems.
I did so when I was in Austrade back in the nineties and we were talking the beginnings of our trade deal. But I was not listened to (clearly I didn’t have the good persuasion skills....) Full reciprocity ought to be our call sign.
ADDED: Opium Wars shifted massive wealth from China to the West.  25% of UK wealth in 19th C came from Opium. Queen Victoria was the greatest drug dealer of all time.  US Colleges involved