Pirates, spies, soul-stealers: spirituality transformed

 

In the past decade the worldwide yoga industry has become a multi-billion-dollar business. Yet, ironically, the one country where yoga does not yet thrive commercially is the very place from which yoga is thought to originate: India. Why should this be?

This paradox emerges, in part, because the practice known as ‘yoga’ around the world is a modern invention of the globalised and capitalist 20th century. A brief look at the history of yoga may help to explain why this industry has not had a straightforward development in India.

Yoga in India has never represented an unbroken historical tradition. Although many of the postures, breath practices and meditations have their roots in classical and medieval Indian texts, the very meaning of ‘yoga’ has varied widely across texts and periods. ‘Yoga’ has been variously understood as a search to separate the spirit from bodily matter, as a quest to unite with the divine, as a tool to strengthen the nation, as a means of magic, and as a form of military training. Before the 20th century, yogis were usually depicted as sorcerers, spies and soul-stealers. They did not do very many lotus poses.

In the early 20th century Indian innovators like Krishnamacharya, began to rehabilitate yoga as a modern physical pursuit that laid important foundations for the commercially successful global yoga industry we see today. These innovative and experimental yogis drew upon Indian textual lineages of yoga, as well as the Western physical culture movement of the early 20th century. Ideas about the moral value of cultivating one’s body appealed to an Indian nationalism looking to combat colonial stereotypes of Indians as weak and effeminate.

Influential students of Krishnamacharya, such as Pattabhi Jois and B.K.S. Iyengar, continued to sow the seeds for a commercial yoga industry by ‘branding’ these emergent forms of postural yoga in the mid-20th century. They created formal institutions, named styles of yoga and authorised new generations of students to teach their particular lineages. Many (though not all) of today’s yoga institutions trace some path back to these figures.

Ironically, this new postural yoga was often most appealing to students coming from outside India. Training spaces were often populated by students from the Western counterculture who transmitted these practices back to Europe and America. Sensitive to this phenomenon, Indian tourist boards in the 21st century have explicitly marketed yoga to foreigners, with regions associated with yoga promoted as Destination Wellness.

In her memoir Yoga School Dropout, when Lucy Edge records conversations with Indians about yoga, her anecdotes are telling. In contrast to the idealised body emphasised in many globalised commercial yoga studios, Edge’s Indian interlocutors tend to think of yoga as something undramatic they do at home, like having a glass of whiskey after a hard day’s work. Usually there is a focus on breath control or meditation rather than on poses. These practices are often done for free at home, rather than in an expensive studio.

Yoga in India has also been historically promoted through robust alternatives to commercial studios. Nationalist Hindu groups have frequently run camps to introduce yoga techniques to middle-class Indians. In these camps, learning yoga is often only one first step in a larger project of religious nation-building. Religious organisations have sometimes turned to yoga as a way to make themselves relevant to ordinary people, as in the case of the Jain Svetambara Terapanth. Such religiously-sponsored forms of yoga are often much more affordable than commercial studios.

In another irony, the Indian state has been reluctant to commercialise yoga to its fullest extent because it wants to maintain yoga as an icon of Indian cultural heritage. For example, the Indian government fought against yoga entrepreneurs, some Indian, being awarded copyrights for yoga sequences in other countries.

Given the rapid growth of yoga across the world, the current situation in India is likely to change. As India’s middle class grows, the combination of stressful lifestyles, chronic illnesses and increased disposable income is apt to produce a new generation of Indians who seek the same respite in yoga as their counterparts abroad. Even the seemingly sedate yoga guided by television-savvy Indian gurus like Baba Ramdev is becoming increasingly entrepreneurial.

Yoga is also, through its promotion by Bollywood stars, beginning to appeal to an Indian youth culture. Standards of beauty and health in India are shifting from the plump ideal of a century ago to slender flexible figures. This ideal is embodied in globalised yoga and appeals to young Indians precisely because of its distance from stodgy stereotypes of ancient Indian tradition.

Yet, even though the Indian yoga industry is almost certainly set to grow, one key question lurks: are yoga studios actually all that lucrative? In the West, commercial yoga’s immersion within a rent economy makes studios very vulnerable. When rents rise, longstanding yoga studios can disappear overnight. Yoga in India is backed by religious organisations and has much more institutional stability to draw upon. But as yoga in India moves beyond religious institutions into secular commercial ones, it is likely to confront similar challenges.

Will developing yoga commercially in India destroy precisely what makes yoga powerful, and even what makes it Indian? Perhaps. There is no doubt that the race to make money from yoga has shifted the kind of cultural work that yoga does. But this doesn’t mean that yoga necessarily ceases to be a transformative pursuit.

For some, globalised yoga has enhanced rather than destroyed the ‘Indianness’ of the practice. As Indians develop their own creative responses to globalising yoga that invoke both tradition and modernity, they are not just making new kinds of money: they are making new kinds of cultural meaning. In the end, this may be the most valuable development of all.

Dr Shameem Black is a Fellow in the Department of Gender, Media and Cultural Studies at the School of Culture, History and Language in the College of Asia and the Pacific at The Australian National University. This article appeared in the most recent edition of the East Asia Forum Quarterly, ‘The state and economic enterprise’.

 

Generals probed in Xi's graft purge

The ruling Chinese Communist Party is investigating 14 generals for corruption as a nationwide anti-graft campaign widens to encompass the People's Liberation Army (PLA), official media reported on Monday.

Among those under investigation is navy Rear Adm. Guo Zhenggang, son of a former vice-chairman of the party's Central Military Commission (CMC), which commands the armed forces headed by President Xi Jinping, the country's defense ministry said in a statement.

In a brief statement on its website, the ministry said Guo, the 45-year-old son of former CMC vice chairman Guo Boxiong, is suspected of "violating the law," a phrase that is often used to refer to corruption.

Leading officers at provincial level in the PLA's navy and in the missile corps and the National Defense University were also named in the "list of tigers," inspired by President Xi's launch of a campaign targeting graft among high-ranking "tigers" and low-ranking "flies" alike.

In a commentary published separately on the same website, the official Xinhua news agency wrote: "We must act masterfully if we are to build the political will needed to reduce corruption and to curb its growth, to purge us of this disease."

"Neither tigers nor flies should have anywhere left to hide," the article said. "Only the cleansing wind of severe punishment can restore social order."

The announcement came after the CMC's former second-in-command Xu Caihou was indicted last year on bribery charges, signaling a political shift in a campaign that had previously been limited to civilian targets.

Former journalist Xu Xiang, who has reported on corruption in the PLA, and who has been following the campaign closely, said Guo Zhenggang's investigation suggests that Guo Boxiong is also likely to be implicated.

"If his own son has become a target of the anti-corruption campaign, then Guo Boxiong can't stay out of this for much longer," Xu said.

Former control weakened
The news followed months of speculation surrounding the Guo family, and Xu said it wasn't unexpected, as Xi seeks to consolidate power of his own, loosening the behind-the-scenes influence of former president Jiang Zemin.

"The PLA has always been under the control of Jiang Zemin, and nobody has been able to mess with it," Xu said. "Since Xi Jinping took office, the alternative to the anti-corruption campaign would be to take orders from Jiang behind the scenes."

Xu said corruption is so deep-rooted in the PLA that it will be hard to eradicate.

"It's extremely serious, because the network of vested interests forms a long chain, so that grassroots level troops bribe the middle-ranking commanders in exchange for benefits, and then the middle-ranking commanders use that money as a tribute to even higher-ranking officials," he said.

Veteran political affairs commentator Antonio Chiang said Guo's investigation could be a tactical move in a behind-the-scenes political game of smoke and mirrors.

"It's likely to be a smokescreen, and they probably won't even open a case against him," Chiang told RFA. "Both factional politics and military corruption have got so bad that no other country can match it anywhere else in the world, nor at any other time in history," he said.

Long-standing problem
Retired former Shandong University professor Sun Wenguang said the problem is a long-standing one for China's military.

"It's said that a lot of soldiers pay bribes to get an officer's commission," Sun said. "If a regular soldier wants to command a platoon, he has to pay for it. The problem of military corruption is definitely the worst it has ever been in history."

But he said an anti-corruption campaign like Xi's likely won't solve the endemic problem.

"The system of oversight is weak, so that it's hard to say if a lot more cases won't emerge once this campaign is over, because they haven't been properly eradicated," Sun said.

The PLA was banned from engaging in business activities during the 1990s, but has gradually begun to ignore the ban in recent years.

While China hasn't fought a war in many years, concerns are growing over its growing military assertiveness in the region, especially over disputed areas in the East and South China Seas. Critics have said corruption in the PLA could seriously affect its military capabilities.

Reported by Yang Fan for RFA's Mandarin Service and Ho Shan for the Cantonese Service.. Translated and written in English by Luisetta Mudie.

Change Coming in Vietnam?

 

Intense political year coming, with Premier Dung scrambling to stay on top

 

Vietnam faces a highly political year in 2015. Inside and outside its Communist Party, elite attention is riveted on the likely outcomes of the party congress that will convene in January 2016.

Political decisions are monopolized by the party, by law Vietnam’s only political party and “the force leading the State and society”. Current leaders are the successors of the revolutionaries who led Vietnam to independence and, 40 years ago, to unification. That’s ancient history to three quarters of the nation’s population.

The party’s claim to rule now depends on its ability to solve 21st Century problems. Though the internet has broadened the space for political discussion (and has enabled a vocal crowd of dissidents and regime critics), Vietnam’s 90 million citizens still show no appetite for political upheaval. Relative prosperity has dimmed but not erased memories of 30 years of war and the privations then and later. The Vietnamese are inclined to accept a high degree of state control as long as the party can deliver stability and prosperity.

Stability is not in question. The regime’s instruments of political suasion are pervasive. Prosperity – that is, sustaining economic growth in the order of 7-8 percent annually and distributing that growth equitably – Is less certain. Economists agree that policies that leverage Vietnam’s advantages – in particular its young and disciplined workforce – should enable explosive growth.

However, the Hanoi regime has stumbled in recent years. A bet that it could build a few state enterprises into internationally competitive companies did not pay off. At almost the same time, a misguided effort to spend its way out of global recession failed badly, leaving thousands of stalled real estate projects and saddling banks with non-performing loans. Hammered by inflation and high interest rates, the public was unhappy. In 2012, criticism of government policies was heard in every street corner cafe and seen in hundreds of dissident blogs.

In the Vietnamese party/state, power is concentrated in the party’s Politburo. Hoping perhaps to raise the public mood, Prime Minister Nguyen Tan Dung’s Politburo colleagues set him up as the fall guy. Dung came up short — reportedly 3 for and 11 against — in a Politburo vote. The Prime Minister appealed to the Party’s 200-man Central Committee, called in all his IOUs and won a vote of confidence. Since then, he’s been the man to beat.

The party conducts its business in private but bits and pieces leak out steadily into the cybersphere. These suggest that intra-party factional antagonism remains at an unusually high pitch. It has been a quarter-century since there were such sharp differences in orientation within the Party leadership. It boils down to argument over three issues: managing China, managing state-owned enterprises, and managing dissent.

Simply put, a faction centered in the Party apparatus is generally conservative and a faction centered in government institutions is by contrast described as “open-minded”. For convenience, we will call these the party faction and the government faction.

Managing China: A renascent China, determined to assert hegemony over the South China Sea, if not over all of Southeast Asia, poses a grave strategic threat to Vietnam. Maintaining Vietnam’s national identity and integrity vis-a-vis foreign invaders – chiefly Chinese – is the liet-motif of the nation’s long history.

The party faction counsels restraint in the face of Chinese provocations, reasoning that Beijing commands overwhelming military and economic power and, though the interest of other powers in the region will wax and wane, China will always be uncomfortably adjacent. The government faction has pursued “strategic alliances” with like-minded Asean partners, Japan, Australia, India, South Korea and especially the United States – all in order to balance Chinese ambitions.

Managing State Enterprises: Vietnam’s state-owned enterprises command key sectors of the economy and absorb resources while creating relatively little wealth. On economic restructuring, the party faction tends to see state-owned industries as “an important tool for the implementation of policies” and less of a problem than endemic corruption.

General Secretary Nguyen Phu Trong has campaigned to sideline corrupt party cadres. Prime Minister Nguyen Tan Dung, meanwhile, has pledged to break the state’s bonds to the public enterprises that command key sectors of the economy, chiefly by forcing them to sell shares and publish transparent accounts. Neither Trong nor Dung has been conspicuously successful to date.

Managing dissent: The party faction favors tight supervision of print and broadcast media, repression of dissident bloggers, and stiff punishments for anyone who dares to advocate multiparty democracy. The government faction seeks to control the state’s narrative with a lighter hand.

Party congresses are convened every five years. There is vigorous internal competition for positions, promotions and the perks that flow from them. Typically a party congress is not a winner-take-all event, but rather one aimed, after a year of alliance-mending and horse-trading, at updating the party’s internal balance among factions and interests while retiring former leaders bloodlessly.

During 2015, local party caucuses will select the 2000 delegates to the 12th Congress. For many of these delegates, the meeting in Hanoi in January 2016 will be their first experience of politics at the national level. They will endorse lengthy statements on political and economic matters and toward the end of the 10-day meeting, they will vote on a list of 200 candidates to fill the 200 full and alternate seats on the Party’s Central Committee.

About half the list will be newcomers who will replace members who have reached retirement age (generally 65) or who, less often, have been dropped as a consequence of misbehavior or conspicuous failure in their public roles.

Immediately after the party congress adjourns, the reconstituted central committee will elect from among its ranks the members of its political committee, or politburo. To the extent that the delegates reflect the mood of the country, the new Central Committee and Politburo are likely to have a more progressive tilt.

Vietnam’s professional and managerial classes give Dung and his closest collaborators relatively high marks for putting the economy back on an even keel, attracting high quality-foreign investors and having the right attitude toward the so-far intractable SOE problem. Dung’s management of the confrontation over China’s drill rig deployment and a subsequent tightening of links to the US is also popular.

Finally, the Dung faction is perceived as markedly more inclusive in its approach to governing – i.e., inclined to seek expert knowledge outside party ranks. Rumors of corruption dog all Vietnamese leaders. Dung is no exception. The ‘black blogs’ first appeared in the summer of 2012, when Politburo colleagues tried to dump Dung as PM in favour of his longtime rival, President Truong Tan Sang.

Allegations against Dung, his family and associates are daily fare on certain blogs. Other blogs specialize in hurling allegations at his rivals. The blogs’ sponsorship is obscure and their content often deadly. In a nation where newspapers are forbidden to discuss intra-party wrangling, these blogs score a huge number of daily hits. The consensus on Dung is that “like everyone else, he’s corrupt, but he delivers on his promises.”

He  is given some credit for promoting capable people into key positions. Working in his favor is a rise in the prestige of the government vis-a-vis the party. While party cadres struggle to remain relevant, it is the Western-trained managers who increasingly populate government ranks that are apt to have the answers to complex issues raised by “globalization” — Vietnam’s integration into a technologically-driven world economy characterized by value chains, non-tariff barriers and highly mobile capital flows.

Dung reportedly aims to succeed Trong (who has reached retirement age) as Party General Secretary, to arrange the elevation of a protégé, Deputy Prime Minister Nguyen Xuan Phuc, as the next Prime Minister, and to secure a dependable majority in the new Politburo and Central Committee.

That will be hard to pull off in a party that has monopolized the perks and spoils of office and in recent years has preserved harmony by sharing these out among party factions. An “anyone but Dung” reaction may well unite the prime minister’s enemies around candidates less dismissive of ideology and tradition.

Though Dung and his protégés seem to have the inside track, it’s still a long way to the 12th Party Congress.

Sea of Troubles

Capping a warming trend in relations, China and Vietnam declared in 2008 that their relationship was “comprehensive, strategic and cooperative.” A year later, Beijing tabled its “nine-dash line” claim to a swathe of ocean extending south from Hainan Island nearly to Singapore. Since then, its pursuit of hegemony over the seas that wash Vietnam’s coasts has posed a huge dilemma for the Hanoi regime.

No matter that the evidence is largely contrived, the Chinese public fervently believes in Beijing’s “historic sovereignty” over the South China Sea. The Chinese regime has ridden the nationalist tide. It maintains that China’s claims trump Law of the Sea rules for carving up maritime areas and has steadily consolidated its de facto sway over disputed reefs and islets.

China’s decision to park a deep sea oil drilling rig in Vietnam’s EEZ in May 2012 was only the latest and most provocative iteration of a salami-slicing strategy that has been startlingly successful. Xi Jinping and his colleagues seem no longer to prize ideological solidarity with the Hanoi regime.

Short of armed conflict, it is hard to imagine what more Beijing could do to undermine its would-be friends in Vietnam. Asked if he had calculated the economic costs to Vietnam if China were to gain control of oil fields off Vietnam’s coast and confine Vietnam’s fishing fleets to coastal waters, a prominent Saigon economist called the economic impact “actually quite small; Vietnam’s future is in manufacturing. However”, he added, “the political impact could be staggering”.

In the wake of the oil rig episode, the Politburo agreed to harden Hanoi’s resistance to Chinese pressure in two very public ways: it sought (and secured) US agreement to sell Vietnam defensive weapons and it registered Vietnam’s support of Manila’s contention to the Permanent Court of Arbitration that the nine-dash line flaunts provisions of the Law of the Sea Treaty.

Membership in the US-sponsored Trans-Pacific Partnership trade pact (assuming it ever goes into effect) is a no-brainer for Vietnam. Peterson Institute calculations show that the deal would make Vietnam 14 percent wealthier than it would be otherwise by 2025.

The American Chamber of Commerce in Vietnam sees the TPP lifting US-Vietnam trade from $35 billion last year to $57 billion by 2020. China’s aggressive posture has made the TPP triply attractive to Hanoi. It is seen as a means of lessening trade dependence on Chinese inputs and markets and as a talisman of Vietnam’s ripening relationship with the United States.

Baby Steps Toward Political Broadening

Although Vietnamese have little appetite for political or social turmoil, there is considerable sentiment for a loosening of restrictions on public expression. Vietnam is a police state. The Ministry of Public Security enforces laws that severely constrain political liberties – for example, a prohibition against “abusing democratic freedoms to infringe on the interests of the State.” Small steps toward liberalisation would be highly popular – such as laws greenlighting the formation of civic organizations independent of the party, relaxing censorship of newspapers and magazines or permitting peaceful public demonstrations.

Within the regime, these remain highly contentious matters. Online social media particularly irritate the party conservatives who are frequently the butt of sarcastic posts. The State can’t afford to build a “Great Firewall” like China’s.

Other attempts to regulate the activity of Vietnam’s 30 million Facebook users have proven futile. In a pointed public rebuff to factional rivals, Dung declared early this year that the government should embrace Facebook. He instructed ministries to take care that the official version of an incident (here he referred to the oil rig crisis and to rumors about the health of a high-ranking party official) is posted promptly and in detail.

In this instance and others, Dung has staked a tacit claim to being the party leader most willing to enlarge Vietnamese political space to include non-party interests. His strategy could well fail. For many party stalwarts, it evokes the specter of the “peaceful revolution” scenario that overthrew Communist regimes in Poland, Czechoslovakia and other East European states.

Beyond the 12^th Congress

Asked what the government is likely to do about such and such a problem, Vietnamese are apt to answer that “that depends on the 12th Congress.” Considerable hope for constructive change is invested in the pending party meeting. These may again be empty hopes. Crony capitalism and rent-seeking remain such a pervasive feature of the regime that it is difficult to imagine a Party consensus for doing away with the “socialist-oriented market economy”.

This is not the first time that progressives within the party have warned that by resisting change, the party risks losing its mandate to rule. This time they may be more than usually right. If Dung and his protégés secure most of the top party positions, including a reliable majority in the Politburo and Central Committee, chances seem good for bold policy initiatives.

Initiatives under discussion aim at returning Vietnam to annual growth circa 7 percent and spreading the fruits of growth more broadly among the emerging middle class. These would include increased public investment in quality higher education, in health care and in affordable housing — the last in partnership with Vietnam’s private sector.

Assuming the 12th Congress confirms his dominant position, a measure of Dung’s success will be the degree to which he is able to turn public enterprises private. The government had hoped that foreign investors would hurry to buy minority stakes in Vietnam’s SOEs. That hasn’t happened. Stronger medicine is needed.

In the opinion of economists who seem to have the government’s ear, that means setting up a ‘hard constraint’ on handouts to state enterprises, leaving them either to privatize successfully or die. In that case, many are likely to fail and as they fail, opportunities will multiply for the nation’s private sector.

David Brown is a regular contributor to Asia Sentinel. He wrote this for Asianomics,  the Hong Kong-based subscription-only financial analysis firm. 

 

The paradox of Xi’s political power

 

A key pillar of President Xi Jinping’s program of political reform is entrenching the rule of law through developing the idea of ‘Chinese constitutionalism’, or the authority of the Chinese constitution. If he succeeds, one would imagine, the consequences for governance, and ultimately even the Chinese political system, will be profound. It is a change that would appear to some to require a fundamental cultural shift in the organisation of the state and the relationship between the Chinese people and the state — a shift from rule by those who wield power (‘the rule of men’), traditionally the hopefully virtuous emperor and his mandarins, but now, post-Mao, the officials of the Party-state, to rule bounded by laws and an overriding state constitution (‘the rule of law’) that serve the public interest at the same time as they protect the rights of citizens.

In October last year, the Chinese Communist Party (CCP) set the ‘rule of law’ (yifa zhiguo) as the principal theme of a plenary session for the first time. There was a good deal of scepticism about this move. Certainly it could not have been a move contemplated lightly because elevating the rule of law and establishing its independence and integrity potentially challenges the supremacy of the Party. The rule of law, properly conceived, would constrain the Party’s power. Yet unchecked power exercised without the constraint of codified laws and principles might well come to corrode the power and damage the legitimacy of the Party itself.

Indeed, one could observe, this had been the cancer gnawing away at the vitals of the Chinese Party-state — a cancer that increasingly threatened the legitimacy of the Party itself — in the lead up to the assumption of power by the current Chinese leadership. Untreated it might tear the state asunder. Without confidence in the legal system, many other things were likely to fall apart. Confidence at home and abroad in the operation of private markets increasingly depended on the rule of law. But there was a deeper issue. If the people had no faith in the rule of law and the abuse of official power in all its forms, and enjoyed no sense of fairness in their dealings with the state and with each other, the bonds of social cohesion will be threatened.

The distinguished academic, Yang Guangbin, in our lead essay this week, observes the ebb in the confidence of the Chinese people in the years after 2008 that led the ‘Party finally (to decide) to adopt the strategy of rule by the constitution or “Chinese constitutionalism”’.

When Xi ascended to the Chinese presidency, he faced a very complex political scene domestically. The Bo Xilai affair hung over the leadership transition ominously, underlining the need to deal with disquiet among the Chinese public over corruption and the relationship between the state and economic power. There was increasing unease within the elite about the direction that the Party was heading.

Political disorder blocked economic reform. The monopolistic position of state-owned enterprises was being entrenched, rather than weakened. Collusion between government officials and businesses was increasingly endemic, reinforcing special interest groups and exacerbating corruption. If Xi wanted to secure popular support, he needed to deal with state monopolies and money power; but he ran the risk of undermining his power base if he wasn’t prepared to see off threats from some very powerful interest groups that were becoming a more and more important feature of the economic and political landscape.

This is the context which has seen a remarkable consolidation of Xi’s political power and, with his new authority, the initiation of comprehensive reforms across the panoply of government institutions. The Party’s Central Committee has moved to deepen reforms to promote the ‘modernisation of the state governance system and governance capacity’. As Yang explains, Xi ‘established new institutions and authorities to expand his power and maintain control. These new institutions include: the Leading Group for Deepening Reform Comprehensively; the National Security Commission, which the former General Secretary of the CCP, Jiang Zemin, was unable to establish; and a leading group for cyber-security and information. Xi is in charge of all these new institutions. This means that all the institutions of the Party, State Council and military are now responsible to Xi and only Xi. As a result, Xi acts as the de facto Party Chairman — like Mao Zedong once did’.

‘In the past year, Zhou Yongkang, formerly a member of the Politburo Standing Committee, Xu Caihou, former Vice-President of the Central Military Commission, and Ling Jihua, the supervisor of party management for Hu Jintao, were all rounded up and indicted. Over 200,000 government officials have been investigated for corruption. The unexpected and unprecedented scale and strength of the campaign shows Xi’s determination to defend the Party’s rule’. The assault on Zhou broke what many considered an unspoken rule to not go after Party heavyweights or their families after they have retired from office. But if Party heavyweights are exempt, there would be no sustained confidence in the rule of law.

Meanwhile, Yang argues, the economic reform agenda which had stagnated has been revived. Xi’s anti-corruption drive has broken down vested interest groups, while Premier Li Keqiang has focused on the economy. ‘Likonomics‘ stresses the decisive role of the market over the state in resource allocation and Li is reshaping government regulation to give effect to this precept.

Among the noteworthy results that Yang reports are that the number of newly-established private enterprises which increased by more than 30 per cent in 2014. And while growth dropped to 7.4 per cent, the lowest in 24 years, employment expanded.

So far, Xi seems to have won widespread support in this campaign, and his leadership has attracted strong public backing. The consolidation of political power around his leadership has huge advantages in coordination of the affairs of the state in dealing with big issues that were threatening to get out of hand. The question is whether the personalisation of policy heft and the centrality of the Party are consistent with long term transformation of governance around the rule of law and constitutionalism which is his stated goal. In the short term, moves like lifting the control of local courts up a level to remove them from local interference is likely to deliver better outcomes to Chinese business confidence, and even some citizens. Taking the privileged down a peg or two is likely to reassure citizens, but the climate of fear that constrains worthy activists as well as venal officials creates an political environment antipathetic to the long term goal of effecting a major advance in Chinese political accountability.

The new emphasis in China on the rule of law is an important shift from the old reference points of clan and emperor — and relying on virtuous leadership to deliver fairness and justice for the people — to the idea of embodying the public interest in a constitution and to raising the position of the rule of law with its attendant rights and duties and civic responsibilities that must impinge upon the behaviour of leaders, however virtuous, as well as upon the behaviour of other and ordinary citizens.

Yang sees Xi’s grand design as evidence of his being ‘a far-sighted reformer rather than a politician satisfied with the temporary ease and support of his position’. Certainly, Xi is a most powerful reformer and has in many ways taken on the mantle of the Party. It will be difficult for Xi, and for the Party, to retreat: China’s economy is unlikely to flourish without the large-scale reforms on which it is apparently embarked, and these reforms will ultimately stand or fall on comprehensive entrenchment of the rule of law.

Peter Drysdale is Editor of the East Asia Forum.

 

The Implications of China’s Growth Slowdown

 

Slowing Chinese growth could have repercussions that extend well beyond the economy.

The once extraordinary rate of Chinese economic growth is slowing. In 2014, China’s GDP grew at an official rate of 7.4 percent, slightly less than the stated goal of 7.5 percent. Although more recently monthly data have been more robust, the trend towards slowing growth seems inexorable.

A decelerating Chinese economy, coming at a time of global economic uncertainty (especially in the eurozone), could have dramatic economic implications throughout the world. However, the repercussions of a Chinese economic slowdown would not be limited to the economic sphere. Given the incredible importance of economic growth to political stability – both within China itself and East Asia in general – adapting to a dampened Chinese economy will be a pivotal challenge in the Asia-Pacific.

While an official GDP growth rate of 7.4 percent would be the envy of most major economies, this figure represents China’s lowest economic growth since 1991. And of course, economic data from China’s National Bureau of Statistics is not completely trusted by all observers. Local officials (and the central government itself) have a vested interest in exaggerating their economic performance. Capital Economics, a London-based research group, monitors the Chinese economy by looking at the five factors of electricity output, freight shipmen, construction, passenger travel, and cargo volume. According to this China Activity Proxy, recent annual growth is closer to 5.7 percent.

Regardless of the statistical specifics of the Chinese slowdown, this development poses some degree of political risk for the Chinese state. For more than two decades economic growth has been the major factor in ensuring political stability in China. Many Westerners forget that the massive protests that rocked Beijing and other Chinese cities in 1989 coincided with the biggest economic crisis of the post-Mao era, with annual inflation of 30 percent leading to panic buying throughout the country.

Since 1990, China has been governed by a social contract in which the material lives of ordinary citizens improve dramatically while the Party keeps a monopoly on political power. Rising wages and standards of living helped ensure political stability. Historically most revolutions, including the recent upheavals in the Middle East, only reached critical mass when a majority of a country’s people lost hope in the economic capabilities of the governing political structure.

Recent initiatives by the Chinese state can be understood in light of these economic concerns. Since coming in to power in 2013, the administration of President Xi Jinping has launched several populist measures. Posters throughout the country combine traditional Chinese themes with Communist Party slogans to promote the “Chinese Dream.” Xi’s campaigns against lavish banquets and other government waste led to a significant drop in the price of high-end liquor soon after his rise to power. Perhaps most important has been a massive anti-corruption campaign, which has netted thousands of corrupt officials, from minor bureaucrats to the massively powerful former head of internal security.

The anti-corruption campaign in China has been so far-reaching that it is now having negative effects on the Chinese economy. These effects create something of a contradiction in the Chinese polity, because although the anti-corruption campaign enjoys widespread support, it appears to be having some detrimental effects on the main economic pillar of Chinese political stability. Besides dampening the high-end liquor market, the anti-graft and ant-waste campaigns have had deleterious effects on industries from tourism and gambling to real estate. Mao Daqing, deputy chief executive officer of the largest property developer in China, openly warned of the economic impacts of the political campaign: “For us developers, the impact of the anti-corruption campaign on the sales of high-end property is very serious.”

China’s once-booming housing market is now deflating, with prices falling in a majority of cities. Prices appear to be dropping because the rapid increase in housing supply in recent years has outstripped demand. Problems in the real estate market are mirrored by other macroeconomic troubles. Much of the low-hanging economic fruit in China has been plucked. Rising wages in China have led many manufacturers to relocate to countries such as Vietnam or the Philippines. China’s historically strong international trade is also taking a hit, with exports down 3.3 percent from a year ago and imports dropping nearly 20 percent.

In June 2014, Chinese Premier Li Keqiang pledged to maintain a robust growth rate: “China’s economy needs to grow at a proper rate, expected to be around 7.5 per cent this year… Despite considerable downward pressure, China’s economy is moving on a steady course. We will continue to make anticipatory and moderate adjustments when necessary. We are well prepared to defuse various risks.”

Indeed, since this pledge and the subsequent slowdown, the central government has used macroeconomic tools to boost growth. The People’s Bank of China cut interest rates in November, and more recently lowered the reserve requirement ratio, freeing up $100 billion for lending. China has weathered previous economic predicaments, for example the 2008 global financial crisis, and emerged stronger. A hard landing is by no means a foregone conclusion, and China still has many macroeconomic advantages.

However, for all the policy tools at Beijing’s disposal, China’s leaders cannot guarantee rapid economic growth forever. It may be necessary to lower economic expectations, while shoring up the state’s popular legitimacy through non-economic means. Back in 2013, Xi criticized the myopic focus on economic growth, saying “We should never judge a cadre simply by the growth of gross domestic product.” More recently an article in China’s NetEase quoted Fudan University Department of Finance professor Kong Aiguo as saying, “Since we are entering what is called the ‘new normal’, we should not worry about the speed of GDP, bur rather we should focus on livelihood issues, public welfare issues, entrepreneurship issues, and financial transparency issues.”

Adapting to China’s “new normal” of lowered GDP growth will be an important challenge for leaders in China and around the world. China does more international trade than any other country on earth. Besides issues of trade, any problems in the Chinese financial system could have serious global impacts, especially coming at a time of relative global economic uncertainty.

If China does face a prolonged period of economic difficulty, the political repercussions could be volatile. The Chinese state might be forced to look for alternative sources of popular support. China’s leaders could implement additional populist measures. It is also possible that increased nationalism could come in to play, especially in the unresolved territorial disputes in the East China Sea and the South China Sea. Regional and global powers would be wise to monitor China’s economic situation closely.

Brendan P. O’Reilly is China-based writer and educator. His specialty is Chinese foreign policy.

 

Why the silence of the left on anti-Semitism?

On  February 15, 38-year-old volunteer security guard Dan Uzan was shot and killed outside a Copenhagen synagogue during a bat mitzvah celebration. A month earlier, a gunman executed four customers at a kosher grocery store in Paris.

In May 2014, a gunman killed four people at the Jewish Museum in Brussels. In 2012, a gunman murdered three students and a teacher at Toulouse Jewish primary school in south-west France. Eight-year-old Miriam Monsonego was shot point-blank in the head.

You might discern a common theme to these shocking crimes. Seventy years after the Holocaust, Jews are again being murdered in Europe for being Jews.

These recent outrages are but the tip of an anti-Semitic iceberg.

About 7000 French Jews made aliyah (migrated) to Israel last year. For good reason. Jews make up 1 per cent of the French population, but half of all racially-motivated crimes during 2014 targeted Jews. In recent weeks several hundred graves were defaced at a Jewish cemetery in north-east France; in Germany a synagogue in the city of Wuppertal was firebombed.

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This is to say nothing of Jew-hatred besides physical violence. During last year's Gaza conflict European protesters chanted "Gas the Jews" and "Death to the Jews". In several countries, Jews are being warned not to wear religious clothing or enrol their children in schools with a high numbers of immigrant (allegedly Muslim) students.

Far-right, anti-Semitic political parties are gaining ground across Europe. In a Greek government dominated by the far-left Syriza, right-wing ally and defence minister Panos Kammenos says that his Jewish compatriots don't pay taxes. In Britain, a recent all-party parliamentary inquiry into anti-Semitism showed an alarming rise in such bigoted attitudes.

Australia has not been immune. A video produced by the Islamist group Hizb ut-Tahrir shows the organisation's head, Ismail Al Wahwah, alleging that "where Jews thrive corruption abounds" and that the world is afflicted by the Jewish "hidden evil".

Yet, as #jesuischarlie hashtags proliferate, violence carried out by supporters of a far-right brand of totalitarianism, radical Islam, is met with thundering silence in the West. Most disturbing is the response of progressives. Recent events demonstrate that a section of what purports to be the left wing no longer stands unequivocally against all forms of fascism and racism and is prepared to ignore or, worse, excuse an ideology that rejects Enlightenment values and promotes a racist, misogynistic and homophobic death cult.

Condemnation has been non-existent or heavily qualified. What about Anders Breivik, they say? The killers have nothing to do with Islam – despite most attacks being launched with the cry of "Allahu Akbar" – but are alienated, radicalised "lone wolves", the argument goes.

Some seek to place the blame on Jews. A BBC anchor suggested that violence directed against French Jews might be understandable given Israeli policies towards the Palestinians. A left-wing Australian "anti-Zionist" tweeted that should Israel's oppression of the Palestinians continue, more attacks on Jews would follow. The normally voluminous twitter feeds of leading progressives are mostly devoid of sympathy or solidarity.

At the root of this silence is denial. A denial of the seriousness and source of the new/old anti-Semitism, whereby a classical racial/religious hostility to Jews has conjoined with a politically motivated denial of the rights of the Jewish people to a state of their own. Yet it is clear that the recent  European attacks have occurred in cities that host relatively large migrant Muslim communities, of which a small but significant minority are willing to act upon the message of jihadist militancy fostered by the likes of ISIS.

These outrages have also drawn less opprobrium from progressive sources because, as militant opponents of the policies (and often very existence) of the State of Israel, they view anti-Semitism as a term deployed by Zionists to deflect criticism.

Moreover, confronting the resurgence of anti-Semitism would mean accepting that the demonisation of Israelis and Jewish diaspora – such as the toxic Boycott, Divestment and Sanctions campaign that effectively calls for the destruction of Israel – has in part contributed to the legitimation of violent attacks against the Jews of Europe.

Instead, we have seen a bizarre reversal of victimhood. The first instinct of many, rather than sympathise with the victims of terror, has been to warn against a potential Islamophobic backlash. According to this warped and infantilising logic, Muslims, as the "new" Jews, are all innocent victims of Western (and Israeli) imperialism and racism.

No one wishes to see the peaceful majority of the world's 1.5 billion Muslims subject to discrimination because of the actions of a minority. We are not, as Roger Cohen has written in these pages, at "war with Islam". However, fear of giving offence or singling out a minority for criticism is scarcely a reason not to oppose anti-Semitism.

What then is to be done? Israeli Prime Minister Benjamin Netanyahu is wrong to call for Europe's 1.4 million Jews to consider a mass aliyah to Israel. This suggestion can only embolden the thugs seeking to hunt the Jewish people off the continent.

Rather the solution is easy and begins with us. We need to talk about the threat of modern anti-Semitism not as some 1930s throwback but as a real and present danger. The next time you are privy to anti-Semitic abuse, speak up. The next time a protest calls for the destruction of Israel, or explains away terrorism with "but Israel", speak up.

Do so as a matter of principle. But we should also not forget the darkest chapter of European history: fascists come for the Jews first and never stop there.

Nick Dyrenfurth is the co-author of Boycotting Israel is Wrong: The progressive path to peace between Palestinians and Israelis (to be published in May by NewSouth).

 

Emails Blow Malaysia’s 1MDB Fund Wide Open

Sarawak Report blog details how deeply a flamboyant financier and friend of PM Najib actually ran the fund

In December of last year, the controversial investment fund 1Malaysia Development Bhd abruptly called in all of its computers, employee laptops and servers and wiped them clean of all emails.

It was too late.

The reason has come embarrassingly clear with a report by Clare Rewcastle Brown, the indefatigable blogger who edits The Sarawak Report. Rewcastle Brown had already obtained thousands of emails and documents before the shutdown, detailing transactions by the fund were actually run by Taek Jho Low, a close friend of the family of Prime Minister Najib Tun Razak. There were times when the CEO of 1MDB, Shahrol Halmi, and his Malaysian colleagues had no idea what was going on. 

Jho Low has repeatedly told the media that he has had nothing to do with 1MDB’s investment activities, and that he has received no money or benefits. But the emails allegedly show that he not only orchestrated a 2009 joint venture between 1MDB, as the fund is known, and a fledgling oil exploration firm called PetroSaudi International, which was little more than a shell, but that Malaysian fund officials had almost no idea what was going on.

Although money provided by 1MDB was putatively going into oil exploration, Sarawak Report’s emails indicate that  Jho Low siphoned off US$700 million and channeled the money to a firm he owned called Good Star Ltd. The money was then used to purchase UBG bank in Sarawak, owned by the former Chief Minister, Abdul Taib Mahmud, “at a very advantageous price for the chief minister and his family, who had been failing to get a deal on the open market.”

1MDB has denied any money has been lost and that in fact on Feb. 21 it claimed that the PetroSaudi JV had turned a profit of US$488 million. 1MDB president Arul Kanda Kandasamy said on 1MDB’s website that that the money it had invested in the venture had been converted into Murabaha notes, an Islamic financing structure.

That assertion remains to be proven.  But whether the fund earned money or not, the extent to which a private citizen and friend of the Prime Minister used 1MDB’s influence and apparently in his own business deals is highly irregular.

PetroSaudi, for instance, greed to act as a “front” for Jho Low on such deals, according to the documents, and it was a subsidiary of PetroSaudi International registered in the Seychelles, which bought UBG, using money siphoned from 1MDB.

The extent to which Jho Low was using 1MD as a personal piggy bank may go beyond just the PetroSaudi deal. Documents on file in London indicate that the young tycoon attempted to use Malaysia’s sovereign credit via 1MDB in his vain attempt to buy three exclusive London hotels including Claridge’s.  Lawyers in Los Angeles have charged that money to fund the film The Wolf of Wall Street also may have been guaranteed by 1MDB. That deal was ultimately settled out of court and the lawyers refuse comment.

The revelations are certain to add to the precarious state of Najib’s premiership.   As finance minister, he put together the arrangement that uses the Finance Ministry to back 1MDB.  He is also its chief economic adviser. He is under intense fire over 1MDB both from the opposition and from former Prime Minister Mahathir Mohamad, who said on Feb. 10 that “something is rotten in Malaysia” and demanded that Najib step down.  The prime minister’s popularity has fallen to 44 percent and seems likely to descend further. Revelations about the 2006 death of the late Mongolian translator and party girl Altantuya Shaariibuu are also coming closer to him.

The article, titled “Heist of the Century, displays documents that show an initial meeting took place in New York on Sept. 8 2009, between Jho Low, then the head of Wynton Capital, a UK-based businessman named Patrick Mahony, who had been introduced a few days earlier by PetroSaudi’s CEO, Tarek Obaid. Obaid is a friend of PetroSaudi’s  owner, Prince Turki bin Abdullah, one of the sons of the then King of Saudi Arabia. Mahony worked for the investment group Ashmore, which was funding PetroSaudi’s main operation, an oil well in Argentina.

Also at the meeting were two of Jho Low’s close colleagues, Li Lin Seet and a UBG bank lawyer, Tiffany Heah.In an email written to “Jho, Seet and Tiffany” the following day, Mahony made clear on behalf of PetroSaudi that the company was very willing to become involved in a series of deals proposed by Jho Low, which were expected to involve 1MDB and Petronas, Malaysia’s national energy firm.  In that email, Mahony said he also understood that Jho Low wanted “to use PetroSaudi International as a front” for certain deals and he said that “we would be happy to do that.”

1MB officials apparently only became aware of the PetroSaudi transaction about 10 days before the initial billion-dollar deal was signed. The emails show that Jho Low initiated formal written introductions between 1MDB and PetroSaudi just days before the transaction was signed. There is no evidence that the Malaysian fund concluded any due diligence into PetroSaudi at all.

Jho Low repeatedly insinuated that he represented Malaysia’s highest authorities, in this case the “YAB PM” – Najib – directly, in the matter. He focused on playing up PetroSaudi’s owner Prince Turki’s royal connection, insinuating that the negotiations were officially connected to “furthering Saudi-Malaysia bi-lateral ties,” although there was nothing to suggest bilateral ties had anything to do with the matter.

“There is no evidence to suggest that this ‘loan’ was anything apart from an entirely contrived transaction between two arms of PetroSaudi, a company with very little working capital,.” Sarawak Report said. “The US$700 million was repaid by 1MDB alone, as PetroSaudi had brought in “zero cash” into the joint venture and had only committed the valuation of its assets.”

In fact, according to Sarawak Report, “Jho Low crafted the whole Joint Venture deal before either PetroSaudi or 1MDB saw what was in the plan. These same emails provide the equally telling information that the first draft copy of the Joint Venture deal to be negotiated with 1MDB was drawn up by Jho Low’s own office.

Two days before negotiations were due to start on the billion dollar deal, “that draft was still being eagerly anticipated by Low’s contacts at PetroSaudi, the story notes. In an email from Mahony on Sept. 21, he said “ETA for first draft of agreement is still in a few hours…?

Mahony suggested that his lawyers and Jho Low’s lawyers should first liaise with each other, before they contacted 1MDB’s lawyers about the content of the proposed Joint Venture document being drawn up by Jho Low’s team in New York.

“I also need to get the 1mdb lawyer and my lawyer in touch asap,” Mahony wrote. “I will wait until you send the jva but what i suggest is that when you send me the jva, you introduce me to your lawyers by email and then i will forward the jva to my lawyers and introduce my lawyers to your lawyers. Thanks.”

“The inescapable conclusion is that the jetlagged team, arriving from Malaysia the next day, had acted as little more than onlookers in the drawing up of this ‘joint venture’, for which only they would be putting up any cash, on behalf of the Malaysian public,” the report added. “According to the contract about to be placed on the table in front of them USD$1 billion was due on day one, with further drawing rights available of up to USD$5 billion.” Asia Sentinel