Generation 40s – 四十世代

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Why the West and Japan should stop preaching to a rising China

South China Morning Post
Comment›Insight & Opinion

Jean-Pierre Lehmann

Jean-Pierre Lehmann says the imperialist powers of old should acknowledge their own bloody history of plunder and exploitation, and work with Beijing to find a path to a peaceful rise, which so far is unprecedented

This year marks the anniversaries of a number of Asian historical landmarks. July 1 was the 20th anniversary of the handover of sovereignty over Hong Kong from the UK to China. August 8 will mark the 50th anniversary of the Asean declaration, the founding document of the Association of Southeast Asian Nations. This Friday, July 7, marks the 80th anniversary of the Japanese invasion of China, triggering the Pacific war that lasted until Japan’s surrender on September 2, 1945.

July 7 should be a day for reflection. Such was the case on June 6 three years ago, on the occasion of the 70th anniversary of D-Day in Normandy, when the French president François Hollande hosted, among others, US president Barack Obama, Britain’s David Cameron, Canada’s Stephen Harper, Germany’s Angela Merkel and Russia’s Vladimir Putin. This was one further indication that, while there are tensions in the Atlantic, the breakout of war, as occurred twice last century, is extremely unlikely.

Over the decades since the end of the second world war, there has been a great deal of dialogue, confidence-building and the establishment of solid institutions. Germany, for all the atrocities it committed, has been an exemplary European citizen and is arguably the Atlantic’s greatest guarantor of peace, just as it has proffered unconditional apologies.

Just as Germany has been the solution for peace in the Atlantic, Japan remains a critical problem for peace in the Pacific. In light of the composition and conduct of the Japanese government – with, inter alia, the Defence Minister Tomomi Inada paying regular visits to the Yasukuni Shrine, a sort of mausoleum for Japanese war criminals – it is highly unlikely that there will be reflection, let alone apology.

The Pacific war and its many ramifications tend to be ignored in Japanese education and public discourse generally. July 7 will not be marked by public forums among Japanese leaders, let alone with their Chinese, Korean, Singaporean or Filipino counterparts.

Instead, we hear of Japanese kindergartens spreading anti-Chinese and anti-Korean xenophobic messages and hotel chain proprietors (Toshio Motoya of APA) distributing in all rooms copies of his writings in which he denies the Nanking massacre occurred and claims that the Korean “comfort women” were not sexual slaves but prostitutes.

But the lessons from July 7, 1937 extend beyond Japan. The 21st century is witnessing the rise of another great global power: China. Though there has been a good deal of debate among Chinese intellectuals on the implications of great power rise, illustrated in the seminal 2005 article by Zheng Bijian (鄭必堅), “China’s Peaceful Rise to Great Power Status”, there has been little reflection among the other great powers on how they might contribute.

If one looks at, for example, the current membership of the G7, all the countries, with the sole exception of Canada, achieved great power status through war, conquest, plunder, imperialism, exploitation, enslavement, and so on. Thus, while Japan is a major problem for peace in the Pacific, its warmongering corresponded to a pattern set by other G7 members, including the US, Britain, France, Germany and Italy – and indeed by others including the Netherlands, Belgium and Russia.

While it has become seemingly pervasive for the Western powers and Japan to mount their high moral horses and admonish China that it should “play by the rules”, they fail to explain why at the time of their rise to great power there were no rules or, if there were, they were egregiously flouted.

Thus, the eloquent 1839 letter by the Canton commissioner Lin Zexu (林則徐) to Queen Victoria, imploring her to stop her subjects from forcefully infesting China with opium, was contemptuously ignored. Throughout the 19th and most of the 20th centuries, the “great” powers plundered the planet, including of course China. What rules were the British and French playing by as they pillaged the Beijing Summer Palace in 1860?

Nor is the behaviour of the Western powers just ancient history. American atrocities perpetrated against Vietnamese and Laotians continued into the third quarter of last century. As depicted in the excellent book by Viet Thanh Nguyen, Nothing Ever Dies: Vietnam and the Memory of War, in fact the US has been pretty much continuously at war throughout the second half of the 20th century and most recently in the 21st, with the 2003 invasion of Iraq.

One of the most compelling recent publications on the rise of China is by Geoff Dyer, The Contest of the Century: The New Era of Competition with China, in which he draws compelling parallels between the rise of the US as a great power in the late 19th and early 20th centuries – manifest destiny, the Spanish-American war of 1898-99, resulting in the colonisation of the Philippines, and so on – and the rise of China in the late 20th and early 21st centuries. The 1823 Monroe Doctrine, seeking to establish a US exclusive sphere of influence over Latin American, ultimately came to concrete fruition a few decades later with, among other things, the metamorphosis of the Caribbean as an “American lake”. This, Dyer suggests, is comparable to what China is aiming to do vis-à-vis Southeast Asia generally and the South China Sea [9] in particular – that is, that it should become a Chinese lake.

The argument that these were different times with different parameters does not wash. The main difference from a Chinese viewpoint was that, whereas then the Western powers and Japan were extremely strong and China was extremely weak, today, the Western powers, the US in particular, remain strong while China is no longer weak. Thus, in seeking to draw inspiration from the methods and achievements of great powers rising, what models are there other than the Western and Japanese imperialist nations? There is no precedent for peaceful rise.

This should not, of course, imply that while previous great powers looted and engaged in outrageous brutality, it is now “China’s turn”. But it strongly suggests that serious and honest reflection is called for, not only on the part of the Japanese, but also on the part of the other great powers, and on that basis to engage in genuine dialogue – not sermons – with China. Instead of getting on their moral high horses, sermonising from the alleged position of liberal values, far more constructive would be to admit – and eventually apologise – that in fact they behaved often abominably, feeling bound by no rules except that might is right.

This would seem the only viable means to engage China in its rise to great power, to contribute constructively to the unprecedented peaceful rise, and thereby to have some hope that peace may reign. Finally, after centuries of warfare, one could hope that great power bellicose rivalry might be relegated to the dustbin of history.

Jean-Pierre Lehmann is emeritus professor at IMD, founder of The Evian Group, and visiting professor at the University of Hong Kong

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The Asian financial crisis teaches the need for bold reform, but is China listening?

South China Morning Post
Comment›Insight & Opinion

William Pesek

William Pesek says regional economies that appear to have recovered from the crash are struggling with structural problems and stagnating incomes, as policymakers baulk at needed reforms. Beijing, now facing similar risks, should take note

My favourite Asian crisis story involves Robert Rubin, an elevator and a pile of cash.

It was September 1997, and I’d just exchanged US dollars in our Jakarta hotel lobby. I was taken aback, and vaguely embarrassed, by the huge stack of rupiah I received – all with colourful money wrappers. In the elevator, I ran into then US Treasury secretary Rubin and one of his top lieutenants, Timothy Geithner. I was among a handful of Washington journalists accompanying them around Asia. Rubin looked at my loot and deadpanned: “I see you found time for a drug deal.”

That was 2½ months after Bangkok’s July 2, 1997 devaluation set Asia’s reckoning in motion. The good news, 20 years on, is that the Thai, Indonesian and South Korean currencies recovered and reserves were restocked. Banking systems were strengthened and economies made more transparent. Capital accounts were loosened and market regulation tightened. Wages bounced back, too. The bad news: income gains have largely stalled in recent years. Is the real legacy of that regional crisis a regional middle-income trap?

That’s when per capita income tops out at, or below, the US$10,000 mark, as it has for Thailand (about US$6,000), Indonesia (US$4,000) and even economies that technically avoided the worst of the crisis – including Malaysia and, perhaps, the Philippines. And while South Korea is the top of the income class – and a proud escapee of the middle-income category – it’s since been ensnared in a higher-income net.

What went wrong? In the immediate years after 1997, technocrats in Thailand, Indonesia and Korea implemented the International Monetary Fund’s reform playbook to modernise financial systems. Strong US demand did the rest, enabling Bangkok, Jakarta and Seoul to export their way back to 5 per-cent-plus growth. But the return of rapid gross domestic product growth deadened the urgency to do the real heavy lifting; weaning economies off exports; building credible institutions; increasing productivity and innovation; diversifying trade links; eradicating corruption; devising better energy strategies; and separating the public and private sectors.

Blame the “Cult of GDP”, something to which Asian leaders have long been susceptible. When heady growth returns, policymakers declare victory, pop the champagne corks and shelve painful upgrades. In the two decades since 1997, Asia’s crisis victims revelled in buoyant equity markets, claimed economies had decoupled from the West and toasted the tidal wave of bankers abandoning New York and London and relocating to Hong Kong and Singapore. And besides, China’s boom would keep the good times going. The cost of leaders believing their own press was slower wage gains. Asia is learning the hard way that “boosterism” is no replacement for economic retooling.

A large painting depicting the late Thai King, Bhumibol Adulyadej, is seen outside the Bangkok Art and Culture Centre last month. Thailand has experienced two coups as a succession of leaders failed to spread the benefits of growth. Photo: EPA
A large painting depicting the late Thai King, Bhumibol Adulyadej, is seen outside the Bangkok Art and Culture Centre last month. Thailand has experienced two coups as a succession of leaders failed to spread the benefits of growth. Photo: EPA

Thailand has experienced two coups as a succession of leaders failed to spread the benefits of growth and get the state out of the financial system (it has been in the hands of a military junta since May 2014). Indonesian incomes are stagnating as reform fatigue and parochial squabbles – over everything from access to natural resources to openness to foreign trade and religion – distract Jakarta. Progress stalled in Malaysia as scandal-plagued Prime Minister Najib Razak clings to affirmative-action policies benefiting ethnic Malays at the expense of competitiveness. In the Philippines, too, Rodrigo Duterte is putting a bloody war against drug pushers and users ahead of raising Manila’s economic game.

Korea beat the middle-income trap, but it’s now ensnared in a higher-income funk. Seoul’s failure to reduce the role of the family-owned conglomerates towering over all corners of the economy and catalyse a start-up boom has average incomes stuck near US$27,000.

Similar criticism could be hurled at Hong Kong, as it commemorates the 20th anniversary of its return to China. While per capita income is 11 times Indonesia’s, Hong Kong hasn’t expanded its growth engines beyond finance and overpriced property. The cost: exploding inequality that’s delegitimising the city’s Beijing-picked leadership and feeding combustible social tensions.

Bold structural changes are always easier when crashing currencies leave leaders no choice. Unless Asian governments relocate some of that 1997 urgency, they will rely more on debt to fuel growth than entrepreneurship and higher productivity. Little good would come of that. That’s Thailand’s big challenge as Prime Minister Prayuth Chan-ocha tries to find his reformist mojo. It’s Joko Widodo’s problem in Jakarta as he struggles to take on vested interests working to regain power over the government. It’s also President Moon Jae-in [4]’s task in Seoul as he deals with a fresh bubble in household debt and rampant corruption.

And what of China? Few questions matter more than whether mainland incomes can reach US$10,000, and beyond. Never before has global stability been so dependent on such an opaque, unbalanced and developing economy. China “definitely has the potential to further catch up with the high-income countries and avoid [getting trapped]”, write Asian Development Bank economists Linda Glawe and Helmut Wagner. “However, the future performance of China’s economy depends on further reforms.” Those changes include altering a debt structure not unlike that of Thailand and other Asian governments, circa 1997.

For most, Asia’s collapse was just as unexpected as Wall Street’s 11 years later. China’s growth engines, it’s worth noting, are tantalisingly familiar: explosions in debt, credit and unproductive investments; chronic overcapacity; quantity of growth trumping quality; a sprawling shadow-banking machine; surging non-performing-loan ratios; policymakers drawing down currency reserves; regulators prodding domestic companies to go public before their time; and complacency among markets about how fast things could go awry. Beijing is treating the symptoms of its excess, not the root causes, in ways that are feeding ever-bigger bubbles. What’s more, US President Donald Trump’s threatened trade war is an ever-present threat to Asia.

Beijing, in other words, must do better than the class of 1997 in learning from past mistakes and preparing for future prosperity. Economic reform, remember, has something in common with the elevator in which I bumped into Rubin 20 years ago: it has the power to lift populations to new heights or leave them on the ground floor. Asia must work harder to ensure incomes regain an upward trajectory.

William Pesek is a Tokyo-based journalist and the author of Japanization: What the World Can Learn from Japan’s Lost Decades.

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10多年前,我就用過《呂氏春秋》中的「刻舟求劍」比喻來說香港的政治發展:「楚人有涉江者,其劍自舟中墜於水,遽契其舟曰:『是吾劍之所從墜也。』舟止,從其所契者入水求之。舟已行矣,而劍不行, 求劍若此,不亦惑乎?以故法為其國與此同。時已徙矣,而法不徙,以此為治,豈不難哉?」




延伸閱讀:Manuel Castells, The Power of Identity(West Sussex: Wiley-Blackwell, 2010)

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Hong Kong’s handover anniversary is an opportunity to restore faith in ‘two systems’

CommentInsight & Opinion
Anson Chan says the inspired solution of ‘one country, two systems’ has clearly floundered in recent years, and now is the time for incoming chief executive Carrie Lam, as well as Beijing, to act so the healing can begin and hope can return

The 20th anniversary of the return of Hong Kong to Chinese sovereignty has prompted a flurry of reflection and commentary, in both local media and, significantly, in the overseas press.

Back in 1997, if one was betting on the success of “one country, two systems”, the stakes would have been high. The concept, hailed as the brainchild of late paramount leader Deng Xiaoping (鄧小平), is certainly one of the most imaginative constitutional balancing acts ever devised: an inspired solution to what seemed like the impossible ­dilemma of how to fit one of the world’s most thriving capitalist ­enclaves into the socialist straitjacket of Communist China.

At the same time, sustaining the concept over the 50 years of “no change”, prescribed under the Joint Declaration and the Basic Law, was always going to be challenging. Leafing through some speeches ­I delivered shortly after the handover as chief secretary, I came across the following words from an address made in 1998 to the Asia Society in Washington: “None of us could know how our world might change after June 30, 1997. We had no precedent to compare with, or to follow. What we did have were the genuine good intentions and the best wishes of all parties involved. But even before the transition, I felt that, in the final analysis, it would be up to us, the people of Hong Kong, to make the transition work.”

My sentiments have not changed; if anything, I feel even more strongly that it is up to the people of Hong Kong to make “one country, two systems” work, up to and hopefully beyond 2047.

Project Citizens Foundation, of which I am a founding director, ­recently hosted a public forum on “Hong Kong 2047: Quo Vadis?” One of the speakers was Legislative Council member and Demosisto chair, Nathan Law Kwun-chung.

Law spoke movingly about how Hong Kong’s younger generations feel their future was just handed off by the British colonial power. As a result, they were robbed of any right of self-determination. This is why, he argued, so many young people struggle to identify with a motherland that doesn’t seem to understand their hopes and aspirations.

As I ponder the issue of where we go from here, I am reminded of the words of a song from Tim Rice and Andrew Lloyd Webber’s hit musical: Jesus Christ Superstar : “I’ve been very hopeful so far, now for the first time I think we’re going wrong … could we start again please?’’

Why do these words resonate? Quite simply because, in the first few years after the transfer of sovereignty, “one country, two systems” worked as it was intended to do. Hong Kong continued to be administered by an able and politically neutral civil service, and there was no interference either by the leadership in Beijing, or the New China News Agency (the central government’s representative office before the liaison office was set up in 2000).

Until Hong Kong people are governed by politicians they respect and whom they can trust to protect their interests … it will be impossible to heal the rifts and safeguard ‘one country, two systems’

Things have gone badly wrong in recent years. Who is to blame? I do not intend to apportion blame, as it does not take us forward. Rather, I believe we should grasp the golden opportunity presented by the 20th anniversary of the handover, and the entry into office of a new chief executive, to start again: to turn over a new leaf in our relations with the central government.

First, Carrie Lam Cheng ­Yuet-ngor must step out of the shadow of the Leung Chun-ying era, with its lack of integrity and connivance in the relegation of Hong Kong’s status to a satellite of the mainland, rather than an ­important global city in its own right. She must quietly, but firmly, take back the reins of day-to-day governance of Hong Kong and make clear that, while her administration will respect fully its obligations under “one country”, the central authorities must stop eating away at the boundaries of Hong Kong’s high degree of autonomy guaranteed under “two systems”.

Recent thinly veiled warnings by the National People’s Congress chairman, Zhang Dejiang ( 張德江 ), to the effect that Beijing will not hesitate to tighten its grip in aspects such as the pace of political reform, its power over the chief executive, and its authority to ­appoint and dismiss key officials, are both uncalled for and totally counterproductive.

As Lam has already rightly emphasised to the leadership, the voices calling for independence for Hong Kong represent a tiny minority. The best thing Beijing can do is demonstrate that, having orchestrated her election as chief executive, they are prepared to trust in her judgement and show her the respect she needs to captain her ship.

Above all, Beijing must support Lam in taking steps to reverse the disastrous decline in the morale of the civil service, which is a direct consequence of its increasingly ­blatant interference in the day-to-day conduct of the bureaucracy.

I have made no secret, over the years, of my belief that the introduction of the political appointment system was misguided. It has drained the senior ranks of the civil service to fill ministerial positions and compromised the neutrality of those who remain. It has failed to nurture new political talent, as seen in the lacklustre performance of many of Leung’s team and the fact that Lam has clearly been less than successful in recruiting the new blood she had hoped for.

I am not convinced that the failure to attract ­talent from the private sector into government positions is due to ­lower pay, or a lack of public-spiritedness. Nor do I believe it is ­because they are discouraged by the (at times) toxic atmosphere in ­Legco. The only way to attract individuals of high calibre and integrity into the public service is to convince them they will be able to exercise their duties with intellectual rigour, impartiality, and according to their conscience. Until Hong Kong people are governed by politicians they respect and whom they can trust to protect their interests – politicians who have a genuine mandate by virtue of being ­appointed on the basis of a democratic system of fair and open elections – it will be impossible to heal the rifts in our society and safeguard “one country, two systems” for coming generations.

Bottom line? Lam cannot ­afford to place the issue of constitutional ­reform on the back-burner. At least, she must bring forward proposals to end the scandalous situation whereby the votes of a minority of vested interests in Legco and the Election Committee for chief executive can usurp the rights of the majority of Hong Kong electorate.

Lam cannot ­afford to place the issue of constitutional ­reform on the back-burner

Numerous well-thought-out proposals to broaden the electorate of the functional constituencies, or phase them out, were submitted during the 2013-2014 consultation process, ­including by my own Hong Kong 2020 think tank. All were ­ignored. These proposals should be revisited at the earliest opportunity.

Back on July 1, 1997, watching for the first time the raising of the national flag at the handover ceremony, I recall a sense of emotion that is hard to describe. I began to appreciate the spiritual propriety of Hong Kong’s return to the mainland. My family – like many in Hong Kong – did not leave China willingly. We left because we felt we had to.

I felt we had been a country and a people divided … now we had an ­opportunity to be whole

As a Chinese, I felt we had been a country and a people divided, travelling different roads and shaped by ­different events. Now we had an ­opportunity to be whole.

On July 1 this year, my emotions are going to be far more mixed. I will take pride in the achievements of the past 20 years, in the resilience of our community and its determination to hold on to the values, freedoms and way of life we hold dear. At the same time, I will feel disappointment and alarm that the precious concept of “one country, two systems” seems to be floundering, despite the best efforts of so many.

The visit of President Xi Jinping (習近平),who arrives on Thursday to officiate at the anniversary celebrations, is an opportunity I hope our country’s leader will embrace: an opportunity to promote the healing process and give our young people hope. Could we start again please?

Anson Chan, a former chief secretary of Hong Kong, is convenor of Hong Kong 2020

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Theresa May must not let the EU hold Britain to ransom in Brexit talks

CommentInsight & Opinion
Grenville Cross says with Brussels likely to play hardball, the British prime minister should make it clear the UK has the will and strength to go it alone, as opportunities beckon beyond the euro zone

After Britain voted last June to leave the European Union, Prime Minister Theresa May triggered Article 50, the Lisbon Treaty’s departure mechanism, on March 29.

If divorce terms are not settled by March 29, 2019, Britain will exit without a deal. European Council president Donald Tusk says “there is no time to lose”.

Despite her election setback, May will oversee Britain’s strategy once formal talks begin on Monday. The negotiations will be tough and tortuous, and probably nasty. May must, however, stick to her guns, as the deal she secures will define Britain’s future.

Many Europeans, given the huge problems caused by open borders, the euro zone and the democratic deficit, now openly praise Brexit. Some in Europe will undoubtedly want to punish Britain for its audacity, and to deter others. The EU, traditionally intolerant of dissent, will play hardball in the talks.

Former Greek finance minister Yanis Varoufakis has described how, after Greece’s anti-austerity Syriza government won a huge electoral mandate in 2015, the EU ruthlessly clamped down. Its central bank cut off emergency liquidity for private banks, bringing Greece to its knees. Syriza was forced to capitulate to EU demands, causing untold misery to ordinary Greeks and an unemployment rate of 23.5 per cent.

The EU cannot bully the UK in the same way, but Varoufakis nonetheless warns Britain against the EU’s negotiating net. He predicts a campaign of attrition by the EU, exploiting Britain’s political divisions. Although Varoufakis advises May “to avoid negotiation at all costs”, she must talk to the EU in good faith, while making clear Britain will not cave in to threats.

The European Commission claims Britain may have to pay as much as £85 billion (HK$845 billion) to leave the union. This is a bluff. The Institute of Chartered Accountants of England and Wales has found that, taking into account rebates owed to the UK and the realisation of Britain’s investment in the European Investment Bank, the Brexit charge could be about £15 billion. Even this could not be legally enforced.

The EU, however, is desperate for British cash, and for good reason. It is hugely expensive, and wasteful.

Apart from its more than 32,000 civil servants, the EU is now expanding its fledgling foreign service, with offices around the world. The patience of European taxpayers will snap at some point but, in the meantime, the UK must not be held to ransom.

Moreover, Britain is not, as some suggest, dependent on EU trade. British exports to the EU have been falling since the euro zone was formed and now only account for 12 per cent of Britain’s economy.

The EU states, however, need to sell their products to Britain, and this will not change. The EU had a £60 billion trade surplus with the UK in 2015, and if it imposed tariffs it would be shooting itself in the foot.

The terror attacks in London and Manchester have highlighted the urgent need for the UK to secure its borders and control who enters, impossible under Europe’s open borders policy. Mass EU immigration has also placed huge strains on housing, social services and schools, and gravely affected the quality of life of ordinary Britons. If Brussels tries to prevent May from reducing immigration to manageable levels, she must be prepared to walk away. She should, however, seek the greatest possible access to the single market, through a new free-trade agreement.

If the EU tries intimidation, May must point out that they rely on British markets, intelligence and armed forces, and that everyone will benefit from an amicable separation. Britain, on course to be Europe’s largest economy by 2030, has always looked outwards, and its future lies in exploiting emerging markets.

At least 14 countries, including Australia, Brazil, China and India, want free-trade agreements with the UK. Once EU red tape is cut, the financial sector could save £12 billion a year, and it will be possible to export to millions more customers from the rising economies.

Although the prospect of breaking away from a dysfunctional political union is exhilarating, the price of separation must still be right. If the EU insists on intolerable terms, May must call it quits. The EU should understand that, if pushed, Britain has the determination and strength to go it alone.

Grenville Cross SC was a backer of Vote Leave