William Yale

Travelling through Sichuan made me realize I still had old copy lying around from previous travels that I had never published. The next couple of posts will be those. Here’s the first. Reflections on Chengdu and Emei Shan will follow.

In Xinjiang, cultural politics mixes with oil politics. Every time the Chinese government squashes Uyghur expressions of independence or solidarity, the West reacts with outrage. ‘The people of Xinjiang (and by extension, Tibet) must have rights of self-determination,’ they shout. The West fails to recognize China’s priorities. China’s desire to foist a nationalist identity on Uyghurs and create a unified China is a secondary concern; it only exists so that they can extract as much oil as they can from Xinjiang.

Karamay is Xinjiang’s oil capital. 15 years ago, it was a patch of the Gobi Desert. Now it is a city of 290,000. It has cost billions of yuan to build – a river was even diverted from the mountains to make it livable. Just recently, a billion yuan was spent to build a major park downtown, featuring a spectacular water and laser light show at night.

Surrounding Karamay for a hundred kilometers are oil fields. You can drive along the highway next to the Taklamakan Desert and never stop seeing them; oil derricks stretch beyond the horizon. It was the first oil field discovered and tapped in post-revolutionary China, and the fourth largest, after those in the Northeast and in the East China Sea. 6.3 million tons of oil flows out of Karamay every year. In the US, you would expect an endeavor like this to be built by private enterprise. But this of course is China, and the Karamay oilfield is owned by the state-run China Petroleum.

Karamay isn’t just one of China’s biggest oilfields – it’s also a major conduit for oil and natural gas to and from Kazakhstan and the rest of the Central Asian “stans”. In this regard, the pipeline is the most important resource in Xinjiang. Even if all the oil dried up today, the city would still exist because of this connection. China could actually be drilling more oil in Karamay, but it’s harder and deeper to get to. They don’t need to spend the capital to invest in more expensive technologies, however, because the oil in Kazakhstan is simply cheaper.

Xinjiang is known for its “one white, two blacks”: cotton, coal, and oil. Of lesser geopolitical importance is its “one red”: tomatoes exported to Italy. Although the vast wind fields, solar power plants and hydropower dams are impressive, they are not as significant, because they are only used to supply energy to Xinjiang itself. Oil and coal, however, power the rest of China.

Too many China scholars view China’s insistence on the territorial integrity of Xinjiang as culturally or historically based, as if the Chinese would “lose face” if the barbarians in the West seceded and overturned their tributary relationship. This is mistaken. Opposition to Uyghur independence is not primarily a matter of nationalism, the unification of all minzu (nationalities or ethnicities) under common citizenship, and certainly not about pride. It’s all about oil.

Francis Fukuyama once again reaffirms why he is one of the most serious foreign policy intellectuals today, crystallizing in a few sentences what most other China commentators have missed or failed to express so eloquently:

The hardest thing for any political observer to predict is the moral element. All social revolutions are driven by intense anger over injured dignity, an anger that is sometimes crystallized by a single incident or image that mobilizes previously disorganized individuals and binds them into a community. We can quote statistics on education or job growth, or dig into our knowledge of a society’s history and culture, and yet completely miss the way that social consciousness is swiftly evolving through a myriad of text messages, shared videos or simple conversations.

If Yajun’s post at Jottings from the Granite Studio was an introduction into the Chinese mindset and the functional barriers to political change, then Fukuyama’s post is the perfect combination American realist/idealist take on the Jasmine Revolution, focusing on China’s middle class. The middle class is definitely the right frame with which to analyze future political instability in China. If change does come, it will be at the hands of a large number of increasingly comfortable but not wealthy Chinese. This is especially true given that, as Fukuyama notes, the unemployment rate among college graduates in China is one of the highest in the world.

UPDATE: I’m rather surprised that my previous post on the Jasmine Revolution published in the Trinity Tripod is now leading New York Times coverage when you google “Jasmine Revolution”.

Published in the Trinity Tripod.

Over 60 years ago, Chiang Kai-shek envisioned China as a bustling economic and political power, albeit controlled by his own totalitarian state. Today, the Chinese Communist Party (CCP) has reshaped China from a rural, fractured, feudal society into a bustling economic and political power, albeit controlled by totalitarian government. Does this sound familiar? The CCP couldn’t have carried out Chiang’s vision better than Chiang himself. And now, with Taiwan functioning as a democracy, some in China want to follow their lead. Several weeks ago, members of an overseas Chinese-language website, Boxun, called for China’s very own “Jasmine Revolution,” a take on the more successful uprising in Tunisia. I say more successful because the Chinese “revolution” has so far been a dud.

The idea was for sympathizers of democracy to gather in designated public areas in major cities every Sunday, and then peacefully take a “stroll,” thwarting the police from figuring out who was a protestor and who was merely a tourist. Things didn’t go as planned. The first Sunday, Jon Huntsman, U.S. Ambassador to China and soon-to-be Republican presidential candidate, “strolled” into the Wangfujing shopping street in Beijing with his family, pretending not to know that there was anything political going on. A video of Huntsman caught in the act was later used by hyper-nationalists to prove a point about the U.S. meddling in Chinese affairs. The second Sunday was even worse. In Beijing, the meeting place was blocked off; police (uniformed and in plainclothes) outnumbered civilians at a ratio of 10-to-1; and some foreign journalists were harassed, taken to police precincts, and even beaten. This past Sunday was much of the same.

It might be tempting to draw comparisons between the Middle East protests and China, but to do so would be ignoring quite a number of differences. At the end of the day, the majority of Chinese citizens are satisfied with their government. If democracy was suddenly instituted in China, there’s no doubt the CCP would win by a landslide. Under CCP rule, economic development has changed peoples’ lives immeasurably. The Chinese wife of a friend of mine has this anecdote: “My mom could only afford a small piece of sugar for lunch during the Great Famine in 1960, but her daughter traveled in three continents before she turned 25.” Who would forsake a party with those results? Furthermore, most Chinese people haven’t even heard of the protests; the “revolution” mainly received news on websites that are blocked in China.

There are still many Chinese people who hold grievances against the government; but to date, there has not been an incident that unifies the farmers and students, or factory workers and professionals, reaching across socioeconomic strata to create the only force that can create political change in China. Even the Tiananmen protests 20 years ago never reached rural areas. Those fighting for political reform in China will have to wait a little while longer. Don’t lose hope.

Around the country, many teachers see demands to cut their income, benefits and say in how schools are run through collective bargaining as attacks not just on their livelihoods, but on their value to society.

This great New York Times article gets to the heart of the matter: breaking the backs of public sector unions inherently entails vilifying teachers and everyone else who enters public service as ‘leeches’ and the like. Ironically, this also comes at a time when more young people than ever are entering into public service. People decry poor results in education and yet don’t realize that attracting better teachers means that we have to raise the status of teachers in society and pay them more. There’s a reason why Teach for America is effective at getting college students to commit to the job for a few years, but isn’t as effective in recruiting life-long teachers.

This isn’t just true in education; it’s true across the public sector. We wonder why the SEC isn’t doing its job effectively and then forget that the GOP is cutting its budget, which just sends more quality public service employees into the much higher-paying financial industry.

With the release of the Treasury Department’s new white paper on housing policy, the administration has restarted a national discussion on reforming the GSEs (government-sponsored enterprises, Freddy Mac and Fannie Mae). The long and short of it is that they distort the market for mortgages, and contributed to the collapse of the economy by backing risky mortgage securities that later blew up. (they are not however the root cause and creators of those exotic securities; you can thank Wall Street for that) Our bailout of Freddy and Fannie has cost the government far more money than the stimulus or TARP ever cost. This entire set-up is rather strange, given that these are for-profit corporations with an arsenal of lobbyists.

What’s the government’s plan? I got curious when I read Ezra Klein write this bit: “But the government isn’t looking to dramatically change the role they play in the housing market. They’re just looking to get away from poorly designed institutions like Fannie and Freddie.” This seems like a contradiction – and I think he misread the report, although I agree with everything else he wrote in that post. The government’s stake in the mortgage market is going to be substantially altered. As Daniel Indiviglio writes, the government will still subsidize a small portion of mortgages for the poor and veterans through FHA and VA programs, but under any of the options provided by the Treasury Department, the U.S. government will gradually exit the 85% percent of the market it had previously inhabited.

The plan makes GSEs less and less competitive with private sources of funding, gradually winding down its influence on the mortgage market. Fees guaranteeing mortgages will rise, more private capital would need to be raised to cover credit losses, and larger mortgages will not qualify for government-backing. Next, the plan offers three options for a limited government presence on the market: completely private, no government role of any kind; a crisis funding mechanism that is so expensive that during good times it is never used, and in bad times much cheaper to ease a credit crunch; and a catastrophic guarantee reinsurance program. Indiviglio describes this better than I can: “Mortgages would pay a premium to obtain this insurance, but the first losses (up to some specified percentage) would hit whoever held the mortgage asset, whether it be a bank or investor. If losses exceed that first loss piece, then the government would cover the remainder. The government would use the guarantee fees it obtained to do so. That way, theoretically, taxpayers would not be harmed. Think of this as a little like depository insurance, where there’s a fund in place paid for by insurance premiums that the government uses to cover losses.”

This is all good. When it comes to housing policy, one major question will shape how you view all related policies: is universal housing ownership a worthy goal of U.S. government policy? I would say: not in of itself. Owning a house is not a smart decision for every single person. It might be the American dream, but we do more harm than good when we try to force it on people. I would suggest everyone also take a look at the GSE section of the Roosevelt Institute’s 2009 report on financial reform, “Let Markets Be Markets”. There’s a very good lecture from Raj Date included. The full report is here (pdf).

The New York Times’ recent article on the nature of Hezbollah’s current existential predicament was extremely instructive – mainly because many people don’t view Hezbollah’s problems as an issue over its very existence (but it is). The best quote, unfortunately, was wedged toward the bottom:

“Hezbollah doesn’t want to control the government or country, even though they could if they wanted,” said Anis Nakkash, director of the Aman Research Center here in Beirut.

The article identified the problem; that is, Hezbollah can’t consolidate power. But this quote says why: Hezbollah doesn’t want to claim total power. The real reason behind this being, Hezbollah is a militant group, and ruling governments by definition cannot fill the same role as a militancy. An institutionalized Hezbollah is no longer the same Hezbollah that once existed, and the leaders of the group don’t want to lose sight of their original goal: vengeance and destruction upon Israel. Now this is not to say that states that employ terror do not exist. They do. But they generally operate dysfunctionally and are rejected by the global community (Iran, North Korea, China at its worst, etc.).

Hezbollah is on a very shaky path right now. It simply does not have the requisite credibility among the international community to act as a real, normalized stakeholder in any Lebanese government. But it’s also true that we need Hezbollah to become legitimate more than anything – to shake off some of its radical roots, cut off ties with Iran (which might already have happened), and take over some responsibility in representing Lebanese’ interests on the world stage. This outcome is possible, but it will require a careful dance by US diplomats. As for Hamas – well, Hamas is another story. They’re really off the deep end.

I was really touched when my homestay parents asked me over dinner, “Who do you think is America’s best friend? China?” I responded, thinking in terms of real-politik allies, “No, probably not.” But they said, “America is China’s best friend. Japanese students don’t come to China and live with Chinese families. They live together in dorms. The Koreans don’t come to China and live with Chinese families. They live out on their own. Only Americans do. They’re unique. More Americans understand China than in any other country, and more Chinese understand America than in any other country; more students study in each other’s country than in any others. That is why we are best friends.”

Also something that I had forgotten: they mentioned that George Bush Sr. had served as ambassador to China in the early 1970′s under Ford (he wasn’t actually ambassador at the time, because the US still recognized Taiwan, but was the official envoy, and acted like an ambassador). Furthermore, they said Bush Jr. was in China during this time, biking around Beijing taking pictures. For some reason, this really surprised me, simply because the perspective you would have as a foreigner in Beijing prior to the Reform and Opening Up would be somewhat unique, as there were really no foreigners in China prior to that time.

At some function (it’s unclear in what capacity), my homestay father got to know John Tsu, who he described as Bush Sr.’s “Chinese teacher” (he was chairman of the Asian-Pacific Affairs Committee in the White House). I thought that was an interesting connection as well.

While WikiLeaks made the trove available with the intention of exposing United States duplicity, what struck many readers was that American diplomacy looked rather impressive.

Is this really true? I don’t believe it!

No seriously, what did people expect? That we have amateurs representing our interests on the world stage?

President Dmitri A. Medvedev, expressing continued wariness over the prospect of military cooperation with his country’s former cold war adversaries, warned on Tuesday that a failure by Russia and the West to reach an agreement on missile defense could provoke a new arms race.

This is why the New Start Treaty needs to be ratified before the end of the year. We need the Russians to be on our side. Medvedev has staked Russia’s good relations with the United States, and any future nuclear negotiations, on the success of the treaty. New Start and missile defense are not just related – they are inseparable. Without a resolution on one, the other will languish. If we let New Start go, our priorities with Russia across the board falter. If we don’t deal with missile defense, then the Russians will back out of New Start.

I’m very happy to see John McCain coming out of a long, dark election season and finally articulating a position that makes sense: supporting the passage of New Start and encouraging Jon Kyl to follow suit. It’s too bad that some politicians can’t stand up to pressure from within their own party (but at least he’s here right now).

I think ratifying the New Start treaty and the successful inclusion of the Russians in a joint-NATO missile defense plan would be an unqualified success.

Over an official lunch in late February, a top South Korean diplomat confidently told the American ambassador, Kathleen Stephens, that the fall would come “two to three years” after the death of Kim Jong-il, the country’s ailing leader, Ms. Stephens later cabled Washington. A new, younger generation of Chinese leaders “would be comfortable with a reunited Korea controlled by Seoul and anchored to the United States in a benign alliance,” the diplomat, Chun Yung-woo, predicted.

That is a bold prediction – and the Guardian (here and here) is much more direct than the New York Times in claiming this. I agree with Stephen Walt that in regards to China and North Korea, the embassy cables are much more of a wash than they are portrayed as (what an ambassador says to another ambassador is not necessarily the discussion the Politburo Standing Committee is having). Even assuming Kim Jong-eun or the military cabal is somehow incapable of successfully negotiating the power transfer, there would need to be some pretty astounding diplomacy for China to be comfortable with a unified Korea. The entire idea behind supporting a divided peninsula from China’s perspective is that, regardless of how odious the North Korean regime is (and it is a serious headache to China), any unbalancing of the status quo will ultimately hurt China’s interests. Any US or NATO military presence above the DMZ and the floods of North Korean refugees, as the article notes, would be untenable. But that’s not all.

An ascendant, unified Korea could not be a benign ally of the US, according to certain Chinese viewpoints. Already, China is boxed in on all sides by countries closely-partnered with the US: South Korea (of course), Japan, the Philippines, Indonesia, Australia, and India. Unification means a great deal psychologically. A unified Korea would have subtle, but greatly-expanded persuasive powers on the international stage. I hope that, as the Guardian suggests, younger leaders are no longer concerned about this, and want to work with both Korea and the US in a mutually beneficial manner. But that’s not a given.

The goal, then, is to make unification in China’s interest. China might not be able to prevent it – the regime might slide so quickly as to be unsalvageable (and China certainly is never going to war over North Korea again). But the US and Korea should want China to recognize the unified state on its own terms. Not consulting the Chinese would harm our relations with them on all fronts. Incentives for Chinese investment in Korea would help – so would significantly paring back American military presence on the peninsula. (Why, in a post-North Korean world, would we even need military bases there? Is war with China a realistic threat in this day and age? And besides, we always have Japan) We could even couple some of the things China wants with some of our own priorities (on trade, fiscal policy, climate change, energy policy, you name it). I have a feeling that this is not a zero-sum negotiation in which China and the US negotiate, tit-for-tat. Instead, an outcome in which both sides are satisfied can only be positive.

I’m having a hard time imagining how painful the reunification process would be. The North Korean state, if it did merge with the South, would probably go down in flames. The state is already a wreck with food shortages and the like, but without even minimal state assistance many more would probably starve. The military would suddenly be a loose cannon – and the nuclear material currently lying around Yongbyon would be up for grabs. Of course, South Korea and the United States have certainly drawn up coordinated response plans to rush into the vacuum when needed, and have practiced plenty of military scenarios (the current exercise with the two countries’ navies being conducted right now included). But it still boggles the mind.