Has China hit the spending curb?

My article Has China hit the spending curb? appeared in Mail Today/DailyO


Here is the link...

Though today it looks as if Xi's 'pockets' have no bottom, the question remains, can it last forever?

One question is highly relevant to predict China's future: How deep are the pockets of Chairman Xi Jinping, recently promoted to People's Leader of Communist China? Beijing's status in the world may depend on the answer. Though today it looks as if Xi's 'pockets' have no bottom, the question remains, can it last forever?
Take the Shandong, the first-generation Chinese aircraft carrier which was launched in April 2017 by the People's Liberation Army Navy (PLAN). It is China's second aircraft carrier after the Liaoning. The conventionally powered ski-jump carrier with a 70,000 tonnes displacement was commissioned on December 17, 2019 at Sanya (Hainan) by President Xi. It probably costs far more than the estimated cost of $9 billion. A third aircraft carrier, Type 003, is already under construction and may have a displacement of 85,000 tonnes.
For the first time, a catapult-assisted takeoff barrier arrested recovery (CATOBAR), like on the most-modern US carriers, will be used. The PLAN broke all the records by launching 28 ships in 2019. The list of the new ships was recently published on Twitter: Two Type-055 destroyers, Eight Type-052D destroyers, 16 Type-056 corvettes, one Type-075 LHD 1 (a multi-purpose amphibious assault ship capable of receiving helicopters and a well deck, known as a 'landing helicopter dock') and one Type-071 LPD (amphibious transport dock, also called a landing platform/dock). This is only one field. Another domain of 'investment' for the Chinese Government are foreign projects like the Belt and Road Initiative and the flagship China Pakistan Economic Corridor; the latter alone is estimated to cost $62 billion. If one adds international projects (some undertaken in India's neighbourhood i.e. in Sri Lanka, Bangladesh or Nepal), but also in Central Asia, Africa or South America, deep pockets are definitively required to finance all this, even if some of the 'generous' gifts are loans-in-disguise.
China is also pouring yuans in infrastructure, particularly in Tibet and Xinjiang. In the last five years, it has relentlessly developed the infrastructure on the 'Roof of the World'. In 2017, China Tibet News announced the reconstruction and an extension of Lhasa Gongkar Airport. In April 2019, Xinhua wrote: "As one of the region's key projects during China's Five-Year Plan, the estimated investment reaches 3.9 billion yuan ($634 million) for the new terminal building construction." The main body of the construction was completed at the end of 2019 while the new terminal building is scheduled to be opened in 2020.

Infra push
Take the railways, on January 2, it was announced that most of the Lhasa-Nyingchi railway (north of Arunachal) had been completed; the balance is expected to be operational in October 2021; its total length will be 213 km. This massive requires money, as do the three new airports on the plateau, to be completed in 2021 or the railway to Kyirong at the Nepal border. Another 'investment' is the relocation of population on the Indian border. On January 6, Tibetan Autonomous Region's (TAR) government Chairman Che Dahla (or Qizhala)said that Tibet would start a pilot scheme for constructing 30 towns on the border: "In developing a group of border towns and villages into centers of commerce, logistics hubs or tourist destinations, Tibet will proceed from local conditions, pool strength and resources to upgrade infrastructure, improve public services. A few billions more! It is not only national defence, international cooperation or internal development which require billions and billions of yuans, internal security too. In 2019, The Nikkei pointed out: "Beijing has actually been pouring even more resources into domestic security than external security." The figures are flabbergasting: China's annual spending on domestic security has more than tripled since 2007, to reach $193 billion in 2017.
"The government of what is formally the Xinjiang Uyghur Autonomous Region said last month that its security spending alone rose 92.8 per cent last year from 2016 to reach 57.95 billion yuan. It had spent only 5.45 billion on security in 2007," as per a research published by Adrian Zenz of the European School of Culture and Theology in Korntal, Germany. And what about the billions of dollars poured into propaganda by the United Front Work Department to project China's 'peaceful rise'?
The question is: Can the spending spree continue forever; the answer: It cannot. The Chinese economy is said to have only progressed by 6.0 per cent in 2019; it was the weakest growth rate since the first quarter of 1992. The trade war with the US, the weakening global demand and alarming high borrowings by local governments are responsible for the slowdown. "With the economic slowdown in China, the Chinese government is strictly controlling the volume of capital flowing out of China, making Chinese investors work much harder than before to shrink the debt level and difficult for Chinese investors to pay back the debts acquired overseas," according to Singaporean newspaper Lianhe Zaobao. The Communist country's pockets definitely have a bottom.

What lies beneath the Yuan devaluation

My article What lies beneath the Yuan devaluation appeared a few days ago in NitiCetral.

Here is the link...

It was a week of explosions.
At around 11:30 pm on August 13, two consecutive explosions blasted warehouses containing hazardous chemical materials in Tianjin, a city located at a 30 minute train-ride from Beijing.
A day after the mishap, 50 people had already been confirmed dead (among them were 17 firefighters) and some 700 had been hospitalized. This is what the world came to know as a partial blackout was declared on the information coming from Tianjin.
Another explosion, with perhaps longer-term consequences, was the devaluation of the yuan for 3 consecutive days.
On Tuesday (August 11), the Central Bank of China lowered the rate of the Chinese currency by 1.87 %; then, the next day in another move, it was further devaluated by 1.6% and once again on Thursday. It was the first time since 2005, when the current mechanism of change was set up, that Beijing went for such brutal and unexpected moves.
More than 4% in 48 hours is a lot.
The South China Morning Post (SCMP) commented: “The Central Bank shocked the markets by devaluing the yuan by the most in a day in more than 20 years.”
The Hong Kong daily added: “With a dramatic devaluation of the yuan, Beijing brought out the bazookas in a move that might escalate a regional currency war that it had until now chosen to avoid.”
Why the bazookas?
This reminded me of the book Unrestricted Warfare, written in 2001 by two Senior PLA Colonels about the ‘Many Forms of Total War’. It says: “Terrorism may be the most transparent form of total war, but it is just one of the many forms of unconventional warfare. ‘Financial warfare’ in which a country is subjugated without a drop of blood being spilled, means entering and subverting banking and stock markets and manipulating the value of a targeted currency.”
Was the devaluation a guerilla tactic? Was it the beginning of a new war?
Experts are yet to agree on the meaning of Beijing’s sudden move.
Will it make China’ exports more competitive against its Asian rivals? Could this restore China’s competitiveness vis-à-vis other currencies such as the Japanese yen and the Korean won? It is not certain.
It is true that the Korean won reached its weakest level since June 2012 and the Taiwan dollar was also at its lowest since 2010.
The Indian rupee followed suit. But India’s Chief Economic Adviser, Arvind Subramanian affirmed that the impact of the devaluation of the yuan on the Indian rupee will only be ‘temporary’, given ‘adequate’ foreign exchange reserves; for him, “China is responding to its own internal development of slowing down of growth and exports in order to give its economy a boost. All of us policymakers around the world, including India, have to take notice of this action.”
Another explanation was that China had, for a few years, kept the rate of the yuan more or less fixed at 6.20 per US dollar, hoping to become a member of the exclusive club of reserve currencies of the International Monetary Fund (IMF). However, in a recent report, the IMF said that China’s immediate inclusion was not on the cards as the Fund would like to see China undertaking more in-depth reforms, by letting exchange rate fluctuate. Is it a first step in this direction? It might be.
Others have argued that the move to push the US dollar higher can only make imports more expensive for China, which is the largest user of energy, metals and grains. The devaluation could worsen the crash in the commodities market.
Interestingly, analysts also differ on what is going to happen next. 
Reuters has another reading: “There are a bunch of reasons why China decided to devalue the yuan, ranging from falling exports to an ailing property market. The most worrying, though, is probably a destructive change happening in the country's labor market.”
Benjamin Robertson in the SMCP commented: “Regardless of other factors, Chinese firms with high non-yuan denominated debt holdings, and reliance on imported components, are now out. Chinese commodity producers, Chinese exporters, and Hong Kong companies with strong yuan cash flow, are in.”
Some time may be necessary to see the full implications of Beijing’s move.
The New York Times remains optimistic: “Here are two things that China’s government wants very badly: first, for its economy to remain on an even keel, keeping growth and employment high. Second, for its currency, the renminbi, to become globally pre-eminent, helping promote the country’s diplomatic goals and solidifying the country’s centrality to the global economy. Frequently those goals are in conflict. But on Tuesday, China did something it thought would advance both at once.”
And of course, there are the believers in China’s collapse, the “I told you soers”, for whom it is the beginning of the end. They believe that the Communist regime is trembling, that its end is coming fast.
To relax the atmosphere, after three days of explosions, the Central Bank of China affirmed that an adjustment to close the gap between the yuan’s mid-price and its actual trading rate was ‘basically completed’ and that the currency will now remain strong in the long run.
Instead of doing more predictions, it might be more interesting to look at the situation in the Middle Kingdom at the time of the ‘devaluation’.
It is ‘holiday times’ in Beijing and all the big bosses of China have moved to a more clement sky in the sea resort of Beidaihe in Hebei province.
Was a council of war held there? Apparently not.
On August 5, 2015, Xinhua published a news item titled, “Do Not Wait Anymore; No Meetings in Beidaihe.”
It explains that every year since Mao Zedong era: “current and retired Chinese Communist Party leaders met at the Beidaihe summer resort in July or August.”
The Official news agency is not shy to admit: “The annual Beidaihe retreat meeting is one of the CCP’s most mysterious meetings. Many major decisions or policies have been made there.”
Though it adds, “sources have speculated on the themes of the Beidaihe meeting this August and whether or not one will be held.”
Xinhua’s conclusion is clear: “Not long ago, the CCP Central Politburo met twice, on July 20 and on July 30, which was unusual. They have already discussed ‘The Thirteenth Five-Year Plan’, the CCP Fifth Plenary Session, economic strategies, the ‘anti-tiger campaign’, and other important issues.”
The article asks: "Is it meaningful, necessary, or possible to talk about these issues again in Beidaihe several days or ten days later?”
It probably means that the decision to devaluate was already taken before the ‘holidays’ started.
But the Communist leadership appears to be on a warpath for something else. On August 10, 2015, The People's Daily published an article sending a strong political message. It is titled: "Dialectically View the Phenomenon of Tea Turns Cold When People Are Away.” It might be far more serious than the devaluation.
The article explained: "People come and go; the present day replaces old times. Over the years, many of our Party cadres have correctly treated their status changes after having stepped down from their leadership positions. They consciously have not intervened in the work of the new leadership team, which demonstrates the open-mindedness and noble sentiments of a senior Party member and veteran cadre. They have thus won everyone's respect.” This targets former President Jiang Zemin.
It was insinuated that ‘a highly positioned cadre’, when he was in power, arranged for his trusted aides to be in the top positions for the purpose of being able to manipulate power in the future: “This phenomenon causes a dilemma for the new leader and puts him in an inconvenient position.”
The People's Daily compares the retired cadre as ‘cold tea’. This, of course, triggered many comments on the Net; one example: "If ginger tea [Jiang Zemin] insists on being as hot as before, what should we do? In such a case, we should pour it (the ginger tea) out!”
A full-fledged war seems on the cards between Xi Jinping and the ancient regime. Who will win is open to bets?
In the meantime, the ‘devaluation’ may stabilize.

Xi Jinping is a Worried Man

My article Xi Jinping is a Worried Man appeared in NitiCentral.

Here is the link...

During the BRIC and the Shanghai Cooperation Organisation (SCO) Summits at Ufa, the capital of the Russian Federation’s Republic of Bashkortostan, President Xi Jinping of China looked tired.
True, he spoke of a new international order, of a multi-polar world while asking his colleagues from the BRICS and SCO to look at their relations from a ‘strategic and long-term perspective’, but the Chinese President had certainly China’s difficult internal situation in mind, while delivering his speeches of the New Silk Road and other Chinese mega projects.
The state of affairs in the Middle Kingdom is indeed worrisome, most immediately, because of the collapse of the Chinese stock exchange. But that is not all.
On July 2, 2015, several overseas Chinese websites published an article which had appeared in the Cheng Ming Monthly magazine in Hong Kong on the possible collapse of the Chinese Communist Party (CCP).
It argued that the Party is “so corrupt that it has come to the verge of disintegration. Even top Party leaders could not avoid speaking of the possibility of the death of the Party.”
Accordingly to the same source, mid-June, the Politburo’s Standing Committee held a two-day expanded meeting to discuss the stern political and economic situation facing the Party.
Though it is difficult to confirm the information contained in the article, it appears that the Standing Committee was joined by the State Councilors (cabinet ministers), senior members of the Central Committee’s Secretariat, members of the Standing Committee of the National People's Congress and the People's Political Consultative Conference, members of powerful Central Military Commission and top bureaucrats of the Central Commission for Discipline Inspection (CCDI), responsible for the anti-corruption campaign; in other words, the cream of the Party.
Xi Jinping asserted, "We must have the courage to face, acknowledge, and accept the harsh reality that the Party has become so corrupt and degenerated that it could trigger the Party's downfall."
The same source said that a report was distributed during the meeting. The research listed six ‘crises’ in the fields of politics, economy, society, faith (religion), which could lead to the Party' collapse.
The report showed that only 25% of the senior officials of the Central Committees and local governments have successfully gone through the CCDI's review; 90% of Party committees at grass-roots or county levels have failed in the review of their performance and needed to be ‘reorganized’, whatever that means.
The next day, China Gate, a Chinese website based in the US, republished another article from Cheng Ming Monthly magazine, this time about the power struggle between different factions within the CCP.
Apparently former President Jiang Zemin and his close associate, Zeng Qinghong, will be the next target of Xi Jinping's and Wang Qishan’s anti-corruption campaign. Once Zhou Yongkang, the former Security Tsar was arrested, the unspoken rule, that no punishment could be imposed on members of the Politburo’s Standing Committee, did not exist anymore.
All this comes at the time of the worse crack in the short history of the Chinese stock exchanges. The South China Morning Post in a commentary said: ‘Future shock: China's market turmoil poses a challenge for Xi Jinping’, adding that “the market instability threatens to be a major setback for President Xi Jinping and his authority.”
The Hong Kong daily rightly argued “stock market crashes inevitably lead to unwanted consequences” and it quoted the Black Tuesday in Wall Street on October 29, 1929 which sent the US into the Great Depression and the Asian financial crisis in the late 1990s, which left deep scars on the economy of the Asian nations involved.
The SCMP asserted: “Analysts cannot accurately assess the damage that the mainland's stock market turmoil will cause while it continues to roil despite the government's rescue efforts. Yet they all agree that it will have a profound impact on the future of the nation's economy, society and politics.”
Since the stock market started crashing, the loss has been evaluated at $3 trillions; it means that some 30% was lost since June 12, when the exchange was at its peak value.
One of China’s problems is that it is not the institutional investors which hold most of the shares; the stock market is dominated by small individual investors, holding more than 80 % of shares.
The SCMP reported: “It is believed that many of the 90-million-strong investors were burned because they often increased their stakes when prices were high. …Some might well have lost their entire life savings as they used margin loans to bet on the wild market.”
This explained why Xi is a worried man; economic instability could bring along political instability, the ‘investing’ middle-class on which the leadership was banking to bring economic, political and social stability in the Middle Kingdom, may become dissatisfied with the regime; after losing most of their life-earnings in the present crash, will they invest again?
The deep-rooted corruption, the vested interests in the Party and the dissatisfaction of the masses, could make an explosive cocktail.
Today, sorting out the economy in a sustainable manner will need much more than a reform here and there: the future of the Party is indeed at stake.
The Wall Street Journal sees the crash triggering ‘rare backlash’ for President Xi: Jeremy Page explains: “Vibrant stock markets are at the center of Mr. Xi’s plans for an economic makeover, intended to help companies offload huge debts, reinvigorate state enterprises and entice more foreign investment. …Investors talked of ‘the Uncle Xi bull market.’ …the government appearing to panic in its response to the drop, some people are starting to voice doubts about Mr. Xi’s autocratic leadership style.”
And this is happening at a time when Xi faces resistance in the anti-corruption campaign and a serious slowdown of the economy.
Chinese-language news portal Aboluowang commented: “China's struggling stock market could turn into a major collapse …If China's stock market continues to nosedive, it could spark a chain reaction that may lead to a political crisis threatening the authority of the Communist Party and the stability of the country's top leadership.”
It is too early to predict what will happen in the months to come, but the situation is perilous, even if the latest news speaks of a stabilization of the markets.
A compounded element is the new draconian national security law which creates fears among foreign companies; it was openly mentioned by Michael Clauss, the German ambassador to China in a recent interview.
On July 1, the National People's Congress passed a controversial national security law defining threats to the Chinese State's power and sovereignty. For example, a vetting scheme will be introduced to scrutinize any foreign investment that posed a risk to national security’. The NPC is also debating three other laws on foreign investment, cyber security, and foreign NGOs.
Clauss explains that “foreign companies feared the laws might be used to keep certain overseas competitors out of the market. …In China the notion of national security [covers] a very wide range - from culture, technology, food safety up to religion. You can hardly find a field that is not relevant to national security concerns.”
This too does not help to create an atmosphere of trust, which China needs so desperately, if it wants to be a ‘normal’ country.

Will China crack up?

My article Will China crack up? appeared in NitiCentral.

Here is the link...

Being a China watcher is a difficult job.
It can however make you rich or famous, provided you write something many in the West will enjoy: the announcement of the Middle Kingdom’s ‘coming collapse’. Unfortunately, wishful thinking is often (not to say never) followed by reality.
It is what David Shambaugh, a respected Chinese expert, who is director of the China Policy Program at George Washington University, has done in his Saturday Essay in The Wall Street Journal.
‘Coming Chinese Crackup’ was prominently circulated on social media by all those with an interest in the ‘cracking’ of China. Wide circulation was probably the objective of the Journal; that way, Shambaugh’s piece has been a success, though it may not automatically make China crack up.
What did the professor ‘prophesied’? He wrote: “The endgame of communist rule in China has begun, and Xi Jinping’s ruthless measures are only bringing the country closer to a breaking point.”
Unfortunately for those who dream of the Dragon’s demise (I am one of them), it is only a point of view and it is doubtful if the events will unfold as forecast.
Bill Bishop, the editor of the excellent Sinocism Newsletter has different views, he commented: “I think his scenario has a 10% probability, and the probability of a ‘crack-up’ may even be lower now than it was in 2011-2012. Xi's apparent control of the PLA and security services, the instruments of hard power should make it much harder for anyone to mount significant resistance in an organized way … and the support from many quarters for what Xi is doing should not be underestimated. Shambaugh does a smart job hedging by leaving the timing open-ended...”
But Bishop sees a new surge of ‘coming collapse of China’ predictions.
Matt O'Brien’s article ‘Is China’s 1929 moment coming?’ in the Washington Post is another one.
As the National People's Congress (NPC) started its deliberations in Beijing, Shambaugh saw the delegates, “participating cheerfully and parroting back official slogans.” This might be true, but it does not mean that it is the end of China.
Interestingly, the author himself admits: “Predicting the demise of authoritarian regimes is a risky business. Few Western experts forecast the collapse of the Soviet Union before it occurred in 1991; the CIA missed it entirely. The downfall of Eastern Europe’s communist states two years earlier was similarly scorned as the wishful thinking of anticommunists—until it happened.”
Ditto for the ‘color revolutions’ in Georgia, Ukraine, Kyrgyzstan and the Arab Spring; who predicted them?
Shambaugh’s main argument is the following: “Despite appearances, China’s political system is badly broken, and nobody knows it better than the Communist Party itself. China’s strongman leader, Xi Jinping, is hoping that a crackdown on dissent and corruption will shore up the party’s rule.”
Nobody can deny that there something rotten in the Kingdom. During the past 2 months, 30 officers of the Peoples’ Liberation Army (PLA) of the rank of major generals and above are said to have been ‘investigated’. It is unprecedented.
The South China Morning Post spoke of the ‘horrible corruption in the PLA: “All People’s Liberation Army ranks have a price, getting a Communist Party membership has a price, and important military positions are reserved for cronies, senior officers’ children and in-laws.”
The Hong Kong daily quotes Major General Yang Chunchang, a former deputy commandant of China’s Academy of Military Sciences, saying: “Everybody in society knows that in the PLA … you need to pay to join the party. Promotions to become leaders at platoon, company, regiment and division levels all have their own price tags.” The general added “It has affected the security of the army. …It’s too horrible, bribes are in the scale of several tens of millions [yuan].”
The fact that President Xi Jinping is “determined to avoid becoming the Mikhail Gorbachev of China, presiding over the party’s collapse”, does not make China automatically ‘crack up’, as Shambaugh suggests, even if he adds: “His despotism is severely stressing China’s system and society—and bringing it closer to a breaking point.”
Shambaugh believes that: ‘The endgame of Chinese communist rule has now begun …and it has progressed further than many think.”
There is no doubt that Communist China will crack one day; historically, it has happened to all empires and regimes, but it is worth noting that the present leadership in Beijing has carefully studied the ‘collapse’ of the Soviet Union and other authoritarian regimes and has drawn its own conclusions. Xi’s fight against corruption is just one action to avoid that end.
When Shambaugh makes the end bloody: “Communist rule in China is unlikely to end quietly. …Its demise is likely to be protracted, messy and violent,” the author does not raise the question: who will benefit from such an implosion or explosion?
Certainly not the United States or Europe which are so intimately linked, economically and otherwise, with ‘Communist’ China.
What would be more interesting to study is what would be the direct and immediate implications of a ‘collapse’ of China on the West and Asia.
Shambaugh speaks of ‘five telling indications of the regime’s vulnerability and weakness’.
Unfortunately, the author’s arguments often lack logic. Let us take the first ‘indication’: “China’s economic elites have one foot out the door, and they are ready to flee en masse if the system really begins to crumble.”
If a large number of wealthy Chinese flee to New Zealand, Canada or Australia, it has more to do with the crack-down on corruption institutionalized by Xi Jinping and his colleague Wang Qishan, than a sign of forthcoming collapse. Before ill-gotten wealth is confiscated by the all-powerful Central Discipline and Inspection Committee, corrupt officials and business people are keen to transfer their wealth to safe heavens abroad. How is it a sign on the forthcoming ‘end’ of the present regime?
In the same way, the other 4 ‘indications’ are not wrong, but conclusions are often hasty, to please the readers.
Shambaugh’s conclusion is: “These five increasingly evident cracks in the regime’s control can be fixed only through political reform.” It is certainly true, but one has to admit that China’s societal values are different from the ones of the West, and reforms do not mean the same thing in Washington and Beijing.
Looking at a recent example, has the Ukrainian revolution been a success or has the Western interference created further mess? It is a question that Shambaugh should ponder upon.
It is also surprising that the WSJ article does not mention Xi Jinping’s new theory of the ‘Four Comprehensives ‘which refer to building a moderately prosperous society, deepening reform, governing the country according to rule by law, and enforcing strict party discipline.
One can understand that the last ‘comprehensive’ is not palatable to the US, but it is not a proof of ‘collapse’.
The instability of the so-called ‘minorities’ areas (Tibet, Xinjiang, etc.) could be a more dangerous issue as it is presently wrongly handled by Beijing.
Ultimately, nobody knows if (and when) China will crack up, collapse or simply reform soon. The last would be the best alternative for China and the rest of the world.
By the way, do you think that the International Monetary Fund, many Western nations as well as some of US’s Asian allies (Australia, Japan and South Korea, etc.) would agree to participate in a Chinese-led Asian Infrastructure Investment Bank (AIIB), is China was perceived by them as ‘cracking’?

China’s loss is India’s gain

My article China’s loss is India’s gain appeared in NitiCentral


Here is the link...

Where is China going? Apparently the Middle Kingdom is not doing too well! Even economically! The economic publication Bloomberg recently reported, “China’s economy got off to a weak start in 2015 with disappointing manufacturing and service-sector readings, renewing calls for the Government to introduce more measures to spur growth in the months ahead.” In January, the factory activity recorded its first contraction in more than two years.
The Daily Economic News, a Chinese publication, predicted five macro-economic challenges for 2015. First, the increase in money supply may not be sufficient to revive businesses; second, exports would continue to decline; third, as banks tighten credit, the demand for credit could be difficult to satisfy; fourth, real estate developers will be unable to reap their usual high returns and lastly, as the Central Government tightened local Governments’ spending to reduce their debts, private investment may not be enough to push up local schemes.
It is difficult to say if the prediction will be correct or not; in any case, President Xi Jinping will have other serious problems to tackle in 2015.
Two other issues could particularly destabilise China: the current anti-corruption struggle and the severe new restrictions on Internet.
One ominous sign is the large number of suicides recorded in China. The Party has started asking its cadres to check on the number of ‘unnatural deaths’ of party members, in other words, suicides.
Zhang Ming, a political science Professor at Renmin University in Beijing told Bloomberg, “There’s a growing number of official suicide cases reported over the past two years as the anti-corruption campaign intensified,” adding that officials don’t want “to expose the people behind them, so the easiest way is to commit suicide to protect people above them and their family members”.
In case of deaths, Party cadres are instructed to fill up an eight-column form with name, sex, rank and work unit of the deceased, along with the time and cause of death. If possibly due to suicide, the location, method of death and status of the investigation, have to be given.
Wang Qishan, secretary of the CPC Central Commission for Discipline Inspection (CCDI), the man behind the anti-corruption crusade, told a recent meeting of the Commission that “the handling of cases implicating corrupt high-ranking officials – such as Zhou Yongkang, Xu Caihou, Ling Jihua and Su Rong – showed the CPC Central Committee’s unwavering volition to punish corruption and strictly manage the Party.”
‘Wrongdoings’ include forming fractions and cliques, exchanging gifts bought with public money, banquets, travels, entertainment activities and ceremonies using public funds, “The situation has improved, but the root is still there, even though the tree has fallen. New tricks might be pulled under huge pressure, and our mission to prevent re-occurrence is arduous. …We cannot afford to lose,” said Wang.
“We can’t afford to lose the battle” seems the new war cry of Xi and Wang.
The CCDI report revealed that “[in 2014] 226,000 cases were filed as a result of complaints, with 218,000 closed. The cases led to 232,000 officials being given Party or administrative punishment, a yearly increase of 30 per cent, and another 12,000 people were transferred to judicial organs on criminal charges.”
Wang told the Commission that some officials still haven’t realised how ‘grave and complicated’ was the corruption issue. He mentioned several remaining problems such as slack supervision and ineffective measures to address grassroots disciplinary violations.
To corruption should be added, loyalty.
In Xinjiang in 2014, 355 Communist Party cadres have been investigated for ‘breaching party political discipline’, (usually, an euphemism for corruption), a six-fold increase over the previous year. Out of the 355 cadres investigated, 333 received unspecified punishments, which means that ‘loyalty’ and not ‘corruption’ was the main charge. President Xi has warned that wavering on core issues such as openly opposing the party line, or secretly working against Central Government would be severely punished.
In Tibet, 15 party officials have been disciplined “for joining independence groups and providing intelligence to the Dalai Lama in activities deemed a threat to national security”. The ‘cleansing’ is not limited to restive provinces. The Central Military Commission announced that the PLA must root out ‘chronic diseases’ and adopt a zero-tolerance stance toward corrupt officers. The reason for the intense chasing of the corrupt is that President Xi Jinping knows that if the disease is not eradicated China will follow the path to disintegration like the Soviet Union.
But is it not too late to tackle a seemingly incurable disease?
Xi believes that Marxism is the answer.
During a recent Politburo session, Xi spoke to his colleagues of the importance to be committed to Marxism and Socialism. The South China Morning Post mentioned, “The Politburo squeezed a collective study session on Marxist dialectical materialism into its tight schedule, a year or so after it held a similar one on historical materialism.”
Xi would have stressed that dialectical materialism was the party’s worldview and methodology in its efforts to unite and lead the people. The SCMP analysed, “The ruling party deviated from hard-line Marxist ideology when Deng Xiaoping launched market reforms in the late 1970s. Since coming to office, Xi has been eager to fill the ideological void by emphasising both Marxism and traditional Chinese culture and values.”
The second ‘hardening’ is the new tightening over the Internet. While China sees the controlling of Internet beneficial to its indigenous growth; some are aware that it is a tricky issue which could badly boomerang on the country’s economy.
The Global Times recently admitted that the ‘Great Firewall’, as China’s sophisticated Internet monitoring system is known, is misunderstood, “The firewall blocks certain overseas websites in a targeted fashion, rather than isolating China’s Internet from the overseas one.”
It argued that the success of China’s biggest Internet giants — Baidu, Alibaba and Tencent, the so-called ‘BAT’, was due to the firewall.
Without this, The Global Times concluded, “China would become the realm of Google China, Yahoo China and Facebook China.”
What is interesting is that for the first time, the mouthpiece of the Party admitted the existence of the firewall.
The New York Times wrote a hard-hitting editorial, “Under the guise of improving security, the Chinese Government is clamping down on technology companies and further limiting the access its citizens have to information that is not sanitized by the Communist Party. These moves will hurt the Chinese economy and create a major rift between China and the rest of the world.” It quotes a letter sent by foreign business groups to President Xi protesting against new policies that “require companies that sell computer equipment to Chinese banks to turn over their source code to the Government.”
The US newspaper threatened, “But this push for greater control could cost China dearly,” before concluding, “Mr. Xi cannot expect the United States or any other country to engage in negotiations to liberalise trade and investment with his country while his Government is actively making it impossible for foreign businesses to survive there.”
It is where India, the largest world democracy, where freedom truly exists, has certainly a slot to occupy. The ‘Make in India’ of Modi Sarkar may become more and more popular with foreign investors extremely nervous at the latest developments in China.

Reopening of the Himalayas

During a seminar on "Tibet's Relation with the Himalayas" organized by the Foundation for Non-Violent Alternatives and the Sikkim University in Gangtok, a debate took place: should the natural barrier between the Tibetan plateau and the Indian subcontinent be called ‘Himalayas’ or ‘Himalaya’.
The debate can continue amongst scholars and academicians, but the fact is that for centuries (or millennia) this formidable mountain range has not been a ‘barrier’, but a space of exchange; this is no longer the case today.
The Dalai Lama always surprises when he says that there is no such thing as ‘Tibetan Buddhism’, even less ‘Lamaism’. The so-called ‘Tibetan Buddhism’, was entirely borrowed from India, he says; more precisely from Nalanda. How?
Because, by a twist of fate, Tibetan monks and lamas, as well as abbots and pundits from the Indian viharas, criss-crossed the high mountain passes and transferred India’s knowledge to the Roof of the World.
Santarakshita, the Abbot of Nalanda, not only introduced the Buddha dharma to the Land of Snows, but also ordained the first monks.
For more than a thousand of years, the Himalayas witnessed a constant flow of knowledge, experiences, traditions and goods transiting up and down from far-away places in Central Asia, China or Mongolia to the entire subcontinent.
Then, China invaded Tibet and as the ‘Liberation Army’ began to occupy the high plateau, the passes were gradually closed.
Already in 1954, the infamous Panchsheel Agreement, which for the first time denied the existence of Tibet as a separate identity, designated only 6 passes (in Uttarakhand and Himachal Pradesh) as the sole Himalayan land ports; myriad other routes were hastily closed. The last stroke was the short border war between India and China in 1962. All bridges were then cut between the plateau and the Indian plains; the passes have been blocked ever since.
As I attended the seminar, a question came to me: how to soften the traditional borders again? Can the age-old relation between the Tibetan plateau and India be revived? The process has started, though it is extremely slow.
In 1991, a Memorandum on Resumption of Border Trade was signed by India and China; in a first phase, an overland trade route was reopened between the Tibet Autonomous Region and Lipukekh pass in the Pithoragarh district of (today’s) Uttarakhand; since then, a mart is annually permitted for a few months. In 1994, the same facilities were extended to Shipki pass in Kinnaur district in Himachal Pradesh and later to Nathu-la (‘la’ means pass in Tibetan) in Sikkim. A series of trade agreements between India and China allowed residents of Tibet and Indians from the border districts to export goods from a selected list of 29 items such as blankets, textiles, coffee, tea, vegetable oil or gur while raw silk, yak tails, goats or readymade garments, etc could be imported from China.
In 2006, India and China decided to resume the border trade through the historic Nathu-la, located 4,545 metres above sea level and 54 kilometers from Gantok; it had been closed for the past 44 years. With Jelep-la (via Kalimpong), the pass was traditionally the most important trade passage between Tibet, China and India.
The bilateral move had also a strategic implication as analysts believed that it signaled Beijing’s implicit recognition of Sikkim as part of India. This is debatable.
Incidentally, when I applied to visit the pass, I was told that I could not go due to my ‘foreign’ origin. This is typically foolish babu-thinking: to allow visitors from India or abroad to have a quick darshan of Chumbi valley on the Tibetan side, would be the best proof that the place is a part the Indian territory, under New Delhi’s control. Security checks should of course go alongside the permission. Babus are often unable to think in India’s interests.
In 2006, it was hoped that the border trade route would give a major boost to local economies and smoothen the bilateral relations between India and China. This has not really been the case for different reasons. The border trade remains rather small in volume, though smuggling of commodity goods is flourishing.
It is perhaps time to think to reopen the Himalayan passes without restrictions. Common men can only benefit from it.
After President Xi Jinping met the Indian Prime Minister on the occasion of the BRICS meet in Durban, the Chinese leader stated that he regarded “ties with India as one of the most important bilateral relationships”. According to him, an important issue was “enhancing people-to-people exchanges and cooperation, and broadening youth exchanges.”
Why can’t both governments agree to remove the restrictions on border trade and later open the Himalayan passes to tourism?
Foremost in my mind is the Demchok route in Ladakh which would allow Indian pilgrims to reach the Kailash-Mansarovar area in a relatively short time and in fairly comfortable conditions. Is it not worth it?

Nepal invaded by China, for India's good?

The Chinese are slowly invading Nepal.
A Nepali anaylsyt told AFP "In Tibet, unrest has significantly increased, so Chinese investment in Nepal should be understood in the context of China's integrity, which is very important for the giant nation." 
He added: "Some Indian analysts repeatedly warn that China has built these ports to prepare for a war with India, it will definitely provide China with an edge but at heart, its goal is to expand the economic opportunity to its workforce and make them loyal to the state."
From Mao's time, the Chinese have always spoken of dual use for infrastructure. In Tibet's Nyingchi prefecture  for example, infrastructure has tremendously been developed, with the first objective to accommodate more than 1 million tourists every year. But the same infrastructure can be used in case of conflict with India (Nyingchi is just north of the McMahon Line).
Ditto in Nepal which is fast invaded by China.
In this context, it is interesting to mention an article published by The Hindustan Times on November 11, 1950. The title is "Sardar Patel Exhorts people to stand unitedly to see conditions in Tibet and Nepal and defend their country".
The article quotes Patel in one of his last speech (probably the last in Delhi). His conclusion was "In this kalyug we shall return ahimsa for ahimsa. But if anybody resorted to force against us we shall meet it with force."

Sardar Patel said in Delhi that the present or potential dangers arising from what was happening in Tibet and Nepal made it incumbent on the people to rise above party squabbles and unitedly defend their newly-won freedom. The path shown by Mahatma Gandhi and Swami Dayanand, he added, would help the people to tide over these none too easy times. Sardar Patel was addressing a meeting organized by the Central Aryan Association to commemorate the 67th death anniversary of Swami Dayanand Saraswati, social reformer and thinker. Referring to the recent developments in Nepal, Sardar Patel said: "In this country, our near neighbour, the Raja has sought sanctuary in the Indian Embassy. How could we refuse to give him refuge? We had to give it. Those who are wielding real power today in Nepal do not accept the Raja as the head of the State. They have installed the Raja's three-year-old grandson on the gaddi. They want us to accept this position. How can we do so?" Sardar Patel emphasized that the "internal feud" in Nepal had laid India's frontiers in the north wide open to outside dangers. It was imperative, therefore, for Indians to be well prepared to meet any challenge that might come from any quarter. Sardar Patel criticized Chinese intervention in Tibet and said that to use the `sword' against the traditionally peace-loving Tibetan people was unjustified. No other country in the world was as peace-loving as Tibet. India did not believe, therefore, that the Chinese Government would actually use force in settling the Tibetan question. "The Chinese Government," he said, "did not follow India's advice to settle the Tibetan issue peacefully. They marched their armies into Tibet and explained this action by talking of foreign interests intriguing in Tibet against China. But this fear is unfounded: no outsider is interested in Tibet. India made this very plain to the Chinese Government. If the Chinese Government had taken India's advice, resort to arms would have been avoided." Continuing, Sardar Patel said that nobody could say what the outcome of Chinese action would be. But the use of force ultimately created more fear and tension. It was possible that when a country got drunk with its own military strength and power, it did not think calmly over all issues. But use of arms was wrong. In the present state of the world, such events might easily touch off a new world war, which would mean disaster for mankind. In these difficult times, Sardar Patel said, the duty of the Indian people lay not in fleeing from trouble but facing it boldly. That was the real
message of both Swami Dayanand and Mahatma Gandhi. "Do not let cowardice cripple you. Do not run away from danger. The three-year-old freedom of the country has to be fully protected. India today is surrounded by all sorts of dangers and it is for the people today to remember the teachings of the two great saints and face fearlessly all dangers." The Deputy Prime Minister continuing declared: "In this kalyug we shall return ahimsa for ahimsa. But if anybody resorted to force against us we shall meet it with force."

The Chinese continue to advance. But now, they say that they want to do business with India.

China eyes India trade by boosting spending in Nepal
Deepak Adhikari (AFP)
March 10, 2013
KATHMANDU — China's ambassador to Kathmandu was recently pictured in a traditional Nepali cap and silk scarf, digging with a spade to symbolise the laying of the foundations of a new dry port near the Tibet border.
The photo opportunity marked the latest in a series of major projects that underscore China's growing economic influence in Nepal, where it is building roads and investing billions of dollars in hydropower and telecommunications.
Other Chinese projects in its impoverished, electricity-starved Himalayan neighbour include a $1.6 billion hydropower plant which is expected finally to end power outages which extend to 14 hours a day in winter.
Meanwhile China recently completed a 22-kilometre (14-mile) stretch of road in central Nepal connecting the country's southern plains with the Tibetan county of Kyirong, to form the shortest motorable overland route between China and India.
Analysts have questioned whether Beijing's largesse is a gesture to a neighbour in need, or the result of a foreign policy which increasingly sees Nepal's roads and dry ports as a doorway to the huge markets of India.
"I am sure that these infrastructure projects will help win influence in Nepal but they will serve a dual purpose," said Purna Basnet, a Nepalese political commentator who frequently writes on Chinese influence in Nepal.
"It will be easier for China to supply goods to India via Nepal. There is even a talk of connecting Kathmandu with their rail networks in Tibet.
"The Shigatse-Lhasa railway will be completed in a couple of years. From Shigatse, they have plans to connect Kathmandu through railways."
Nepal has always been in the shadow of its southern neighbour India, which has traditionally exerted huge political influence and is Kathmandu's biggest trading partner and sole provider of fuel.
Since the end of a bloody decade-long civil war in 2006 and the emergence of the Maoist rebels who fought the state as the largest political party, China has been gradually -- and literally -- making inroads as a counterweight to India.
Chinese ambassador Yang Houlan outlined his country's vision of Kathmandu as a trade gateway to New Delhi in a recent op-ed article in Nepal's English-language Republica newspaper.
"From an economic viewpoint, Nepal links China (with 1.3 billion people) with South Asia (with 1.5 billion). The huge common market provides great opportunities for both China and South Asia," he wrote.
"China is pushing its ?Develop West' strategy, and South Asia represents one of the main overseas investment opportunities. Nepal could provide China the much-needed overland channel to South Asia."
China's commitment to Nepal is outlined by its construction of a further five dry ports in the Himalayan region where the treacherous terrain marks the 1,414-kilometre long border.
It has also offered to fund an international airport in the tourist hub of Pokhara.
On top of infrastructure development, around two dozen Chinese companies have invested $100 million in housing, hotels, restaurants and other areas of tourism in Nepal.
By the end of 2013 annual trade between the two countries is expected to hit $1.5 billion, a 25-percent rise on an annual basis.
But it's not just about getting rich, say many observers who see China's investment in Nepal as a vital part of its strategy for quelling unrest in a country of 55 ethnic groups where poverty remains a major threat to security.
"In Tibet, unrest has significantly increased, so Chinese investment in Nepal should be understood in the context of China's integrity, which is very important for the giant nation," said Kathmandu-based strategic affairs analyst Lekhnath Paudel.
"Some Indian analysts repeatedly warn that China has built these ports to prepare for a war with India," he added.
"It will definitely provide China with an edge but at heart, its goal is to expand the economic opportunity to its workforce and make them loyal to the state."

Learning from China

Indian Union Minister of State for Personnel, Public Grievances and Pensions V. Narayanasamy recently met his Chinese counterpart Yin Weimin in Beijing.
According to Ananth Krishnan of The Hindu "Mandarins and Babus to learn from each other".
One can only hope that the babus and the mandarins will exchange good practices. 
Last month, I mentioned on this blog an article of the China Economic Weekly which says that scores of Party's officials were fleeing China with large amounts of money.
The China’s Academy of Social Science released statistics showing that between 16,000 to 18,000 Party officials had fled the country since the mid 1990s, taking away with them 800 billion yuan with them. 
A Report of the People’s Bank of China suggested that dishonest officials had clandestinely taken $124 billion of illegally obtained money out of the country between 1995 and 2008. 
The mandarin's practices were detailed in my posting The Chinese babus invest abroad.
Since then, Radio Free Asia affirmed that "Half of World’s 'Black Dollars' Are from China; Capital Flight Is Accelerating":

The German newspaper Süddeutsche Zeitung said that in the past 10 years, through different means and various channels, the illegal funds fleeing from China reached a staggering US $3 trillion. Out of every two 'black dollars' in the world, one is from China. It was estimated that, after the 18th National Congress of the Chinese Communist Party, when the authorities considered implementing the exposure of the personal assets of government officials, the capital flight accelerated to US$ 41.2 billion in November alone. Süddeutsche Zeitung reported that the second largest group responsible for the flight of capital was government officials.
Li Xinde, who runs a website that monitors Chinese public opinion, believed that the cause of the problem was the current policies and laws that involve anti-corruption, exposure of personal assets, and supervision of power.
A Beijing economist Zhong Dajun attributed the rampant capital flight to the current social political system, where a person can become rich quickly but develop a strong sense of insecurity after becoming rich. A 2011 report from China’s central bank revealed eight major means that corrupt officials use to transfer their property: cash smuggling, remittance fraud, current account fraud, overseas investment, credit card spending, creating an offshore financial center, foreign direct receipt, and transfer through offshore special relationships.

Indians still have a lot of things to learn from China.  
But one can't put the entire blame on the bureaucrats, business people are also leaving China. 
On January 6, Xinhua mentioned China’s International Migration Report (2012), released in December which indicated that among business owners with personal assets of more than one billion yuan (US $ 160 million), 27 percent have emigrated, and 47 percent are considering emigration.
In the past three years, at least 17 billion yuan ($US2.7 billion) of capital has flown abroad. According to the Blue Book many businessmen transfer their 'gray income' overseas to avoid tax and evade prosecution.

Mandarins and ‘Babus’ to learn from each other
Ananth Krishnan
The Hindu
January 17, 2013 
Indian and Chinese officials plan to train together and exchange best practices on reforms
Two of the world’s biggest bureaucracies — India and China — have begun an effort to share their experiences of carrying out administrative reforms and to jointly train their civil servants, following talks between the two governments here this week. In an effort to share “best practices” — more sensitive issues such as the rampant corruption plaguing both governments have been kept off the table, for now — both countries have decided to come together to learn about each other’s experiences in carrying out administrative reforms within two of the world’s most complicated and vast bureaucratic systems.
Union Minister of State for Personnel, Public Grievances and Pensions V. Narayanasamy and Chinese Minister for Human Resources Yin Weimin held day-long talks on Tuesday that covered a range of issues from assessing the performance of officials to social security and the functioning of the public sector in both countries.
China has offered to host Indian civil servants at the Chinese Academy of Personnel Sciences for training, while India will similarly choose an institution to host young Chinese bureaucrats. A delegation from India will visit China in May to kick-start the process, while officials from Beijing will travel to India in November. China’s vast bureaucracy — a source of increasing criticism from some quarters here on account of its opacity — is more than three times the size of India’s, employing 3.7 crore officials in the Centre and provinces. While talks on expanding cooperation are at an early stage, Mr. Narayanasamy said he was particularly struck by the Chinese approach to training civil servants. Here, officers are only trained intensively for five months before taking up their jobs,compared to a two-year period in India.

More on the Eldorado

In continuation with my last week posting on the Eldorado (Tibet), here is one more article on the subject. It is published in the China Daily.
The Chinese economic machine needs to be fed with minerals, which are either imported or extracted from China's provinces.
Chang Fushan, vice-chairman of the China Nonferrous Metals Industry Association explained: "China has formed major resource bases such as those for copper in central area of the Tibet autonomous region, and for nonferrous metals in western Yunnan province, the central-eastern area of Tibet, and the Xinjiang Uygur autonomous region."
A website, Meltdown in Tibet, has posted excellent Google images of mining sites on the Tibetan plateau. Just have a look.
Meltdown in Tibet also highlight the importance of the railway line: "Mining and mineral exploration have increased dramatically on the Tibetan Plateau since the 2006 arrival of the Golmud-Lhasa railway link, and due to government programs and promotion. Along with the large government and business controlled mines, small unregulated mining operations are popping up all over the plateau. Due to low salaries, minimal health and safety standards, and weak environmental laws, normally uneconomic mineral deposits can be mined profitably by Chinese companies. Corrupt officials are willing to cut costs even more."
Already in 2007, Xinhua had announced: "Chinese geologists have discovered 16 large copper, iron, lead and zinc ore deposits along the Qinghai-Tibet Railway route since 1999, said the country's top geological surveyor here Wednesday.
Geologists initially found five non-ferrous metal deposits along the 1,956-kilometer railway with total possible reserves of more than 20 million tons of copper and 10 million tons of lead and zinc, said Meng Xianlai, director of the China Geological Survey (CGS) under the Ministry of Land and Resources.."
The mouthpiece of the Communist Party added: "They included a copper deposit in Qulong, Tibet Autonomous Region, with a proved reserve of 7.89 million tons, second only tothe country's largest copper mine in Dexing of east China's Jiangxi Province, said Meng. The CGS predicted the possible copper reserves in Qulong could reach 18 million tons, making it the biggest copper deposit in China. Estimated reserves of 760 million tons of high-grade iron ore were found in the Kunglun Mountains on the western Qinghai-Tibet Plateau and southern Xinjiang Province, which the Qinghai-Tibet Railway crosses, said Zhang Hongtao, deputy director of the CGS."
In other words, it was a good investment to 'liberate' Tibet in 1950.

Overseas focus remains key for nonferrous metals
2012-07-09 
China Daily
China will accelerate the overseas exploration of nonferrous metals to meet growing domestic demand, senior industry officials said on Friday.
"Chinese companies have accelerated their exploration of overseas nonferrous mining resources in recent years, making the country an important driver of the global nonferrous metals industry's development," said Shang Fushan, vice-chairman of the China Nonferrous Metals Industry Association.
According to the association, China had overseas mining rights for 80 million metric tons of copper, 30 million tons of lead and zinc, and 6 million tons of nickel by the end of last year.
These mining rights have an annual production capacity of 200,000 tons of copper, 35,000 tons of nickel and 900,000 tons of lead and zinc.
"China's rapid urbanization and industrialization will support the growing demand for nonferrous metals," Shang said.
"However, the domestic proven reserves are far from enough to meet the increasing demand."
He called for continued investment in the mining industry to improve the quality of its products and increase the output of copper, aluminum, lead and zinc.
"The nonferrous metals industry is facing severe international competition," said Chen Quanxun, chairman of the association.
"Since the 2008 financial crisis, developed economies are more focused on the real economy (such as manufacturing), which has led to fierce competition in the mining sector."
In 2011, China's overall output of six major nonferrous metals — copper, lead, zinc, nickel, stannum and stibium — was 8.25 million tons, up 18 percent year-on-year. The growth rate was almost double the average annual growth rate of the output of the six nonferrous metals during the 11th Five-Year-Plan (2006-10).
As a new group of mines will be put into production soon, the output of major nonferrous metals products will continue to grow at a rapid pace in the years to come," Shang said.
He said China has formed major resource bases such as those for copper in central area of the Tibet autonomous region, and for nonferrous metals in western Yunnan province, the central-eastern area of Tibet, and the Xinjiang Uygur autonomous region.
At present, the recycling of waste materials, also known as tailings, has huge potential in China, especially red mud, barren rocks and mine tailings.
According to an investigation conducted by the association, the total amount of tailings from nonferrous metals mining between 1949 and 2011 reached 3.8 billion tons.
These tailings contain 1.45 million tons of copper, 730,000 tons of stannum, 200,000 tons of wolfram and 3.2 million tons of lead and zinc, which have the potential to be used in many ways, according to the association.

Tibet: the Chinese Eldorado

On July 4, China Tibet Online published an article entitled, Qinghai-Tibet Railway boosts economy.
It quotes from an official of the Qinghai-Tibet Railway Company: "the annual growth rate of passenger volume reaches 10.3 percent.”
The article further affirms:

The railway has helped Tibet break through the transportation bottleneck that hindered the local economy, according to Bao Chuxiong, general manager of the railway company.

Also, the cost of transportation of both passengers and goods are greatly reduced, allowing for an increasing volume. The cost for per ton-kilometer was reduced from 0.38 RMB to 0.12 RMB.
Statistics indicated that total weight of cargo increased from 24.91million tons in 2006 to 51.64 million tons by the end of 2011, up 15.7 percent annually.
Tourism also benefits from the railway; thirty percent of the total passengers visiting Tibet use the train. The Chinese government expects that by the end of 2015, Tibet will receive 15 million tourists annually while Qinghai will will get 20 millions.

China also announced that its plans to increase the passenger train services from major cities in China to Lhasa. Wang Tao, a spokesman for the Qinghai-Tibet Railway Company said that starting July 9, daily trains will start running between Guangzhou, capital of South China's industrial province of Guangdong and Lhasa; Chengdu-Lhasa trains are also scheduled to follow the same schedule in the very near future.
Xinhua quoted railway officials as saying that the train frequency to Lhasa have been increased in order to 'cope with the travel surge' to Tibet.
Statistics released by the railway company in May said that more than 49 million people have travelled on the Gormo-Lhasa railway since the route opened in July 2006.
But more than tourism, mining explains the exponential growth of the Tibet railways. The article of Xinhua reproduced below shows the ‘economic benefits’ of the railway line for the Chinese economy.
One understands why, 62 years ago, Mao decided to ‘liberate’ Tibet.
In a way, he was a visionary; the Great Helmsman understood that if China wanted to become a major economic power, it needed raw materials and water (though water can't be transported by train,it can be diverted).
Where else than Tibet could he find all these precious goods?
Today, China may say that they want to protect the Tibetan plateau's environment, but the fact remains that the underground wealth of the Roof of the World is taken away to the Mainland, for the benefit of the Mainland.
A few days ago, I mentioned another benefit of the railways on this blog: transportation of troops, armament and missiles for the People's Liberation Army. Mao thought of this too.

Multi-metal mine with world-class deposits rises in Qinghai-Tibet Plateau
Xinhua
2012-06-29
A multi-metal mine in the birthplace of Tibetan King Songtsen Gampo has the potential to be among the world's 50 biggest mines of its kind by deposits and may generate an annual product value of 4.5 billion yuan (about 712 million U.S. dollars) by the end of 2015, Chinese prospectors have announced.
Medrogungkar county, home to the Jiama Copper Gold Polymetallic Mine, about 68 kilometers from Lhasa, may dethrone Dexing in east China's Jiangxi province to become the country's biggest copper town in 10 years, said Jiang Liangyou, board chairman and Party secretary of the owner of the mine, Tibet Huatailong Mining Development.
The projections were based upon the initial prospecting finished by Huatailong in 2010 within a land area of nine square kilometers, Jiang said. The company's mining permit covers a total area of 144 square kilometers at an altitude of 4,000 to 5,407 meters.
"The prospecting results are subject to independent third-party verification overseas," he said. "If verified, it would propel the mine into its second-phase expansion."
According to the expansion feasibility report that has already been completed, the subsidiary of the China Gold International Resources Corp. Ltd. (TSX:CGG; HK:2099) would expand its daily processing capacity from the current 6,000 tonnes of ore to 40,000 tonnes since the end of 2015 for 70 years.
"Phenomenal changes will be brought to Tibet's economic and social development, because, after the expansion, Jiama Mine may generate tax revenue equivalent to one-sixth of the current fiscal revenue of the government of Tibet autonomous region," said Jiang.
Official statistics show that Tibet took in record-high tax revenue of 9.663 billion yuan in 2011, up 91 percent year on year. Last year, Medrogungkar became the first Tibetan county to rake in tax revenue of more than 200 million yuan. Also last year, Huatailong posted revenues of about 660 million yuan from its main business and 140 million yuan in profits, and the company paid 118 million yuan in taxes.
First-phase production started in July 2010 with a total investment of 3.5 billion yuan, and the largest copper gold polymetallic mine in Tibet specializes in the exploitation and processing of six metals -- namely, copper, lead, zinc, gold, silver and molybdenum.

INDUSTRIAL WEATHERVANE
Located within the Gangdise Copper Metallogeny Belt in central Tibet, the Jiama project has been developing amid disputes. Before the mining area was taken over by Huatailong under the state-owned China National Gold Group Corporation (CNGG) in late 2009, a dozen private miners were caught up in a rat race for the rich ore supplies, ignoring their responsibilities to the local community and environment.
Ensuing public complaints forced the regional government to suspend the operations of the private miners, re-examine the local mining industry and seek a proper way to develop Tibet into "a reserve base of strategic resources" as the central government had required in January 2010.
Although nine key mining zones, including Jiama, had been officially designated as such years before, the local mining industry contributed to less than 3 percent of the region's total gross domestic product and was heavily criticized for jeopardizing the ecology and environment of the "roof of the world."
"As the only mining company parented by a centrally-administered enterprise in Tibet, Huatailong has been challenged to lead the industry by the regional government, blazing an appropriate trail to honor its social responsibility in Tibet and bring local residents long-lasting benefits through environmental protection and community-building efforts," said Sun Zhaoxue, general manager of CNGG.
"The answer, in our mind, is to build Jiama into a large,environmentally-friendly mine equipped with leading technologies," he said.

JIAMA MODEL
People have traditionally associated mineral exploitation with pollution and environmental degradation. How far Tibet could go with its mining industry would depend on whether mining companies could strike a balance between instant wealth and sustainable development, corporate profits and benefits for local residents, said Teng Yongqing, general manager of Huatailong.
"If these balances were not achieved, regardless of the rich mineral resources Tibet may boast, turning this region into a reserve base of strategic resources would be just a pipe dream," said Teng.
What Huatailong has been doing in Jiama over the past two years has been summarized as the "Jiama Model" by the Ministry of Land and Resources, and many of its domestic industry peers have visited the place in hopes of learning from Huatailong's experiences.
"The golden rule we have been following here is to always be responsibility-aware and harmony-aware. You can never be careful enough with these issues. We have had bitter lessons," said Teng.
To ease the hostility among local residents, Huatailong spent more than 32 million yuan on land compensations and another 3.5 million yuan to make up for herders' livestock losses at the hands of the former irresponsible miners.
It also invested 19 million yuan to install the Jiama Industry and Trade Company (JITC), a platform specializing in the transportation, green and labor services within the mine, but held only a 51-percent stake. The remaining stake advanced by Huatailong was equally distributed among the 665 local households of Jiama Township who received an aggregate cash bonus of 330,000 yuan the day the platform was put into operation.
In the following two years, these shareholders have shared in year-end dividends of 1 million yuan and 1.18 million yuan, respectively. Moreover, locals enlisted by the JITC can earn 4,000 yuan to 10,000 yuan a month. By contrast, the average per capita annual net income of Tibetan herders was 4,700 yuan in 2011.
Huatailong has also dedicated itself to boosting local employment. About 35 percent of its total employees, or 294 people, are from ethnic minorities, including 253 Tibetans. Jiama Township has become the most wealthy place in Medrogungkar to date.
"Working with Huatailong is an admirable job here. As far as I understand, people admire us for not just the relatively high salaries we earn, but also out of respect because many of them think the company is trustworthy," said Tsering Dekyi, one of the nine locals who graduated from Northeast University with a major in geological surveying and exploitation through Huangtailong's sponsorship.

CHANGING FOR THE PEOPLE
For Han employees, Huatailong has established a number of behavioral taboos. For instance, they are banned from speaking disrespectfully to locals, not fulfilling a promise, shirking their duties, littering and feeling self-important.
Employees are also given regular lessons on local customs and the Tibetan language so they can befriend local residents and offer a hand when the latter is in need.
Knowing the public fears its production might raise dust and damage grasslands, Huatailong modified its infrastructure construction plan and invested 200 million yuan on a 5.5-km-long tunnel to transport minerals through mountains instead of on the ground.
To date, the company has spent 180 million yuan on various environmental protection projects, including water recycling, land reclamation and tailings disposal. This investment is roughly 11.7 percent of its total investment on the Jiama project -- much higher than the national benchmark of 3 percent.
To conserve water and avoid pollution, the project is a zero-discharge site, as flotation tailings are de-hydrated in a press filter facility above the plant and the filtered water is re-circulated into the processing cycle.
To help local residents and livestock tide through dry seasons, the company spent 1.65 million yuan on building a stand-by water cell that draws water from the Lhasa River, and it invested another 3.3 million yuan on water-saving irrigation facilities for farmers.
"Not everyone in the management can speak Tibetan, but we are open to communicating with every resident. They just come and see. If they crack a smile, we see what we value," said Teng Yongqing.
(Writing and reporting by Cheng Yunjie; Xu Lingui, Guo Yaru and Li Hualing also contributed to the story)

Naked Chinese and Black Indians

Last week, I quoted from a survey prepared by the Central Committee of the Communist Party which discovered that 187 (91%) of the 204 members of the Central Committee of the Communist Party had family members living or working overseas or maintaining citizenship in other countries. 
Now, the US-based TV channel New Tang Dynasty (NTD) says that  China's 'Naked Officials Move Their Wealth Overseas:

It appears that large numbers of Chinese government and Party officials are preparing to leave China by moving their families and wealth overseas first. This phenomenon of officials—who live in China but have prepared to move elsewhere—is so common that there is even a name for them in Chinese: “naked officials” (裸官).
Roughly 90 percent of Politburo Central Committee members and Central Discipline Inspection Commission members have family working or living overseas, according to Hong Kong’s Trend Magazine.
Many Party and government officials have already fled, often with ill-gotten gains. According to the Chinese Academy of Social Sciences, between 1995 and 2008 as many as 18,000 Chinese government and Party officials fled China—transferring stolen assets worth $130 billion.

In India, the opposition has rightly been complaining that the Government was do nothing to repatriate tons of 'black money' in the vaults of secured banks in Switzerland or other fiscal paradises, but once again India can't compare with China. The Middle Kingdom is always doing things at a larger scale than India. This article in The Epoch Times, confirms it. 
But is it so?
The great pity is that there is no investigative journalism in India. Would a major publication sponsor one or two senior journalists for a couple of years to go into the businessmen of Black Money held by Indians abroad, one would perhaps discover that India is not so far behind China.
One of the difference is that Indians with black money continue to live in India, while in China, they have to flee the country to avoid the guillotine.

The Big Business of Fleecing the Chinese RegimeRecovery almost nil
By Heide B. Malhotra
Epoch Times Staff
June 6, 2012
Over the past months, economists, investment experts, and the media have reported extensively about Chinese officials embezzling funds from the Chinese state and absconding with the funds to foreign countries. Such activities didn’t escape the Chinese regime, controlled by the Chinese Communist Party (CCP), especially as that regime is keeping the country under tight control.
“Officials appropriate houses for family members; divert business loans to their own accounts; declare bankruptcy rather [than] pay back loans; use government money to fix up their offices and homes,” according to a July 2011 entry about corruption in China on the Facts and Details website.
In August 2011, Xinhua, the Chinese regime’s mouthpiece, reported that China’s legislature was revisiting its Criminal Procedure Law, enacted in 1979 and amended once in 1996, to address confiscation of ill-gotten funds. A draft had been turned over to the National People’s Congress (NPC) Standing Committee for review.
“China’s legislature will revise its Criminal Procedure Law to allow the confiscation of illegally-obtained money from corrupt officials and terrorists who have fled the country,” the Xinhua announcement said.
A legal amendment, passed on March 14 by the Chinese regime’s 11th National People’s Congress, allows the confiscation of assets in cases of bribery or corruption, though it is unclear how the law will be applied in practice, according to a translation of the law on the Law Professor Blogs Network website.
The amendment included four new proceedings, including “cases involving the confiscation of illegally obtained incomes by suspects and defendants who have fled or died,” according to a law review on the JD Supra LLC website.
The law review suggests that prosecutors are being assigned a quota under which they are to achieve a certain amount of convictions of criminal defendants. Should the quota not be reached, the individual will receive a lowered performance rating.
The JD Supra review ends by suggesting that “it will take more than revising laws on paper to advance China’s system of criminal justice. Among other things, there is also an urgent need to reform the system that governs how legal rules are implemented.”
“The detailed statistics from China’s April monetary statistics show that the change in the position of forex purchases has turned negative again in April. With a relatively large trade surplus in April, this indicates that capital flow turned hugely negative. … Excluding the trade surplus, capital outflow would be RMB177 billion [US$27.8 billion],” according to a recent article on the Macro Business website.
China’s regime continues to experience trade surpluses, with the April trade surplus amounting to $18.4 billion. Imports can’t keep up with exports, while foreign currency reserves are increasing at a much slower rate.
One measure of capital outflow or inflow is the easing or tightening of monetary conditions. When a central bank of a country increases the reserve ratio for financial institutions, it takes money out of the market, and when it decreases the ratio, it puts money into the market.
The People’s Bank of China reported that effective May 18, it would reduce the reserve ratio for financial institutions by 0.5 percent, after already implementing a 0.5 percent reduction in February.
According to Xinhua, the February and May reductions would allow for US$62.9 billion to flow back into the economy with each reduction.
Generally, a capital outflow from any country would reduce the liquidity in the market. To counter the effect, a central bank may release money into the economy by reducing the reserve ratio requirement of a bank. This action tells banks that they need to release money back into the economy through lending activities.
“There is only one way to square a record trade surplus with the sharp fall in reserve growth. … Hot money is now flowing out of China,” according to a 2009 article on the naked capitalism website.
The article suggests that the Chinese regime’s trade surplus should have increased their foreign reserves. Foreign direct investments experienced by China should have put another few billion dollars into the Chinese regime’s reserve pockets.
The May reduction in financial institutions’ reserve ratio pumped even more money into the country. Yet, apparently, the Chinese state’s reserves didn’t increase as much as they should have.
“We now know, more or less, the reason for last weekend’s [May 2012] decision to reduce Reserve Requirement Ratio [RRR]. Indeed, while the 50bps [0.5 percent] cut of RRR would have made RMB421.14 billion [US$66.7 billion] available for banks to lend, almost half of that would have been offset by the April’s capital outflow,” according to Macro Business.

Macao as Port for Money Fleeing China
“A look behind the scenes at Macau [also called Macao] reveals a lot about Chinese corruption, and also about how scared many Chinese businessfolk [sic] are about the political climate back home,” according to The Economist, quoted in a January article on the Seeking Alpha website.
The article suggests that one can get a sense of the amount of illegal money leaving China by analyzing Macao gambling earnings.
Macao is the perfect place for a corrupt official to bypass the Chinese regime’s export controls on money. The official travels to Macao after buying the gambling chips beforehand. All the spoils are then paid out in Hong Kong dollars, which then can be deposited either in Hong Kong or a different foreign country, according to a quote from The Economist on the Seeking Alpha website.
“One rough way of monitoring the ‘unofficial’ money flow is to watch gaming revenues in Macau,” Seeking Alpha said.

Embezzling and Absconding Rampant
Chinese “anti-corruption officers are on heightened lookout for officials who implement a conniving and devious scheme to get their families abroad before they too flee with their ill-begotten gains already safely stashed in overseas banks. Their modus operandi involves cunning, timing and a good amount of luck,” according to a February 2012 report on The China Money Report website. The China Money Report is a publication by Tiger Hill, a Hong Kong-based asset management firm.
A mistakenly released report by the People’s Bank of China, the Chinese regime’s central bank, suggested that dishonest officials had clandestinely taken $124 billion of illegally obtained money out of the country between 1995 and 2008.
The China Money Report also said that from 16,000 to 18,000 public sector employees of various levels had taken flight according to a report from the Chinese Academy of Social Sciences. The report also referred to a Chinese anti-corruption expert who suggested that between 1995 and 2005, close to 1.2 million corrupt officials took flight.
It is not just officials who embezzle funds, the same can be found in the research environment. The China Decoder said that according to the China Association for Science and Technology, 60 percent of all research funds end up in the wrong hands.
“Much scientific research funding today goes to line the pockets of researchers,” the China Decoder article said.
Very few absconding officials are caught and brought to justice. Xinhua said that Chinese law is not favorable when trying to have a felon deported from a foreign country. For example, it took 12 years for fugitive Lai Changxing to be deported to China.
“It is common in China to hear of officials and wealthy individuals who transfer their money overseas by fair means or foul. At the end of March, Sun Feng, director of the Jiangsu branch of Agricultural Bank of China, was found to have illegally transferred 300 million yuan (US$79 million) to Canada before fleeing there with his five family members,” according to an article on the Want China Times website.

Why the deep Chinese gloom?

Armed Police in Tibet

It is not only Tibet which has witnessed unrest in the recent weeks.
The Financial Times mentions: "Beijing has underlined its concern that an economic slowdown could lead to social unrest in China, with the country’s security chief urging local officials to do more to prepare for the 'negative effects of the market economy'."
It quotes Zhou Yongkang, a member of the Standing Committee of the Politburo telling some provincial officials that they needed "to find better methods of 'social management' – a euphemism which can include everything from better internet censorship and strategic policing of violent unrest, to a better social safety net. It is an urgent task for us to think how to establish a social management system with Chinese characteristics to suit our socialist market economy.”
Gordon C. Chang says in The Daily: "An economically weak China could be more dangerous than a strong one".
He considers that "after 35 years of virtually uninterrupted growth, the Chinese economy has reached an inflection point. September may have been the peak. Since then, the signs of contraction are unmistakable: falling car sales, declining electricity consumption, plunging industrial output, collapsing property prices, you name it. There were large transfers of money out of the country in October. The deterioration has been as rapid as it was unexpected. In short, the wheels are coming off the Chinese economy".
Chang says that "protests — 'mass incidents' in Communist lingo — have been skyrocketing, especially during the last couple years, going from around 127,000 in 2008 to perhaps as many as 280,000 in 2010". 
It might be exaggerated, but the point is that China (and India) will find it more and more difficult to escape the effects of 'economic crisis'. 
If the Chinese leaders are worried, it does not seem the case of their Indian counterparts.

Are China's leaders worried?
BBC
Damian
December 2, 2011
This has been the week when China's economy suddenly looked vulnerable and its Communist Party leaders sounded worried.
That may sound hard to believe. China's GDP is growing at around 9% a year, its foreign exchange reserves are the biggest in the world and Western nations keep looking to China suggesting, perhaps implausibly, that it may be able to help them out.
But listen to what China's Vice Finance Minster Zhu Guangyao told a forum in Beijing on Thursday about the global economy. "The current crisis is grimmer and more challenging than the global financial crisis triggered by the Lehman Brothers bankruptcy in 2008," he said.
That's right - here in China, the place most people look to with economic envy, senior officials think things are "grimmer and more challenging" than the dark days of 2008.

So why the deep Chinese gloom?
Mr Zhu gave some clues when he went on: "At that time, the world economy maintained growth, and world leaders... rolled out a massive fiscal stimulus and monetary measures... so that the crisis was to a large extent contained and economic recovery was achieved in a relatively short time."
China's fear seems to be that the world economy as a whole could shrink, something it avoided three years ago in large part because China and others kept growing.
The problem is that now things are different. It is far harder for China and other nations to roll out new stimulus measures.
So China's senior Communist officials seem to be deeply troubled by what is happening in the world around them. The deepening debt crisis in the Eurozone and the anaemic state of the US economy, China's two biggest export markets, are already hurting China's own economy.
But I think what is probably worrying them even more is the difficult position they now seem to be in at home.

Housing market woes
The shock this week was the news that China's massive factory sector, responsible some say for 40% of GDP, is now contracting for the first time since 2008.
The reasons are revealing. The official Purchasing Managers Index showed a sharp drop in export orders was responsible for one part of the contraction, but there was also a fall in domestic orders too.
The unpleasant message had two components. First China has not "decoupled" from the rest of the world - its economy is still, in part, export dependent and vulnerable to what happens elsewhere.
But crucially too, the idea that China's domestic economy is sailing ahead and can pick up the slack is also looking shaky.
While China's manufacturing is having a tough time, so too is another important part of its economy, the housing sector.
After 2008 China splurged vast amounts of money in a huge expansion of credit to keep the economy growing at 10%. House prices soared. That led in recent months to worries about inflation and asset bubbles.
So China had been tightening bank lending, trying to curb price rises and rein in property purchases.
The credit squeeze has had a visible impact. Businesses are hurting, while in October house prices in many cities started falling fast and the number of transactions is declining fast too. The OECD warned in a report that property price falls risk triggering the collapse of big developers.
That warning was repeated by the People's Bank of China on Friday after officials met representatives of commercial banks and property companies.
"Some banks think the banking system and developers can withstand home price falls of 20-30%," it said in a statement on its website. "But they are more concerned about whether a fall of 20% in home prices will trigger panic sales and whether the government can take effective measures to control chain reactions afterwards."
We have already, this week, had a signal of how worried Chinese officials are. On Wednesday the People's Bank of China cut bank reserve ratio requirements by 0.5%, basically meaning banks have to hold less cash and can lend more.
It was a surprise to many, and taken as a signal that all of a sudden China's leaders have shifted - over-riding their fears about inflation are now new fears about how to keep the economy growing fast.
Their problem is that inflation still stands at 5.5%, well above the government's target. So if they free up lending once more they risk fuelling new price rises and inflating the bubble again. More reason to be worried.
Patrick Chovanec, professor at Tsinghua University's School of Economics and Management in Beijing, says the People's Bank of China had been resisting pressure to ease up for months but has reluctantly conceded.
"The PBOC resisted loosening because it fears - and I agree with them - that pumping more money into the economy will reignite inflation and reinflate the property bubble," he wrote on his blog this week.
"Chinese leaders were hoping that vibrant export demand would offset the need for a more substantive adjustment within the Chinese economy, and that hasn't materialised. So their sole - and highly problematic - alternative is to try to reflate China's investment boom through monetary easing. The PBOC, and China's more perceptive leaders, know this is not a sustainable solution, but they're stuck."
As he put it: "One-time Fed Chairman William Mcchesney Martin famously observed that the job of a central banker is to 'take away the punch bowl just when the party is getting started'. To put it simply, the PBOC just handed back the punch bowl."

Strike fears
China, like the West, Professor Chovanec says, is facing a domestic credit crunch, but they are crucially different: "China stands at the peak of a bubble, while Europe and the US stand in the trough of a recession."
So China's leaders have many reasons to be worried. Export markets are grim. Manufacturing is contracting. Inflation is higher than they would like. The central bank is warning about events that could "trigger panic" in the property market. They need to sustain growth but without inflating the bubble even more.
China's leaders are, of course, still in a much more enviable position than their Western counterparts. The central government has cash to spend and the economy is growing.
But there is one more reason why China's authoritarian rulers might be worried. All the economic concerns are having a very real impact and it can be seen in growing labour unrest.
Friday brought news of a new strike in Shanghai. Several hundred workers were striking outside a factory. Their employer Hi-P international, a supplier to the electronics, automotive and telecoms industries, was reported to be cutting jobs and shifting production elsewhere.
Hi-P's latest financial report on its website indicated that the costs of its labour and materials had gone up so its net profit margin had plunged from 10% to just 2%.
A group of the workers outside the factory was displaying a banner reading: "We want an explanation! We want truth! Where is Hi-P's truth? Where is the government's credibility?"
The Communist Party's credibility is now built on the idea it can keep the economy growing fast and keep creating jobs. These look like troubling economic times.