The Screaming Pen

Providing Global Insight, Context, and Perspective

The New Amsterdam?

Minorities Crime & Drugs in China

The meanest bowl of la mian – steaming sweet noodles and meat that renew life on a frosty winter evening – you’ll ever find will be in a Uighur restaurant. Fortunately for survival, the dish can be found for 40 cents in noodle stalls located in neighborhoods throughout China. Less auspiciously for Chinese authorities, the widespread presence of ethnic minorities is, combined with the drug trade, making domestic control increasingly harder to maintain.

People from the Xinjiang (the place) Uighur (the people) Autonomous Region, China’s most western province, are noticeably different-looking than the ethnic Han that make up around 95% of the nation’s population. On average, the Uighurs are taller, with sharper features and lighter eyes. They appear more like Central Asians as they are indeed from that corner of the world. Unlike the officially atheistic Chinese, they are Muslim and wear a doppa, or Uighur hat.


Visine: Gets the Red Out

Uighurs are overwhelmingly a friendly, hospitable, and decent people. As is inherent in human nature, however, a small minority exists with less savory motives and the will to resist. They also have legitimate grievances: Xinjiang was only really pulled into Beijing’s orbit in the 1950’s when the People’s Army arrived. In a successful effort to prevent independence – similar to that witnessed in former Soviet states with similar histories in Central Asia – China has been moving its citizens to the province by the millions in an effort to pacify the Uighurs through demography and breeding; the Han now make up 50% of Xinjiang’s population. Furthermore, widespread human rights abuses and the absence of choice in the political arena lead to increasing frustration and unrest among Uighurs. Beijing’s solidarity with America’s war on terror is frequently thought to stem from domestic desires in Xinjiang. Remember the screeching woman on the White House lawn during Chinese President Hu Jintao’s speech in April? She was Uighur, and never would’ve been heard in China.

Yet as long as the central government possesses a monopoly on force restive groups find it virtually impossible to challenge its rule directly. Instead, dissent will undermine the state through other outlets. With little stake in a system that discriminates against them, some minorities seek profit through street crime and drug smuggling. Noodle stalls and niu rou (meat stick) vendors often sell hasheesh alongside their edibles. During 2005 they became even bolder, approaching shaggy-looking foreigners on Shanghai’s main tourish promenade. They also sustain a healthy trade in stolen goods, lifting cell phones and wallets, and push imitation Marlboros.

An Unhappy Bunch

The Uighurs are not the only groups in China with varying loyalties: Tibet has long been a high-profile cause celebre, and the people in Southern China – Guangdong and Hong Kong – don’t consider themselves Chinese because they aren’t Han and don’t speak Mandarin, but Cantonese. Economic dynamism has led to relative calm from Hong Kongers who were more than a little uneasy when the People’s Army arrived as the British pulled out in 1997. And while they have very different aspirations and live under widely divergent conditions than the Uighurs, they are increasingly pushy about their freedoms. Mongolian, Laotian, and Burmese groups also call the PRC home.

Definitely Worth the Trip

Nationalities from far beyond Asia are developing a presence in the country as well. In May, in conjunction with the United States, China seized 300 pounds of cocaine from a Colombian narco-gang with local partners in Hong Kong and mainland China.

Even more disturbingly, less than a mile from Zhongnanhai – the Chinese leadership’s central headquarters in Beijing- lies Sanlitun Rd and its shady cousin, Sanlitun South. The former is a dull stretch of karaoke bars with awful beer that guidebooks tout as having the best nightlife around. Just a few blocks away, hidden on all sides by apartment blocks, emerges an expatriate college student’s dream: a dusty dirt road where animals roam freely, lined by tiny alleys with wild-west bars that stay open all night serving Coronas for 50 cents. Indeed, the latter looks more like Mexico than what you’d expect to find in the heart of the Chinese capital. Less benignly are the Nigerian lookouts that man each end of the street offering everything from marijuana to crack to the passerby.

In a country that places a premium on prying into both its own citizens’ and foreigners’ lives, combined with the blatant visibility of the practice, one wonders how it can exist without the authorities’ complicity. This is doubly so given that the Nigerians are legally in China on student visas. How they got the visas is not so difficult to discern: Nigeria is a significant source of Chinese oil imports, and thus the necessary immigration papers get filed rather quickly. Yet the opacity of the government means that its role in the drug trade – whether through tacit approval and taxation or active facilitation – cannot be ruled out. Do high-ups have knowledge of it? Could it be that the Colombian drug bust accomplished two tasks at the same time: cracking down on a rival gang without connections while showing America’s Drug Enforcement Agency that it’s a good-faith partner in the War on Drugs?

If so, not only is it grossly illegal and disingenuous but illogical. Both petty and violent crime are on the rise in China, and figures will continue to climb in the future. China’s leaders should be careful about the short-term profits they seek from the trade, as the networks it creates will undermine their authority and prove impossible to stamp out. Politically, the communist party exerts a firm hold on power, but increasing revolts – numbering 87,000 last year according to party reports – will lead to a day, unlikely to be soon, when this changes. When it does the Uighurs, Tibetans, Cantonese and others will hardly help slow its fall.

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June 17, 2006 Posted by | Asia, Author: DML, China, Corruption, Country Profiles, Crime, Human Rights, Nigeria, War on Drugs | 2 Comments

Chicken the China, the Chinese Chicken

A Changing Tide, the Spigot is Tightened

Since hitting an all time high on May 8, the MSCI Emerging Markets Index has fallen over 20%, as inflation fears and global monetary tightening begin to mop up the loose liquidity that has helped emerging market exchanges, along with other riskier assets, achieve strong annualized gains over the past few years.

With China experiencing staggering economic growth, one would think that the Chinese Stock Markets would have been on the winning end of a several year long emerging markets run. In fact, on June 6, 2005, while many Asian markets were continuously breaking multi-year highs, the Shenzen Compositie hit a six year low, puzzling amateur investors across the globe. Possible answers to China’s equity market conundrum can be found by taking a closer look.

The Times, they are a Shenzen

The Late Bird Gets the Sub Par Market Returns

China, a late bloomer in the Capital Markets game, did not have a stock market until 1990, and not a single Chinese company was listed abroad until 1993. As of 2003 -the latest information thescreamingpen.com could muster- over 66 million Chinese citizens participate in the domestic equity markets, with only 35 companies listed as private. It is estimated that at least two thirds of the shares listed on the Shanghai and the Shenzen, China’s two largest stock markets, are owned by the government. It is apparent that investors, especially those abroad, are hesitant to invest in companies whose balance sheets, among other things, could be compromised because of government involvement.

The Reforms of 2005

Realizing that capital inflows are essential to sustainable growth, the powers that be in China undertook some important reforms in 2005, including:

  • Public listing of the “Big Four” Chinese banks on overseas exchanges
  • Selling large stakes of domestic banks to international investors, which will result in increased capital inflows and much needed international banking expertise.
  • Reform of China’s A share market, which has resulted in 1/3 of China’s A shares being tradable.
  • The removal of capital gains taxes on securities held by foreign investors
  • The issuance of sovereign “Panda Bonds”, issued in Chinese currency.

Outlook and Conclusions

With the initiation of a global tightening cycle, it is possible that China may have missed out on the latest emerging markets rally. The good news is that China’s Eleventh Five Year Plan, which began on January 1, 2006, contains many provisions that aim to reform China’s financial sector even further. Hopefully these provisions are enacted.  This would allow China to efficiently handle foreign inflows of Capital, as well as wealth created at home.  If China continues down the road of financial sector reform, it will be a much needed step on the path to possible market maturity.

*Look for an overview of the Indian Financial sector reform in the coming days.

-JPL

Links of Interest

http://www.washingtonpost.com/wp-dyn/content/article/2006/06/08/AR2006060801493.html

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June 9, 2006 Posted by | Asia, Author: JPL, China, Chinese Stocks, Corruption, Emerging Markets, Globalisation, Investing, Politics, World Markets | 1 Comment

Tom the Truculent’s Time to Retire

Sleaze and the Slander of American Democracy

The unfortunate product of a sleazy triangle between government, special interests, and unscrupulous lobbyists, widespread corruption is neither new nor surprising. Yet media outlets are far more likely to cover eye-catching events such as the gruesome abduction of pretty young girls or a judge reducing a pedophile’s prison term. The web of shady relations is byzantine, and the public largely prefers easily defined events like former President Clinton’s lurid sexual escapades. Complex corruption simply isn’t a very good news story. As a result, public debate has been quite dispassionate considering the magnitude of the problem.

This is true even in the face of the disgraced and truculent Tom Delay, former House Majority Leader; the arrest of the depraved lobbyist Jack Abramoff; subsequent allegations against Illinois Congressman Bob Ney, which outrageously also involve the “gang-land style” murder of a Florida businessman; the potential indictment of Bush confidant Karl Rove, hugely influential GOP strategist; VP Cheney’s former Chief of Staff Scooter Libby’s indictment, and more. The litany is so comprehensive it’s almost unbelievable.

Yet politically, and despite the fact that these scandals and a myriad of other blights are explicitly associated with the GOP, the Democrats have thus far been impotently unable to turn it to any advantage. This is bad not just for supporters of the Democratic Party, but for the whole country. When the extended lack of effective opposition allows any party unfettered control of all three levers of government, intolerance, arrogance, and corruption are inevitable results. In a democracy, elections are the remedy: when voters become fed up with their leaders they can remove them.


No thank you, Massachusetts: beans and lager make better exports

The Legacy of Elbridge Gerry

In the United States, however, among several disturbing trends there is at least one deeply troubling circumstance that threatens to undermine the efficacy of the electoral method. Redistricting – a euphemism for its more harmful cousin, gerrymandering – is a stratagem used to institutionalize political dominance at the expense of competition. From the Economist:

“Imagine a state with five congressional seats and only 25 voters in each. That makes 125 voters. Sixty-five are Republicans, 60 are Democrats. You might think a fair election in such a state would produce, say, three Republican representatives and two Democrats.

Now imagine you can draw the district boundaries any way you like. The only condition is that you must keep 25 voters in each one. If you were a Republican, you could carve up the state so there were 13 Republicans and 12 Democrats per district. Your party would win every seat narrowly. Republicans, five-nil.

Now imagine you were a Democrat. If you put 15 Republicans in one district, you could then divide the rest of the state so that each district had 13 Democrats and 12 Republicans. Democrats, four-one. Same state, same number of districts, same party affiliation: completely different results. All you need is the power to draw district lines. And that is what America provides: a process, called redistricting, which, through back-room negotiations too boring for most voters to think about, can distort the democratic system itself.”

This is a real problem in America, from Texas to California and everywhere else. The Economist – no petty partisan critic – calls the process “how to rig an election” and a “travesty of democracy.” They are right: in this year’s Congressional elections approximately 30 of 435 House seats will see competitive races.

Less Tinkering, More Oversight, and a Novel Idea

Republicans should be wary of resorting to disdainful methods, which also include eliminating the Senate filibuster – a vital tool of the minority since 1789 – and the near total exclusion of Democrats from seats of consequence on important committees. These will undermine democracy and will return to haunt them should they lose control of the legislature either in this year’s elections or afterward. Moreover, independent committees should handle legitimate redistricting needs, instead of allowing state legislatures to police themselves. Closer monitoring and regulation of lobbyists and a reduction of pork barrel spending are also needed.

Due to refusal to examine these issues, flouting of democratic methods, extreme profligacy (which has enraged small-government conservatives), and seemingly never-ending corruption, the GOP should be dealt a defeat in November. Indeed, some inauspicious signs are materializing for the GOP’s fortunes. Yet the Democrats likewise have work to do in that they must prove themselves capable of addressing the nation’s challenges. Unless they come up with a galvanizing idea about an issue of importance to the American people these will not translate to an electoral sweep. Without these, headlines will be captured by extremist proposals with little chance of passing or of accomplishing anything besides aimless legislative drift until 2008.

– DML

 2006. All rights reserved.

May 20, 2006 Posted by | 2006 Elections, Author: DML, Congress, Corruption, Democrats, Politics, The GOP, United States | Leave a comment