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TM, ®, Copyright © 2005 Piero Scaruffi All rights reserved.

Articles published after 2005
An interesting provocation
Beijing's model
A new definition of hypocrisy
Western folly and Lenin's rope
Why Beijing needs Taiwan
A new driver for the world economy: Chinese tourism
Applying communism to capitalism
Cancel the 2008 Beijing Olympic Games
Bomb North Korea and defend Taiwan
The giant that woke up
How Beijing bought the USA
Shame on the United Nations
Beijing does not face its past
Tung on the way out?
How the Chinese dictatorship spread SARS
The new Chinese leadership does not bode well for human rights
The three-gorges dam and ethnic cleansing .
Chinese occupation troops harass buddhist monks
Beijing executes freedom fighters
Taiwan, the legitimate government of China, elects a new president.
One China or two China's?
Why America likes the new China
Taiwan angers Beijing by declaring independence
The state of Beijing's economy
  • Articles published after 2005
  • (November 2005) An interesting provocation. On a tour of Asia, George W Bush delivered a powerful speech about Beijing. Beijing considers Taiwan a renegade province, and still considers Japan as an imperialistic warmonger. Interestingly, Bush was speaking in Japan, Beijing's arch-enemy, and was telling the Beijing government (and, if they can ever hear it, the whole Chinese nation) that mainland China (ruled by Beijing) should adopt the model of peaceful democracy adopted by Taiwan. There are two "insults" in this statement, and both are likely to reverberate with ordinary Chinese as well: the speech comes from Japan, which no Chinese regards as a friendly nation, and paints Taiwan as better than mainland China, while mainland Chinese regard the Taiwanese as rebellious brothers who fell under the influence of decadent foreigners.
    The USA has agreed to the "one-China principle" (that eventually Taiwan should rejoin mainland China), but not to a specific format of such a reunification. Thus the provocation is limited in scope: the USA is not saying that Taiwan is a separate country, but only that mainland China has to become as democratic and peaceful as the Chinese of its sister island. In other words, Bush may be telling China that, yes, the USA will agree to a reunification of the two Chinas, but the terms are the opposite of what the regime in Beijing has long believed: it is not Taiwan that has to comply with Beijing, but Beijing that has to comply with Taiwan. The moral higher ground is in Taiwan, not in Beijing.
    The economic ties between the USA and mainland China are too strong for a speech to derail them. This move by the USA is likely to be motivated by a sincere (if a bit reckless) desire to settle the Taiwan issue once and forever. There will be no solution for as long as the Taiwanese are scared of the totalitarian regime of Beijing. A solution can come only from a political change in Beijing that will make it a non-brainer for the Taiwanese to accept to reunite with mainland China.
    It might be a bit reckless, but the logic is impeccable.
    (At the same time, an event largely ignored by the media was taking place in China: the rehabilitation of Hu Yaobang, the main reformer of the 1980s who was forced to resign in 1987 starting the dissent that erupted in the pro-democracy Tiananmen Square protest of 1989).
    TM, ®, Copyright © 2005 Piero Scaruffi All rights reserved.
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  • (November 2005) China's model. On a recent trip to China (from its Turkish far west to its booming eastern megacities), I pondered how resilient the Chinese model can be. And my first impression is that the Chinese leadership must be concerned about the exact same question.
    Communist China (as it is still anachronistically called) has adopted a model that is basically the best of two worlds: the political efficiency of the one-party system and the economic efficiency of the market economy. The one-party market economy is not new. And, in fact, it has often worked very well. It has been used by a long series of totalitarian regimes, from Hitler to Pinochet, to bring prosperity and stability to countries as different as Germany and Chile. In many cases it has indeed "worked". There is no question that Hitler's Germany was far wealthier than Germany before Hitler, and Chile is still called "the Switzerland of Latin America".
    In some cases (e.g., Chile) the system ended because people demanded democracy: as people get richer, they want a nicer life, and freedom is part of it. In other cases (e.g., Germany) the system was destroyed in a war. (But notice that Hitler's system ended because it was destroyed not because it failed internally).
    The most original and intriguing idea to come out of China's version of this system is that ministers must be entrepreneurs. China's traditional system was a meritocracy in which state officers were chosen among scholars fluent in the classics of literature and philosophy. Today's version of that tradition is that state officeer must be fluent in economics.
    Other than this very Chinese variation, the model is the same as the one that has been tried and has collapsed (for either internal or external reasons) several times before by several right-wing dictators.
    Communist China enjoys a great advantage: a meek, peaceful population, educated over the centuries to believe both in superstition and in the government (which is supposed to come from Heaven). Many in China still believe the government's version of the facts, although the current government itself has admitted that the previous government (Mao's) lied on several important issues.
    It has also the enviable advantage that this is one country in which minorities see the benefits of occupation. Instead of being discriminated, they are given much needed infrastructures. They realize that their ethnic leaders would probably be incapable of giving them the same standard of life. Therefore the younger Tibetans and Turks (and Mongols and Manchus) are beginning to amalgamate in this Han-dominated society. After all, it is nice to have paved roads in Tibet (and soon a railway) and it is nice to have boutiques instead of street stalls in Kashgar. (This advantage was not so clear to the ethnic minorities of the Soviet Union, since almost everybody was starving).
    Communist China has its own problems: high unemployment, high crime, high corruption, a huge wealth gap (perhaps the biggest ever in the history of the world), diseases and pollution. Each of these could cause serious rebellions, but none of them is impossible to solve. Given enough money, the government will create more jobs, increase security and rise the income of the middle class. (It has already started to clean up the cities).
    A comparison with the neighboring giant, India, is enlightening. India, the world's largest democracy, is often paralyzed and inefficient. Its quarrelsome democracy cannot possibly match the cold efficiency of China's one-party system. India cannot even quell terrorism. Its leaders are constantly arguing over very important issues (taxation, privatization, foreign relations) where Chinese leaders simply tell the country what to do and when to do it.
    India exposes the weaknesses of democracy. Beijing displays the strength of dictatorship.
    But the most important comparison for the Beijing leadership is the one with the Soviet Union. Beijing views Gorbachev as the mistake to avoid at all costs. Gorbachev tried to reform the communist party at a time when the Soviet Union was weak and unprepared. This led to the disintegration of the country, to the collapse of the centralized economy, to the worst excesses of unbridled capitalism, and ultimately to the emergence of a periphery of satellites of the USA (Baltic Republics, Ukraine, Georgia, Kyrgyzstan, Mongolia). De facto, Russia was left bankrupt and surrounded. When Beijing hears the USA advocate democracy in China, Beijing hears an attempt by the USA to replicate the successful model that the USA used to peacefully destroy the Soviet Union. Beijing learned from Gorbachev's mistakes.
    Beijing is also highly successful in brainwashing and impressing its subjects. The regime made a big deal of the Olympic Games, knowing that sooner or later they will get them. That was interpreted by the masses as a huge success, and thus created more support for the regime. Ditto for the astronauts, that have virtually resurrected Chinese nationalism (which was probably the whole point of starting a Chinese space program). Like all communist countries, Beijing has brainwashed its subjects to believe in a one-sided view of history, but it has been a lot more successful than any other communist country in being believed by its subjects (possibly because China is still such a closed country, and of course the language is a major barrier in itself to international communication). The average Chinese seems truly convinced that China was always a victim of foreign imperialism, never guilty of anything, and thus China has to remain suspicious of foreign influences and pressures. For example, there still seems to be widespread sincere hatred for Japanese people, and it is pointless to remind a Chinese that today's Japanese weren't even born when the Japanese atrocities were committed in the 1930s. Official propaganda is so anti-Japanese that the average person grows up thinking that the Japanese are somehow not even human. (Needless to say, Chinese people grow up knowing nothing about the atrocities committed by their regime against Uygurs, Tibetans, Mongols and Manchus, and thinking that all the wars China fought against India, South Korea and Vietnam were legitimate defensive wars). The average Chinese person also seems to conceive of westerners as decadent people, and may show little patience for a westerner's wishes or needs. The fact that westerners have a lot of fun with a freewheeling lifestyle does not make the average Chinese envious (maybe it does, but in a subconscious way): it makes them despise westerners, because they don't live according to the moral standards of China (which, at this point, are an odd mix of Confucian, Buddhist and Communist moral values). Taiwanese are viewed as brothers and sisters who are under the perverse influence of westerners.
    What could undo China is actually (and ironically) a very Marxist problem. Marx based his whole theory on the premise that social classes enter into conflicts. Out of those conflicts a revolution is born, and the result is socialism and then communism. China is creating the biggest of divides between its social classes. Any traveler to any region that developed quickly can notice how happy people are when everybody in the country is starving (there is only one class) and how unhappy people are when nobody is starving but some people are getting very rich (more than one class). In China people were not rebelling when they were all poor, but they may start rebelling now that some people have become billionaires. Today's yuppies are "rich" compared to their parents (who literally starved under Mao) but they may get angrier than their parents because they see some people getting extremely rich.
    The division among classes is only one aspect of the problem. China is also a dramatic example of what sociologist William Ogburn called "cultural lag": when technological innovation proceeds too rapidly, the masses can't catch up fast enough. Basically, any society needs time to adapt to a changing technology. The Chinese people have had precious little time to adapt to a dramatic change that basically packed two centuries of Western technology into two decades. They probably feel like they are watching a fast forward showing of a very complicated movie. They are fascinated by it, but they can't possibly identify with its characters. They don't "belong" in that movie. Alas, that movie turns out to be their daily lives.
    The condition of women is kind of odd. Obviously, this is a much more egalitarian society than most. Women can be bus drivers, party officials, police officeres, station supervisors, etc. Even more stunning for westerners is how women (of all ages) tend to dress like men: skirts are virtually inexistent. On the other hand, there has never been a woman at the top of the Communist Party, and, as far as I know, none of the billionaires is a woman. The price that women pay for these semi-egalitarian system is in terms of family life. Family life in the cities of mainland China is far more brutal than in any other Asian country (where family is usually very close and strong).
    The other change in China that may backfire against the government has to do with the traditional Chinese willingness to accept the government. Confucianism has been taught for millennia, and faith in the "mandate from Heaven" has helped generations of inept emperors stay in power. One of the main reasons for China's decadence was precisely its way of stubbornly sticking to the "classics". For centuries the Chinese rulers thought that China was superior to the rest of the world and had nothing to learn from it.
    Mao was actually important in convincing the Chinese people to abandon the old superstitions and accepting that Chinese civilization was inferior not superior. By adopting the model of two Europeans (Marx and Lenin), he caused an intellectual revolution that is still going on today: the adoption of western ideas. But this may now backfire against the regime.
    It is much more unlikely that Communist China will get itself into trouble abroad (as, for example, Hitler and the Soviet Union did). In China one hardly feels that Beijing has any intention of venturing into foreign lands. Beijing is much more interested in exploring the space than in invading or even controlling its neighbors. The whole military apparatus of Beijing seem to focus only on Taiwan (Beijing's eternal obsession). Even this, which is truly the central dispute between Beijing and the USA, is not as serious as it first appears to be. The Communist Party has made it clear that it would not tolerate a unilateral declaration of independence by Taiwan, but that statement included a number of points that, all considered, are quite conciliatory: basically, as long as Taiwan does not cross the point of no return, Beijing is happy with the status quo. Beijing already accepts capital and tourists from Taiwan, and lets Taiwan trade with the whole world. What Beijing is not willing to accept is that Taiwan makes it impossible in the future for the two to get reunited. As long as a future unification is not ruled out, Beijing may be happy with the status quo. And, let's face it, there is no reason for Taiwan (or the USA) to declare the impossibility of a future unification. After all, haven't even ferocious enemies such as France and Germany get united, eventually?
    Other than Taiwan, there is indeed very little that Beijing is doing to intimidate the rest of the world. Rumsfeld was worried about Beijing's modernization plans, but the truth is that Japan spends as much as Beijing without even having an official army.
    Beijing agrees with the USA about reducing (not increasing) nuclear weapons, and in particular about keeping the Korean peninsula nuclear-free. It may not agree with the methods of the Bush administration, but it is in fundamental agreement about the way the Far East has to develop: peacefully, focusing on trade and development.
    Beijing was alarmed by the USA's attack on Iraq (and, in general, by the USA's Middle-Eastern policy) because Beijing has much more at stake. People forget that the USA relies very little on Middle-Eastern oil, whereas China has to import more and more oil from the Middle East. It is Beijing, not the USA, that desperately needs a stable Middle East. Here century-old attitudes become important. The USA has inherited the Roman and the British passion for "civilizing the world". China never had that passion. China has been traditionally indifferent to the rest of the world. What China cares about is the Chinese people. The rest of the world is a factor as much as the weather or the tides. China does not try to change the weather or the tides, but simply tries to create as stable an environment as possible. Ditto in foreign policy: China is indifferent to the lot of the Iraqis, but is interested in having a stable Iraq. Whether the Iraqis aspire to democracy or not is not a Chinese problem. The USA sees the rest of the world as brothers and wants democracy to spread all over the world. China sees the rest of the world as a mere supplier of resources and buyer of goods, and only wants the rest of the world to be as stable as possible.
    Thus Beijing's opposition to any kind of regime change unless they are affecting China itself (such as the Taliban were). But this, from the USA point of view, is actually good news. Unlike the Soviet Union, that was very interested in destabilizing the whole world, Beijing wants to interfere as little as possible. In fact, it may even be brought aboard by a more diplomatic USA administration, by explaining to China that democracies are inherently more stable than totalitarian regimes (except, of course, that Beijing is one of them).
    Beijing's view of the USA is quite interesting. A program broadcast by Chinese tv on an English-language channel discussed World War II as a war between Japan and China that started in 1931, and the European powers and the USA as mere accessories to that war. It hardly mentioned that the USA finished Japan with two nuclear weapons (Beijing's version of the facts is that the Chinese resistance finished Japan) but it did mention that the USA was an ally of China against Japan. The status of Taiwan is blamed on the Japanese invasion of a century ago, not to the USA. If one visits the ruins of the Old Summer Palace in Beijing, one can read in English their grievances against the Europeans who destroyed the city in 1860. But not a word against the USA (which in fact often mediated on behalf of the Chinese). In other words, historically China has no reason to hate the USA. In many ways, China and the USA are more similar than different, as they both had to fight against a foreign colonial power and assert themselves in a European-dominated world.
    Thus the leadership in Beijing may view the USA leadership a little bit like the USA leadership views the Beijing leadership: an inscrutable entity that sometimes behaves in odd ways.
    The USA is as mysterious to Communist China as Communist China is to the USA.
    Communist China is pragmatic and doesn't understand some moves by the USA that appear to be counterproductive or reckless. The USA is idealistic and doesn't understand how the Chinese accept to live under a totalitarian regime.
    If these misunderstandings can be cleared out, not only the two countries can avoid confrontation but their relationship may become "the" fundamental alliance of the 21st century, the equivalent of the USA-UK alliance in the 20th century.
    TM, ®, Copyright © 2005 Piero Scaruffi All rights reserved.
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  • (April 2005) A new definition of hypocrisy. Thousands of Chinese people (hopefully a minority of the Chinese population) have marched in the street to protest Japan's bid for a permanent seat at the United Nations. (See Anti-Japan rallies spread ). The reason is that the Japanese governments of the past committed atrocities in China. Also, "protesters are angry at a new Japanese history textbook which they believe plays down Japan's wartime atrocities."
    This is simply unbelievable.
    Beijing history textbooks totally ignore (not only downplay) Chinese atrocities committed from the birth of the communist regime in Beijing. Tibetans were massacred and more than one thousand temples were destroyed. Turks were massacred. Tibet, Turkestan, Hong Kong and many smaller regions were invaded and annexed against the will of the people. Today, Beijing executes 10,000 people a year, and many of them are political dissidents.
    Unlike Japan, that changed government and adopted democracy, Beijing is still ruled by the same regime, one of the least democratic in the world.
    These protests come just a few weeks after Beijing formally threatened to invade, destroy and annex Taiwan, a peaceful and democratic country.
    How can any Chinese protest against Japan when the Chinese nation has caused so much grief to its neighbors? How can any Chinese complain about facts that happened 60 years ago, and ignore what Chinese politicians have done over the last 60 years?
    Shame on the thousands of Chinese, who, instead of apologizing for the crimes of their leaders (and, possibly, overthrowing them), are marching in the streets against the peaceful, democratic and generous people of Japan. The world would have more respect of those Chinese people if they marched against their president, Hu Jintao.
    If the nationalism of young Chinese people is worrisome, it is only part of the problem. Beijing rarely starts this international rows without a practical goal. When it protects North Korea, it's because it wants Taiwan. It wants Taiwan because it knows that its economy can't prosper without modern technology. (See Why China needs Taiwan). Thus there is probably a more practical reason for Beijing's anger at Japan: most likely it is the contentious area in the Chinese Sea where Japan just started drilling for gas and oil. Beijing knows that it is running out of oil, and that its growing demand is sending the price of oil skyrocketing. Thus every drop matters. Accusing Japan of being unfair to the Chinese people might be a way to get concessions from Japan on more important issues. In other words, this is dirty politics from one of the dirtiest regimes in the world.
    Japan deserves a permanent seat at the United Nations. The totalitarian regime of Beijing does not. Expel Beijing from the United Nations if you want the United Nations do have any credibility at all. This is what those Chinese people should be marching for.
    TM, ®, Copyright © 2005 Piero Scaruffi All rights reserved.
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  • (Novembet 2004) Western folly and Lenin's rope. There is only colonial "power" left (France, which owns a few islands around the world and a piece of South America, Cayenne), but that one is largely symbolic. On the other hand, there is one country that is clearly trying to expand its territory, not just to create colonies: mainland China. Beijing has no intention of granting independence to the nations it invaded in the 1940s and 1950s (Tibet and Turkestan), or to the nation that it acquired through intimidation (Hong Kong). It is now getting more and more aggressive towards Taiwan, an independent and democratic nation. For reasons that are largely due to western stupidity towards Beijing, western nations pretend to believe in Beijing's rationale (Taiwan has always been part of China). That rationale is bogus: Beijing and Taiwan have always been one nation, but who said that the "nation" has to be the one created (through terror) by Beijing and not the one created (through democracy) by Taipei? Giving mainland China to Taiwan would make as much historic sense as giving Taiwan to mainland China. Secondly, what about Tibet and Turkestan, which were never part of the Chinese empire? The only time they were united with China was when they were both part of the Mongol empire. Again, if you think history is so important, give China, Tibet and Turkestan to Mongolia, not Tibet, Turkestan (and a piece of Mongolia) to China, as it is today.
    This is not only bad history. It can become suicidal. Beijing's economic miracle is largely due to the rejeection of Mao's homicidal policies and the adoption of capitalist policies. But it is also due to a ferocious undemocratic application of those regimes. The worst excesses of the British industrial revolution and of unbridled American capitalism pale in comparison with the forced displacements of millions of people that are commonplace in mainland China, with the thousands of yeawrly casualties in Chinese mines, with the level of corruption, with the systematic oppression and ethnic cleansing of the non-Han provinces, etc. The result os this undemocratic process has been to make China one of the most competitive countries in the world, and thus weaken the Western democracies. The European textile industry, for example, has been largely destroyed by mainland China.
    In one of her speeches, Condy Rice named six "outposts" of tyranny: Cuba, North Korea, Belarus, Iran, Burma and Zimbabwe. One wonders how could she forget the biggest and most aggressive of them all: Beijing.
    The West seems willing to tolerate both the domestic brutality and the international expansionism of Beijing. The West is even funding the regime: what would Beijing be without its exports to the USA and Europe? What would Beijing be without the technological transfers from Europe? The West is basically training and funding the Beijing regime, as the Beijing regime is competing against the West and slowly eroding the West's standing in the world. Never has the echo of Lenin's words been more sinister: "They will even sell us the rope that we will use to hang them".
    TM, ®, Copyright © 2005 Piero Scaruffi All rights reserved.
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  • (Novembet 2004) Why Beijing needs Taiwan. Beijing will face three kinds of problems in the near future.
    • Economic. The Chinese economy is growing very fast, but is still relying mainly on exports of cheap goods to more developed countries (USA, Japan, western Europe). This economic model relies on cheap energy. It worked for Japan in the 1950s and 1960s because oil was very cheap. It worked so far for China because China had its own oil. As the Chinese economy keeps growing, the situation will change dramatically: China has already become a net importer of oil, and the price of oil has been increasing. This will create pressure on an economy that basically specializes in cheap goods. At the same time, the huge USA trade deficit that has been supporting Chinese growth is putting pressure on the Chinese currency, which is kept artificially low by the Chinese government. Eventually, the Chinese currency will have to fluctuate and the oil factor will become relevant. Those two factors will push up the cost of manufacturing in China, thus making China a lot less competitive.
    • Domestic politics. The Chinese economic miracle is mainly the economic miracle of a few eastern metropoles. There has been little tangible benefit for the rest of China, which in fact is living in horrible conditions (high pollution, inadequate health care, massive displacement of people to harness energy, rising unemployment). These were precisely the conditions of Qing China that led to Sun Yatsen's revolution one century ago.
    • Foreign politics. Islamic extremists are being massacred by the thousands in Chechnya and Iraq (not to mention the many Arab countries that also quietly execute hundreds of them every year). Islamic terrorism is looking for vulnerable, soft targets. As the traditional targets become harder and harder to hit, Islamic terrorism may turn to China. China has annexed Turkestan, an Islamic region, and has been carrying out a program of ethnic cleansing that is deeply resented among the Turkish population of Turkestan (now called Sinjang). This has already led to the formation of a "terrorist" organization that has been fighting the Chinese occupation for 50 years. It is only a matter of time before the international jihadist movement realizes that China is as guilty 9if not more guilty) than Russia or the USA of repressing Islam. The Chinese economy is not as resilient as the USA or Russian economies (the USA's economy is so big that the devastation caused to airlines and tourism was readily absorbed, and Russia has its own oil, plenty of it). A terrorist attack against China would greatly destabilize its key industries.
    The way out of this three-pronged danger is to move away from the low-tech sector and invade the high-tech sector. That is precisely what Japan did when it was forced (by the rising prices of oil and by the rising value of the yen) to abandon its "cheap goods"-driven economy. Japan moved to electronics and computers.
    Japan succeeded in moving from the "poor country" economy to the "rich country" economy essentially because it used to be a rich country. Japan was already a high-tech industrial country before World War II. It was just a matter of rebuilding its industry after the war. China was never a high-tech country. It is unlikely to be able to create a self-sustaining high-tech industry, no matter how much technology the suicidal western European countries (led by Germany and France) are willing to sell to China. China's only hope to become a high-tech power in a few years is to "acquire" the high-tech industry from countries that already developed it. That's why annexing Hong Kong was so important. That's why annexing Taiwan is so important. It will give China a more viable economic model, a buffer towards the collapse of the "cheap goods" economy.
    TM, ®, Copyright © 2005 Piero Scaruffi All rights reserved.
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  • (September 2004) A new driver for the world economy: Chinese tourism. The World Tourism Organization predicts that 180 million Chinese will become international tourists in the next few years, as the Chinese government restricts travel abroad and the Chinese middle class finds itself with enough money to buy air tickets and hotels. Currently, Chinese tourism is mostly domestic: Chinese have trouble obtaining visas to visit democratic countries, and few Chinese can afford the prices of western hotels and restaurants. But this is changing rapidly. China could become the main tourist source nation by mid century. This is a huge reservoir of money that the world will compete for. Ironically, the most difficult visa to obtain is the one for the USA, despite the fact that the USA is the country that, more than any other, helps Chinese get rich enough to travel.
    TM, ®, Copyright © 2005 Piero Scaruffi All rights reserved.
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  • (September 2004) Applying communism to capitalism. China is undertaking a monumental task. It is not only building one of the most efficient capitalistic systems in the world, but is creating a model of its own, that basically builds on the most extreme aspects of American capitalism and the most extreme aspects of Stalin's communism. Stalin forced huge masses to relocate in order to optimize the working of the communist state. China is doing the same but for a different reason: optimize the profits.
    The textile industry is a good example. Dongguan, a region located in the southeastern of the Pearl River Delta, is becoming the world's capital of textiles. China has scientifically relocated people who were not useful for the textile industry and has scientifically brought in skilled people to work for the textile industry. The next result is that there are now 5 million "immigrants", about 4 times more immigrants than natives. In a few years, the government has created 6523 textile and garment enterprises (2001 data) that employed 700,000 machines and about 500,000 people. As a comparison, Italy's traditional textile region of Biella has a total population (including women, children, elderly and non-textile employees) of 180,000 people. Dongguan's production capacity is 860 million pieces a year.
    The 2001 output of the region was 30billion yuan, mostly from exports (the total export value was US$2.82billion).
    On one hand, mainland China applies the Stalinist logic: we decide which region does what, and where it is most useful that people live. On the other hand, mainland China uses the capialist logic: we want to maximize profits. The goal is not the survival of the communist state: the goal is being competitive on the international markets.
    This application of communism to capitalism is the real innovation of today's mainland China, and one of the few experiments around the world that try to "improve" on the USA model.
    TM, ®, Copyright © 2005 Piero Scaruffi All rights reserved.
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  • (August 2004) Cancel the 2008 Beijing Olympic Games. The world is still in time to avoid the embarrassment of holding the Olympic Games in a country that routinely tortures and executes dissidents, where respect for human rights is virtually non-existent. Mainland China is the only country in the world that makes no mystery of wanting to invade another country (Taiwan) and that has already invaded and annexed two (Tibet and Turkestan, not to mention Hong Kong). This is a country that keeps friendly relations with the mad regime of North Korea, indifferent to the millions who have been sacrificed by North Korea in the name of a failed communist model.
    Now the world has to face not only the dubious political record of the Chinese leadership, but also a growing and disturbing sense of nationalism. When China played Japan in the final game of the Asian football championship, the Japanese were jeered and booed from beginning to end. (The official reason was that Japan never apologized for its invasion of China during World War II. But did China ever apologize for the invasion of Tibet and Turkestan?)
    Far from realizing that China owes all it has to the generosity of the USA, that keeps buying their low-quality products, China is beginning to behave like a superior country and, worse, like a superior race. It is good news that it is planning to send a man to the Moon, it is not good news that it is planning to dramatically increase its military budget.
    The 2008 Olympic Games deserve a better host. The Beijing regime has a long way to go before they can deserve the honor.
    TM, ®, Copyright © 2005 Piero Scaruffi All rights reserved.
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  • (July 2004) Bomb North Korea and defend Taiwan. Condoleeza Rice met with Chinese leaders in july 2004. She was hoping to find support for a policy of containment of North Korean's crazy dictator. Instead, she was forced to discuss Taiwan. Taiwan is a free, democratic and peaceful country. It has achieved economic and technological progress which is virtually unmatched by any other country. It has obviously no intention to invade mainland China. But mainland China, which is still ruled by a dictatorship, is obsessed with annexing Taiwan. The pathetic institution of the United Nations (See What is wrong with the United Nations) decided to expel free, democratic and peaceful Taiwan and to accept totalitarian China as a member, and China even enjoys veto power.
    The USA was coward enough to establish diplomatic ties with China and formally repudiate Taiwan (so much for USA the superpower), although in practice it continues to supply Taiwan with high-tech weapons.
    There is little question that mainland China wants to become the dominant superpower of Asia (and perhaps of the entire planet). It annexed and demolished the democracy of Hong Kong. Now it wants to do the same with Taiwan. China never even contemplated freeing Tibet and Turkestan, which it illegally annexed in the 1950s. The trend is expansionistic in an age in which not even the world's nominal superpower (the USA) is trying to extend its borders. The age of the empires is over, except for one country: mainland China. The meeting between Condoleeza Rice and mainland China highlighted the real danger: the USA is very naive, the Chinese are very subtle. The USA wanted to resolve the problem with nuclear North Korea. The Chinese managed to derail the meeting so as to discuss their imperial ambitions on Taiwan.
    The USA should become smarter. Ignore China, demolish its economy by introducing stiff tariffs against cheap Chinese imports, deploy navy and air force all around China, and pressure China into withdrawing from the occupied territories of Hong Kong, Tibet and Turkestan. The USA should demand that the United Nations expels China (and, for that matter, all totalitarian regimes) or at least remove China's veto power, and of course that Taiwan be admitted in the United Nations. It is ridiculous that even fictitious countries such as Cyprus are represented at the United Nations, but Taiwan is not.
    The USA should not even mention Taiwan at meetings with China, except to assert that it would defend Taiwan with all available means. On the other hand, the USA should resolutely confront North Korea, and, if necessary, use force to dismantle any offensive capabilities that North Korea has, and fund a program for freedom fighters to remove the current dictatorship of North Korea.
    Finally, the USA should also fund a program to foster a regime change in China, and recognize peaceful and democratic Taiwan as the legitimate representative of mainland China.
    What the USA has done so far is just the opposite: it has helped the totalitarian Beijing regime get wealthy by exporting cheap goods to the USA, and that wealth has created support within China for the dictatorship. The USA has tolerated every Chinese imperial ambition by tacitly accepting the annexation of Tibet and Turkestan. The USA is de facto accepting the emergence of China as a superpower by discussing the issues that matter to the Chinese dictatorship. The USA is, one more time, creating its own future problem, and showing the world yet another case of double standards (why did it invade Iraq twice, first to protect Kuwait and then to remove the dictatorship of Saddam Hussein, but it does not invade China to protect Tibet and Turkestan and to remove the Chinese dictatorship?)
    The status quo helps China, not the USA.
    TM, ®, Copyright © 2005 Piero Scaruffi All rights reserved.
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  • (March 2004) The giant that woke up. China, which used to be the giant that sleeps, is awake and restless, towering over Asia as the new economic superpower. But the foundations of its wealth are dubious. No doubt Deng's capitalistic revolution has turned Mao's China from a country of starving peasants to a country of high-tech industries. But China has a number of problems that do not bode well for its future:
    • It has already become a net importer of oil. Its natural resources were greatly over-estimated. China is as big as the USA, but it has 4 times more people. As China industrializes, its energy consumption skyrockets. If its economic expansion continues, China will soon become the biggest importer of oil in the world. And it will start realizing how nice it is to depend on the whims and the contradiction of the Arab world.
    • The USA has to feed less than 300 million people with 400 million acres of arable land. China has to feed more than 1.2 billion people with 250 million acres of arable land. China is doomed to become a net importer of food, and a huge importer of food. Again, its natural resources were vastly over-estimated.
    • China is not only going to become a massive importer of food and oil, but also of all sorts of raw and finished goods. Japan's trade surplus has been skyrocketing mainly because of increased Chinese imports (not exports). In a few years, the Chinese economy could turn from a net exporter to a net importer. China's economy needs to serve 1.2 billion people but doesn't have the (natural or industrial) resources to feed half of that population.
    • China's economic boom has come to the expense of its military expenditures. Only recently has the government decided to reverse the downward trend in military investments, but, between Mao's death and Jiang Zemin's election to president, China's military budget had steadily declined, thus freeing more capital for investment. As China gets more and more relevant, it will find out that it can't afford to be a weak military entity. There is no USA defending its interests (unlike Japan's or Taiwan's). China has to take care of itself.
    • Technological innovation is still coming mainly from the USA. People had long speculated that, as Japan transformed itself into an economic power and a wealthy nation, brains would start moving east. It never happened. Precious few foreign scientists move to Japan, whereas many Japanese scientists are still moving to the USA. This imbalance of brain-drain will be even harder to deal with by the Chinese government because China has blood ties to the USA (one of the largest Chinese communities in the world is in California). Brains will still move out of China, whereas it is difficult to imagine a flow of American or European brains wishing to relocate to China.
    • Most important of all, China's economic boom has been largely fueled by exports to the USA. The dogma of free trade has backfired against the USA, helping Chinese companies flood the USA market with cheap goods and forcing American companies to outsource jobs to China. But it is only a matter of time before the USA changes the rule of the gain, either introducing protectionist measures against China or reneging on the whole doctrine of free trade. If China were to lose its main export market, its growth rate would be erased. When the USA forced Japan to let its currency rise and introduced protectionist measures against Japanese companies, Japan entered a long period of stagnation: like it or not, it is difficult to find economic growth in the world outside the USA. Japan has learned that lesson. China may soon have to learn it too.
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  • (February 2004) How China bought the USA. The central banks of Asian countries have been fighting the decline of the dollar (which hurts their exports) by buying dollars. Slowly but steadily, they are amassing a huge treasure in dollars. China now holds about 403 million dollars (117 more than in 2002), and add 100 million for Hong Kong alone. Japan has 673 billion dollars, Taiwan 200 million and South Korea 155 million dollars. The grand total is about two trillion dollars. Europe holds another trillion dollars.
    These amounts are so vast that these central banks can affect the finances of the USA. They do invest in Wall Street, and their investments have caused stocks to be more expensive than they should be (yet another bubble). They do invest in USA government bonds, and their investments is basically paying for Bush's tax cuts.
    At the end of the day, the USA economy is more and more dependant on foreign countries, and the fastest growing dependency is with China. At this pace, China alone will soon own more than a trillion dollars, and control a good chunk of the USA's bond and stock markets. That day might not be a happy day for America.
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  • (December 2003) Shame on the United Nations. In their campaign to defend all dictators anywhere anytime, the United Nations continue to maintain that the 21 million of people of Taiwan (a peaceful, democratic nation) do not exist. They are the only country that is not represented at the United Nations. Officially, that country does not exist. Taiwan has not harmed anyone, and has a prosperous and free society. On the other hand, countries like the Western European "powers" (that killed hundreds of millions of people throughout their history) and Japan (that killed about 20 million civilians in the 20th century), China and Cuba, the two surviving mad communist regimes, and countless Arab dictators, are represented at the United Nations (and China even has veto rights). What is wrong with this picture? The United Nations has assigned itself the goal of serving all dictators anytime anywhere. Thus the Kurds do not exist, the Tibetans do not exist, the Turks of Turkestan do not exist, the Sahrawis do not exist, and the Taiwanese do not exist. Coincidentally three of these "annihilated" peoples are all victims of the same regime: the so called Republic of China.
    Now that Taiwan has decided to forget the past and declare the obvious (its own independence), China threatens to nuke it. First Jiang Zemin and now new leader Hu Jingtao have promised that they will nuke Taiwan if Taiwan dares state its existence. You would expect that the United Nations would at least censure China's behavior, wouldn't you? Guess what...
    The United Nations is fast becoming the biggest threat to any peaceful and democratic society in the world. All totalitarian regimes in the world are appealing to the United Nations because there is no other entity that recognizes them as legitimate rulers. The real enemy is the United Nations.
    And shame on George W Bush for financing the Beijing regime with a ballooning trade deficit. This is the first time in history that the USA is financing the main totalitarian regime in the world. It used to be that, before every high-level USA-Chinese meeting, communist China would take a democratic step to please the USA. Now it is the other way around: the Bush administration has asked Taiwan to cancel a referendum (a very democratic step) ahead of Bush's meeting with Wen Jiabao, premier of communist China. Now it is the USA that takes undemocratic steps to please communist China. ow times have changed.
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  • (October 2003) China does not face its past. In august 2003, China was outraged that Japan decided to honor the soldiers who died in the invasion of China. China correctly claimed that Japan is not facing its past and admitting its atrocities. Correct. Except that China has never admitted its own atrocities: the invasion of Tibet (no less brutal than Japan's invasion of China), the disappearance of millions of dissidents, the repression of Turkestan, the stubborn war of attrition against the democracy of Taiwan, its support for the mass murderer Pol Pot, etc. Why only Japan has to face its past and make amend? Why doesn't China live up to the standard that it demands from others? After all, Mao killed many more Chinese than Japan did. Why not denounce Mao's folly publicly? Instead, Mao's giant posters still decorate the main square of Beijing. If one of the all-time greatest murderers is honored in Beijing, then Japan is entitled to honor its soldiers.
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  • (September 2003) Tung on the way out? Tung, the chief executive handpicked in 1997 by Jiang Zemin to rule over Hong Kong, is widely despised by the people of Hong Kong. Now even the Chinese government seems to be withdraing its support for him: Tung has been force to give up on his efforts to pass Article 23 of the Hong Kong constitution, an article that, de facto, defines as "treason" any act of disobedience against the Chinese rule. China has realized how unpopular Article 23 was with the people and Hong Kong, and eventually it has decided to avoid another Tiennamen Square. Instead, it has put Tung under vice-president Zeng Qinghong, fifth in the chain of command. Zeng is now, de facto, the new ruler of Hong Kong.
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  • (May 2003) How the Chinese dictatorship spread SARS It all started in 1958 with Mao's "great leap forward". That killed millions of people between 1959 and 1961 (mostly of starvation), but Mao kept secret the number of victims and hailed China's monumental conversion from agriculture to industry. Then, in 1966, came Mao's second deadly invention, the "Cultural Revolution", and, again, millions of people died in the next three years, and, again, Mao hid the cost in human lives of his second revolution. Mao went as far as to deny that the Americans had landed on the Moon: for over ten years one billion Chinese people did not know that a man had landed on the Moon.
    After Mao died, Chinese communists opened up the Chinese economy, but they guarded the deadly secrets of the country and allowed almost no political freedom at all. In 1989, the "progressive" leaders of communist China slaughtered the students who were demonstrating in the Tiananmen Square of Beijing. Again, silence fell on the events. Communist China continued to run one billion people by lying to them. SARS is simply the product of that culture and system. When SARS started spreading, the Chinese communists scientifically wiped out information from any organ that tried to inform the country and the world of what was happening. The Chinese communist government was well aware of SARS since january (the first official report that is known to have circulated is dated january 27). It did nothing to prevent the spreading of the disease. Only on april 3, when doctor Jiang Yanyong went public, did the government acknowledge that there was, indeed, a problem. What has killed 1,400 Chinese people is not SARS: it is a system that is still afraid of letting its people know the truth.
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  • (October 2002) The new Chinese leadership does not bode well for human rights. The Communist Party is undergoing a generational shift that will introduce whole new leaders for China.
    Hu Jintao, better known as the man who crushed Tibetan resistance in the 1980s, will succeed Jiang Zemin as most powerful man in the country. He is a technocrat, as are all the other candidates to the Standing Committee of the Communist Party, the seven-member council that controls all of the power in China.
    Wen Jiabao will succeed Zhu Rongji as premier.
    Luo Gan will remain in charge of "internal security" (which means arresting dissidents).
    Li Ruihuan and Wu Bangguo are also veterans, and also technocrats.
    Zeng Qinghong is the strategist who played a key role in Jiang Zemin's successful political career. Zeng is the theoretician who reinvented Marxism as the ideology of the technocrats (displacing the proletariat).
    They are all children of the repression of the Tiananmen Square pro-democracy riots in 1989. That event ousted the ones who opposed repression (like the once powerful Zhao Ziyang) and promoted the ones who favor "stability" (notably, Jiang Zemin).
    This generation of leaders believe that China has the right to incorporate Taiwan, Tibet and Turkestan. China's obsession with these issues is impressive. If it dropped them, China could become the USA's main ally in the world, even displacing Europe and Japan. No other country in the world is so capitalistic and so dynamic as China and the USA.
    Note that this will be the first political succession at the helm of China that occurs without any struggle
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  • (July 2002) The three-gorges dam and ethnic cleansing are related. The world's largest dam, which is being built on the Yangtze Kiang in the area known as the "three gorges" (construction began in 1993), involves the forced relocation of about two million people (one million is the official number, but nobody who has been there believes it). Besides creating a human problem of biblical proportions, this process seems to involve a stunning level of corruption by just about every official involved. This has caused widespread anger that occasionally turns into public protests. Farmers who complain with the foreign press are routinely arrested for anti-Chnese actvities, so we don't really know how widespread the discontent is.
    What is less known is where these uprooted people end up. Unless they have connections high up in the army or in the party, they are not relocated among other ethnic Chinese: they are relocated in sparsely populated areas, which, in communist lingo, means Tibet and Turkestan (Xinjiang), the two countries that China occupied in the 1950s. The Chinese communist party has been working for decades to annihilate the original ethnic inhabitants of those areas. Since Mao's good old-fashioned system (extermination) is no longer practical, the Chinese leadership has resorted to a mellower form of ethnic cleansing: relocating millions of Chinese to Tibet and to Turkestan.
    The three-gorges dam is therefore providing two million ethnic Chinese to water down the Tibetan population of Tibet and the Turkish population of Turkestan.
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  • (June 2001) China executes freedom fighters In another slap in the face to the international community, China keeps executing freedom fighters in Tibet and Turkestan (the Chinese occupation troops use different names for these countries that they annexed as provinces). On June 28, 2001, two ethnic Uigurs and five ethnic Tibetans were executed by the occupying Chinese forces. The international community is ready to condemn the killings of Palestinians and Albanians (mainly because it is easy to criticize small countries like Israel and Serbia) but the western powers pretend not to know that freedom fighters are being routinely executed by what is arguably the worst imperialistic power in the world.
    July 2001: China has been rewarded by being selected to hold the 2008 Olympic games. Now the Chinese authorities have additional motivation to jail and/or kill as many dissidents as possible before 2008. You can bet that in 2008 there will be no more Tibetan separatists in Tibet, and perhaps no more Tibetans at all. China gets the Olympic games the same way Hitler's Germany got them at the peak of Hitler's power.
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  • (June 2001) Chinese occupation troops harass buddhist monks. China (or, better, one of the many Chinas), that has been occupying Tibet since the 1950s, is still persecuting Chinese occupation troops harass buddhist monks China, that has been occupying Tibet since the 1950s, is still persecuting Tibetans. In June 2001 soldiers expelled students from an academy located in the far eastern corner of Tibet (which the Chinese occupation troops have annexed to one of their provinces). Larung Gar is a respected buddhist school run by Khenpo Jigme (or Jikphun), who is considered a living Buddha. Despite their recurrent human-rights abuses, the Chinese occupation troops (the same ones that do not recognize Taiwan as their legitimate master and that pretend to rule over Turkestan) are recognized by the United States and others as a legitimate country.
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  • (march 2000) Taiwan, the legitimate government of China, elects a new president. Chen Shui-bian is the new president of China, the country that westerners continue to call Taiwan because the mainland part of it broke away 50 years ago and installed a communist dictatorship. Chen has advocated giving up reunification with the mainland (the country that the West likes to call China). Of course, nobody knows what the one billion people on the mainland desire, as mainland China refuses to let them vote. Chen won only 39% of the votes and owes his victory to a split within the Kuomintang (or MKT) between ex-president Lee Teng-hui and James Soong. It is the first time that the KMT loses an election in Taiwan.
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  • (October 1999) One China or two China's? The correct answer is actually: five. Taiwan is an independent country. Tibet has been invaded by the Chinese in the 1950's but noone other than a few communist dictatorships recognized the annexation. Turkestan (now Sinjiang) was annexed in a similar way. Mongolia also harbors self-determination ambitions. Imperial (communist) China is only the fifth China. Shame on the West for supporting its hegemonic ideology, and abandoning tens of millions of innocents to their fate, when the West is so eager to fight for small minorities in Kosovo and East Timor.
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  • (July 1999) The state of China's economy For about a decade China's economy expanded at rates of 8, 10, even 12% a year. Recently, it has slowed down to 3-4%. Paradoxically, one of the main causes is not a communist anachronism but a capitalist credo applied in the wrong place at the wrong time: the reform of state-owned industries (prime minister Zhu Rongji's main claim to fame). Started in the spring of 1998, it had a devastating side effect: unemployment is growing daily. A country with 1.3 billion people, whose population grows at 1% a year, needs to add 7.5 million jobs a year just to keep unemployment stable. The rising unemployment has generated consumer insecurity. As consumers are insecure, they stop buying consumer goods. Too many factories are making too many goods, which foreign markets are not enough to absorb. The effect is deflation: goods are getting cheaper and cheaper. In order to afford those prices, companies must cut on salaries, when they don't cut on jobs. This results in further insecurity among workers, which further curtail their shopping. And the spiral continues.
    Prime minister Zhu Rongji is little more than a "technician" in the hands of president Jiang Zemin. His opponents, led by his predecessor Li Peng, who is now in charge of the legislative branch, advocate much slower reforms and much stronger crack-down on dissidents. So far Chinese citizens have enjoyed the unusual freedom and forgotten about economic disparities.
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  • (July 1999) Taiwan angers China by declaring independence. It is funny that the West is so obsessed with the rights of the Kurds, the Palestinians, even the Kosovars, to govern themselves, but has never been too keen on defending Taiwan's right to exist. President Lee Teng-hui has declared that he does not want reunification with mainland China anymore, and China has retaliated by announcing that it possesses the neutron bomb, with which it could solve the Taiwanese dispute in a few minutes. Mr Lee's is the first freely elected official in any Chinese country in the entire history of the Chinese race. Taiwan is a prosperous and relatively free country, which has never threatened any of its neighbors. On the other hand, China is still a dictatorship, which is still occupying two nations (Tibet and Turkestan) and has been at war with at least three neighbors (India, Vietnam and the Soviet Union). There should be no doubt who is the nice guy between China and Taiwan. There should be no doubts that Taiwanese have the right to self-determination. Instead, Europeans and even Americans do not recognize the government of Taiwan and Taiwan is excluded from the United Nations. The tiny Former Yugoslav Republic of Macedonia is represented at the United Nations. But not the 70 million inhabitants of Taiwan, a free and peaceful country.
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  • (January 1998) Why America likes the new China. The new Chinese line-up doesn't really differ much from the Deng Xiaoping era, but it does stabilize things after a period in which all western analysts had been expecting instability following Deng's (timely) departure. Li Peng, who is widely considered a "bad guy" in the West because of his stern anti-democratic stand, had to step down from prime minister but was given the job of president of the parliament, not a trivial position at all (and still second-ranking in the hierarchy). It is actually likely that his appointment to this job reflects Jiang Zemin's desire to inject new life into a Congress that has been less and less active and therefore useful. Zhu Rongji, the new prime minister, really appears to be but a shadow of Jiang Zemin. His tough management style reflects the style that made Jiang so successful and powerful. To dissolve any hope that Li Peng's apparent "demotion" means a more democratic China, the new vice-president is the butcher widely held responsible for the latest repression in Tibet, Hu Jintao, former party boss of Tibet. (On the other hand, Tian Jiyun, the second ranking person in the Parliament, is an old associate of Zhao Ziyang, who is still under house arrest following his support of the 1989 pro-democracy demonstrations, and a bitter rival of Li Peng).
    The truth is that Jiang has forged a masterly balance of powers in his cabinet which will assure him support both from the believers in economic reforms, who want to get rid of the last vestiges of communism, and from the hard-liners who still rank discipline as the number one priority. No doubts Jiang has been successful in raising China from developing country to world power. He may actually rank as the premier who has created more wealth than anyone else in China's history. And the West can only be happy about his leadership: first, he is steering China towards Western ideals much faster than, say, the democratic Indian government ever did, or any of the Arab countries ever did; second, he has reluctantly endorsed most of the West's views around the world (there isn't a single war left that pits the West against China); third, his unwillingness to involve China in international politics is almost a guarantee that the West can police the world for a little longer.
    Along these lines, Jiang's survival strategy is very simple: first, copy Western capitalism which has proven to be much better than communism (it was counterproductive to defend a system that would never work); second, appease the West, whose investment you need to quickly implement your reforms; third, don't mess with the West in foreign policy because it can only bring bad news (you lose a war and your rating suffers, if you don't enter any war, then your rating is unaffected). This turns out to be especially good news for the United States, as there are now only three countriesleft that could truly compete for the job of world power, but all three (Japan, China and Germany) show no intention of wanting that job. Now do you still wonder why the United States is not pressing China to free Tibet or to release the political prisoners...? Jiang is even more ideal than Yeltsin.
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