Sunday, July 31, 2005

Don't Worry About China. Learn From It.


July 31, 2005 ; NYT
By BEN STEIN

ONE disadvantage of being 60 is that you have to get up in the middle of the night, often more than once. But a big advantage of advancing age is that you get to recognize news media silliness when it happens.
This comes to mind in terms of the economic relationship between the United States and China. Partly because a company affiliated with the Chinese government has made a bid to buy Unocal, a large American oil company, there is a lot of talk in the news media about how powerful China has become and how weak and pitiful the United States has become. There is talk of Chinese dominance over the world economy, and, from what I can gather, a general fear that soon we will be in peonage to the Chinese.
It all reminds me a lot of how the news media and the Central Intelligence Agency went berserk after the launching of Sputnik in 1957, and it was forecast that the Soviet Union would soon be the world's technological and economic hegemon. That talk was based on a number of faulty assumptions and a good deal of hysteria. Obviously, it did not happen.
In the case of China, the confusion is slightly similar, but with some important differences - and one immense fact that the news media regularly overlooks about personal responsibility.
First, let's look at the data. But the problem is that the data are extremely confusing when it comes to reporting the real size of China's economy. On the one hand, if you take what is reported about the output of China, you get a range of estimates, but generally the gross domestic product of China in the year 2004 is estimated to be substantially less than $2 trillion. That would roughly make it one-sixth the size of the United States economy. Yet China has nearly five times the population of the United States. That means the per capita G.D.P. of China is about one-thirtieth the per capita G.D.P. of the United States, estimated to be about $40,000 at present, in rough terms.
Obviously, this puts Chinese per capita G.D.P. far behind that of any major industrial country. But some economists, especially at the C.I.A. (which loves to puff up estimates of the power of other countries, as we have learned at great cost), say that we should count only "purchasing power parity" G.D.P. That means we would adjust Chinese G.D.P. and per capita G.D.P. drastically higher to account for the lower prices that the Chinese pay for things like food and medical care. (It is a mystery to me how these economists account for the fact that tens of millions of Americans have a house on a quarter-acre of land with three bedrooms and air-conditioning, a type of property that is simply not available except to maybe the richest 10,000 families in China. Maybe that should ratchet up our purchasing power parity G.D.P., but I don't think it does.)
Consider the most optimistic C.I.A. data about China in 2004. It says China has a purchasing power parity G.D.P. of (very) approximately $8 trillion, compared with roughly $12 trillion for the United States. Again, this is for a nation with nearly five times our population. Even when using this most astoundingly optimistic estimate - I would almost say a preposterous estimate - China has a per capita G.D.P. of about $6,000, or about 15 percent of America's and well below that of any nation in Western Europe, or of Japan, Israel, Taiwan and many other countries.
In other words, the United States is vastly richer than China by any measure. This is not to boast, but it's also not to be afraid of imminent world-pauper status.
It is true that China is industrializing at a fantastic pace. It is estimated that China has been growing at roughly 9 to 10 percent annually for several years, while the United States has been growing about 3 percent annually. Torrid growth, however, never goes on forever, in companies or in nations. (At least it never has so far.)
But suppose that these trends continued for 25 more years. Chinese per capita G.D.P. would be about $65,000 in 2040, and American per capita G.D.P. would be about $84,000. Again, this assumes that we use the most optimistic possible estimates of current Chinese G.D.P.
If we used the more conservative, non-C.I.A. estimates of where Chinese per capita G.D.P. is now, in 25 years it would be about $17,500- and this assumes the continuation of China's recent sizzling growth rates. That would put China's per capita income in 2030 at roughly one-sixth of our level.
In other words, it will be a long time before Chinese per capita G.D.P. matches ours. And for that to happen, it will take a previously unheard-of growth rate for an unheard-of length of time. This is a big series of ifs, especially for a country with a rapidly aging labor force and an inherent contradiction between dictatorship and free markets.
But suppose that it does happen. Suppose that China becomes a larger economic power than the United States. Suppose, in our great-great-grandchildren's day, that the average Chinese citizen is about as rich as the average American. How would it hurt us? Why would we be worse off? If the Chinese were richer, they could buy more from us and employ more of our workers. They could buy more of our stocks. They could tour our beautiful nation more.
The fact that our neighbors are worse off does not make us richer, and the fact that they are better off does not make us poorer.
But another factor is even more important: personal responsibility. Americans who want to make sure they stay well off accomplish nothing by worrying about China. But we can certainly learn something from China. Individuals and nations become rich by investing in human capital - getting a good education, learning good work habits, saving and investing prudently and living healthy lives. Any young Americans who want to keep up with the Chinese can get a good education, work hard, save as much as possible, invest prudently - and they will be just fine now, in 25 years and in 50 years.
The moral here is simple: learning from our friends, the Chinese, means something. Fearing and envying them means nothing.
Ben Stein is a lawyer, writer, actor and economist. E-mail: ebiz@nytimes.com.

Seething Unease Shaped British Bombers' Newfound Zeal


July 31, 2005 , NYT
By AMY WALDMAN

LEEDS, England, July 30 - Mohammad Sidique Khan was never on the corner, a detail friends offer as a compliment. In a neighborhood where many young South Asian men had lost their way, or foundered into drug dealing, Mr. Khan's peers admired his focus on family, work, working out, and Islam.
The discipline of Mr. Khan, 30, was shared, and not just with his friends Shehzad Tanweer, 22, and Hasib Mir Hussain, 18, who joined him on a murderous assignation in London on July 7. The three men and Germaine Lindsay, 19, detonated four bombs that killed 56 people, including themselves.
Mr. Khan, Mr. Tanweer and Mr. Hussain were part of a larger clique of young British-raised South Asian men in Beeston, a neighborhood of Leeds, who turned their backs on what they came to see as a decadent, demoralizing Western culture. Instead, the group embraced an Islam whose practice was often far more fundamentalist than their fathers', and always more political, focused passionately on Muslim suffering at Western hands.
In many ways, the transformation has had positive elements: the men live healthier and more constructive lives than many of their peers here, Asian or white, who have fallen prey to drugs, alcohol or petty crime. Why Mr. Khan, Mr. Tanweer and Mr. Hussain in particular crossed a line that no one had before, how they and Mr. Lindsay linked up, or whether their plot was homegrown or steered from outside, remain mysteries, at least to the public.
But the question asked since their identities were revealed after the bombings continues to resonate: what motivated men reared thousands of miles from the cradles of the Muslim world, without any direct experience of oppression themselves, to bomb fellow Britons, ushering in a new chapter of terrorism.
Many here see answers in the sense of injustice at events both at home and abroad that is far more widespread among Muslims than many Westerners recognize; in the rigid and deeply political form of Islam that increasing numbers of educated European Muslims are gravitating to; in the difficulty some children of Muslim immigrants in Europe have had in finding their place or direction.
It is a broader narrative being played out by such immigrants across Britain, and Western Europe. The young men here grew up brown-skinned in white Britain, in a blighted pocket of Leeds straddling their parents' traditional values and the working-class culture around them. They have been reared shoulder to shoulder with old stone churches and young hooligans, and face to face with attitudes toward family and morality different from those taught by their parents.
"They don't know whether they're Muslim or British or both," said Martin McDaid, a former antiterrorist operative who converted to Islam, taking the name Abdullah, and worked in the neighborhood.
They are alienated from their parents' rural South Asian culture, which they see as backward. Reared in an often racist milieu, they feel excluded from mainstream British society, which has so far not yielded to hyphenated immigrant identities as America has. They have come of age in an era marked by conflicts between Muslims and better armed powers - India, Serbia, Russia, Israel, America and Britain - and the rise of an ideology that sanctifies terrorist attacks against the West in response.
So some young men have solved the "don't know" riddle by discovering a new assertive and transnational identity as Muslims. The change has played out within families in the small, brick "back-to-back" terraced houses of little Beeston's lattice of down-at-the-heels streets.
In one corner shop sits Ejaz Hussain, 54, who came from a Pakistani village in his teens, and has reared eight children in Britain. The bombers' fathers and he worshiped at the same mosque; their sons left, rejecting the mosque's form of Islam as incorrect and its determination to keep politics outside the mosque as unjust.
Walk down Stratford Street, past another mosque of the elders the bombers and their cohort rejected, to the store of Mohammad Jaheer, a burly Bangladesh-born shopkeeper who went "religious," as young men here say, 10 years ago at 16. Islam has saved him from what he calls an animal-like life as a Western businessman spending time at clubs, he said. He helped form the Iqra Learning Center, an Islamic bookshop, five years ago, to educate Muslims and non-Muslims about the faith.
That bookshop, just a few blocks from his shop, was raided by the police because of its possible links to the bombers. Over time its education came to include provocative material that some contend was meant to inspire jihad.
Mr. McDaid, who worked at the bookshop, said it was intended only to raise awareness and passions - among Muslims and the British establishment alike - about the oppression of Muslims around the world.
Passions have been raised, among the bombers most radically, but among many others here and across Europe. Mr. Hussain, who helped organize two peace marches in the bombings' wake, rejects the notion that an outsider from Al Qaeda recruited the men, although others disagree.
He pointed to his head and said in reference to the bombers, and their peers: "Al Qaeda is inside."
An Epic Migration
Ejaz Hussain was 16 when he left his 40-household village in Pakistan and came to Britain in 1967. Everybody was going; no one planned to stay long. He did not realize that he and so many others were part of an epic, and permanent, migration that would reshape Britain in so many ways, the events of July 7 being just one.
The British Raj officially ended on Aug. 15, 1947, but its relationship to its subjects did not. In the following decades men of the Indian subcontinent came to Britain en masse to supply cheap, unskilled labor for factories, foundries and, especially, textile mills in northern Britain.
A majority of the immigrants were Mulsim farmers from the Mirpur region of Pakistani Kashmir. Others came from Gujarat in India, or what is now Bangladesh, or, as with the bombers' families, Punjab Province in Pakistan. Most were poor, with rural backgrounds and often uneducated, although Mr. Hussain, the thoughtful, genteel son of a policeman, had more education than most.
They started with perhaps £5 in their pocket, and worked 16 to 18 hours a day, with a beaverlike determination to earn and build something for the next generation.
Mr. Hussain, now 54, worked in factories and mills, drove a taxi, and has run a corner minimart for 15 years.
Integration was minimal, thanks to barriers of race and language, culture and religion. The migrants were the colonized who came to live among their former colonizers. "When we came, we were like servants," Mr. Hussain said. Even though they had time for little beyond Friday Prayer, if that, they were Muslims still, for whom true assimilation into Western ways, like drinking, would inevitably be irreligious.
Many, Mr. Hussain among them, thought they would earn and then go home. Instead, they eventually brought over wives or young families, forming insular communities in which English fluency was dispensable.
In the late 1980's, most of the mills and factories closed. Men began driving taxis, or opened shops or other family-run businesses that require round-the-clock tending by an extended family. Others simply retired.
The first wave's attitude was, and largely still is, one of gratitude toward Britain, which offered a livelihood and left them alone to practice their religion.
"Britain is the greatest country in the world" for those reasons, boomed Arif Butt, a forceful figure in Beeston who runs one of its mosques and has clashed with its youth.
Arshad Chaudhry, an accountant and member of the Leeds Muslim Forum, sees it differently. "They were very timid," he said of the first wave.
Tough Neighborhoods
Beeston Hill, where Mohammad Sidique Khan and Shehzad Tanweer were raised, and nearby Holbeck, where Hasib Mir Hussain grew up, have a dreary, dissolute air. The houses somehow seem shrunken in scale, and the dreams of many youth seem to have been sized to match.
The two neighborhoods are about 77 percent white and 18 percent "Asian or Asian British," according to the 2001 census. Almost half the population is under 30.
Many white residents of Beeston tend toward tattoos and pit bulls. The drinking starts early, and openly. Trash and furniture clot some streets. Faces have been ravaged by drugs, whose use peaked a few years ago when legions of zombielike heroin addicts wandered the streets.
More than 10 percent of houses are vacant. Nearly a third of the population of about 16,000 receives the British equivalent of welfare. Unemployment is nearly 8 percent, more than double the rate for the rest of Leeds.
Whites and Asians live for the most part politely, but distantly, adjacent. Both groups say South Asians have actually prospered more than whites, which has generated some resentment. Plenty of British Muslims face staggering poverty and unemployment, but the bombers and their immediate circle were not among them. At least some youth seem more directionless than deprived.
In some ways, Mr. Hussain and other elders say, the young people have had it easy. At the age when their fathers worked like mules, the sons are playing cricket, studying, hanging out. Compared with their parents, they are well educated, thoroughly literate, fluent in English and the Internet.
Some know family businesses are waiting for them to take over. Some go on welfare as soon as they reach adulthood. Some sell drugs. "They are getting lazy, getting spoiled from the government," said Abu Hanifa, 60, another shopkeeper who works around the clock.
And yet Mr. Hussain and others think the young have also had it harder. In an alien culture, work ballasted the migrants, as did the traditional values they had imported from home. The young have no such anchors; they sometimes seem to be living in rooms without walls.
Mohammad Sidique Khan's generation was the first to be educated entirely in Britain. The schools they attended made almost no accommodation to their presence. They learned almost nothing about Pakistan or Islam's history and traditions.
Instead, they were expected to become British, and many have tried. But in areas like Beeston, they say, that has also meant learning to drink, using or selling drugs and losing one's virginity at an early age.
They grew up in rough and often blighted neighborhoods where "hardness" - the ability to fight anyone, at any time - was essential, said Mr. Hussain's son Nadeem Ejaz, 30, who runs the family's green grocery. The red shoelaces favored by young racists from the National Front remain etched in his teenage memories.
Many young Muslims, Mr. Khan among them, turned to martial arts or boxing partly to ensure combat readiness.
Boys regularly divide into white and Asian gangs. In April, a 15-year-old boy was stabbed to death by a member of an Asian mob that pursued him.
The children of the immigrants have shed the servility, and passivity, of their parents, Mr. Hussain said. They want their rights, even if they have to fight for them. This inspires both pride and unease in him.
Mr. Hussain sees a continuum of self-destruction between the recent bombings and race riots that occurred just 10 miles away in 2001 - seemingly disconnected rage. "Why this damage to their own streets, their own cities, their own communities?" he asked of the Asian youth who took part in the riots, echoing those who now ask how the bombers could turn on their own society. "Maybe if we had paid attention then this wouldn't have happened."
A good many young Asian men here are, in British social welfare parlance, NEET: Not in Education, Employment or Training. Here and in other South Asian communities over the past 15 years, they have begun to out-English the English, selling drugs and serving prison terms at alarming rates.
In Stratford Street, a Bengali-British drug dealer with a gold tooth and a practiced air of menace sits on a stoop. Mr. Jaheer, the Bengali-British shopkeeper, passes him by. As Mr. Jaheer and his friends see it, the critical battle here has been between those who have succumbed to their milieu, dragging their community down, and those who have sought to rescue and uplift it.
In that effort to fight Beeston's addiction, violence and aimlessness, they say Islam has proved an invaluable ally. To those who say Islam turned the bombers against Britain, they answer that Islam also saved youngsters from Britain.
The Draw of Religion
Mr. Jaheer was among the first to become religious, and others soon followed. One by one, young men who regularly slept through namaz, or prayers, awakened. Mr. Khan was among them; so, later on, were his fellow bombers, Mr. Tanweer and Mr. Hussain.
The group was always a small minority among Beeston's youth, but an influential one. The pioneers coached those who followed them in how to live as Muslims in the West, bringing a new social conservatism to bear. It is permissible to look once at scantily clad women in summer, they would tell youth. After that it is a sin. Young men put away their televisions, saying there was no appropriate programming for Muslims, and sometimes imposed new restrictions on their wives.
"They were doing quite well with the young brothers," said Nadeem Ejaz, crediting Mr. Khan and others with weaning some youth from drugs. "It was smack city around here. These people took on the initiative to clean up the community."
The group of friends created a network of organizations to lure Asian youth off the streets through sports, nature outings and education. For the Leeds City Council, desperate to counter the social ills present in Beeston and similar communities, the men were an ideal conduit. Over the years the council funneled numerous grants to their organizations and says some worked well.
Mr. Khan was among the grantees. Under the auspices of the South Leeds Asian Youth Association, he twice applied for, and won, grants of about £2,000 apiece for gym equipment, according to council records.
At the same time, the group's newfound faith was creating distance from its members' peers, and sometimes conflict with parental choices.
One of Ejaz Hussain's sons became very religious five years ago. He works at his father's corner shop, joking with customers, calling the women "luv," the standard Yorkshire greeting. But the shop sells cigarettes, bacon and tinned pork, girlie magazines.
To him, the shop - the fruit of his father's life of work - violates his faith, and he has unsuccessfully tried to persuade the family to give it up.
Religiously, the young men came at Islam like converts - questioning everything, accepting nothing. If they were going to practice, they wanted to do it in what they considered the right way. If they wanted to go to heaven, they felt, they had to find the purest form. They wanted evidence for whatever they did in the Koran.
All of the young men quickly rejected the Islam of their parents, who practice a Sufi-influenced strain of the subcontinent called Barelvi. Shaped partly by Hindu and folk customs, it believes in the power of pirs, or holy men, and their shrines.
The young men, Mr. Khan especially vehement among them, believed such "innovations" contaminated Islam.
They stopped praying at their parents' mosque, even as they used its basement gym to warn youth against the type of Islam their parents practiced upstairs.
They turned, instead, to the more rigid, orthodox Deobandi school of Islam, which also had a mosque in town. The adherents of Deobandism include the Taliban of Afghanistan; they take what they see as a literal approach to the faith. In Britain, as in Pakistan, this school is growing fast - starting seminaries, producing English-speaking preachers and drawing youths away from the more liberal Islam of their parents.
Eventually Mr. Khan and his friends left the Deobandi mosque, too, saying its approach to outreach was too narrow, its focus too apolitical. And the young zealots felt only frustration and contempt for the mosques' imams, who were often brought from the subcontinent, spoke minimal English, knew nothing of the moral maze young British Muslims face, and abided by an injunction by mosque elders that politics or current events involving Muslims should stay outside the mosque.
A Politicized Islam
For the young, Islam was politics. "There is a lot of hatred" because of Iraq, Kosovo, Kashmir, Mr. Ejaz said. If the mosque makes subjects like that taboo, if their doors are closed, he said, young people are going to go somewhere else.
In Beeston and across Britain, that is exactly what they are doing, which may make Prime Minister Tony Blair's call for mosques to preach against extremism an exercise in futility.
Educated second-generation Muslims are finding their way to an extreme form of Islam spreading not through mosques but through Islamic bookshops, the Internet and university societies, said Roger Ballard, an anthropologist in Manchester who specializes in Pakistani Muslims in Britain.
The form is called Salafism, taking its name from the term for the Prophet Muhammad's companions, although its adherents often reject any label. It originated in 19th-century Saudi Arabia, and has helped inspire groups like the Muslim Brotherhood and Al Qaeda.
The Salafi demand for purity and rejection of any Islam except that of the early years can lead to deep intolerance even for other Muslims like Shiites. Salafis see politics as embedded in the DNA of Islam. They take to heart the injunction that the ummah - the global community of Muslims -is "like one body": if one part is suffering, the rest will be in pain as well. They believe, therefore, in an obligation to physical jihad, or struggle, under the right conditions.
For educated young European Muslims who learned nothing of their own history in school, Salafism is a natural fit, Mr. Ballard said. It provides unequivocal answers. And, he said, it is largely "do it yourself."
In Beeston, the young men did do it themselves. After they left the mosques they gravitated to the Iqra Learning Center. There, they were free of their elders and their old ways. They held study circles, debated and produced literature and videos, all with an agenda that was political as much as religious.
Their effort to create an Islamic identity in British Muslims has been fueled by the belief that the West is waging a war - a "crusade," the word President Bush used in 2001 - against Islam, a notion strengthened by the invasion of Iraq.
This notion recurs in the materials circulated by Islamic bookshops and on the Internet. DVD's produced and distributed by Iqra juxtapose images from the Crusades with images of war-mutilated Muslims. A cross drips blood over Afghanistan. In one DVD are images of what Mr. McDaid called "mujahedeen," Muslims fighting in an array of conflicts, but he insisted those images were not on the copies given away.
Under new legislation Britain is weighing against "indirect incitement" to terrorism, such DVD's could become illegal. That perplexes the young men here. One Briton's propaganda, they point out, is another's truth. Bloodshed in places like Iraq is not their invention, Mr. Jaheer said. "How can it be incitement if it's facts?" he asked.
In his shop, Mr. Hussain, whose Islam his children rejected as too liberal, opens the newspaper to an article about 25,000 civilian dead in Iraq in the past two years.
"People keep asking what was in their heads," he said quietly.
Mr. Hussain changed worlds by coming to Britain, and now the world he made here has been irrevocably changed by its youth. The government says community leaders should police their communities, mosques their devotees, fathers their sons. Outside, police close-circuit television vans prowl, there to protect the community from possible retaliatory attacks, but also to watch.

Advantage, China

In This Match, They Play Us Better Than We Play Them

Sunday, July 31, 2005; B01; WashingtonPost

[James McGregor is a journalist-turned-businessman and former chairman of the American Chamber of Commerce in China. His book "One Billion Customers: Lessons From the Front Lines of Doing Business in China" (Simon & Schuster/ The Wall Street Journal Books) will be published in October.]

BEIJING We're losing the intelligence war against China.
No, not the one with spy satellites, human operatives and electronic eavesdropping. I'm talking about intelligence : having an intelligent understanding of and intelligent discussions about China -- where it's heading, why it's bidding to buy major U.S. companies and whether we should worry. Above all, I'm talking about formulating and pursuing intelligent policies for dealing with China.
The Chinese government today understands America much better than our government understands China. Consequently, the Chinese government is much better at pulling our strings than we are at pulling theirs. China's top leaders, diplomats and bureaucrats have a clear framework from which they view the United States, and they are focused and unified in formulating and implementing their policies toward us.
In contrast, our government's viewpoint on China is unfocused, fractured and often uninformed. Is China still the Red Menace of the Cold War or a hot new competitor out to eat our economic lunch? Both views as well as a hodgepodge of other interpretations can be found in the halls of the White House, Congress and the Pentagon. Add to that confusion a vicious domestic political culture that brooks no compromise, and the chances of formulating a coherent China policy approach nil.
Playing the barbarians off against each other has been a core tenet of Chinese foreign policy since the imperial dynasty days when China's maps depicted a huge landmass labeled the "Middle Kingdom" surrounded by tiny islands labeled England, Germany, France, America, Russia and Africa. China was the center of the world and everyone else was a barbarian. That's why the Chinese are delighted by spectacles such as when rival members of a U.S. congressional delegation screamed at one another in front of their Chinese hosts in the Great Hall of the People. And what should they think of the time top Chinese officials laid out clear policy objectives to an American business audience and a U.S. cabinet member responded by saying "Jesus loves the Chinese people"?
Since the 1989 Tiananmen Square massacre, China policy has been a political football that American politicians kick back and forth to score points against one another. In the 1990s, it was a penalty-free game because the United States had the upper hand. China needed our capital, technology, know-how and insatiable consumer market to build its economy, as well as our blessing to join the World Trade Organization (WTO).
But those days are over. China's raging consumer market, its massive export machine, voracious appetite for global resources and more than $700 billion in foreign exchange reserves puts the ball in its court. It is difficult to overstate the transformation that has swept China in the past 15 years. To frame it in terms of comparable historical changes in the United States, China has been simultaneously experiencing the raw capitalism of the robber baron era of the late 1800s; the speculative financial mania of the 1920s; the rural-to-urban migration of the 1930s; the emergence of the first-car, first-home, first-fashionable-clothes, first-college-education, first-family-vacation middle-class consumer boom of the 1950s; and even aspects of social upheaval similar to the 1960s.
Today Chinese government officials and business executives admire, fear and pity the United States. They admire our entrepreneurial culture, free markets, legal system and ability to unemotionally discard what doesn't work while our best-in-the-world universities and enormous R&D capabilities create new products and services. China's economic reforms over the past 25 years have been aimed at creating a Chinese variation of the U.S. economic system and its ability to unleash entrepreneurial instincts and harness markets to build a world-beating economy.
China's fear stems from seeing our high-tech military machine in action. I will never forget standing in front of the Beijing train station during the first Gulf War, amid a sea of Chinese workers, thousands of whom had stopped their bicycles in the street to watch slack-jawed as huge outdoor TV screens displayed footage of American missiles screaming down Baghdad smokestacks. Just a few blocks away in the leadership compound of Zhongnanhai, Chinese officials imagined such destruction raining down on Beijing and realized that their strategy of defending China with swarms of peasant soldiers was as outdated as Maoist philosophy. They immediately embarked on a multi-decade plan to build a military as advanced as ours.
Chinese pity comes from their belief that we are a country in decline. More than a few Chinese friends have quoted to me the proverb fu bu guo san dai (wealth doesn't make it past three generations) as they wonder how we became so ill-disciplined, distracted and dissolute. The fury surrounding Monica-gate seemed an incomprehensible waste of time to a nation whose emperors were supplied with thousands of concubines. Chinese are equally astonished that Americans are allowing themselves to drown in debt and under-fund public schools while the media focus on fights over feeding tubes, displays of the Ten Commandments and how to eat as much as we can without getting fat.
China is all about unity, focus and leverage. Chinese officials and business executives are obsessed with a single question: What advantage do I have over you? No surprise then that Chinese officials are delighted to be funding ever larger portions of America's budget deficit. They know that if they sat out one U.S. Treasury auction, the U.S. stock markets would tumble. They yawn when Congress threatens to impose huge tariffs on Chinese imports, knowing that the resulting huge price increases at Wal-Mart, Best Buy and the Gap would cost some members of Congress their jobs. And while the Chinese do not relish sharing a border with the nutso North Koreans, they are happy to turn this bad situation to their advantage. The Bush administration desperately needs China's help in quelling the hermit kingdom's nuclear ambitions while we are bogged down in Iraq.
Still, China isn't even a fraction as powerful as it pretends to be. Beneath the bluster, it is a nation beset with internal problems. Pollution chokes its air and water. The growing gap between the haves and have-nots and rampant government corruption are triggering almost daily demonstrations. And China has no ideology other than enriching itself. The relentless commercial drive that has shaken China out of its imperial and socialist stupor has now become an end unto itself, leaving a population that is spiritually adrift. So far rapid economic growth, looser lifestyle strictures and straightforward political repression have held things together, but the Communist Party leadership knows that it needs a different formula for long-term success.
From a U.S. perspective, China's untempered commercialism suggests a nation out to milk us of everything it can. What is being lost in our vicious battles over China policy is that China and America have manageable differences and many complementary interests. With an intelligent and consistent China policy, the United States could help China and itself at the same time.
I offer these humble suggestions as a patriotic American who has lived in Beijing for 15 years -- and as a person who respects the Chinese people and what they are accomplishing.
Domestic politics should stop at the U.S. border. Trench warfare on China policy between the political parties and executive branch factions only plays into China's hands.
Stop preaching instant democracy. After the Tiananmen massacre, China's state media engendered a "nationalism of resentment." Aimed at cooling the ardor that young Chinese felt for America, the media portrayed the United States as having a secret agenda to keep China poor so that America can stay rich. A key part of this message is that America wants China to democratize because it will plunge the country into chaos. Those who survived the insanity of the Cultural Revolution see the point. Even Chinese people I know who are unhappy with their government believe that a nation with two millennia of top-down rule can only pluralize gradually. America can best help China inch toward political pluralism by trying to strengthen China's court system and rule of law and by making visas plentiful again for Chinese to attend our universities and public policy forums.
Let Chinese companies purchase or merge with U.S. companies unless the American company has genuine advanced military technology. We should also require reciprocity. Take the recent China National Offshore Oil Corporation Ltd. (CNOOC) bid to purchase Unocal Corp. Hysteria led to passage of a ridiculous House resolution by 398 to 15 expressing national security concerns about the deal, which involved a scant 0.8 percent of U.S. oil production. Instead, the United States should have responded as China would: Use the deal as leverage. America's politicians should have welcomed the CNOOC deal as long as China changed its own oil policies, which prevent foreign companies from operating gas stations in China, compel them to use Chinese companies when exploring for oil and almost always offer exploration leases for foreigners at the edges of promising fields to help China pinpoint the location of the biggest reservoirs for its own drillers.
Develop smart, workable rules on technology exports. Since the mid-1990s, China has been able to purchase almost any commercial technology it desires from Japan, Israel, Russia or the European Union. Bogged down in a bureaucratic quagmire of ever-changing rules and approval processes, U.S. machine tool makers and silicon chip equipment manufacturers have fallen behind. If this continues, we will endanger our own national security base by weakening our technology companies and their R&D capabilities. Nevertheless, many in Washington favor "catch-all control" regulations that could, for example, block a U.S. truck engine manufacturer from doing business with a Chinese firm that supplies some engines for Chinese army trucks. European and Japanese truck engine makers doubtless will be deeply grateful.
Vigorously push trade issues that provide a long-term win-win for China and its trading partners. Our focus should be intellectual property rights (IPR) protection. China's original modernization model was to invite foreign firms to manufacture for export in joint-ventures with Chinese companies. China was then supposed to learn to build its own companies and products. But many huge companies have been built through the wholesale theft of intellectual property and rampant copying of products. Within a three-block radius of my Beijing apartment, there are several dozen shops selling any Hollywood movie or American television series of note for $1 per DVD, copies of Prada and Louis Vuitton handbags for $10, nearly perfect copies of Callaway or Taylor Made golf clubs for $150, and fake North Face parkas for $35. Copied pharmaceuticals, car parts and the whole gamut of industrial products are plentiful across China. Worse, more and more such products are being exported. Chinese piracy is rapidly undermining political support for China in Congress and hampering the growth of its most innovative companies.
China knows the problem needs fixing but fears job losses and potential unrest in the towns and villages that host copycat factories. New U.S. Trade Representative Rob Portman could take a lesson from a predecessor, Charlene Barshefsky, who drafted a road map to guide China to WTO accession. As with WTO, China lacks the political will or consensus to come up with a plan on its own. The U.S. government should also back a new effort by the U.S. Chamber of Commerce and the American Chamber of Commerce in China to rate Chinese provinces and cities by their level of IPR enforcement. Public embarrassment and internal competition for foreign investment may prove to be stronger motivators than foreign complaints.
I understand America's genuine security concerns regarding China. But they should not be overblown to the point where they undermine our economic security. I also understand that reaching a political consensus isn't easy. But I am worried about the erosion of the sensible center. Chinese and U.S. politicians share the blame. As a global economic power, China can no longer employ IPR policies appropriate for a banana republic. And responsible members of Congress can no longer gin up China hysteria to get votes.
The stakes are getting too high.

Author's e-mail: jlmcgregor@jlmcgregor.com

Friday, July 29, 2005

Friends Describe Bomber's Political, Religious Evolution


(Photo : Muslim cleric Qari Attaullah stands in front of a mosque where Shehzad Tanweer was said to pray in his ancestral village in north-central Pakistan. Relatives said Tanweer traveled to Lahore, Pakistan, late last year to learn how to correctly pronounce readings from the Koran. (By Asim Tanveer -- Reuters) )


22-Year-Old Grew Up Loving Western Ways And Wanting for Little

By Sudarsan Raghavan Washington Post Staff Writer Friday, July 29, 2005; A16

LEEDS, England -- The day before Shehzad Tanweer strapped on a backpack filled with explosives and made his way into London, he took part in a cherished British pastime: a pickup soccer match in a park here.
It was a ritual he carried out most days, if he wasn't playing cricket. Whites, blacks, Asians -- everyone in the neighborhood would come out. For a couple of hours, they would forget their races, religions and prejudices and play only as Britons.

On that day, Tanweer's black hair was showing some fashionable brown streaks, recalled several friends who were there. Apart from that, there was nothing unusual about him -- not a sign that he would soon be killed by a bomb he carried onto a London subway train.
"He was laughing and joking like normal," said Saeed Ahmed, 29, downcast eyes reflecting the shock that still lingers.
Of the four men investigators have concluded were the London bombers, Tanweer, 22, seemed the most unlikely to commit such a fanatical act against the nation where he was born and bred, friends said. He seemed to enjoy everything British and Western, and had the means to do so.
That's why three weeks after the July 7 bombings, many friends, relatives and elders in Tanweer's community still dwell in a realm of denial. "I think there was somebody else behind it," Ahmed said. "If you saw Shehzad on the street, he wouldn't even say boo to you."
Tanweer came from a Pakistani family who had toiled their way to prosperity and given him every opportunity. They were a classic immigrant success story, seeming proof of the multiculturalism that Britain often boasts is woven into its society.
But friends say that at around age 18, the slim and boyish-looking Tanweer underwent a political and religious transformation. He began to feel secretly distant from things British. He hung around with people who were convinced that Islam was under siege around the world.
Tanweer and the other bombers are an aberration: The majority of Britain's 1.6 million Muslims are law-abiding and Muslim leaders have condemned the attacks as violating the tenets of Islam. Yet recent events have brought back to the surface old questions about the nation's ability to embrace and assimilate Muslims.
"Who is responsible?" asked Mohammed Arshed, 44, a Muslim community leader in the Beeston neighborhood, where Tanweer lived. "These young men have been raised in the British education system. They ate British food. They were exposed all their lives to British culture.
"Our community is looking at itself for answers. But we're also looking for answers from the government," he said, referring to failed social policies and lack of opportunity.'A Very Genuine Family'
"They are just a normal family, like any other Pakistani family," said Mohammed Iqbal, a Leeds City Council member. "They are respected, a very genuine family." Everywhere you go in Beeston, a scruffy patch of red-brick rowhouses and corner shops in south Leeds, you can hear the Tanweer family described this way.
Mumtaz Tanweer, Shehzad's father, arrived in 1961 from the eastern Pakistani city of Faisalabad. He was part of a wave of immigrants from India, Pakistan and Bangladesh who established self-contained communities of South Asian culture, religion and food in the industrial heartland of north-central England.
He had come, with the help of his parents, to study for a degree in textile manufacturing, said Safina Ahmad, 23, a cousin of Shehzad who acted as spokeswoman for the family in four e-mail interviews last week. When Mumtaz Tanweer graduated, he wanted to set up his own fashion clothing business. But he lacked the start-up money. So he became a Yorkshire police officer.
In a few years, he saved enough to open a corner shop. Slowly, he built it into a thriving business that today includes a slaughterhouse and a fish-and-chips shop. Along the way, he returned to Pakistan to marry his wife, Parveen. They settled in Bradford, about 10 miles from Beeston.
Mumtaz Tanweer "always worked hard because he never wanted his kids" to struggle like he did, Ahmad wrote.
Whites sometimes hurled racist epithets at him and his brother-in-law, who also lived in Britain. But the two men never became alienated from their adopted land, relatives said. "They both remember being surrounded by very welcoming and caring communities that they felt very much a part of," Ahmad wrote.
The family moved to Beeston 20 years ago. Today, Mumtaz Tanweer is a pillar of the Pakistani community. He doles out legal and business advice freely to friends and neighbors and helps fill out forms for those in the community who can't read or write English. "If you wanted to borrow anything, he would help you," said Mohammed Ali, 36, a shopkeeper.
The Tanweers have three other children. They live in a large, two-story white house with maroon trim -- one of the largest in the neighborhood. Mumtaz drives a silver Mercedes; Shehzad was often seen driving a red Mercedes.
The family is not known for being particularly religious, friends and neighbors said. They typically attended Friday prayers at a mosque on Hardy Street, but seldom prayed five times a day, as some Beeston Muslims do. Shehzad's mother and sisters wore fashionable traditional outfits like those favored by many Westernized, urban Pakistani women, neighbors said.
"I don't understand where his hatred came from," said Saeed Ahmed, Shehzad's friend.Finding 'Our Identity'
Shehzad Tanweer's boyhood dream was as British as it got: to become a professional cricketer. He favored tracksuits and T-shirts so he could play cricket or football at a moment's notice, said Safina Ahmad, his cousin.
"He was my best mate growing up," said Chris Whitley, who lives across the street from the Tanweers and is white. "He couldn't go a day without playing cricket."
At the same time, Tanweer wafted like smoke toward his other culture. At home, he was the obedient Muslim son. He worked in his father's fish-and-chips shop. He visited Pakistan several times with his family, but reluctantly. He learned passages of the Koran, but only after some arm-twisting.
"When our parents would try to teach us to read the Koran, we treated it the same way kids treat homework: try anything to get out of it," Ahmad recalled.
At Wortley High School, and then Leeds Metropolitan University, where he studied sports science, Tanweer was popular and never experienced the racism that older Asians felt. "He felt completely integrated and never showed any signs of disaffection," Ahmad wrote.
Tanweer was never interested in foreign policy or politics, said Ahmad, adding that she never once saw him reading a newspaper or watching the news. Nor did she see him attend any protests against Britain's involvement in Iraq or Afghanistan, or against Israel.
But while he grew up with most everything he could ask for, the same was hardly true for many of his contemporaries.
Unemployment among Muslim youths is 22 percent at a time when overall joblessness is 5 percent, the lowest it has been in decades, according to Britain's Office for National Statistics. Muslims rank at the bottom in having school degrees and decent housing.
A common sight in Beeston is Pakistani youths hanging idly in clusters on street corners, chatting away in Punjabi slang. Others smoke marijuana and drink beer in Cross Flats Park, breaking sacred codes of their faith. At other times, the alienation turns violent: In 2001, young Pakistanis turned out on Bradford streets to battle the largely white police force.
Many British Muslim youths also feel like strangers in their parents' Pakistani culture. Drinking, dancing and dating women, especially white women, are frowned upon.
"We're not English, and we're not Pakistani," said Saeed Ahmed, Tanweer's friend. "In the last few years, we had to find our identity. A lot of people here have gone back towards their religion to find out where they come from."
Tanweer, friends say, was one of them.
"He was more British than Muslim up until he was 18," Whitley recalled. "He started going to mosque a lot more."
"We grew apart," he added.
Many of Tanweer's friends said in interviews that he became more religious after the Sept. 11, 2001, attacks in the United States.
"Shehzad definitely opened his eyes because of September 11th," said Ashid, a friend who did not give his last name out of fear the police might question him. "That's when many young people got back into Islam around here."
In Beeston, Tanweer and two other bombers frequented a local Islamic bookstore, the Iqra Islamic Learning Center. As they learned about Islam, they found it impossible to ignore the mounting deaths of their Muslim brothers across the globe, Tanweer's friends recounted. Ashid said he once saw Tanweer and Mohammed Sidique Khan, 30, one of the other bombers, watching a DVD that purported to show an Israeli soldier killing a Palestinian girl.
On a recent Wednesday, some of Tanweer's Muslim friends were playing soccer in Cross Flats Park. Others who said they had known him watched from a bench, some of them smoking marijuana.
In conversations with a reporter, they spoke about conspiracy theories they had downloaded from radical Web sites. There was no plane that crashed into the Pentagon. Nor did any bring the twin towers down. It was an American plot, they said.
"Why should we care about the London bombings when thousands of innocent Muslims are being killed in Iraq?" one friend demanded. Like the others, he refused to give a name. He said he understood Tanweer's anger. He paused, then added that he might have done the same.
It is unclear what finally possessed Tanweer to take that final step. By some theories, he was influenced by the older Khan, a popular primary-school teacher's assistant and youth worker. In the months before the bombings, they were often seen together.
Tanweer rarely brought friends home, said his cousin Ahmad, so all that his family knew about Khan was that Shehzad had a friend who worked at a local school. She added that "none of us know who was behind the plans."
In December, Tanweer went to the Pakistani city of Lahore to learn how to correctly pronounce readings from the Koran and stayed for two months, his relatives said. Khan accompanied him. Authorities are investigating whether they received terrorist training.
Tanweer's uncle, Tahir Pervaiz, was quoted in the Pakistani newspaper Dawn as saying: "Osama bin Laden was Shehzad's ideal and he used to discuss the man with his cousins and friends in the village."
When he came home, Tanweer was his usual, confident self. The week before the bombings, he was laughing and play-fighting with his young cousins, Ahmad said.
On July 7, Tanweer told his family that he was going to visit a friend.
They were expecting him back that day.

Thursday, July 28, 2005

IRA says armed campaign is over


IRA KEY POINTS OF STATEMENT

  • All IRA units ordered to dump arms
  • Members ordered to pursue objectives through "exclusively peaceful means"
  • Arms to be put beyond use as quickly as possible
  • Two church witnesses to verify this
  • Statement followed "honest and forthright" consultation process
  • Strong support among IRA members for Sinn Fein's peace strategy
  • There is now an alternative way to achieve goal of united Ireland
  • "Volunteers must not engage in any other activities whatsoever"

IRA statement in full
Reaction to IRA statement

QUICK GUIDE Northern Ireland conflict


The IRA has formally ordered an end to its armed campaign and says it will pursue exclusively peaceful means.
In a long-awaited statement, the republican organisation said it would follow a democratic path ending more than 30 years of violence.
The IRA made its decision after an internal debate prompted by Sinn Fein President Gerry Adams' call to pursue its goals exclusively through politics.
Prime Minister Tony Blair said it was a "step of unparalleled magnitude".
"It is what we have striven for and worked for throughout the eight years since the Good Friday Agreement," he said.
"It creates the circumstances in which the institutions can be revived."
During the NI Troubles, the IRA was blamed for about 1,800 murders.
A statement issued on Thursday said that this would take effect from 1600 BST.
"All IRA units have been ordered to dump arms. All Volunteers have been instructed to assist the development of purely political and democratic programmes through exclusively peaceful means. Volunteers must not engage in any other activities whatsoever.
"The IRA leadership has also authorised our representative to engage with the IICD to complete the process to verifiably put its arms beyond use in a way which will further enhance public confidence and to conclude this as quickly as possible."
The statement said independent witnesses from Catholic and Protestant churches had been invited to see the decommissioning process.
DUP leader Ian Paisley greeted the statement with scepticism, saying that the IRA had "reverted to type" after previous "historic" statements.
"We will judge the IRA's bona fides over the next months and years based on its behaviour and activity," he said.
He said they had also "failed to provide the transparency necessary to truly build confidence that the guns have gone in their entirety".
Ulster Unionist Party Sir Reg Empey, told the BBC's World at One it would take time to convince the people of Northern Ireland that this was more than just rhetoric.
He said: "People are so sceptical, having had... been burnt so many times before.
SDLP leader Mark Durkan welcomed the statement, saying it was "clear, clean and complete", but "long overdue".
He called on Sinn Fein to commit to the new policing structures in Northern Ireland, as his party had done.
Taoiseach Bertie Ahern has said he welcomes the IRA's statement that it was ending its "armed campaign".
Mr Ahern said the end of the IRA as a paramilitary group "is the outcome the governments have been working towards" since the 1994 ceasefire.
He added: "If the IRA's words are borne out by verified actions, it will be a momentous and historic development."
Denis Bradley, vice chairman of the Policing Board, said the statement was "saying the war was over" and people needed to acknowledge the clarity of it.
"This is enormous within the history of this island," Mr Bradley said.
"Will Sinn Fein now take their responsibility and their place in policing and justice?" he asked.
When he made his appeal in April, Mr Adams said it was "a genuine attempt to drive the peace process forward".
Republicans had been under intense pressure to end IRA activity after the £26.5m Northern Bank raid in December and the murder of Belfast man Robert McCartney in January.
Political talks last year failed to restore devolution, which stalled amid claims of IRA intelligence gathering at Parliament Buildings, Stormont, in 2002.
The Provisional IRA's campaign of violence was aimed at forcing an end to the British presence in Northern Ireland, leading to a united Ireland.

Story from BBC NEWS:http://news.bbc.co.uk/go/pr/fr/-/1/hi/northern_ireland/4720863.stm

Tuesday, July 26, 2005

Modernizing China's Military: Opportunities and Constraints

Keith Crane, Roger Cliff, Evan S. Medeiros, James C. Mulvenon and William H. Overholt
296 pages, 2005
This report is available at: http://hongkong.usconsulate.gov/pas/eb/2005/0705.htm

Abstract
Projects future growth in Chinese government expenditures as a whole and on defense in particular, evaluates the current and likely future capabilities of China's defense industries, and compares likely future expenditure levels with recent defense expenditures by the United States and the U.S. Air Force. The authors forecast that Chinese military spending is likely to rise from an estimated $69 billion in 2003 to $185 billion by 2025-approximately 61 percent of what the Department of Defense spent in 2003.

新華專題報道:落實科學發展觀

http://big5.xinhuanet.com/gate/big5/www.xinhuanet.com/newscenter/kxfzg/index.htm

新華視點:從數據看中國經濟走勢

2005年07月20日 18:00:44  來源:新華網
新華網北京7月20日電 記者趙承、劉錚

國家統計局20日在國務院新聞辦公室舉行新聞發佈會,公佈了上半年中國經濟大賬,受到社會各界的普遍關注。
此前,關於當前經濟形勢的判斷出現了不同的聲音。從20日公佈的數據看,一些數據出乎部分經濟
學家的預料。這些數據澄清了一些模糊認識。
9.5%:中國經濟增長並沒有下滑
經濟增長速度是國民經濟運行的核心數據。國家統計局的初步核算表明,上半年中國經濟增長率為9.5%,儘管比去年同期低0.2個百分點,但與今年一季度相比,加快了0.1個百分點。
經濟依然高位運行,沒有出現放緩勢頭,出乎部分經濟學家的預料。此前經濟學界有種看法認為,隨著宏觀調控政策的實施、投資增幅的回落、房地產市場的降溫,中國經濟將減速。有人甚至擔心這種減速會陡然出現,通貨緊縮重現。
事實上,中國經濟仍處於上升通道。國家發展和改革委員會宏觀經濟研究院副院長王一鳴認為,當前經濟運行總體向上,經濟增長的動力沒有減弱。
上半年,拉動經濟增長的“三駕馬車”動力強勁。投資同比增長25.4%,消費增長13.2%,出口增長32.7%。從長期因素看,中國的高儲蓄率、高投資率、旺盛的市場需求、充裕的勞動力,都可以保持經濟較快增長。
“中國經濟仍處在一個平穩、較快的增長時期”,國家統計局新聞發言人鄭京平判斷。但專家同時提醒,當前出口面臨貿易摩擦等不確定因素,引領關聯產業發展的房地產行業出現了某些觀望趨勢,面對好的經濟形勢,我們不能盲目樂觀。
12.5%:農民收入繼續加快增長
早在今年年初,就有很多人擔心農民收入增長能否保持去年的好勢頭。上半年的數據多少有些出乎預料:農民人均現金收入實際增長12.5%,比去年同期加快1.6個百分點,高於今年同期城鎮居民收入增幅3個百分點。
農業豐收為農民增收奠定了堅實的基礎。統計顯示,夏糧總產達到10627萬噸,增產512萬噸。雖然糧價出現一定的下行壓力,但較高的價格基數,5.1%的產量增長,依然使農民獲益。
國家的政策支持提供了有力保障。上半年,中央和地方對種糧農民直接補貼132億元,同比增加13.8%。國家發佈了早秈稻最低收購價,臨時收儲130億斤小麥,暫停輪出儲備小麥,穩定了糧食市場價格。
但是,今年農民增收的形勢依然不容樂觀。主要表現在,糧食價格出現下行壓力,農資價格上漲較快,政策推動的空間和後勁有限。確保農業增產、農民增收,依然是當前經濟工作的重點和難點。
  2.3%:上游產品漲價並未推動消費價格過快增長
與去年同期3.6%、全年4%的漲幅相比,今年上半年居民消費價格2.3%的漲幅形成較大的反差。
曾有經濟學家預測,由於去年上游產品價格漲勢過猛,今年上半年可能出現成本推動型的通貨膨脹。而事實上,上半年消費品市場價格表現得相當溫和,同比漲幅逐月穩步回落,環比出現下降。但與此同時,上游產品價格仍保持在一個相當高的水準。
王一鳴分析,上游產品向下游產品價格傳導受阻,總體上是由市場供求格局決定的。目前市場總體供大於求,競爭激烈,企業主要依靠技術進步、加強管理等方式消化成本的上升,消費品價格上漲空間有限。
糧價快速上漲是去年居民消費價格漲勢迅猛的主要原因。今年上半年,由於夏糧獲得豐收,糧價對居民消費價格上行的推動力也大大減弱。同時,由於國家的調控措施,公共服務價格不太可能會出現密集上漲。
“全年居民消費價格走勢會大致維持這種溫和上漲的格局,但仍然不能掉以輕心,特別是需要對那些低收入者給予更多的關愛。”鄭京平如是說。
  396億美元:貿易順差突破去年全年水準
在連續兩年出口較快增長的背景下,很多經濟學家預測今年的出口增幅會出現較大幅度的回落。但統計顯示,上半年我國出口同比增長32.7%,而進口只增長了14%,這種高出低進的局面,使得貿易順差達到396億美元,突破去年全年水準。
在去年同期外貿出現逆差的情況下,今年上半年外貿出現如此順差,出乎人們的預料。原材料進口大幅回落是其中的一個重要原因。上半年鐵礦砂及其精礦進口額增幅由去年同期增長2.17倍降低為38.6%,成品油進口額由增長66.1%降低為0.8%。
雖然出口對經濟增長的拉動作用擴大,但鄭京平提醒,出口存在不確定性因素,下半年增幅“肯定要下來”。這主要是由於今年的國際經濟環境比去年略差一些,而且中國面臨的貿易摩擦也在增加。去年上半年是逆差,全年320億美元的順差都集中在下半年,這樣使得今年下半年出口的增幅肯定要下來。
  27.9個百分點:工業企業利潤大幅回落
在經濟保持快速增長勢頭的同時,規模以上工業企業的利潤卻出現比較大的回落。統計顯示,1至5月,規模以上工業實現利潤增長15.8%,增幅比去年同期回落27.9個百分點。
企業利潤增幅的下滑,主要原因是上游產品價格的大幅上漲。從2003年至今,上游產品價格居高不下,而下游產品的價格始終又沒有上去,這樣形成了一個“兩頭擠”的作用,使得企業的利潤空間受到擠壓,效益下滑。
另外,前一段比較大規模的固定資產投資,使得有一些行業的生產能力過大。如電解鋁,現在全國的電解鋁生產企業有百分之二三十已停產,還有百分之四十多虧損。
企業利潤與經濟走勢出現一定的背離,這看似不正常的狀況其實是正常的。鄭京平這樣向大家解釋:“現在銀行存款的利息才多少?企業貸款利率也就是5%左右,這樣的回歸是合理的。”(完)

半月談: 經濟增長穩中趨好下行“拐點”不會顯現

新華網 ( 2005-07-22 16:02:59 )
來源: 半月談2005年第14期

經濟增長穩中趨好下行“拐點”不會顯現 ──2005年上半年經濟形勢述評

國家統計局國民經濟綜合司副司長 萬東華

今年以來,在國家一系列加強和改善宏觀調控政策的持續作用下,國民經濟進一步向好的方向發展,整體形勢為近幾年來最好的時期之一。
“高增長、低通脹”:經濟運行總體格局良好
經濟繼續保持較快增長。初步測算,上半年我國國內生產總值為67422億元,比上年同期增長9.5%。今年經濟增長的外部環境並不寬鬆,一方面,世界經濟增長趨緩,國際油價持續居高不下;另一方面,國內嚴把土地和信貸兩個閘門,繼續加強對房地產、鋼鐵等的調控。經濟繼續保持快速增長,主要得益於中央區別對待、有力有效的宏觀調控政策,得益於經濟本身所具備的內在活力。從需求方面看,內需外需雙輪驅動。上半年,固定資產投資、市場銷售分別增長25.4%和13.2%,對經濟的拉力作用依然強勁。外貿比較優勢進一步凸顯,出口在連續兩年分別增長34.6%和35.4%的高基數上,繼續增長32.7%。出口減去進口,上半年貿易順差高達396億美元,比去年全年還多76億美元。從供給方面看,第二產業特別是工業的主導作用依然明顯突出。一、二、三產業分別增長5%、11.2%和7.8%,工業增速與上年全年水準基本相當。基礎產品和電子通信產品保持快速增長,其中粗鋼、鋼材分別增長28.3%和25.9%,微型電子計算機、移動電話機、傳真機分別增長61.3%、5.6%和21.6%。 市場價格漲勢趨緩。上半年,居民消費價格同比上漲2.3%,漲幅比去年同期回落1.3個百分點。其中,4、5、6月的上漲幅度均在2%以下。如何看待目前的價格走勢,年內會不會出現一些人所擔心的通貨緊縮現象,我認為需要做深入分析。一方面,由於前幾年投資增長過快,部分行業生產能力明顯增加,導致目前市場供過於求矛盾更趨突出,價格走低的壓力進一步加大,這是客觀存在的,也是為什麼上游產品價格持續走高、下游產品價格持續下行,兩者反差明顯的主要原因。另一方面,按照國際上通行的通貨緊縮的標準,居民消費價格應該連續兩個季度同比出現絕對下降,從目前情況看,這種可能性不大。主要依據:一是上半年價格漲幅總體上仍處於比較適度的區間,既沒有出現通貨膨脹,也沒有出現通貨緊縮;二是目前價格漲幅的適度回調,主要是糧食生產形勢較好,帶動食品價格全面走低。投資、消費、出口等的需求依然比較旺盛,需求對價格特別是上游產品價格的拉動作用仍比較強。上半年,原油出廠價格上漲31.1%,原煤出廠價格上漲26.3%,表明其供求矛盾仍十分突出;三是水、電等公用事業價格調整的壓力還比較大。從全年看,如果糧食生產不出現大的意外,全年居民消費價格平穩上漲的可能性較大,漲幅將低於去年,但不會出現絕對下降的現象。
經濟運行呈現“四個好轉”,結構比例趨於協調
與上年煤電油運頻頻告急、經濟運行關係繃得很緊不同,今年以來,隨著各項宏觀調控政策效應的進一步顯現,經濟運行各項比例關係明顯改善,增長的穩定性和協調性大為增強,突出表現為“四個好轉”:一是農業生產形勢較好,糧食種植面積增加,夏糧增產100多億斤。二是經濟增長過度依賴投資的現象有所改觀,投資消費比例關係趨於改善。與去年同期相比,投資增速減慢了3.2個百分點,消費加快了0.4個百分點,投資消費增速之比(以消費增速為1)由去年同期的2.2:1變為今年上半年的1.9:1。三是經濟增長內部結構體現了冷熱兼治、有保有壓的政策意圖。投資結構中,鋼鐵、水泥、電解鋁、房地產投資等的調控取得初步成效,增速出現較為明顯的回落,與此同時,煤電油運等行業的投資得到大力加強,增速分別高達37.4%~81.7%。對外貿易結構中,機電產品、紡織品出口快速增長,鋼坯等高耗能產品出口勢頭減緩;經濟增長大量依靠進口國外基礎原材料的狀況得到改善,鐵礦砂及其精礦進口額增幅由去年同期的2.17倍回落為38.6%,成品油進口額增幅由66.1%回落為0.8%。四是經濟運行環境趨於改善。儘管目前煤電油運等的緊張壓力依然存在,但與去年相比有較大緩解。去年一度只能支撐幾天的電廠、鋼廠等的煤炭庫存,目前均已接近合理水準。由於新增裝機大幅增加和來水情況較好,加之高耗能行業用電得到一定抑制,拉閘限電的省級電網數比去年有所減少。
增長動力依然強勁下行“拐點”不會顯現
對下階段經濟的走勢,目前各方看法不一。一些人認為,進口增長減緩、物價持續下行、企業生產經營難度加大等情況表明,當前社會需求已略顯不足,整體經濟已經越過峰頂,進入下行調整期,即出現了所謂的下行“拐點”。我認為,當前經濟運行仍處於一個十分敏感的時期,既存在著下行的壓力,也存在著反彈的可能,判斷當前經濟已經開始進入下行通道為時尚早。主要原因,一是目前經濟增速仍較高,整體上仍處於9%以上的快速增長區間,並沒有顯露出明顯下行的態勢。從變動趨勢方面看,與一季度相比,二季度各主要指標的增速還程度不同地有所加快。其中,GDP加快了0.1個百分點,規模以上工業加快了0.2個百分點,城鎮固定資產投資加快了2.7個百分點,進口加快了3.3個百分點,6月末狹義貨幣M1、廣義貨幣M2分別比3月末加快了1.7和1.4個百分點,表明下階段經濟增長的動力仍然較強。二是綜合國內外各種因素的分析,全年乃至今後幾年我國經濟仍將繼續保持9%左右的較快增長,不會出現大的起伏,即使下半年經濟增速出現適度回調,也是經濟高位小幅波動的正常反應。三是目前鋼鐵、房地產等的投資增長趨緩,鐵礦石、原油進口減速,主要是政府對某些行業主動調控的結果,在一定程度上是宏觀調控所追求的目標,經濟本身內在擴張的動力仍然較強。特別是一些地方以投資促增長的願望仍十分強烈,稍有放鬆,投資極有可能重新膨脹。上半年,城鎮固定資產投資新開工項目計劃總投資增長24.3%,施工項目計劃總投資增長28.4%,均比一季度有所加快。
沉著應對新情況 堅持調控不動搖
綜合各方面情況分析,我認為,下階段宏觀調控政策的取向應著眼於當前,著力於長遠。調控的重點應該是:穩定政策,適時微調,著力改革,優化結構。從短期看,當前經濟形勢是基本正常的,增長速度也是基本適度的,宏觀調控應保持現有政策的基本穩定,繼續實施穩健的財政政策和貨幣政策,不宜也不需要做大的調整。具體操作上,應更加注重靈活微調、區別對待。同時,對前進中出現的農民增收難度加大、部分行業明顯增虧、貿易摩擦加劇等方面的問題,及其可能對當前特別是明後年經濟的影響要引起高度關注,要加強追蹤監測,早作應對預案。從長期看,應抓住當前經濟形勢較好的有利時機,加快推進各項改革,著力解決某些短期問題迴圈往復出現的體制和機制性根源。目前我國已進入加入WTO的後過渡階段,更大的挑戰即將來臨,應抓緊建立起既符合中國實際、又與國際通行規則接軌的金融體制、財稅體制,規範政府對市場運行的管理,促進國民經濟的協調有序運轉。
(編輯:李力)

中央政治局召開會議 決定召開十六屆五中全會

2005年07月25日 20:37:45  來源:新華網

[2005年上半年經濟形勢述評]
[新華視點:從數據看中國經濟走勢]
[專題報道:落實科學發展觀]

中共中央政治局召開會議 決定召開十六屆五中全會 會議還討論研究了當前經濟形勢和經濟工作 中共中央總書記胡錦濤主持會議

新華網北京7月25日 中共中央政治局25日召開會議,決定今年10月在北京召開中國共產黨第十六屆中央委員會第五次全體會議,主要議程是,中共中央政治局向中央委員會報告工作,研究關於制定國民經濟和社會發展第十一個五年規劃的建議。會議還討論研究了當前經濟形勢和經濟工作。中共中央總書記胡錦濤主持會議。
會議指出,“十一五”時期是全面建設小康社會的關鍵時期,研究和提出關於制定國民經濟和社會發展“十一五”規劃的建議,對於做好“十一五”規劃綱要的編制工作,指導全黨全國在今後5年緊緊抓住重要戰略機遇期,深化體制改革,提高開放水準,推動國民經濟持續快速協調健康發展和社會全面進步,具有十分重要的意義。
會議強調,制定“十一五”規劃建議要堅持以鄧小平理論和“三個代表”重要思想為指導,堅持以科學發展觀統領經濟社會發展全局,堅持發展是硬道理的戰略思想,堅持抓好發展這個黨執政興國的第一要務,堅持以經濟建設為中心,深入分析國內外發展大勢,圍繞實現好、維護好、發展好最廣大人民根本利益和推動社會主義經濟建設、政治建設、文化建設、社會建設全面發展的根本要求,立足科學發展,著力自主創新,完善體制機制,促進社會和諧,明確未來我國經濟社會發展的指導方針,提出符合我國國情、順應時代要求、反映人民意願的發展目標和總體部署。
會議認為,今年以來,全黨全國圍繞全面建設小康社會的宏偉目標,積極落實科學發展觀,繼續落實加強和改善宏觀調控的一系列政策措施,更加注重有針對性地解決經濟運行中的突出矛盾和問題,更加注重推進結構調整和增長方式轉變,更加注重深化改革,重點領域經濟體制改革取得進展,宏觀調控的成效進一步顯現,國民經濟保持了平穩較快增長。
會議強調,下半年改革發展任務很重,各地區各部門要繼續貫徹落實黨的十六大和十六屆三中、四中全會精神,繼續落實科學發展觀,按照穩定政策、分類指導、調整結構、深化改革、協調發展的原則,繼續加強和改善宏觀調控,堅持穩健的財政政策和貨幣政策,保持宏觀經濟政策的連續性和穩定性。更好地實行區別對待、有保有壓,加快推進結構調整,著力轉變增長方式,積極穩妥推進重點領域、關鍵環節的改革。更加關注人民生活,切實維護社會穩定,認真對待經濟社會生活中出現的新情況新問題,繼續推動我國經濟社會又快又好地向前發展。
會議要求,各地區各部門要認真貫徹落實中央的方針政策和工作部署,深入基層,深入實際,深入調查,加強對影響我國經濟社會發展的全局性、戰略性、長遠性問題的研究,紮實工作,開拓創新,努力實現全年經濟社會發展的預期目標,為“十一五”規劃開好局奠定堅實的基礎。
會議還研究了其他事項。(完)

專題報道:
構建和諧社會
建設節約型社會
落實科學發展觀
學習貫徹十六屆四中全會精神

Sunday, July 24, 2005

Britain Says Man Killed by Police Had No Tie to Bombings

July 24, 2005

By ALAN COWELL and DON VAN NATTA Jr.


LONDON, July 23 - Scotland Yard admitted Saturday that a man police officers gunned down at point-blank range in front of horrified subway passengers on Friday had nothing to do with the investigation into the bombing attacks here.
The man was identified by police as Jean Charles de Menezes, a 27-year-old Brazilian, described by officers as an electrician on his way to work. "He was not connected to incidents in central London on 21st July, 2005, in which four explosive devices were partly detonated," a police statement said.
At the same time, the police said they had found a link between four attackers on July 7 and the men who tried to carry out carbon copy attacks July 21. The July 7 attacks killed the bombers and 52 others.
A flier in a backpack found with undetonated explosives on a London bus was for a whitewater rafting center at Bala, North Wales, where two of the July 7 bombers had been photographed just weeks before the attack, a police official said.
The police also said late Saturday that after the failed attacks on July 21, they found a mysterious package - possibly a fifth explosive device - in Little Wormwood Scrubs, northwest of London.
The explosive was "almost exactly the same" as ones in the failed attacks on that day, a police official said.
Of the fast-unfolding developments, the most overwhelming for many Londoners, was the police admission that an apparently innocent man had been gunned down in full public view - a killing that left the city even more rattled after a wave of attacks, alarms, scares and shootings that, in a brief three weeks has propelled London from the euphoria of the Live 8 concert in Hyde Park to a sense of embattled siege.
"For somebody to lose their life in such circumstances is a tragedy and one that the Metropolitan Police Service regrets," a police statement said, noting that the police had started a formal inquiry.
The admission by the police that it had killed a man not involved in the investigation revived and fueled an already tense debate over the arming of British police officers. It also came after a series of police misstatements since July 7 when the first bombers struck. (Related Article)
The shooting shocked many of the country's 1.6 million Muslims, already alarmed by a publicly acknowledged shoot-to-kill policy directed against suspected suicide bombers. And it has dealt a major setback to the police inquiry into suspected terrorist cells in London.
"This really is an appalling set of circumstances," said John O'Connor, a former police commander. "The consequences are quite horrible." Azzam Tamimi, head of the Muslim Association of Britain, said: "This is very frightening. People will be afraid to walk the streets, or go on the tube, or carry anything in their hands."
A cousin of the dead man, interviewed on Brazil's leading television network, identified him as Jo?o Alves Menezes and said he was an electrician who had been working in England for more than three years. The cousin, Alex Pereira Alves, identified Mr. Menezes' body in London, the network said.
Mr. Menezes was from the interior state of Minas Gerais, home of the bulk of migrants from Brazil to the United States and Europe and had been in Britain legally, Mr. Alves said. He would have been on his way to work that morning, he said, and had no reason to flee the police.
"How could they have done such a thing as to kill him from behind?" Mr. Alves told the Globo Television Network. "How could they have confused and killed a light-skinned person who had no resemblance at all to an Asian?"
Another cousin, Aleide Menezes, said in an interview with Brazil's national radio network that Mr. Menezes understood English well and would have understood the officer's instructions. Other relatives, in television and newspaper interviews, said the family was Roman Catholic and that Mr. Menezes had nothing to do with Islam.
In an official statement issued late Saturday, the Brazilian government said it was "shocked and perplexed" by the killing and was waiting for an explanation.
The shooting occurred the day after the copycat attackers tried to bomb three other subway trains and a bus, but their bombs failed to explode. Plainclothes police officers staking out an apartment followed a man who emerged from it, then chased him into the Stockwell subway station and onto a train. The man tripped, and one of the officers in pursuit fired five rounds.
After the shooting, Sir Ian Blair, the police commissioner, said the man was "directly linked to the ongoing and expanding antiterrorist operation," and the police issued images from closed-circuit cameras of four suspects in the failed attacks. They said the man they shot may not have been one of the four, but he was still being sought in their inquiry.
A Friday statement said that the man's "clothing and his behavior at the station added to their suspicions," apparently referring to reports that the man was wearing a bulky jacket on a summer day.
Through most of Saturday, the police refused to give any further details. Then, in the late afternoon, Scotland Yard issued its statement admitting the "mistake." So far in the investigation, the police have detained two suspects. It was not clear whether those men were among the four caught on security cameras.
In the latest alarm on Saturday, police cordoned off an area in north-west London, and Peter Clarke, head of London's Anti-Terrorist police, said that a package that was discovered appeared "to have been left in the bushes, rather than hidden."
"Naturally this is a matter of concern," he added.
The link between the two bombing teams, at the white water rafting center in north Wales, is the latest in a series of connections made by detectives since Thursday. They have found that the bombs for both teams were made of the same homemade material, were roughly the same size and were carried in similar backpacks, officials said.
Asked if Prime Minister Tony Blair would address the killing of Mr. Menezes, a spokeswoman said Mr. Blair was "kept updated on all developments, but this is a matter for the Metropolitan Police. We have nothing to add." But with the nation jittery after the attacks and the shooting, Mr. Blair was expected to confront political passions likely to be inflamed by what his critics are depicting as excesses of a war on terrorism that have eroded freedoms.
"This policy is another overreaction of the government and police," said Ajmal Masroor, a spokesman for the Islamic Society of Britain.
Both the government and the police have sought the support of British Muslims to assist in the inquiry.
"This will turn people against the police, and this is not good," said Mr. Tamimi, of the Muslim Association. "We want that people stay beside the police. We need to convince the people to cooperate."
Civil rights groups also seemed likely to demand new curbs on the police at precisely the moment officers have been given much freer hand to pursue the investigation.
"No one should rush to judgment in any case of this kind, especially at a time of heightened tension," said Shami Chakrabarti, director of Liberty, a civil and human rights group. She acknowledged, however, that officers faced "knife-edged, split-second decisions often made in times of great danger."
In a country used to unarmed police officers, the shooting seemed to be a stark turning point - one that seemed even more portentous after the police admission on Saturday.
The killing revived a never-resolved debate among the public and the police over the arming of officers. In one recent case, officers faced trial after shooting a man carrying a wooden table leg in the mistaken belief that he was armed.
Some police officers authorized to carry weapons now say they prefer not to because of the risk of prosecution if they make mistakes.
Normally British police officers are under orders to give ample warming and, if they have no choice but to open fire, to aim to wound. However, according to London's mayor, Ken Livingstone, that has given way to a shoot-to-kill policy in some circumstances.
"If you are dealing with someone who might be a suicide bomber, if they remain conscious they could trigger plastic explosives or whatever device is on them. And therefore overwhelmingly in these circumstances it is going to be a shoot-to-kill policy," he said after the shooting Friday, but before the acknowledgment by the police that the dead man was not part of the inquiry.
Police guidelines for dealing with suspected suicide bombers recommend shooting at the head rather than the body in case the suspect is carrying explosives.
Except in Northern Ireland, at airports and nuclear facilities, British police officers are not routinely armed. A small percentage of officers - roughly 7 percent in London - have weapons training, which is also required for the use of Taser stun guns, available to nearly all police forces. As routine weapons, officers carry batons and tear-gas-like spray. Of more than 30,000 officers in London, around 2,000 are authorized to carry weapons, a Scotland Yard spokesman said, speaking anonymously under police rules.
Even before Saturday's police statement, Britons had been bracing to see how their vaunted sense of fair play and civil rights survives the onslaught by attackers and the measures to combat it.
"Many civil liberties will have to be infringed to impose the requirement on all communities, including Britain's Muslims, to destroy the terrorists before they destroy us," the author Tom Bower wrote in The Daily Mail on Saturday.
The country's Muslim minority has expressed vulnerability to a backlash since it was announced that the July 7 bombers were all Muslims, three of them British-born descendants of Pakistani immigrants in the northern city of Leeds. Groups linked to Al Qaeda have claimed responsibility for both sets of attacks.
The Islamic Human Rights Commission said it feared that "innocent people may lose their lives due to the new shoot-to-kill policy of the Metropolitan Police."
The rash of attacks, incidents, alarms and arrests has rocked a city that, even during the days of I.R.A. attacks, was used to being warned in advance about bombings. Indeed, after several years of an I.R.A. truce in mainland Britain, the howl of police sirens, the popping of gunfire and the thud of explosives has ended a mood of complacency underpinned by Britain's relative prosperity.
Now, after the bombings on July 7, the attempts on July 21, and the shooting incident, the city seems far less sure of itself.
"The realization that the events of July 7 were not an isolated conspiracy has changed the way that we travel on the city's public transport system, probably forever," Damian Whitworth wrote in The Times of London, recounting how "suspicion, fear and panic spread like a virus" through the subways.
The Independent said, "There seems to be a state of denial about the pervasive sense of fear that exists in London at the moment."
At the same time, British authorities are facing unusually frank criticism from officials and leaders of some Muslim states.
Prince Turki al-Faisal, the Saudi ambassador, said in a radio interview on Friday that it was a "true criticism" to say Britain had offered sanctuary too easily. "Allowing them to go on using the hospitality and the generosity of the British people to emanate from here such calls for killing and such I think is wrong."
President Pervez Musharraf of Pakistan also noted that some Islamic groups banned in Pakistan "operate with impunity" in Britain.
Reporting for this article was contributed by Stephen Grey, Souad Mekhennet and H?l?ne Fouquet in London, William K. Rashbaum in New York and Larry Rohter in Rio de Janeiro.

Rural Poor Aren't Sharing In Spoils of China's Changes

Costs of Goods Rise, Standard of Living Falls

By Peter S. Goodman Washington Post Foreign Service Tuesday, July 12, 2005; A01

SANBAIHU VILLAGE, China -- The China that Wang Huazhong glimpses on television is in the midst of an amazing transformation. In cities he has never visited, skyscrapers tower over highways choked with cars, and people jam glass-fronted malls buying up jewelry and luggage simply to pass the time.
Here in his village in the country's northwest, Wang sees the same desiccated landscape that has changed little in his 46 years. A rutted dirt track winds through treeless mountains to the county seat 30 miles away, the outermost boundary of his experience. Watermelon plants emerge reluctantly from chalky soil, waiting for rain that may never come. A wood stove occupies his mud floor, painting his walls with soot.
But Wang's world is far from cocooned from the larger forces shaping his country's fortunes: In the 3 1/2 years since China entered the World Trade Organization, aggressive industrialization combined with an outpouring of consumption has jacked up prices for everything from fertilizer to transportation, roughly doubling the average cost of living here.
Those within reach of China's booming coastal cities have been compensated with new opportunities that have lifted millions out of poverty, such as factory jobs making goods for export and cash markets for fruit and vegetables. But that upside remains beyond this rural community and thousands of others like it across this still predominantly peasant country. The costs of buying food and growing watermelon have climbed faster than what Wang receives for his crop. His household income has slipped by 20 percent over the past five years, to about $300 per year.
"Our lives are more and more difficult," Wang said, as his donkey probed the soil near the family outhouse for stray wheat. "Every year, it gets harder."
A recent study conducted by the World Bank found that incomes among rural Chinese -- about three-fourths of the total population -- have declined slightly in the years since China entered the WTO, while urban residents have enjoyed modest gains.
Economists say this trend underscores the downside of globalization: While free trade has proved highly efficient in generating wealth, it has failed to share the spoils, intensifying gaps between rich and poor, urban and rural. In many instances, new wealth is coming at the direct expense of the poor as local governments sell off land for development projects.
"Industrial companies gain the profits while rural people lose their basic materials of livelihood," said Wen Tiejun, dean of the School of Agricultural Economics and Rural Development at People's University in Beijing.
In China, the divide between rich and poor is greater than before the peasant-led revolution that brought the Communist Party to power in 1949. Last month, China's government announced that the income gap had widened in the first three months of the year, with the richest 10 percent of the population controlling 45 percent of the country's wealth and the poorest 10th holding little more than 1 percent, according to the official New China News Agency.
In Beijing, concern mounts that the rural poor are falling so far behind as to challenge the legitimacy of the party. Demonstrations have become near-daily occurrences as farmers protest loss of land to development and excessive taxation. In response, the central government has rolled back taxes on peasants.
Last year, China's State Council, the equivalent of a cabinet, released an official document outlining a strategy aimed at closing the rural-urban income gap, including tax cuts for farmers and development funds aimed at stimulating business in poor areas. President Hu Jintao and Premier Wen Jiabao are frequently quoted in the state press pledging to alleviate village poverty.
Some worry that rural poverty is a potential threat to the overall economy. China is beset by a surplus of production, as over-exuberant investment erects too many factories making more goods than the country needs. Policymakers are banking on domestic consumption to absorb the surplus.
"Rural areas have no spending power," said Yu Nanping, a sociologist at East China Normal University in Shanghai. "If farmers have no money, then who is going to buy all these home appliances and cars?"
The recent World Bank study notes that China's farmers were already suffering declining income in the years before WTO entry. But the linking of China's fortunes to foreign markets has apparently aggravated the trend, particularly as China removes tariffs that once protected local farmers from imports. In some counties of Liaoning province, where imports of foreign grains are depressing prices for local farmers, incomes have fallen by more than 5 percent, according to the study.
In crucial ways, this village of 3,000 people in Gansu province, one of China's poorest, has seen progress. As communism has given way to free-market reforms, villagers have been able to raise cash by selling produce. Man-made caves carved into the hills, now abandoned, remain as reminders of a time when people had no other shelter. Today, most people live in mud and brick homes the same color and texture as the parched soil. Many homes have satellite dishes, bringing in television from the provincial capital Lanzhou and the national news from Beijing.
"People's lives are improved a little," said the village's Communist Party secretary, Yan Jiying, as he sipped a refrigerated bottle of orange soda in his home, beneath a beaming portrait of Chairman Mao that looked down on a karaoke set and video-disc player. "Before, we couldn't feed ourselves. Now, we have food to eat."
China's linkage to the world economy has brought one direct benefit to this village: Increasingly, it exports watermelon seeds, the principal crop here and, dried, a popular snack in much of Asia. Demand for the seeds in Taiwan and Hong Kong has sent the price of the local crop soaring by 75 percent since 2000. Still, farmers here are angry, asserting they are being cheated out of an even higher market price by middlemen who monopolize the trade. The traders have trucks to transport the seeds to processing plants, something the farmers lack. Living hand-to-mouth, the farmers cannot afford to stockpile and wait for a higher price.
"We have no bargaining power," Wang said. "It's not fair."
What gains they are enjoying have been erased by increased prices for pretty much everything. Fertilizer has roughly doubled in price as farmers in coastal areas expand operations to exploit demand for fruit and vegetables in Japan and Korea -- an option foreclosed to farmers here, who lie more than 1,000 miles from the nearest coastal port.
Wang's family cannot afford to eat meat, buying it only during the Chinese New Year. The rest of the year, they subsist on what vegetables they can grow and noodles made from wheat flour, a commodity a third more expensive than five years ago. Throughout China, food prices increased 28 percent between 2000 and 2004, according to the National Bureau of Statistics.
Wang's shoes are full of holes. He owns a single pair of pants. He bought them two years ago in the county seat, Jingyuan, for about $3.50. That was twice as much as the pants they replaced, which he purchased in 2001.
Throughout China, more than 200 million farmers have supplemented incomes by heading to coastal provinces to do construction or factory work. Typically, one or two people go, sending money back to relatives who remain at home to tend land.
Roughly 360 residents of this village work outside the village, according to the party secretary, but 80 percent of them work within Gansu province, where wages are low. Train or bus fare to Guangdong province near Hong Kong, traditionally the largest source of higher-paying factory work, costs about $35, roughly a third of the average local per capita income.
Wang's two oldest children work outside the village -- his 22-year-old son as a security guard in a village and his 20-year-old daughter in Jingyuan as a waitress. But neither makes more than about $25 per month, leaving them nothing to send home after supporting themselves.
They could make twice or three times that if they went to the coast. But their father will not allow it. He cannot understand the newscasts he watches at his neighbor's house because he does not understand Mandarin Chinese, the national language. He cannot read a newspaper because he is illiterate. But he has heard stories about exploitative factory owners in Guangdong.
"I fear they'd be put in danger or cheated, because they have never seen the world," Wang said. "I would worry that they would never return."
All of Wang's hopes rest on his youngest son, now in Jingyuan in high school. He is the first in his family to attain that level of education. The costs of keeping him in school are monumental, about $250 per year.
Every year, Wang borrows that amount from the local credit cooperative, and every year he cobbles together about $100 from friends to keep up with the interest payments so he can draw another loan.
His total debt exceeds $1,250 -- about what the average person lives on here in a decade. Still, his may be a rational strategy for the times: He hopes his son will test into a university, get a white-collar job in a city, and lift his family out of the poverty that still defines reality in most of rural China.

China's Growing Pains Shouldn't Hurt Us

By Albert Keidel Washington Post Sunday, July 24, 2005; Page B05

[Albert Keidel is a senior associate at the Carnegie Endowment for International Peace. He previously served as deputy director for the Office of East Asian Nations at the Treasury Department and senior economist in Beijing for the World Bank.]

Yes, China is growing fast and buying global assets. And yes, its economy is going to be bigger than America's.
But this will not happen nearly so soon as most people think -- 2040 at the earliest and more likely 2050. In the meantime, rather than trying to block China's access to U.S. assets and markets, the task at hand is to craft, with China, an international system inclusive enough and flexible enough to enable China to grow and for the rest of the world to share the potential gains its economy has to offer.
This hardly seems to be the spirit here in Washington these days. Anxieties about China's burgeoning economic might have been heightened by the sale of IBM's personal computing business to a Chinese firm and Chinese bids to buy American corporate icons such as Maytag and the oil company Unocal. Other worries have centered on the more than $700 billion of foreign exchange reserves China has piled up, much of it invested in U.S. Treasury bonds.
Yet these anxieties have more to do with our own economic challenges than with China's, which remain largely domestic. And those who would build a Great Wall of America to fend off China's influence could end up jeopardizing everyone's long-term peace and prosperity while doing little to improve prospects for political change in China.
In fact, the United States has a major stake in whether or not China succeeds in pulling most of its 1.3 billion people out of poverty. Average consumer spending in China is less than a tenth that in America. Those fearful of the prospect of a bigger Chinese economy should consider the alternative. If China fails in its ambitious program of market reforms and commercial globalization, it could turn into the "sick man" of Asia, governed at the local level by organized criminals and hemorrhaging desperate boat people and migrants.
We have an even greater stake in ensuring that China's success, which seems likely, does not proceed in a world of growing diplomatic and even military confrontations over access to scarce resources. Otherwise we risk a return to late 19th-century globalization patterns -- not with colonies but with spheres of influence. Leading powers would scramble to expand their spheres at the expense of others, with the United States trying to limit China's access to minerals, technology and information. In the past, this sort of pattern led to war.
Trying to hold on to outdated price advantages, whether for U.S. labor, U.S. industries or U.S. energy consumers through blockade and exclusion can only result in destructive retaliatory strategies and military tensions.
The right procedure for absorbing China's growth is through market mechanisms, especially the price mechanism. China's thirst for scarce commodities will inevitably show up in higher prices. But higher prices trigger a whole range of beneficial developments -- exploration for new resources, development of substitutes, breakthroughs in conservation, and adjustments in human behavior. These changes are faced equally by all nations, and competition dictates who benefits most from the resulting productivity gains.
While we concentrate on China's external posture, China's domestic challenges -- many of them left from the Maoist era -- are so big that the country's attention will be turned inward for a long time to come. The most fundamental of these has been the need for wrenching dislocation of state workers, tearing them from long-held but overpaid and unproductive positions and compelling them to find less secure jobs, to work for themselves, or to move to new cities. Between 1997 and 2004, 50 million Chinese workers lost jobs in state-owned and collective firms. The result has been major gains in market-based productivity and income increases. The cost is anger, social tension, demonstrations and riots.
At the same time, close to 200 million rural workers have migrated to non-farm jobs in towns and coastal areas from remote interior regions. Their competition for jobs and housing is a constant source of social tension, while back on the farm, loss of rural land to non-farm investment often triggers local conflict.
China's transition is thus far from easy, and the country could hit many bumps along its way. The government has acknowledged that more than 50,000 demonstrations take place each year -- many of them large and violent. That is well more than a hundred a day. Many demonstrations are labor actions, protesting unpaid wages, poor working conditions and plant closings. Profit motives have also worsened pollution and environmental degradation. Managing these side effects of market reform is a daunting challenge.
Is the Chinese Communist Party to blame? Yes, in part because of its rigid response to criticism, but no form of government promoting change at this pace could avoid similar tensions, demonstrations and violence. Less energetic economic reforms might result in less violence, but also in less progress in eliminating poverty and raising living standards. Grievances in China are magnified in some cases by local corruption. But even as China arrests and convicts corrupt officials, the introduction of markets in new areas continues to provoke resentment among those losing their previously vested privileges.
China's domestic programs are tackling many of these challenges head-on. There have been improvements in legal mechanisms and procedures, but the process is slow, has a long way to go and is hampered by a severe shortage of qualified personnel. Nongovernmental organizations are becoming more numerous, and there are legal frameworks for those seeking redress. Citizens can sue government officials, even if most cases are "settled" out of court. Demonstrations and protests themselves are one avenue of recourse. Chinese authorities defuse most of them peacefully and often work out some meaningful response to the grievance. Organizers and ringleaders, however, are frequently arrested -- especially if there has been violence.
A different challenge -- infrastructure investment -- also illustrates market-oriented tensions. China's cities are booming -- and so are their needs for mass transit, office space, housing and treatment for water and waste. But infrastructure takes money, and with a low per-capita income of just over $1,000 per person, tax and fee revenues are inadequate. China's solution to the funding challenge has been to use banks and other deposit-taking institutions to raise needed money, with repayment to depositors ultimately guaranteed by the government out of future tax revenues. Such programs are anathema to free-market financiers here in the United States. But this is an East Asian pattern that worked for Japan, Korea, Taiwan and Singapore, at least for a while.
Access to world resources is also a vital part of managing China's market transition. Energy supplies are the best-known problem, along with needs for technologies and management methods, information and technical skills. Opening itself to foreign investment on a scale not seen elsewhere in Asia has helped meet many of these needs. Buying foreign companies has helped too. But at this point, with China getting bigger, the country's transactions begin to impinge on privileged access to resources heretofore enjoyed by already industrialized countries.
If the United States reflexively blocks these transactions, it will damage China's trust in its ability to rely on even-handed global market rules for solving its domestic problems. A good example is grain. China's farmers need to increase incomes by diversifying away from grain. They don't make any money growing grain -- the single most important food in China. If China felt safe relying on grain imports for its food needs, farmers could convert their land to more lucrative crops and products, like vegetables, oilseeds, fruits, meat, milk and fish. And America could sell a lot more grain to China. But China doesn't feel safe. China's leaders worry about a supply cut-off or blockade. And so, the emergence of a rural middle class in China is delayed, and U.S. farm interests are hurt.
Instead of appreciating the challenges China faces, Americans naturally concentrate on what plays well in the domestic political arena. China's currency is a good example. U.S. politicians, sensitive to manufacturing job losses in the last recession, blame China. Never mind that last year China's overall trade surplus (with partners worldwide) was only 8 percent of the U.S. trade deficit, compared to 26 percent for the euro currency zone's surplus, 21 percent for Japan and 19 percent for the rest of Asia excluding Japan and China. The sister countries of Singapore and Malaysia together had a larger overall trade surplus than China last year. No one claims they are causing "global imbalances." But China is fair game.
The result is an image of China's sources of foreign reserves that distorts thinking when China comes to bid for U.S. companies like Unocal. The real source of the large U.S. trade deficit is those surpluses in Euro-zone countries and Japan. But these countries are friends and allies; China is not. And so a recent congressional hearing on China's Unocal bid could unblushingly entertain anti-China rhetoric that is out of touch with the reality of China and U.S.-China relations. One member even wondered whether the Unocal purchase could be the first step leading to China's military occupation of major Middle East oil fields and hence control of world oil prices. It is this kind of rhetoric, not China's desire to acquire a U.S. company, that endangers American national security.
The best U.S. response to China's global emergence is to welcome it on the basis of shared commercial rules and procedures. At the same time, America itself needs to accelerate its own domestic restructuring if it is to raise the productivity and incomes of its own labor force in response to the opportunities and challenges that China presents.

Author's e-mail: AKeidel@CarnegieEndowment.org

Friday, July 22, 2005

NYT : For Two Aides in Leak Case, 2nd Issue Rises

July 22, 2005
By DAVID JOHNSTON [This article was reported by David Johnston, Douglas Jehl and Richard W. Stevenson and was written by Mr. Johnston.]

WASHINGTON, July 21 - At the same time in July 2003 that a C.I.A. operative's identity was exposed, two key White House officials who talked to journalists about the officer were also working closely together on a related underlying issue: whether President Bush was correct in suggesting earlier that year that Iraq had been trying to acquire nuclear materials from Africa.
The two issues had become inextricably linked because Joseph C. Wilson IV, the husband of the unmasked C.I.A. officer, had questioned Mr. Bush's assertion, prompting a damage-control effort by the White House that included challenging Mr. Wilson's standing and his credentials. A federal grand jury investigation is under way by a special counsel to determine whether someone illegally leaked the officer's identity and possibly into whether perjury or obstruction of justice occurred during the inquiry.
People who have been briefed on the case said the White House officials, Karl Rove and I. Lewis Libby, were helping prepare what became the administration's primary response to criticism that a flawed phrase about the nuclear materials in Africa had been in Mr. Bush's State of the Union address six months earlier.
They had exchanged e-mail correspondence and drafts of a proposed statement by George J. Tenet, then the director of central intelligence, to explain how the disputed wording had gotten into the address. Mr. Rove, the president's political strategist, and Mr. Libby, the chief of staff for Vice President Dick Cheney, coordinated their efforts with Stephen J. Hadley, then the deputy national security adviser, who was in turn consulting with Mr. Tenet.
At the same time, they were grappling with the fallout from an Op-Ed article on July 6, 2003, in The New York Times by Mr. Wilson, a former diplomat, in which he criticized the way the administration had used intelligence to support the claim in Mr. Bush's speech.
The work done by Mr. Rove and Mr. Libby on the Tenet statement during this intense period has not been previously disclosed. People who have been briefed on the case discussed this critical time period and the events surrounding it to demonstrate that Mr. Rove and Mr. Libby were not involved in an orchestrated scheme to discredit Mr. Wilson or disclose the undercover status of his wife, Valerie Wilson, but were intent on clarifying the use of intelligence in the president's address. Those people who have been briefed requested anonymity because prosecutors have asked them not to discuss matters under investigation.
The special counsel in the case, Patrick J. Fitzgerald, has been examining this period of time to determine whether the officials' work on the Tenet statement led in some way to the disclosure of Ms. Wilson's identity to Robert D. Novak, the syndicated columnist, according to the people who have been briefed.
It is not clear what information Mr. Rove and Mr. Libby might have collected about Ms. Wilson as they worked on the Tenet statement. Mr. Rove has said he learned her name from Mr. Novak. Mr. Libby has declined to discuss the matter.
The effort was striking because to an unusual degree, the circle of officials involved included those from the White House's political and national security operations, which are often separately run. Both arms were drawn into the effort to defend the administration during the period.
In another indication of how wide a net investigators have cast in the case, Karen Hughes, a former top communications aide to Mr. Bush, and Robert Joseph, who was then the National Security Council's expert on weapons proliferation, have both told the Senate Foreign Relations Committee that they were interviewed by the special prosecutor.
Ms. Hughes is to have her confirmation hearing on Friday on her nomination to lead the State Department's public diplomacy operation. Mr. Joseph was recently confirmed as under secretary of state for arms control and international security. As part of their confirmation proceedings, both had to fill out questionnaires listing any legal matters they had become involved in.
Mr. Rove and Mr. Libby did not meet face to face while hammering out the critical points that were desired for the Tenet statement, the people briefed on the case said.
In its final version, the Tenet statement, through its language and tone, supported the contention that senior White House officials were focused on addressing the substance of Mr. Wilson's claims. It did not mention Mr. Wilson or his wife, and Mr. Libby made it clear that Vice President Cheney did not send Mr. Wilson to Africa, a notion some said Mr. Wilson had suggested in his article. The defenders of Mr. Rove and Mr. Libby contend that the statement underscores that they were not trying to punish Mr. Wilson.
A former government official, though, added another element to how the statement was prepared, saying that no one directed Mr. Tenet to issue it and that Mr. Tenet himself felt it was needed. The statement said that the "C.I.A.'s counterproliferation experts, on their own initiative, asked an individual with ties to the region to make a visit to see what he could learn."
In Mr. Wilson's article, he recounted a mission he undertook to Niger in 2002 seeking information about a purported effort by President Saddam Hussein of Iraq to acquire uranium there, his conclusion that the effort had not occurred and the filing of his report.
In his State of the Union address in January 2003, Mr. Bush cited reports that Iraq had sought to acquire a form of uranium in Africa as evidence of Mr. Hussein's intentions to gain weapons that he might provide to terrorists, use to threaten the United States or employ against other nations in the Middle East.
Lawyers with clients in the case said Mr. Fitzgerald and his investigators have shown interest in a classified State Department memo that was provided to Colin L. Powell, then the secretary of state, as he left for Africa on Air Force One with Mr. Bush and his top aides on July 7, 2003, a day after Mr. Wilson made his accusations public.
The memorandum identified Ms. Wilson by name and described her as having a role in her husband's selection for the mission to Niger. A government official said the paragraph in the memorandum identifying Ms. Wilson was preceded by the letter S in brackets, a designation meaning that contents of the paragraph were classified secret. The designation was first reported on Thursday by The Washington Post.
The investigators have been trying to determine who else within the administration might have seen the memo or learned of its contents.
Among those asked if he had seen the memo was Ari Fleischer, then the White House press secretary, who was on Air Force One with Mr. Bush and Mr. Powell during the Africa trip. Mr. Fleischer told the grand jury that he never saw the document, a person familiar with the testimony said, speaking on the condition of anonymity because of the prosecutor's admonitions about not disclosing what is said to the grand jury.
Mr. Fleischer's role has been scrutinized by investigators, in part because his telephone log showed a call on the day after Mr. Wilson's article appeared from Mr. Novak, the columnist who, on July 14, 2003, was the first to report Ms. Wilson's identity.
In his column, Mr. Novak referred to her by her maiden name, Valerie Plame, which she had used when first employed by the C.I.A. Mr. Fleischer has told the grand jury that he did not return Mr. Novak's call, a person familiar with the testimony said.
Mr. Rove has also told the grand jury that he never saw the memorandum, a person briefed on the case said. Democrats who have been eager to focus attention on the case have urged reporters to look into the role of several other administration officials, including John R. Bolton, who was then under secretary of state for arms control and international security and has since been nominated by Mr. Bush to be ambassador to the United Nations.
In his disclosure form for his confirmation hearings, Mr. Bolton made no mention of being interviewed in the case, a government official said. In the week after Mr. Wilson's article appeared, Mr. Bolton attended a conference in Australia.
In addition to ferreting out the original leak, the grand jury is examining the truthfulness of its witnesses, comparing each account with previous testimony. One apparent area of interest is the conflicting accounts given by Mr. Rove and Matthew Cooper, a Time magazine correspondent who has said he spoke to Mr. Rove about Ms. Wilson, about why they spoke on July 11, 2003.
Mr. Rove, said a source familiar with his testimony, told prosecutors that the conversation began under the pretext of discussing welfare reform.
But Mr. Cooper said he had no record or memory of actually talking to Mr. Rove about welfare reform, instead only discussing the Wilson case in their brief chat. The grand jury focused on that apparent discrepancy, Mr. Cooper wrote in an account in Time this week.