The Great Wall of Debt

Great Wall of DebtReview of China’s Great Wall of Debt: Shadow Banks, Ghost Cities, Massive Loans, and the End of the Chinese Miracle by Dinny McMahon. Houghton Mifflin Harcourt, 2018.

A year before the financial crisis struck in 2008, A Demon of Our Own Design was published. Its author, a former Wall Street insider, wrote a vivid and damning account of an industry whose fetishization of complexity and incentive structure, instead of managing risk, was amplifying it. Reading Dinny McMahon’s China’s Great Wall of Debt provokes the same uneasy recognition as Demon did that the jig is up.

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The China Questions

Cover of The China QuestionsReview of The China Questions: Critical Insights into a Rising Power, edited by Jennifer Rudolph and Michael Szonyi. Harvard, 2018. 

The China Questions is a collection of thirty-six essays, all written by experts affiliated with Harvard’s Fairbanks Center for Chinese Studies in honor of the institution’s sixtieth anniversary. As a project, it is an impressive demonstration of expertise on China commanded by a single institution and a strong challenge to other institutions to continue investing in their own study of China. As a book, both the questions asked and answers offered fall short of its potential.

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2017 year in review

In 2017, Xi Jinping moved China closer to one-man rule while most of the world maintained an uneasy holding pattern in light of a diminished American presence. Many of China’s developments center on the theme of control. Domestically, the subordination of all corners of society to the Party continued. Abroad, what some consider an ethnonationalist foreign policy gained greater definition. China is no longer “hiding its light” and is unapologetic about the prerogatives to which it believes itself to be entitled.

Under collectivist rule, the Party allowed a degree of purposeful incoherence to accommodate the great ideological differences on its path from Mao to the market. This created a modest space for debate and afforded those who sought change a place within the system. Xi is signaling that it is now decisiveness that is needed, even though the ideological differences have in many ways only become more pronounced. There are two interpretations of Xi’s push for decisiveness. One is of a country moving triumphantly towards supremacy. The other is of a country racing against time to seize what it can before growth, the basis of its strength, is exhausted.

In tying the Party closer to his person, one can no longer disagree without doing so with Xi personally, risking the alienation of those who sought change within the system. Xi has, perhaps fatefully, greatly linked the survival of the Party to his own mortality.

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You can’t escape the past

Asia's Reckoning by Richard McGregorReview of Asia’s Reckoning: China, Japan, and the Future of US Power in the Pacific Century by Richard McGregor. Viking, 2017. 

“What once seemed impossible and then merely unlikely is no longer unimaginable: that China and Japan could, within coming decades, go to war.” That is the frank assessment with which Richard McGregor opens his new book, “Asia’s Reckoning,” a workmanline telling of the complicated dance between the United States, Japan, and China from the end of World War II through the early days of the Trump administration.

Bringing Japan back into the conversation about the United States and China, McGregor warns, is vitally important. “If China is the key to Asia, then Japan is the key to China, and the United States the key to Japan.” To neglect Japan, he writes, is to ignore the ways in which the American hysteria prompted by Japan’s post-war resurgence served as a “a practical and psychological dress rehearsal” for the rivalry to come with China.

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A polar great power?

Review of China as a Polar Great Power by Anne-Marie Brady. Cambridge, 2017.

Climate change is normally seen as a global threat, yet melting ice in the Arctic and Antarctic regions for better or worse opens new passageways for shipping and access to tremendous natural resources. It is not just those who border these regions that are taking notice. China has announced to the world that it too will be a polar power.

As the closest thing there is to a blank slate in geopolitics, China’s polar activities are also closely examined for what they might reveal about the future of global governance. Anne-Marie Brady, professor at New Zealand’s University of Canterbury, has a new book on China’s growing involvement in the poles, in which she guides readers through the principles of polar governance, the region’s strategic attractions, how China is positioning itself to take advantage, and what it means for the rest of the world.

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China’s education crisis

No one believes that China’s economy is sustainable in present form – not even its government. Beijing and most external experts agree that continued growth is possible, just not from the combination of cheap labor, exports, and infrastructure investment it historically depended on. In its place, the economy must transition to higher value-added goods and services. But for China’s workers to become more productive, they must be better educated. A host of worrying studies, many led by Stanford’s Rural Education Action Program, suggest that China’s young people are not being educated broadly enough to make that transition.

China educational attainment

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Cold War rivals

Winning the Third World, Gregg BrazinskyReview of Winning the Third World: Sino-American Rivalry During the Cold War, by Gregg Brazinsky. University of North Carolina Press, 2017. Also referenced is Shadow Cold War: The Sino-Soviet Competition for the Third World, by Jeremy Friedman. University of North Carolina Press, 2015.

Shadow Cold War, Jeremy FriedmanWhen China announced plans to launch an Asian Infrastructure Investment Bank in 2015, the United States chose a response reminiscent of its Cold War playbook. It cast doubt on China’s intentions and leaned on other nations not to get involved. The result was no different from the Cold War era too—nations, including close allies of the United States, signed on to the initiative—awarding China a significant symbolic victory before any tangible work had even been accomplished.

A new book places China at the center of an underexplored aspect of the Cold War: the competition for influence in the “third world” between China and United States. Written by Gregg Brazinsky at George Washington University, Winning the Third World relies on previously unpublished archive materials from both countries. Far from last century’s history, the book illuminates the remarkable continuities in both countries’ foreign policies.

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Flipping through the Nikkei Asian Review

Until publication ceased in 2009, the Far Eastern Economic Review reigned as the Economist of the Pacific. For its devoted fans, no other English language publication better covered the sweep of the region’s politics, business, and culture. In the years since, other publications have stepped up their Asian coverage, mostly focused on China’s rise. That country’s state media in particular has increased the volume of information it produces, slanted but nonetheless useful. New media and newsletters have simultaneously sought to make sense of the cacophony while also adding to it.

Japan’s English-language Nikkei Asian Review has quietly worked to change that since it began publication in 2013. It professes to be a “global publication with a uniquely Asian perspective,” leveraging the 24 bureaux and 1300 reporters of Japan’s leading business newspaper. In 2015, its parent acquired the Financial Times. Despite its prominent sister publications, the magazine has attracted a modest audience of 25 thousand print subscribers and 2 million unique monthly page views. Are the rest of us missing out?

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The overseas Chinese agenda

Li Keqiang meeting with representatives of overseas Chinese businesspeople / Xinhua

Next month, China will host its national equivalent of the Olympic Games. This year, for the first time overseas Chinese nationals will also be able to participate. More telling is the inclusion of foreign athletes of Chinese ancestry. The initiative is one of many attempts, some subtle and others not, by Beijing to signal control of its citizens abroad and effectively nationalize ethnic Chinese regardless of citizenship in service of Beijing. How aggressively China pursues this strategy will impact the country’s relationships with nations that are home to significant populations of both overseas Chinese nationals and ethnic Chinese. Already, some nations are sounding alarms not heard since the end of the Cold War. For their part, overseas Chinese worry how the influence campaign may put them at risk in both countries.

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