Friday, 13 December 2019


We say “global Left” to indicate the Left as a historical progressive movement not just nationally but also across the globe. Of course, many divergencies and contradictions exist between the aims and policies of individual national left-wing parties and movements, on one side, and the more properly “global” aims and policies of the historical Left.

I wish to make two points tersely: first, so far as the analysis and critique of capitalism that the Left advances broadly, most of it implanted on Karl Marx’s original work, there can be no doubt that these critical analyses are broadly correct and still apply to capitalism as we know it at present. Only on one respect – which we have highlighted frequently here – is Marxism inapplicable to the present capitalist reality. Like all other “economists” Classical and Neoclassical, Marx always saw human reproductive and productive activity as a matter of “exchanges” between human beings inter eos or humanity as a whole inter se. No economists or critics of economics (Marx saw himself as a debunking “critic” of “economic science” or “political economy”) have ever considered that one aspect of human industry, and especially of capitalist industry, would entail the eventual destruction of the ecosphere – which is what we are witnessing presently. In other words, far from being limited to “exchange value” or the distribution of resources among and between human beings, the critique of economics must now start with the pernicious effects that capitalism has on our environment – something that involves the analysis of “use values” as against “exchange values”. All economists to date have assumed that use values were “scarce” in terms of their pricing in inter-human exchange. What we have learned now is that capitalism’s gravest deleterious fault is its tendency to consume and destroy all available resources or use values to the point that the very survival of humanity is imperiled.

So much for the critical analysis of capitalism on the part of the historical Left. The other aspect of the Left concerns not just the critique of capitalism, which is a negative stance, but also its positive advancement of historical humanitarian and progressive aims, goals and policies. It is in this regard at least that the global Left is failing catastrophically as we have asserted vehemently here repeatedly and even ad nauseam. What is wrong with the global Left at present is that whilst its historical “values” remain irrefutably unobjectionable – freedom, peace, equality, progress -, the policies that it proposes to implement these goals and values are woefully inadequate and indeed entirely counterproductive when they are not also irrational.

This sad state of affairs is especially evident when it comes to matters concerning “globalization” – by which we mean generally the movement of resources and people across countries and regions, the rapid implementation of colossal and sweeping technological changes, and the individualization of political goals (what is called “identity politics” where “the political” becomes exclusively “personal”, as in “the personal is political”, whereas in harsh reality it is the political that is ineluctably and catastrophically personal!).

In one specific regard the Left is especially and contemptibly culpable:- and that is in its inability to see that although the capitalist bourgeoisie pretends to be “conservative”, it is so only in ideology but never (!) in practice! Far from being conservative, the bourgeoisie destroys all communities, values, even nations in its truculent path! And yet it uses the ideology of “conservation” as the party of stability just at the same time as the global Left is absolutely blindly hell-bent on pushing “progress” and “growth” at any cost as if they could only bring happiness and fulfilment to humanity!
The absurdity of this lies in the paradox that whilst the bourgeoisie is busy destroying the daily stability of proletarians the world over, it is the Left that pushes the very ideology of destructive creation masked as bleary-eyed progressivism whilst the bourgeoisie (of, what madness!) is busy pretending to be the passionate preserver of the status quo! 

Thus, whilst the Left keeps invoking its humanitarian values to facilitate the migration of billions of indigent masses from Asia and Africa to the advanced capitalist countries, to the immediate detriment and destruction of proletarian living standards in the West (!), it is the bourgeoisie that hypocritically and ideologically professes to fight a ceaseless and defiant battle to stop such destructive and abominable migration of false refugees! It is thus that the Left is completely hoodwinked and “taken from behind” by the capitalist bourgeoisie. Of course, the same goes for the environmental fight where the Left proposes to destroy the living standards of workers in the West while all the while the worst abusers of the environment are those very “emerging economies” whose overpopulation the Western bourgeoisie aids and abets with the full aid of local bourgeoisies, and whose “refugees” Western workers are supposed to welcome into their societies with open arms!

As we have stressed repeatedly here, the sooner the Left realizes that the twin evils of capitalism are (a) overpopulation in Asia and Africa and (b) overconsumption across the globe, the sooner we shall be able to stop the collapse of left-wing politics the world over. If not, we shall simply be condemned to see our planet destroyed by the likes of Trump, Johnson, Le Pen, Salvini, Orban and what not – to leave aside, of course, the greatest usurpers such as the Han Chinese, the nationalist Hindus of India, the appallingly misogynist Muslims and so on and so forth. Cheers.

Chinese P2P executive disappears as company offices raided

Li Yonghui’s family believe he has been detained in latest sign of crackdown on sector Beijing, above, is just one of several cities where local governments in recent months have attempted to shut down the $77bn peer-to-peer lending business

 Police have stormed the Beijing offices of a large, New York-listed peer-to-peer lending company and the group’s chairman has disappeared in the latest sign China has stepped up its crackdown on the internet loan industry. Local governments in several Chinese cities and provinces in recent months have attempted to shut down the $77bn peer-to-peer lending business, which connects lenders with borrowers over online platforms. Several prominent businessmen connected to P2P lending have been detained by police and accused of financial crimes such as illegal fundraising. In some cases, investors have lost billions of dollars as P2P businesses collapsed. Li Yonghui, the chairman and chief executive of Fincera, disappeared on Friday morning in the northern Chinese city of Shijiazhuang, his son Spencer told the Financial Times. Mr Li’s family believes he has been detained by authorities. About 20 plain-clothes police officers laid siege to Fincera’s Beijing offices on Friday. When the Financial Times arrived at the location at midday, many staff were still in the office alongside police. Employees said police arrived from Shijiazhuang in the early morning and that some employees had been detained. When asked if Mr Li had been arrested, one officer said all questions regarding the whereabouts of the businessman would need to be addressed to police in Shijiazhuang.

 Mr Li’s whereabouts could not be verified on Friday and Shijiazhuang police did not respond to faxed questions on the matter. Fincera’s chief technology officer and a vice-president were detained by police at their homes in Beijing on Friday morning, according to Spencer Li. Recommended Special ReportInternational Governance Should poor countries welcome Beijing’s money? He said on Friday that he was barred from leaving China the previous evening and was told at Beijing Capital Airport that he could not leave the country because he was suspected of illegal fundraising. “I had no idea I wouldn’t be able to leave last night,” he told the Financial Times. The father and son are both Canadian citizens. Fincera, an over-the-counter stock that trades in New York, is based in Shijiazhuang, about 250km south-west of Beijing. The company specialises in lending to the transportation sector and, at its height, had about Rmb9bn in outstanding loans, making it the largest P2P company in Hebei province.

China’s P2P industry has been in a free fall this year. After allowing the industry to grow rapidly with little oversight for several years, authorities began cracking down on P2P lending in early 2018, adopting the view that the industry poses a threat to financial and social stability. Since May last year, outstanding loans have collapsed from a high of about Rmb1.06tn to about Rmb540bn in November. A number of prominent businessmen with links to P2P lending have been detained this year. In September, authorities said that Dai Zhikang, a billionaire property tycoon and prominent art collector, surrendered to police in Shanghai in connection with illegal fundraising activity. His P2P lending unit Laocaibao has ceased operations. In October, authorities in Shanghai told a number of the city’s largest P2P lenders, such as Lufax and Dianrong, to wind down their operations. Additional reporting by Xinning Liu in Beijing
Huawei critics in China inspired by Hong Kong protests 
Online posts attacking company cite city’s demonstrations in worrying move for Beijing Hong Kong has suffered protests since June 

An online campaign against the alleged mistreatment of an ex-employee at Huawei in mainland China is drawing inspiration from the Hong Kong protests in a development that is likely to concern Beijing. After news of the alleged wrongful detention of a former employee of the telecoms equipment group went viral on social media in China last week, users published more than 20,000 posts drawing parallels between the Huawei situation and Hong Kong, Financial Times analysis showed.  While China has a vibrant social media scene, the posts on Huawei represent the first sustained campaign in the country to draw on the Hong Kong protests. One popular post by Chen Youxi, a prominent Chinese lawyer, said the case of Huawei ex-employee Li Hongyuan, who was detained for 251 days after a labour dispute, showed that Hong Kong people were justified in their opposition to a proposed extradition law that sparked the protests. The bill, which was later withdrawn, would have allowed people in Hong Kong to be extradited to China, where long detentions without charges or trial are common. “After this Huawei [incident], which has made the hairs stand up on the back of our necks, now everyone suddenly realises how important reasonable bail conditions are . . . and why it is correct that the Hong Kong protesters were against the extradition bill,” Mr Chen Youxi wrote in the post, which was subsequently censored on Weibo, the social media platform. Since Hong Kong’s protests erupted in June, the Chinese Communist party’s greatest fear has been that the unrest would spill over into mainland China. Beijing has gone to extreme lengths to prevent this, detaining mainland Chinese who have publicly expressed support for the protests.

“After this Huawei [incident], which has made the hairs stand up on the back of our necks, now everyone suddenly realises how important reasonable bail conditions are . . . and why it is correct that the Hong Kong protesters were against the extradition bill,” Mr Chen Youxi wrote in the post, which was subsequently censored on Weibo, the social media platform. Since Hong Kong’s protests erupted in June, the Chinese Communist party’s greatest fear has been that the unrest would spill over into mainland China. Beijing has gone to extreme lengths to prevent this, detaining mainland Chinese who have publicly expressed support for the protests. “Beijing is afraid of piggyback actions inside mainland China, especially in China’s southern provinces like Guangdong, where many people understand Cantonese, the language spoken in Hong Kong,” said Willy Lam, a professor of Chinese politics at the Chinese University of Hong Kong. China has also embarked on an aggressive propaganda campaign to portray the Hong Kong protests as the work of an unpatriotic minority backed by the US. While this pro-government narrative has dominated social media, the emergence of some posts relating to the Huawei situation with Hong Kong represents an unusual departure from the official line.

 The controversy over Huawei was sparked by the case of Mr Li, a 13-year veteran of the company who was accused by management of extortion over a pay dispute and detained by local police.  A Chinese court ruled that there was insufficient evidence against him and awarded him Rmb108,000 ($15,400) in compensation but not before his detention had generated a wave of anger online. Recommended Weekend long reads Hong Kong and the art of dissent Comments about the case were viewed more than 220m times last week, according to an analysis by an online news portal run by the People’s Daily, the mouthpiece of the Chinese Communist party.  In some of these posts, disgruntled mainland Chinese social media users repurposed one of the key slogans of the Hong Kong protesters: “five demands, not one less”, referring to the five things the territory’s demonstrators want from the government, including an independent police inquiry and universal suffrage. An online post titled “eight demands, not one less” began circulating on mainland Chinese social media, calling for among other things an independent investigation into the actions of Huawei and the Shenzhen police. “It’s extraordinary because it shows there are chinks in the armour of China’s propaganda machinery,” said Chinese University’s Mr Lam of the posts. Huawei declined to respond to specific requests for comment but offered an official response that Mr Li’s case “was not a labour dispute, and we reported the suspected illegal conduct to the authorities”. 

China hit by biggest dollar bond default by state company in two decades
 Analysts expect further failures as local governments remove support 

China’s Tewoo Group has forced investors to take losses on a US dollar bond, marking the largest failure to repay dollar debt by a state-owned company in two decades and provoking fears of a wave of defaults. The commodities trader, which is wholly owned by the city government of Tianjin, completed an exchange offer this week that made investors take significant discounts on their holdings in the company’s debt. The offer was “tantamount to a default”, S&P Global Ratings said on Thursday, and is expected to reframe how global investors view the market for government-backed corporate debt. “The market has been building to something like this,” said Fraser Howie, an independent analyst and co-author of the book Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise. State-owned enterprises “cannot be assumed to be backed by the state when it comes to bond repayment”, he added. 

Until this year, no Chinese company backed by the state had been allowed to default on its dollar debt since the collapse of Guangdong International Trust and Investment Company, or Gitic, in 1998. A missed payment on a US dollar bond in February by Qinghai Provincial Investment Group signalled that state support was waning, although the company made the payment within a five-day grace period. Tewoo’s restructuring represents a radical shift in how the Chinese government deals with failures at debt-strapped state enterprises by forcing investors to take losses. The restructuring offer, which has been accepted by investors, gave Tewoo bondholders two options. The first was to take deep discounts on four outstanding bonds — one of which, a $300m bond, matures on Monday. The other option was to exchange the Tewoo bonds for that of another Tianjin-based state enterprise and accept far lower coupons.

 Given the economic downturn in China, the Chinese government may lack the resources to bail out all defaulting companies and will probably be forced to accept more market-based restructurings, global investors have warned. “We expect the government to be more selective in where it uses its resources,” said Alaa Bushehri, head of emerging markets corporate debt at BNP Paribas Asset Management in London. “It doesn’t do anyone any good to be in that comfort zone.” Gitic’s default in 1998 sent a shockwave through Asia’s US dollar debt market as investors were forced to recalibrate anticipated state support for government-owned companies. But the collapse of the company came at a time when the borrowings of Chinese state-owned enterprises were still small. Today, state groups are some of the largest debt issuers in Asia, and Beijing is wary that an end to the state’s implicit guarantee will force a repricing of risk associated with such companies and drive up borrowing costs. Some analysts expect that Tewoo’s problems, and the lack of support from the city government in Tianjin, are just the beginning of a series of defaults at government-backed groups. “We believe Tianjin is not an exception and other local governments with deteriorating fiscal profiles might also see eroding support for their uncompetitive and distressed SOEs,” S&P said on Thursday.

Wednesday, 11 December 2019

The role of AI in China’s crackdown on Uighurs

What counts as a terrorist in Xinjiang is ultimately decided by humans, not machines

In the past month, a trove of leaked internal documents has revealed the Chinese government’s plans in the border region of Xinjiang, where about 1.8 million members of the country’s Muslim minority have been detained. The leaks have further exposed the centrepiece of China’s surveillance state in Xinjiang, a vast database with information on the background and behaviours of millions of residents. In the wake of the leaks, IJOP, an “integrated joint operations platform”, has been described as a form of “predictive” policing that uses “big data” and artificial intelligence. Yet while AI does aid the inputting of data — through tools such as facial-recognition cameras — there is no evidence so far that it is used by the IJOP to form decisions about individuals. In associating China’s repression in Xinjiang with sophisticated, AI-driven policing models, we may be assuming too much. The IJOP’s technology is at root driven by political objectives that are blunt and indiscriminate. As Edward Schwarck, a PhD student researching Chinese public security at the University of Oxford, says: “Calling it intelligence-led or predictive policing draws attention away from the fact that what is happening in Xinjiang is not about policing at all, but a form of social engineering.”

 China has high ambitions for the use of big data in national security and set up a series of labs, starting in Xinjiang’s Urumqi, to research the topic. But officers lament that their systems are a mess. Crimes such as political dissent are so loosely interpreted that one may never be able to predict them precisely. The stated intention for the government’s security clampdown is to prevent terrorism and separatism. For the IJOP to incorporate an AI model that spots terrorists, humans would have to decide what counts as a terrorist, feed examples of terrorists into the IJOP’s AI model, and then ask the platform to find matches of people with similar characteristics. What counts as a terrorist in Xinjiang? This is the central question, and it is ultimately decided by humans, not just machines. The government boasts there have been no terrorist attacks in Xinjiang since 2016. So for this AI model to even work in theory, there must be humans deciding that certain people — who have not yet committed terrorist crimes — are terrorists or future terrorists. Under Beijing’s vague criminal categories, “terrorism” or “separatism” can include not just plots to harm people but simply holding or attending private religious gatherings.

But, from various leaks, we know that a vast range of traits can lead to someone being tagged as suspicious, including having family living abroad or having certain foreign apps like WhatsApp installed on one’s phone. More broadly, the behaviours that the police are punishing are Uighur Muslim customs, from practising the religion to celebrating the language and culture. At the very least, China is trying to make Uighurs more like the Han Chinese majority. The fact there are 1.8 million people in mass detention camps in Xinjiang should itself suggest the Chinese state is not interested in precision or predictive policing. For AI models to be meaningful, the objective has to be defined to include a cost for inaccuracy to avoid false positives. If you don’t care about accuracy, you don’t need AI to achieve your goals. The most devastating feature of the IJOP is not how the data is processed, but how it is gathered. Input sources range from government-assigned groups of 10 households asked to inform on each other, to police extracting data from smartphones, to facial-recognition surveillance cameras. The effect of surveillance on this scale is to make people feel that they are constantly being watched, and to fear they might be doing the wrong thing — even when “wrong” is not well defined. When I was last in Xinjiang, a Uighur man told me he was no longer able to pray in the mosques, since many had closed. He could only pray at home, and even then, he added, “they” would know. I didn’t ask why he believed he was being watched at home, fearing the consequences for him of speaking to a journalist. But for the government to eradicate Uighur customs, it doesn’t matter whether people are actually being watched, so long as they believe they are.
 Yuan Yang is the FT’s China tech correspondent in Beijing

China’s smaller banks forced to act to support shares 
Stream of obligatory stock buybacks underscores challenges facing banking sector

A flurry of Chinese banks are being forced to buy back shares to stabilise their stock prices following a series of bank bailouts and mounting pressure on the country’s financial system. At least 10 small, listed banks have been required by local regulations to purchase their own shares after their stock traded below net asset value per share for more than 20 consecutive days. The share purchases, called “stock price stabilisation plans”, are mandatory for companies whose stocks perform poorly within the first three years after listing, and are common among China’s listed companies. However, the sharp declines by many small bank stocks and the steady stream of forced buybacks in recent months has exposed the plight of China’s banking industry, which is experiencing a wave of defaults with economic growth at its slowest in three decades.

 While asset quality at larger banks has remained stable, a number of mid-tier and smaller banks have been saddled with high rates of non-performing loans, some exceeding 40 per cent of total assets. Several banks, such as Baoshang Bank and Bank of Jinzhou, have required state bailouts — a measure not taken by the central government in about 20 years. Other small institutions, including Yingkou Coastal Bank, have experienced bank runs as confidence among Chinese people about the safety of their savings wanes. Funding for banks has also dried up. Investors have abandoned the shares of smaller banks over the past three months, leading to swift price drops that have required buybacks by the lenders. Michael Chang, director of China financials research at CGS-CIMB Securities in Hong Kong, said: “With economic indicators weaker this year compared to last year, plus with some banks needing bailouts or capital injections earlier this year, this has placed pressure on bank share prices.” Most recently, shares in Jiangsu Zijin Rural Commercial Bank tumbled 13 per cent over three days of trading, prompting expectations among analysts that the bank, which listed in Shanghai earlier this year, will be obliged to eventually buy back shares. That followed an announcement from central China-based Bank of Zhengzhou last week that its share price had traded below its net asset value per share for more than 20 days, and that it would enact a stock price stabilisation plan. Its shares were trading at Rmb4.54 in Shanghai on Wednesday, 43 per cent below their listing price when the bank went public last year. Nine other lenders in recent months have been forced to undertake similar share buybacks.

 Maintaining stability in China’s financial system is a priority for policymakers in Beijing, who view banking and markets upheaval as a threat to social order. Regulators have played down the problems facing small banks across the country but China’s central bank warned late last month that about 13 per cent of lenders, or 586 institutions, presented a “high risk” for financial distress.

Tuesday, 10 December 2019

The Chinese Yuan: Always the Global Currency Bridesmaid, Never the Bride

Small FishThe yuan's role in currency transactions is smaller than the Indian rupee's, relativeto each country's import and export heft.Ratio of foreign exchange turnover to trade valueSource: Bank for International Settlements
Chinese yuanIndian rupeeKorean wonEuroCanadian dollarBritish poundJapanese yenU.S. dollar0 times50100150200250300
China’s yuan is on the rise: a future challenger to the global supremacy of the dollar, or at the very least, the herald of a new multipolar currency system—or so we’re told.
A look at the data on the actual international use of the yuan, and its achingly slow development over the past decade, is a sobering experience.
Data highlighted by the Bank for International Settlements this week are the latest to cast the yuan’s global role in a pessimistic light. Relative to its size as the world’s largest trading nation, China’s currency punches far below its weight.
Total yuan foreign-exchange turnover runs to around 14 times the value of China’s imports and exports. That compares with nearly 40 times for the euro—in a bloc where much trade is done between countries that use the same currency—160 times for the Japanese yen and around 273 times for the dollar.
Dim OutlookOffshore Chinese yuan bonds market has shrunk and stagnated.Market value of the FTSE Dim Sum IndexSource: FactSetNote: 100 billion yuan=$14.2 billion
.billion yuan2012’13’14’15’16’17’18’19’20050100150200250300
International Monetary Fund data produced earlier this year showed that China ranks above all other assessed countries in terms of the share of its trade invoiced in dollars. Even emerging markets such as Brazil and Indonesia record a greater diversity of currency invoicing.
True believers might assert that the yuan’s influence is small, but growing. But the data doesn’t bear that out much either: Offshore trading in the yuan—conducted in jurisdictions where both sides of the transaction are outside China—rose 25.3% between April 2016 and April 2019. That’s less than the growth of the Indian rupee, Brazilian real, Korean won or Russian ruble, albeit from a higher base.
Stories about the internationalization of China’s yuan tend to be covered frenetically at first, but with little follow-up, giving the impression of a constant path forward. In reality, many initiatives wither or die on the vine.
Total yuan foreign-exchange turnover runs to around 14 times the value of China’s imports and exports. PHOTO: JOHANNES EISELE/AGENCE FRANCE-PRESSE/GETTY IMAGES
Almost a decade ago, the big development was the dim-sum bond market—yuan-denominated debt issued offshore. U.S. companies like McDonalds and Caterpillar dipped their toes into the market. By the end of 2014, the FTSE Dim Sum bond index had burgeoned in size to over 280 billion yuan ($39.78 billion).
Today, the novelty has worn off and the index is worth less than 115 billion yuan. It shrank in 2016 and 2017, and has ossified since. McDonalds and Caterpillar no longer have any outstanding yuan bonds. Almost two-thirds of the bonds included in the index currently were issued either by the Chinese government or by major state-owned banking institutions.
The strength of a currency for international use rests on what holders can do with it. In the case of the yuan, a largely closed capital account and ultraspeculative asset markets are relatively uninviting.
Unless that changes, expect discussions of the yuan’s international role to keep producing more hot air than headway, and take any pronouncements of its coming role in global finance with a pinch of salt.