Commentary on Political Economy

Thursday 30 September 2021

 Japan’s push back on China right

It would be wrong to expect any radical policy changes from Fumio Kishida, a consensus politician who holds the record as his country’s longest-serving post-war foreign minister and who is set to become Japan’s new prime minister on Monday. But it could hardly be more significant that following strong statements by him on China and Taiwan during his campaign for leadership of the ruling Liberal Democratic Party, Beijing moved swiftly on Thursday to warn him not to “push China-Japan relations towards hostility”.


Apparently referring to statements by Mr Kishida in which he highlighted Taiwan as “the frontline in the struggle by democracies to resist authoritarianism’s advance”, the febrile Chinese Communist Party mouthpiece Global Times declared: “He should not be the leader who ignites new fires of hatred between China and Japan, nor the one who pushes China and Japan into an all-out confrontation.” Mr Kishida should ignore such attempts to intimidate him before he has even been sworn in by Emperor Naruhito. His statements on China and Taiwan, as well as Russia, were well founded.


Beijing may be peeved (is it ever anything else?), but Mr Kishida, in taking a significantly harder and more outspoken line than outgoing prime minister Yoshihide Suga, was right to warn that Japan needed to be prepared “for a scenario in which it was hit first and was expecting further missile attacks”. He hinted strongly at the need for Japan to achieve the strategic resources to “block the other side’s missile attack ability”.


China and Russia were “at the forefront of the advance of the authoritarianism that democracies such as the US, Japan, India, Australia and Western European nations needed to combat. The frontline of the clash between authoritarianism and democracy is Asia, particularly Taiwan”, Mr Kishida added in an interview on the eve of the LDP’s leadership ballot. Japan continually needed to update its preparations for a conflict involving Taiwan, he warned.


Mr Kishida’s strong reassertion of Japan’s strategic concerns in the face of Chinese aggression across the Indo-Pacific could hardly be more significant when, as last week’s Quad leaders summit in Washington showed, there is a need for much more to be done to meet the Chinese challenge. While insisting he wants to maintain the best possible trade ties with China, Mr Kishida doubtless has angered Beijing by backing Taiwan’s application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. He also has made it known that he wants to boost Japan’s Self-Defence Force, including developing longer-range missiles. Published reports have indicated that he also could adopt a proposal by his main rival in the leadership race, Taro Kono, and follow Australia’s example in trying to get nuclear-powered submarines. It has been suggested he could seek Japanese entry into the Five Eyes intelligence-sharing alliance


Given Mr Kishida’s long experience as foreign minister and, for a time, defence minister, there can be no surprise in his preoccupation with the strategic challenges facing Japan and the region at a time of unrelenting Chinese aggression. It would be unfair to suggest that Mr Suga, during his brief and troubled interregnum, was not similarly committed. But it does suggest a return to the way former prime minister Shinzo Abe prioritised Japan’s security interests during the nine years he was in office. The immediate challenge facing Mr Kishida will be to lead the LDP into a general election, which must be held before November 28. Given that the party has been in power almost continuously since it was founded in 1955, few doubt he will get the mandate he wants. Although he was Mr Abe’s chosen successor, Mr Suga was clearly uncomfortable as prime minister. He lost the confidence of LDP leaders.


With Mr Kishida’s strong views on security and Japan’s need to be able to defend itself against Chinese aggression, his victory is of major significance to the Indo-Pacific. Alliances such as the Quad will be strengthened immeasurably by his clear-eyed determination on crucial issues such as Taiwan’s freedom.

 Will Biden’s Fall Be Worse Than His Summer?

From the Afghan debacle to his economic overreach, the White House has ample reason for alarm.


By

Sept. 30, 2021 6:43 pm ET

The White House should be feeling alarm. It hasn’t been a good summer for the president, and it isn’t looking to be a good fall. The manner and timing of the withdrawal from Afghanistan was a catastrophe that left Americans infuriated and ashamed. The president’s statements and interviews in the aftermath were highly unsuccessful. The testimony of his top military leaders that they advised him to leave 2,500 troops to keep the process safe made him look dodgy. The whole thing was a botch from beginning to end, and it will stick in history. The images it yielded (kids running to the planes, 13 Americans killed as they tried to bring order) seemed to sum up the political moment, making this seem not like merely a bad event for the president but a definitional one.


Opinion: Potomac Watch

WSJ Opinion Potomac Watch

The White House pandemic response has been uneven to the point of baffling. Inflation is going up (in June the Federal Reserve estimated it at 3.4% for the year; by September, 4.2%.) Immigration is not a problem but a crisis, and there appears to be no administration plan to deal with the reality that those from other countries who want to come here approach our border as if there is no border. What the crisis requires, at a bare minimum, is a sense of urgency, of something being done. There is no such sense. Their only plan seems to be hoping Border Patrol agents will do something wrong, or at least something that looks bad, so White House officials can lay blame with indignation and performative compassion.


On Capitol Hill, months of fighting in the Democratic caucus, with liberal moderates versus progressives, has gone on just long enough that it looks not like the inevitable jostling in a divided party but like disarray and an absence of leadership.


All this makes Mr. Biden look unimpressive. And eight months is long enough for an impression to take hold. If I were a Democrat I would be starting to think Joe Biden’s historical purpose was to get rid of Donald Trump, but beyond that he is the answer to no political question.


SUBSCRIBE

FiveThirtyEight.com’s tracking poll has Mr. Biden underwater (49% disapprove, 45% approve). The Gallup poll has his approval down 13 points since June. An ABC News/Ipsos poll out this week shows his support eroding on a range of issues, most of the decline fueled by independents and Republicans but with numbers down among Democrats too.


This White House has been pretty good at keeping its secrets. The public has heard very little of what used to be called “Who shot John?”—details about what was said in the Oval Office when the decision got made, who made what argument, who steered things, whose view was decisive. That will come—it always does.


For now, some essentials seem obvious. The sheer size and scope of Mr. Biden’s economic proposals show he is operating with a certain daring. His bills are mandate-size. But he didn’t have a mandate-size victory in 2020 when he was up against the most divisive and controversial president in modern history. Donald Trump got more votes than any Republican ever had. Mr. Biden in turn received more votes than any Democrat. He won by seven million of 159 million votes cast. A good solid win (51.3% to 46.9%), but not a mandate. His party won the House but only by a handful of seats. The Senate is 50-50.


The country is closely split. Mr. Biden’s governing margin is precarious. Yet his economic proposals are quite sweeping, as if he’d won the Great Society mandate of 1964. Lyndon Johnson’s landslide was huge—61% to Barry Goldwater’s 38.5%. Johnson came in with 68 Democratic senators and a 295-140 House majority.


At the same time Mr. Biden acts as if he has a mandate, he seems strangely absent from Hill negotiations. Rep. Debbie Dingell (D., Mich.) said Wednesday on MSNBC that Democratic members “need to know exactly where the president stands and what the president wants them to do, and they’re getting mixed signals depending on who you talk to.” They are told they have to be with the president, but “what is it that the president wants?”


He is letting progressives play the part of conscience of the party. They appear to be calling the shots, and he’s ceding to them the idea they’re not part of the party; they’re the heart of the party. But Mr. Biden didn’t run as a progressive—he beat the progressives in the primaries. In a party going left, he played the role of the middle’s man. What happened to politics as the art of the possible?


This looks like a late-life conversion to progressivism. Maybe that’s what the abrupt and decisive withdrawal from Afghanistan was about, doing what others had failed to do, Barack Obama had failed to do—and what progressives wanted. Show them who their real hero is. The economic part of his agenda would be of a piece with that—show them what Mr. Obama, with his distance from the more progressive wing of his party, refused to show.


I’ve got a feeling there’s more to the Obama competition angle than we understand.


There’s already been a lot of spending since the pandemic began. Mr. Trump was a high spender. Mr. Biden is a high spender. But when the federal government, which is far away from life on the ground in America, creates mammoth spending bills, a sense of targeting gets lost, of workability and intention, of trade-offs and long-term implications. It all gets lost unless you’re careful. We spend so much as a country now, we’re starting to make some workers believe they don’t really have to work. Some renters would be starting to think they don’t necessarily have to write the monthly check.


Does the spending in the big reconciliation bill look careful? It is almost 2,500 pages long, it’s not clear anyone has read it, and no one seems precisely sure what’s in it. It is simply understood as a bill that while not necessarily pertinent to current crises provides the societal changes progressives wish to see in such areas as climate and taxation and beefing up the Internal Revenue Service and free community college.


I think the common wisdom on the right that if this economic program passes it will be bad for the Democrats (huge, messy, inflationary) and if it fails it will be bad for the president (he’s hapless, they don’t have their legislative act together) is correct.


I think Mr. Biden got himself in a fix. The past eight months he could have been gradual and incremental in his approach—a few months slower with a lot more planning in Afghanistan, less appetite and maximalist in economic matters. Old fashioned, undramatic, stable governance from a longtime liberal Democrat.


Not everything has to be big, bold and transformational. Especially when you don’t have a mandate for those things. In political figures it is often vanity and ego that make them insist on being transformational.


Or competitiveness.


Or ideology. But ol’ Joe from Delaware didn’t use to have all that much ideology, and wasn’t chosen to have it.

Wednesday 29 September 2021

FAREWELL, PHILIP STEPHENS!

The west is the author of its own weakness

China presents a threat to the liberal global order but the bigger danger lies in the discrediting of democracy

Efi Chalikopoulou illustration of Philip Stephens column ‘The west is the author of its own weakness’

© Efi Chalikopoulou

   

September 30, 2021 4:00 am by Philip Stephens

Call it the age of optimism. Twenty five years ago, when this column first appeared, the world belonged to liberalism. Soviet communism had collapsed, the US claimed a unipolar moment, and China had joined the market economy. European integration had banished the demons of nationalism. The UK would soon be dubbed “Cool Britannia”.


You did not have to think the wheels of history had stopped turning to judge that the 21st century would be fashioned in the image of advancing democracy and a liberal economic order.


Today’s policymakers grapple with a world shaped by an expected collision between the US and China, by a contest between democracy and authoritarianism and by the clash between globalisation and nationalism. Britain is again the sick man of Europe. If this sounds insufficiently bleak, you can add the existential threat of man-made global warming.



The easy explanation is that the west fell prey during the 1990s to hopeless naivete. Victory in the cold war went to its head. Living standards were on the up. It was still possible, pre-Facebook, to imagine the internet as a global community for good. In any event, it is the human instinct to project the present into the future. Doesn’t history travel in straight lines?


Europe was no innocent in this respect. The continent’s liberal internationalists made common cause with US neoconservatives in promoting a great democratising mission. America had guns but the EU had its own “normative” power. Large swaths of the world were set to become, well, European.


The great unwinding since has seen the US-led post-cold war order give way to the return of great power rivalry, populists of far right and far left raising the standard of nationalism against European integration, and a mercantilist scramble for national economic sovereignty. In an era of authoritarian “strongmen”, headed by China’s Xi Jinping and Russia’s Vladimir Putin, democracy is in a defensive crouch.


And now western policymakers risk another big mistake by identifying China as the most pressing challenge to the ancien regime. The US and its allies, we are told, must concentrate their energies on gathering their resources to see off the threat. What we need is more submarines in the South China Sea.


Given Beijing’s belligerence, the argument is beguiling. It is also displacement activity, an excuse not to admit what has really happened since the 1990s. Yes, China has grown at a much faster pace than almost anyone imagined. But the explanation for the weakening of western democracies lies largely in the west.


America’s wars of choice in Afghanistan and Iraq are part of the story. They were intended as a salutary demonstration of US power. Instead these vastly costly and unpopular conflicts served to delineate the limits of the Pax Americana. The sole superpower promised to remake the Middle East. Instead, as we saw last month in the fall of Kabul, Washington has been forced to cut and run. The rest of the world notices these things.


The failure in the Middle East, however, pales into insignificance against the damage inflicted by the 2008 global financial crash. Historians will record the crash as a momentous geopolitical as much as an economic event — the moment western democracies suffered a potentially lethal blow.


The failure of laissez-faire economics was visible before the collapse of Lehman brothers. The incomes of the not-so-well off had long been stagnating under the pressure of technological advance and open markets. It was obvious too that the rewards of globalisation were being reaped by the rich and super-rich. The crash, though, crystallised what had become, in effect, an elaborate shakedown.


Those looking for an explanation for Donald Trump’s presidential victory, for the UK Brexit vote, or for populist insurgencies across Europe need reach no further. The excesses of the financial services industry and the decision of governments to heap the costs of the crisis on to the working and lower middle classes have struck at the very heart of democratic legitimacy.


What Trump understood, as did populists elsewhere, is that the voters’ respect for established politics is rooted in a bargain. Public faith in democracy — in the rule of law and the institutions of the state — rests on a perception that the system at least nods towards fairness. There have been reforms to that end since the crash, but little to suggest they are enough.


There was nothing wrong with the ambition of the post cold war optimists. It remains hard to see how the world can work without liberal democracy and a rules-based international system. What the optimists missed then, and the China watchers overlook now, is the hollowing out of trust in democracy at home. Of course, China is a potential threat. A second presidential term for Trump would be a much more dangerous one.


It may be that history will conclude that the excessive optimism of the 1990s is being mirrored today by too much pessimism. That’s a judgment I intend to leave to others. For a political commentator, 25 years in the same slot is long enough. So this is my last column. I will continue to write from time to time as an FT contributing editor, but otherwise intend to go in search of a better understanding of, well, history.

China braces for a chilly winter as its home-grown energy crisis intensifies

Stephen Bartholomeusz


The energy crisis engulfing the UK and Europe is being driven by the global shortages and soaring costs of gas and oil. In China, it’s coal-driven and is largely the result of decisions made in China.


Two-thirds of China’s provinces are now rationing power. Factories have closed or have reduced production. Households are going dark and street lights have been turned off. Demand for candles has soared. The impact on food processors is creating a threat to food security.


There is no simple solution for China’s energy crisis.

There is no simple solution for China’s energy crisis.CREDIT:AP


Heading into a winter that is typically extremely cold, China is facing threats to its people and its economy that have no quick or easy solutions.


While there is some commonality in the issues confronting the UK, Europe and China – the interaction of responses to climate change with a shortage of oil and gas supply relative to the rebound in demand as the world bounces back from the worst impacts of the pandemic (and the consequent surge in LNG and oil prices) – the core elements of China’s difficulties are homegrown.


Advertisement


Nearly 60 per cent of China’s power is generated by coal, with about 90 per cent of that coal sourced domestically.


It was coal that powered China’s remarkable acceleration in economic growth over the past half century, which helped turn it into the world’s manufacturing base and which fuelled the decades-long construction and property booms at the heart of its domestic economy.


RELATED ARTICLE

The UK is going through a fuel crisis.

Opinion

Gas

The energy crisis wreaking havoc across the globe

Stephen Bartholomeusz

Stephen Bartholomeusz

Senior business columnist


The seeds for the current crisis were largely sown within the five-year national strategic plan that ran from 2016 to 2020. Within that plan was the ambition of capping China’s energy requirements and carbon emissions and reducing the energy intensity of its economy.


Those goals were imposed at the same time as China was trying to reduce pollution, lift the productivity of its industrial base and reduce a horrific rate of deaths and injuries in its coal mines by forcing the closures of smaller and low-quality domestic coal producers.


Advertisement


The more recent introduction of non-negotiable emissions-reduction targets to try to deliver Xi Jinping’s commitment to reducing energy intensity by three per cent this year, achieving peak carbon by 2030 and reaching carbon neutrality by 2060 has overlaid a shortage of coal supply and the rising cost and declining quality and volume of China’s domestic coal resources.


To try to achieve those targets, mines were closed or ordered to reduce production and heavy energy users like steel mills and aluminum producers were also forced to cut their output (hence the collapse in the iron ore price and the highest global prices for aluminium in more than a decade).


Local governments have struggled to comply with Beijing’s directions – many are said to have ignored them in pursuit of energy-intensive growth and the revenue and employment that generates – and are now resorting to power cuts and blackouts because of the shortage of coal.


Two-thirds of China’s provinces are now rationing power.

Two-thirds of China’s provinces are now rationing power.CREDIT:BLOOMBERG


The pandemic, which saw demand for coal slump, and the global antipathy to new production haven’t helped China’s power supply challenges.


Advertisement


Nor has China’s effective ban on Australian coal. While Australia only supplied about two per cent, or about 50 million tonnes a year, of China’s energy coal requirements the quality and cost of the coal – its higher calorific values and lower sulphur content – meant it was the benchmark for regional pricing.


RELATED ARTICLE

“If G20 countries – including Australia - choose business-as-usual, climate change will soon send Australia’s high living standards up in flames,” says Selwin Hart, a top climate adviser to the UN Secretary-General.

Mining

Coal prices are roaring back amid a global energy crunch

When China imposed the ban in the second half of 2020 – in the midst of the worst of the pandemic – the price of Australian thermal coal slumped to about $US55 a tonne. China, however, was forced to source the replacement supply from South Africa, Indonesia, Russia and North America, driving the prices for inferior coal imports up dramatically.


After the initial shock the Australian producers quickly diverted their output to new markets, some of them impacted by China’s diversion of traditional coal trades, and the price rebounded even as the global economy and its demand for coal recovered.


The price of Australian thermal coal is currently at record levels above $US200 a tonne while China has been paying significantly more than that for imports of lower-quality tonnes. Its domestic coal prices have almost doubled from a year ago and are up about 40 per cent over the past six weeks.


Advertisement


Confronted with the surge in prices its power generators have cut back on their purchases and left China with only about two weeks’ worth of reserves. The caps on the prices they can charge mean that many, if not most, would operate at a loss if they keep operating at full capacity.


Beijing’s response has been to try to import more coal, at the vastly higher prices, and increase its imports of LNG.


That is contributing to the global surge in the demand for gas and the resultant surge in its price at a time when Russia is focused on increasing its domestic reserves and US production has been affected by hurricanes and the impact of the pandemic on its onshore oil and gas production.


Beijing will inevitably have to do whatever it takes, including sidelining its emissions targets until it gets the supply/demand equation into better balance and is able to maintain power through the looming winter to keep the lights and heating on.


The central authorities are also mulling over a relaxation of the price caps for industrial users, allowing the generators to charge prices that reflect the increased cost of their inputs and providing an incentive for them to restore their own output.


Advertisement


RELATED ARTICLE

The start of the rolling assault came after Alibaba’s Jack Ma made some derisive public comments about China’s financial system, its regulation and the big state-owned banks within it last year.

Opinion

Inside China

Billionaire crackdown: China’s risky new pathway to Mao’s ‘common prosperity’

Stephen Bartholomeusz

Stephen Bartholomeusz

Senior business columnist


That would, of course, increase the demand for coal and be reflected in even higher coal prices but Beijing will inevitably have to do whatever it takes, including sidelining its emissions targets until it gets the supply/demand equation into better balance and is able to maintain power through the looming winter to keep the lights and heating on.


An energy crisis, a potential property-driven financial crisis, continuing massive disruptions to the supply chains that connect China’s manufacturing base to the rest of the world and the continuing tensions with the US and its allies are occurring even as Xi is attempting a radical shift in China’s economic model.


What’s that Chinese curse? Xi and the rest of China’s authorities are living through very interesting times.

REMARKABLE THAT THIS BIZARRE STORY SHOULD APPEAR IN THE NYT, THE ONE TITLE THAT HAS DONE MORE HARM THAN ANY OTHER TO THE AMERICAN STORY. AND THE ONE PAPER THAT HAS UNEARTHED UNEARTHLY FANTASIES OF BLACK LIVES MATTER AND BLACK REPARATIONS! PROGRESSIVES FAIL TO SEE THAT GOING DOWN THIS PATH THE ONLY REPARATIONS THEY WILL EVER RECEIVE WILL BE IN THE LIKENESS OF MASS GRAVES FOR THEIR PROPONENTS!

 

She Bought Her Dream Home. Then a ‘Sovereign Citizen’ Changed the Locks.

A New Jersey woman was preyed upon by a fast-growing extremist group that claims its members are sovereign Moors, not bound by U.S. laws.

Image
Shanetta Little was startled one day to find that the locks on her new home in Newark had been changed by a man who claimed he was the rightful owner.
Credit...Bryan Anselm for The New York Times

The official-looking letters started arriving soon after Shanetta Little bought the cute Tudor house on Ivy Street in Newark. Bearing a golden seal, in aureate legalistic language, the documents claimed that an obscure 18th-century treaty gave the sender rights to claim her new house as his own.

She dismissed the letters as a hoax.

And so it was with surprise that Ms. Little found herself in her yard on Ivy Street on a June afternoon as a police SWAT team negotiated with a man who had broken in, changed her locks and hung a red and green flag in its window. He claimed he was a sovereign citizen of a country that does not exist and for whom United States laws do not apply.

Ms. Little was a victim of a ploy known as paper terrorism, a favorite tactic of an extremist group that is one of the fastest growing, according to government experts and watchdog organizations. Known as the Moorish sovereign citizen movement, and loosely based around a theory that Black people are foreign citizens bound only by arcane legal systems, it encourages followers to violate existent laws in the name of empowerment. Experts say it lures marginalized people to its ranks with the false promise that they are above the law.

The man who entered her house, Hubert A. John of Los Angeles, was arrested on June 17 and charged with criminal mischief, burglary, criminal trespass and making terroristic threats. Prosecutors in New Jersey are preparing to take the case before a grand jury, according to Katherine Carter, a spokeswoman for the Essex County Prosecutor’s office. He was released on his own recognizance.