Category: Socialism

Xi’s Micromanaging “Zero Covid” Policy Hurting Chinese Economic Growth

(p. A1) Earlier this year, Xi Jinping issued brief instructions to education officials in Beijing. China’s leader wanted to reform the country’s $100 billion private tutoring industry, which the state worried was helping well-to-do families gain advantages for their offspring and creating anxiety among families that couldn’t afford the help.

Education officials drafted a plan that included new limits on tutoring for children up to the equivalent of ninth grade, said people familiar with the effort.

The plan was too soft, Mr. Xi said, in a one-sentence note to the education ministry, according to the people.

Scrambling to please him, the ministry expanded the limits to include students up to the equivalent of 12th grade. In addition, it required all private education companies to re-register as nonprofits.

The more extreme rules, issued in July [2021], triggered panic selling that erased tens of billions of dollars from the value of education com-(p. A14)panies listed on U.S. and Hong Kong stock exchanges. Officials from the China Securities Regulatory Commission hastily scheduled meetings with foreign investors to calm them down, according to people familiar with the conversations, and promised that Beijing would consider market impact before introducing future policies.

The episode is just one example of Mr. Xi’s evolving management style as the Chinese president consolidates control of the world’s second-largest economy. He is widely considered the most powerful Chinese leader in a generation. He is also a micromanager who intervenes often, unpredictably and sometimes vaguely in policy matters big and small.

. . .

Behind the scenes, many officials question some of Mr. Xi’s decisions.

In late July [2021], a Covid-19 outbreak caused more than 1,200 infections after months of nearly zero reported cases. Some central government officials, eyeing other countries, suggested it might be time for China to stop its strategy of pursuing “zero Covid” and learn to live with the virus, according to a person familiar with the discussions.

Mr. Xi was furious, said people familiar with the issue. In a note to underlings, he asked if officials were becoming “lax and numbed” in fighting the virus, according to these people and to state media reports. “Zero Covid” would remain the policy.

Local officials intensified their efforts. In late October [2021], they locked more than 30,000 visitors into Shanghai Disneyland and forced them to undergo Covid-19 tests after one customer tested positive. Authorities temporarily shut one of China’s biggest container ports after a single case, hurting global supply chains.

China’s economic growth slowed to 4.9% in the third quarter from the previous quarter’s 7.9% rate. Economists have said China’s zero-tolerance pandemic measures, including lockdowns of residential compounds and cancellations of public events, are likely to have a significant impact on China’s growth if they don’t succeed in snuffing out the virus soon.

Some local government officials have warned against “excessive pandemic prevention” measures, according to speeches quoted on websites. Yet officials keep pressing, fearful they might be punished if a Covid-19 case emerged in their area.

. . .

Mr. Xi later “personally planned, personally proposed, personally deployed and promoted” the development of Xiongan, a new “eco-city,” out of farmland about 60 miles from Beijing, according to state media, and urged state firms to move there. Despite billions of dollars of investment, it hasn’t matched the quick success of Deng-era special economic zones such as Shenzhen.

To comply with the new regulatory regime for after-school tutoring this year, education companies have laid off tens of thousands of employees, including teachers. Given the impact on the industry, officials have been enforcing the rules on tutoring for children only up to the equivalent of ninth grade—as originally proposed.

. . .

“Some only act when the party’s central leadership has instructed them to do so,” Mr. Xi said in a speech to the party’s top disciplinary officials last January, made public only recently. He complained that many officials aren’t competent to deal with complicated issues, and that if he didn’t issue so many instructions, little would get done.

“I issue instructions as a last line of defense,” he said.

For the full story, see:

Josh Chin. “Xi Jinping’s Style: Micromanagement.” The Wall Street Journal (Thursday, Dec. 16, 2021): A1 & A14.

(Note: ellipses, and bracketed years, added.)

(Note: the online version of the story has the December 15, 2021, and has the title “Xi Jinping’s Leadership Style: Micromanagement That Leaves Underlings Scrambling.”)

China’s “Authoritarian Virus-Fighting Methods” Lead To Loss of Freedom and Scarcity of Food and Health Care

(p. A1) China’s ability to control the virus has come a long way since the pandemic started: It has inoculated nearly 1.2 billion people and set up a nationwide electronic health database for contact tracing.

Yet it has continued to rely on the same authoritarian virus-fighting methods from early 2020, including strict quarantines, border closings and lockdowns. These have led to food and medical shortages and growing questions about how much longer its zero-Covid strategy, the last in the world, can continue.

. . .

“The district security guards are like prison guards and we are like prisoners,” said Tom Zhao, a Xi’an resident. Mr. Zhao, 38, said he had joined dozens of chat groups last week searching for anyone who could help him find medicine for his mother, who has early-stage diabetes.

. . .

(p. A6) Xi’an has reported 1,800 cases in its latest outbreak, stunningly low compared with the daily case count in the United States. And as the world struggles to contain the spread of Omicron, in China officials have reported only a few local cases of the variant, and none in Xi’an.

The authorities are nevertheless worried, in a country that has stridently stuck by its zero-Covid policy — and held up its success fighting the virus as proof that its authoritarian style of leadership saves lives.

. . .

So far, the experiences have been grim. Tens of thousands of people have been relocated to centralized quarantine facilities to stop the spread. Several top city officials have been fired, and the head of Xian’s big data bureau was suspended.

On Tuesday, the vast health code system used to track people and enforce quarantines and lockdowns crashed because it couldn’t handle the traffic, making it hard for residents to access public hospitals or complete daily routines like regular Covid testing.

Many were incensed when a woman in the city, eight months pregnant, lost her baby after she was made to wait for hours at a hospital because she was unable to prove she did not have Covid-19. (The authorities responded by firing officials and requesting an apology from the hospital.)

Days into the lockdown, residents began to post on social media about how hard it was to get groceries or order food. After being reassured by officials that it was unnecessary to stock up, residents across the city were caught off guard when an initial policy allowing one member of each household to leave every two days was eliminated.

Officials later acknowledged the mistake and quickly posted images of volunteers delivering groceries. But by then, residents were already complaining online that officials had put the pursuit of eliminating the outbreak above the well-being of citizens.

Mr. Zhao, who moved in with his parents ahead of the lockdown to help take care of them, watched as their neighbors bartered for food. Several days ago, officials came in trucks to deliver vegetables, announcing their arrival on loudspeaker. Mr. Zhao and his parents received two plastic bags: a white radish, a head of cabbage, three potatoes, a carrot and two zucchinis.

They fared much better than others.

. . .

As the situation worsened across the city, people posted videos and heartfelt appeals for help. “SOS,” wrote one resident whose father could not get medical care when he suffered a heart attack. He later died, according to a post from his daughter, who shared the story on Weibo, a major social media platform in China.

Zhao Zheng, the father of an 8-year-old boy with acute lymphoblastic leukemia, found himself battling with staff at several hospitals in Xi’an after his son’s Dec. 28 appointment was canceled. Each hospital asked for proof that he was no longer in quarantine and documentation that Mr. Zhao and his family had not recently been exposed to the virus.

“Nobody could issue this document for us at all,” said Mr. Zhao, 43, who until recently had owned a small construction company.

For the full story, see:

Alexandra Stevenson. “China’s Latest Lockdown Leaves Residents Feeling ‘Like Prisoners’.” The New York Times (Friday, January 7, 2022): A1 & A6.

(Note: ellipses added.)

(Note: the online version of the story has the date Jan. 6, 2022, and has the title “China’s Latest Lockdown Shows Stubborn Resolve on Zero-Covid.”)

Chinese Social Media Attacks Walmart as Some Firms Reduce Investment in China

(p. A1) Walmart Inc., the world’s largest retailer, became the latest Western company to face scrutiny over its handling of business involving Xinjiang, following the passage of a U.S. law that virtually bans all imports from the northwestern Chinese region over forced-labor and human-rights concerns.

The Bentonville, Ark.-based retailer attracted anger on Chinese social media beginning last week after internet users shared comments that purported to show that Walmart had stopped stocking products from Xinjiang in its China-based Walmart and Sam’s Club stores.

. . .

Last week, U.S. semiconductor giant Intel Corp. issued an apology to Chinese consumers, partners and the public following an outcry on Chinese (p. A9) social media against the Santa Clara, Calif.-based company, which had published on its website a letter to suppliers asking them to avoid sourcing from Xinjiang.

. . .

Chinese social media campaigns are often not as organic as their overseas peers, as authorities and technology firms curate and censor domestic online content.

. . .

The American Chamber of Commerce in Shanghai said in September that 30% of retail and consumer companies polled in its most recent business survey cited public backlash and consumer boycotts as a top concern, the highest among the major industries covered by the business lobby. More than one-tenth of the companies said they had reduced planned investments in China because of concerns about consumer boycotts.

For the full story, see:

Liza Lin. “Walmart Draws Anger In China Over Xinjiang.” The Wall Street Journal (Tuesday, December 28, 2021): A1 & A9.

(Note: ellipses added.)

(Note: the online version of the story has the date December 27, 2021, and has the title “Walmart Sparks Public Outcry in China Over Products From Xinjiang.”)

Beijing University Bans Visiting Harvard Students from Singing the National Anthem on the Fourth of July

(p. A4) TAIPEI, Taiwan — Harvard University will move a popular Chinese-language program to Taipei from Beijing amid a broad chill in academic and cultural exchanges between the United States and China.

The program’s director, Jennifer L. Liu, told The Harvard Crimson that the move had been driven by a perceived lack of friendliness on the part of the Chinese host institution, the Beijing Language and Culture University.

. . .

. . . Professor Liu said that the program had been experiencing difficulties securing access to the classrooms and dormitories needed from Beijing Language and Culture University, according to an account she provided to The Harvard Crimson, a student newspaper. She also said that in 2019, the Chinese university told the program that it could no longer hold an annual gathering to celebrate the Fourth of July, during which students and faculty would typically eat pizza and sing the American national anthem.

Though China has instituted stringent pandemic restrictions, with provinces undergoing snap lockdowns as coronavirus cases have flared up, Professor Liu said she believed that the unwelcoming environment was related to a shift in the Chinese government’s attitudes toward American institutions.

. . .

The Harvard program’s relocation to Taiwan also comes as the island has supplanted Hong Kong as a bastion of free speech in the Chinese-speaking world, an idea that Taiwanese officials have been keen to emphasize.

Joanne Ou, a spokeswoman for Taiwan’s Foreign Ministry, said the agency “believes that the democratic and liberal system and pluralistic society will enable young American students to have a deeper understanding of Taiwan and the Chinese-speaking world.”

She added, “Only in a free environment where speech is not censored can the best results of learning be achieved.”

For the full story, see:

Amy Qin. “Chill in Beijing, Harvard Shifts Program to Taiwan.” The New York Times (Thursday, October 14, 2021): A4.

(Note: ellipses added.)

(Note: the online version of the story was updated Nov. [sic] 10, 2021, and has the same title “Amid U.S.-China Chill, Harvard Moves a Top Language Program to Taiwan.” The last three sentences quoted above, appear in the online version, but not in the shorter print version. Where there is a slight difference in wording between the two versions, the passages quoted above follow the online version.)

Open Source Log4j Software Bug “Poses a Severe Risk”

In Openness to Creative Destruction, I argue that open source software has severe drawbacks, compared to a system where firms receive higher profits for selling better software. The severe Log4j bug, discussed in the quoted passages below, is an example that strongly supports my argument.

(p. B1) The Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency issued an urgent alert about the vulnerability and urged companies to take action. CISA Director Jen Easterly said on Saturday, “To be clear, this vulnerability poses a severe risk.”  . . .  Germany’s cybersecurity organization over the weekend issued a “red alert” about the bug. Australia called the issue “critical.”

Security experts warned that it could take weeks or more to assess the extent of the damage and that hackers exploiting the vulnerability could access sensitive data on networks and install back doors they could use to maintain access to servers even after the flawed software has been patched.

“It is one of the most significant vulnerabilities that I’ve seen in a long time,” said Aaron Portnoy, principal scientist with the security firm Randori.

. . .

(p. B2) The software flaw was reported late last month to the Log4j development team, a group of volunteer coders who distribute their software free-of-charge as part of the Apache Software Foundation, according to Ralph Goers, a volunteer with the project. The foundation, a nonprofit group that helps oversee the development of many open-source programs, alerted its user community about the vulnerability on Dec. 9 [2021].

“It’s a very critical issue,” Mr. Goers said. “People need to upgrade to get the fix,” he said. Log4j is used on servers to keep records of users’ activities so they can be reviewed later on by security or software development teams.

Because Log4j is distributed free, it is unclear how many servers are affected by the bug, but the logging software has been downloaded millions of times, Mr. Goers said.

For the full story, see:

Robert McMillan. “Software Flaw Spurs Race to Patch Bug.” The Wall Street Journal (Monday, December 13, 2021): B1-B2.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the story was updated Dec. 12, 2021, and has the title “Software Flaw Sparks Global Race to Patch Bug.”)

My book, mentioned above, is:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.

Of 176 Countries, 171 Are More Democratic Than Communist China

(p. A12) . . . the University of Würzburg in Germany, . . . ranks countries based on variables like independence of the judiciary, freedom of the press and integrity of elections. The most recent put China near the bottom among 176 countries. Only Saudi Arabia, Yemen, North Korea and Eritrea rank lower. Denmark is first; the United States 36th.

In China, the Communist Party controls the courts and heavily censors the media. It has suppressed Tibetan culture and language, restricted religious freedom and carried out a vast detention campaign in Xinjiang.

What’s more, China’s vigorous defense of its system in recent months has done nothing to moderate its prosecution of dissent.

Two of China’s most prominent human rights lawyers, Xu Zhiyong and Ding Jiaxi, are expected to face trial at the end of this year on charges that they called for more civil liberties, according to Jerome Cohen, a law professor specializing in China at New York University. A Chinese employee of Bloomberg News in Beijing has remained in detention for a year, as of Tuesday, with almost no word about the accusations against her.

Under Mr. Xi’s rule, intellectuals are now warier of speaking their minds in China than at practically any time since Mao Zedong died in 1976.

“This is an extraordinary time in the Chinese experience,” Mr. Cohen said. “I really think that the totalitarianism definition applies.”

For the full story, see:

Keith Bradsher and Steven Lee Myers. “Beijing Claims China Uses Its Own Variety Of Democracy to Govern.” The New York Times (Wednesday, December 8, 2021): A6.

(Note: ellipses added.)

(Note: the online version of the story has the date Dec. 7, 2021, and has the title “Ahead of Biden’s Democracy Summit, China Says: We’re Also a Democracy.”)

The most recent (2020) University of Würzburg ranking can be found at:

https://www.democracymatrix.com/ranking

California Labor and Environment Policies Reduce Nimble Response to Supply Chain Backups

(p. A17) The backup of container ships at the Long Beach and Los Angeles ports has grown in recent weeks despite President Biden’s intervention to get terminal operators to move goods 24/7.

. . .

The two Southern California ports handle only about 40% of containers entering the U.S., mostly from Asia. Yet ports in other states seem to be handling the surge better. Gov. Ron DeSantis said last month that Florida’s seaports had open capacity. So what’s the matter with California? State labor and environmental policies.

Some 20 business groups recently asked Gov. Gavin Newsom to declare a state of emergency and suspend labor and environmental laws that are interfering with the movement of goods. Opening the Port of Los Angeles 24 hours a day “alone will do little without immediate action from the state to address other barriers that have created bottlenecks at the ports, warehouses, trucking, rail, and the entire supply chain,” they wrote.

One barrier is a law known as AB5. Before its enactment in 2019, tens of thousands of truck drivers worked as independent contractors, which gave them more autonomy and flexibility than if they were employees. As contractors, truck drivers can work for multiple companies, which allows them to nimbly respond to surges in demand.

. . .

Another problem: a shortage of storage space. “There is absolutely no available capacity in the warehousing sector due to the difficulty in developing any new capacity,” the businesses noted in their letter. The vacancy rate for warehouses near the Los Angeles and Long Beach ports was a mere 1%, compared with 3.6% nationwide.

If warehouses don’t have space in their facilities or parking lots to unload goods, drivers can’t make deliveries. Some truck drivers are leaving container boxes along with the chassis outside storage facilities and are picking them up later, but that results in a shortage of chassis at the ports. (About half of chassis are leased to truckers from a common pool supplied by private companies.)

. . .

. . . in California warehouse growth ignited opposition from environmental groups, which complain of pollution and noise. Many cities have limited new logistics facilities.

For the full commentary, see:

Allysia Finley. “California Is the Supply Chain’s Weakest Link.” The Wall Street Journal (Friday, Nov. 5, 2021): A17.

(Note: ellipses added.)

(Note: the online version of the commentary has the date November 4, 2021, and has the same title as the print version.)

Young People With “More Dignity Than Fear” Continue to Protest Cuba’s “Lack of Freedom”

(p. A9) Four months after a wave of spontaneous demonstrations against Cuba’s 62-year-old Communist regime, civic groups and dissidents are defying authorities with protests inside high-security prisons and plans for peaceful rallies across the nation to demand democracy.

Despite facing a crackdown that includes forced exile, summary trials and prison sentences of as much as 25 years, government critics ranging from artists to doctors have openly expressed discontent on social media.

. . .

The arrests have done seemingly little to discourage an increasingly organized and determined opposition movement, fueled by a wave of anger in the island nation over its lack of freedom and the government’s handling of the coronavirus pandemic, as well as the country’s sharpest economic contraction since the early 1990s.

. . .

“They have sicced prosecutors on us, and threatened us with expulsion from work and universities, but I think many young people have more dignity than fear,” said Yunior García, a playwright and founder of Archipiélago, a rights group with more than 31,000 members on Facebook that requested permission for the demonstration.

. . .

In an unusual show of public criticism, doctors—long considered the pride of Cuba’s revolution—posted videos on social media complaining about dismal work conditions.

For the full story, see:

José de Córdoba and Santiago Pérez. “In Cuba, Protest Amid Threat Of Prison, Exile.” The Wall Street Journal (Tuesday, Nov. 9, 2021): A9.

(Note: the online version of the story has the date November 8, 2021, and has the title “Cuba’s Dissidents Dig In Despite Government Crackdown.” When there was a slight difference in wording in the versions, the passages quoted above follow the print version.)

China Adds to Coal Use, While Already Burning More than Rest of World Combined

(p. B1) LINFEN, China — Desperate to meet its electricity needs, China is opening up new coal production exceeding what all of Western Europe mines in a year, at a tremendous cost to the global effort to fight climate change.

The campaign has unleashed a flurry of activity in China’s coal country. Idled mines are restarting. Cottage-sized yellow backhoes are clearing and widening roads past terraced cornfields. Long columns of bright red freight trucks are converging on the region to haul the extra cargo.

China’s push will carry a high cost. Burning coal, already the world’s single biggest cause of human-driven climate change, will increase China’s emissions and toxic air pollution.

. . .

China is expanding mines to produce 220 million metric tons a year of extra coal, a nearly 6 percent rise from last year. China already digs up and burns more coal than the rest of the world combined.

The effort is infused with patriotism. “Guarantee the supply” has become a national slogan, appearing frequently now in state media and official statements and even on red banners on the front of coal trucks.

. . .

(p. B4) Coal shortages were not China’s only electricity problem by September. A lack of rain in southwestern China meant hydroelectric dams generated less power. Calm skies in northeastern China meant wind turbines also contributed less.

Coal prices nearly doubled. Utilities, prevented from raising prices, began running power plants less. Blackouts followed as China’s factories ran flat out to meet strong demand. Heavy rains and flooding in Shanxi in early October briefly delayed China’s initial ability to dig extra coal. The Shanxi government said on Thursday [October 28, 2021] that all but four mines have reopened.

Officials have responded by partially deregulating electricity tariffs. Depending on the province, energy-intensive industries like steel or chemicals production now face cost increases of as much as 50 percent. That may prompt them to embrace energy efficiency, said Yan Qin, a lead analyst at Refinitiv, a data provider.

For the full story, see:

Keith Bradsher. “China Hurries to Burn More Coal, Putting Climate Goals at Risk.” The New York Times (Friday, October 29, 2021): B1 & B4.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the story has the date Oct. 28, 2021, and has the same title as the print version.)

Communist China Pays World Bank for Higher Ranking in “Doing Business” Report

(p. A1) The World Bank canceled a prominent report rating the business environment of the world’s countries after an investigation concluded that senior bank management pressured staff to alter data affecting the ranking of China and other nations.

The leaders implicated include then World Bank Chief Executive Kristalina Georgieva, now managing director of the International Monetary Fund, and then World Bank President Jim Yong Kim.

The episode is a reputational hit for Ms. Georgieva, who disagreed with the investigators’ conclusions. As leader of the IMF, the lender of last resort to struggling countries around the world, she is in part responsible for managing political pressure from nations seeking to advance their own interests. It was also the latest example of the Chinese government seeking myriad ways to burnish its global standing.

(p. A10) The Doing Business report has been the subject of an external probe into the integrity of the report’s data.

. . .

The World Bank was in the middle of difficult international negotiations to receive a $13 billion capital increase. Despite being the world’s second largest economy, China is the No. 3 shareholder at the World Bank, following the U.S. and Japan, and Beijing was eager to see its power increased as part of a deal for more funding.

In October 2017, Ms. Georgieva convened a meeting of the World Bank’s country director for China, as well as the staff economists that compile Doing Business. She criticized “mismanaging the Bank’s relationship with China and failing to appreciate the importance of the Doing Business report to the country,” according to the investigative report’s summary of the meeting.

. . .

Ultimately, the team identified three data points that could be altered to raise China’s score, the investigative report said. For example, China had passed a law related to secured transactions, such as when someone makes a loan with collateral. The World Bank staff determined it could give China a significant improvement to its score for legal rights, citing the law as the reason.

World Bank employees knew the changes were inappropriate but “a majority of the Doing Business employees with whom we spoke expressed a fear of retaliation,” the investigative report said.

Although the data-gathering process for the 2018 report was finished, the World Bank’s economists reopened the data tables and altered China’s data, the investigative report said. Instead of ranking 85th among the world’s countries, China climbed to 78th due to the alterations.

For the full story, see:

Josh Zumbrun. “World Bank Cancels Report After Investigation.” The Wall Street Journal (Friday, Sept. 17, 2021): A1 & A10.

(Note: the online version of the story has the date September 16, 2021, and has the title “World Bank Cancels Flagship Report After Investigation.”)