WikiLeaks, The Internet And Democracy

SPEAKERS INCLUDE:

Daniel Ellsberg, Former State and Defense Dept. Official prosecuted for releasing the Pentagon Papers

Clay Shirky, Independent Internet Professional; Adjunct Professor, Interactive Telecommunications Program, New York University

Neville Roy Singham, Founder and Chairman, ThoughtWorks

Peter Thiel, President, Clarium Capital; Managing Partner, Founder's Fund

Jonathan Zittrain, Professor of Law and Professor of Computer Science, Harvard University; Co-founder, Berkman Center for Internet & Society

MODERATOR:

Paul Jay, CEO and Senior Editor, The Real News Network


Bio

Clay Shirky teaches the theory and practice of social media in NYU's Interactive Telecommunications Program and its Journalism department, where he is a Distinguished Writer in Residence. He is the author of, Here Comes Everybody: the Power of Organizing Without Organizations and Cognitive Surplus: Creativity and Generosity in a Connected Age. He is a Fellow at the Berkman Center for Internet and Society at Harvard. In 1967, Daniel Ellsberg worked on the top secret McNamara study of U.S. Decision-making in Vietnam, 1945-68, which later came to be known as the Pentagon Papers. In 1969, he photocopied the 7,000 page study and gave it to the Senate Foreign Relations Committee; in 1971 he gave it to the New York Times, the Washington Post and 17 other newspapers. His trial, on twelve felony counts posing a possible sentence of 115 years, was dismissed in 1973 on grounds of governmental misconduct against him, which led to the convictions of several White House aides and figured in the impeachment proceedings against President Nixon. Ellsberg is the author of three books: Papers on the War (1971), Secrets: A Memoir of Vietnam and the Pentagon Papers (2002), and Risk, Ambiguity and Decision (2001). In December 2006 he was awarded the 2006 Right Livelihood Award, known as the "Alternative Nobel Prize," in Stockholm, Sweden, ". . . for putting peace and truth first, at considerable personal risk, and dedicating his life to inspiring others to follow his example." Since the end of the Vietnam War, Ellsberg has been a lecturer, writer and activist on the dangers of the nuclear era, wrongful U.S. interventions and the urgent need for patriotic whistleblowing. Paul Jay is the CEO and Senior Editor of The Real News Network. 9-11 and the Iraq war were turning points in history and it had an irreversible effect in Paul Jay's life. Alarmed by the inability of major media to ask the underlying questions, Paul decided to combine his film and television experience and his quest to know the undercurrents of news to build an independent television network. Three years later The Real News Network is on it's way. Paul is an internationally acclaimed, award winning filmmaker whose films include Return To Kandahar, Hitman Hart: Wrestling with Shadows, Lost in Las Vegas, and Never-Endum-Referendum. For a decade, Paul was the Executive Producer of counterSpin - Canada's flagship debate show on CBC Newsworld. He was also the Founding Chair of Hot Docs!, International Documentary Film Festival (Toronto), now the largest in North America. Roy Singham is founder and chairman of ThoughtWorks, Inc. With more than 20 years of technology and executive management experience, Singham is a globally-renowned information technology thought leader. Sigham and ThoughtWorks are recognized experts in Enterprise Architecture, Agile development, large scale software development including highly distributed teams, Open Source Software, Ruby, .NET and Web Services. During the last five years, Singham has provided management services to clients in the insurance, mortgage, energy, leasing, retail and software development industries. He has also directed multi-million dollar projects with clients including Caterpillar Financial Services, Dixons Group, Progressive Insurance and Transamerica. One of Sigham's passions is evolving cultural and organizational patterns to create the most advanced internally and externally socially networked Consultancies in the industry. Singham drives the innovative cultural changes that enable ThoughtWorks to remain the world's most influential company in the arena of bespoke business software development. Peter Thiel is a technology entrepreneur, investor, and philanthropist. He has founded and helped launch numerous companies--from PayPal to Facebook--and runs Clarium, a global macro hedge fund manager. He also works to promote and protect freedom through the Thiel Foundation and by sponsoring many nonprofit organizations. Mr. Thiel earned a BA. in philosophy from Stanford University and a J.D. from Stanford Law School. He lives in San Francisco. Jonathan Zittrain is Professor of Law and Professor of Computer Science, Harvard University, and co-founder of the Berkman Center for Internet & Society. He is a member of the Board of Trustee of the Internet Society and is on the board of advisors for Scientific American. His research interests include battles for control of digital property and content, cryptography, electronic privacy, the roles of intermediaries within Internet architecture, and the useful and unobtrusive deployment of technology in education. He performed the first large-scale tests of Internet filtering in China and Saudi Arabia in 2002, and now as part of the OpenNet Initiative he has co-edited a study of Internet filtering by national governments, "Access Denied: The Practice and Policy of Global Internet Filtering," and its sequel, "Access Controlled: The Shaping of Power, Rights, and Rule in Cyberspace. " His book "The Future of the Internet -- And How to Stop It" is available from Yale University Press and Penguin UK.

Transcript

Part 1

And now it's my privilege to introduce our moderator, Paul Jay. Paul is CEO and senior editor of The Real News Network, which is a nonprofit organization that he created in 2005 to create uncompromising global news. Paul has been a force in the Canadian media for over 20 years. He is an award-winning documentary filmmaker and is currently working on a feature documentary film called Report from the Middle East. Paul's films have been shown on television around the world through groups such as A&E, Turner, BBC, and CBC. But not content with just documentaries, Paul created and was the executive producer of CBC Newsworld's daily flagship debate programs Face Off and CounterSpin, which for ten years were the primetime Canadian national debate shows about the news of the day. And we're very happy to welcome him back to our stage at the Churchill Club. Please give your warmest welcome to Paul Jay.
PAUL JAY, SENIOR EDITOR, TRNN: This is far too long an introduction for me, because one of the things we're going to try to do tonight is not have very long introductions, because as one of the local newspapers said, we have a stellar panel, and we--it really is, the brainpower on this stage is enormous. So we're going to try to make as much room for people to speak from the panel as possible. This topic we're dealing with is an issue of rights. And I think that's going to be the theme that will run through the evening. The rights of government to keep secrets. The rights of people to know what their government is doing. The right to have transparency. In the most recent case with WikiLeaks, the issue of foreign policy: does government have the right to carry on a foreign policy that's publicly one thing and in reality something else, and do the people have a right to know that? It's also an issue about private companies. When do private companies have the right, or do they always have the right, to put commercial interests first? Meaning, if you get a call from a senator--in the case of this specific situation, Senator Lieberman's staff, we're told, calls Amazon, whether it's coincidental or not, 'cause Amazon claims that phone call did not lead to Amazon taking down WikiLeaks, but they did, and they weren't the only company that took down WikiLeaks--the right of a private company to say, this is in our commercial interest not to get into a war with a senator. And the right of public discourse on a platform that's primarily privately owned. What happens to public discourse when it's all moving to the Internet but the Internet is delivered primarily by private companies? So what do we do about that? How will the public interest be defended there? But it's also very much an issue about whistleblowers. And in this day and age, the only place whistleblowers are really going to get to the public opinion, both in the United States and globally, is on the Internet. And right now there's a fight taking place about that. And there's obviously a very zeroed-in campaign to try to close down WikiLeaks altogether. So to start us off, probably the best-known whistleblower in the United States, and certainly renowned for his courage--and I'm not going to go on and on about him, 'cause I promised you no long introductions. Daniel Ellsberg is a former state and Defense Department official, and as you all know, he was prosecuted for releasing the Pentagon Papers. Daniel. So in terms of the significance of the attempt to close down WikiLeaks on the Internet, the great amount of pressure to try some way to prosecute Julian Assange--and I believe there's a grand jury deliberating that now--what does your experience teach us?
DANIEL ELLSBERG, FMR. DEFENSE DEPT OFFICIAL, LEAKED PENTAGON PAPERS: Well, I had the very unusual experience of being the first person ever prosecuted for a leak to the press or the public in the United States. The act under which I was prosecuted, namely, the Espionage Act, had been designed for espionage and had never been used for anything else, other than against spies with the intent specified, to harm the interests of the United States or help a foreign power. My prosecutors did not charge that of me. On the contrary, they used the clause in the Espionage Act--which they're using against Bradley Manning also, and which they would use against Assange if they decide to do it. And that makes no distinction, by the way, in its target. It had never been used, as I say, for--in connection with a leak or a disclosure of classified information, and the reason for that was really that it had been always understood that that was intended to cover spying and that we did not want, Congress did not want an official secrets act of the British kind which criminalizes any and all disclosure of classified information, of government secret information. And the people working on that act or other proposals by administrations to have an official secrets act, Congress had always rejected that on the grounds that that went against the core of our democracy--the First Amendment; the necessity--if the public is to be in any sense sovereign, it had to be informed; that the press played an essential role in that; and that it was the role of the press to inform the public of information of the most embarrassing and sensitive kind, namely, information about mistakes, errors, crimes, reckless policies, incompetence, the sort of thing that I can tell you, as somebody who was in the government, is subject to the closest guarding from its political rivals, from the electorate, and from the public. So we've never had an official secrets act. Actually, Congress did pass one in the year 2000 and Clinton vetoed it. Let me ask how many in this elect audience knew either of those facts? Can I see hands? I see one, two, three, four, five, six, seven. Okay. How many did not know either of those? Okay. We would have an official secrets act if Clinton had not been led to veto that act, and it would criminalize what Assange did, it would criminalize what Bradley Manning did, definitely what I did. And actually it would go a lot further, because the wording of that act, the only act that the government has found to be--claimed to be applicable makes no distinction between officials, press, bloggers, anyone without authorized access to the information, passing it on to anybody unauthorized. And that means--and this sounds absurd, but it's the way it's written--that would mean that any reader of The New York Times reading a story saying--this is not a joke--saying this is a classified document to which we've been given access, the reader is not authorized--passing it to her husband or her child, her sister, whatever, would be passing it to an unauthorized person and just as prosecutable, in terms of the wording of the Act, as an official or a consultant, as I was, or Bradley Manning, or Julian Assange, or anyone who--you know, this could apply to everyone. Extremely broad. It was always assumed that that would be unconstitutional if it were applied to disclosures. And that's why prior to Obama there were only--in a world where leaks occur every other day, there were three prosecutions, of which mine was the first. The third, AIPAC, was dismissed for a variety of reasons (mainly its being AIPAC, I believe). But--AIPAC. But we would have had to admit that Israel was a foreign country to which they passed the information, and so they didn't want to get them under spying, which otherwise they could have done--[Section] 794. But--different act. But only one person has actually been convicted by a jury and gone to prison, Samuel Loring Morison. So if Supreme Court refused to address that case [inaudible] Two other people have pled guilty, so their cases didn't go up. The Supreme Court has never actually ruled on whether it's constitutional to put this much material--we're talking billions to trillions of pages of classified documents over the last 60 years--to put that all beyond public discussion, not just by threat of firing or clearance, which is very effective and has kept far too many secrets, but to add to that criminal sanctions. Is that constitutional? The Supreme Court has never yet addressed that. I think that is related to the strange fact that President Obama, who came in promising transparency, who has in fact, in the area of national security and homeland security, been as secretive as any prior administration, including George W. Bush, and in some ways more secretive, in one way in particular I'm about to mention. I said [that] before Obama there were three indictments. Obama has brought five in these two years. If he brought it against Assange, if they did six, it would be twice as many as all previous presidents put together. And what's going on here? Well, it's part of a policy of, generally, use of state secrets privilege, use of--against dismissing lawsuits, being totally secretive, not being at all forthcoming on freedom of information in terms of these areas. So it's part of a policy. But why more than others? I don't--I'd be interested to hear anybody's suggestion. In fact, I think you were asking me that the other night, Peter [Thiel]. Why is it that Obama is pressing this so strongly? This is before WikiLeaks, remember, except for Bradley. The previous four were before WikiLeaks, and two of them were for acts undertaken under Bush, which Bush had not indicted--Thomas Drake and Shamai Leibowitz, who is in prison now. So in other words this we're not looking back applies to the myriad crimes of the Bush administration--torture, aggressive war, warrantless wiretapping, crimes that actually strike at the heart of our Constitution, as well as our domestic law. No looking back on those. The only looking back is on whistleblowers Drake and Liebowitz revealing what they thought were great wasteful practices. So there is a war on whistleblowing. To me--and again, why Obama so much? I have a hypothesis. It's really--this is just very speculative. I think he's more--feels more vulnerable to whistleblowers than either [of] his predecessors, because he's doing many of the same things. One of the great secrets in the cables released is how little difference there is from 2008 to 2009. They're the same practices, the same torture. Not that much difference. But Bush was proud of it. He did it secretly at first; it was all covert at first. But when it came out, Torture? We don't torture. But what we do we do, and I don't apologize for it. NSA warrantless wiretapping? No problem. Need it. I think Obama's a little more embarrassed about all that coming out, that he's acting in the same lines, that he has a new war that he's escalating, added to Bush's war in Afghanistan. And he really wants to do what other presidents have always wanted to do: shut down leaks that they don't control, the leaks they don't make. But I think he's really doing it more aggressively than any previous president, and specifically he's doing it by treating the act that I was charged under as on official secrets act, as an act that criminalizes all leaks. And if he gets a conviction of any of these people, not just Manning or Assange, if he gets Drake or Kim, if they go up to the Supreme Court and the Supreme Court takes it and doesn't notice that it is unconstitutional--which is not a bad bet: earlier courts would almost surely have called it unconstitutional; this one might not. And if he gets that, he has a very broad official secrets act, and from then on, all he has to do to find out who is the source of any leak, one day to the next, with a clear-cut crime, is to call in the reporter whose byline is on the head of that column and say, we're not charging you with anything, we're not against the press, we're for the press; just who committed the crime? And if the person can't take the Fifth Amendment, he or she is not being charged with anything, they just either tell or they go to jail indefinitely for contempt. Judith Miller lasted 85 days. And some of them will last longer, but a lot of them won't. And from then on, no source will have any basis for assuming or hoping that their name for this whistleblowing will be anonymous. Their only recourse will be WikiLeaks. So WikiLeaks matters.
JAY: I should have said in the beginning what the format for this evening is. Each speaker will speak for about five or so minutes, and then I'm going to open it up to the panel to question or comment on what the first speaker spoke about. And over the course of the evening each speaker will get a chance to speak. So I now throw it to the panel. Any questions or comments or argument with Daniel Ellsberg?

End of Part 1

China, America & the Economic Crisis

China holding the (US dollar) bag




Transcript

PAUL JAY: Welcome back to the next segment of our interview with Professor Minqi Li. We're talking about winners and losers in the new China. Welcome, Professor Minqi.

MINQI LI: Thanks.
JAY: China owns something like 1.3, 1.4 trillion US dollars. Much of that is debt. Some of it, I guess, is just receipts for Chinese goods sold in the United States. One way or the other, the two economies are in a rather dependent position to each other. At the same time, they're contending with each other as powers around the world for markets and raw materials. Talk a little bit about this relationship.
LI: Well, exactly. But the US in recent years has been running very large current account deficits, and right now about $700 billion a year. And that partly reflect the fact that, basically since the 1990s, the US economy has been sustained first of all by the stock market bubble, then by the housing market bubble, and both has played a role in sustaining the debt-financed consumption, which is the primary factor behind the US economy. And China on the other hand has played a key role in supporting the US current account deficits. China runs every year basically about $200 billion of traded surpluses against the US. And China then invests most of that back into the US-dollar assets. And that in fact is meaning that China's lending to the US every year about $200 billion. And so that is a big part in financing the US current-account deficit, allowing the US to support its debt-financed consumption. But now we all know that US can no longer sustain this debt-financed consumption anymore.The US housing bubble has burst, and the US economy right now is entering into a recession. The Eurasia economy is also entering into a recession. The latest news is that the second-quarter GDP of the Eurasia economy is negative, negative growth. And so with both the US market, the Eurasia market, and also the British market, with the European market in trouble, in the coming years China will have growing difficulty to support its export-led growth. And over the past decade, China has been very successful with this export-led model. But in the coming years, China will have growing difficulty. Moreover, with this peak oil, and China will also have growing difficulty to support its rapid expansion of energy consumption. So I would say probably beyond 2015 China will have increasing economic difficulty, and China may have to accept much lower economic growth rate. Until now China has counted on this economic growth to avoid major social problems, to offset the negative consequences from the rising inequality. And if China's economic growth slows down dramatically beyond 2015, that might pave the way for some kind of social explosion.
JAY: What might this look like?
LI: That you have to speculate. You know, if China's economic growth slows down dramatically, and that will simply mean this rising inequality will then translate into direct hardship for the majority of the Chinese population. Then we could first of all foresee many massive mass incidents like what we saw in the Guizhou province, the Weng'an incident, and that in turn combined with various tendencies of political dissidence. And, yes, it's very difficult to predict, but if that happens, and since China in recent years has become a major pillar for the global capitalist economy, that would also be very bad news for the global capitalism as well.
JAY: So if the United States sinks into a very profound recession, the effects on China could have even bigger vibrations.
LI: Definitely, although I would say that in the coming years China should be able to maintain relatively rapid growth, because China still has got these huge foreign exchange reserves, and China still has got this huge fiscal surplus, and so it has room to use policy—.
JAY: But can the Chinese domestic purchasing power, domestic market, is there enough strength there to pick up for what it might lose if the American economy or Western economies go into a deeper recession?
LI: Well, there are two problems with this solution. If China want to transform into an economic growth model sustained by domestic demand, then it needs to first of all undertake some major redistribution of income and wealth, and I'm not sure the Chinese capitalist class is wise enough or could think through enough to undertake that path. And the second problem is that in addition to the problem on the demand side, and potentially—that's why I'm saying beyond 2015—you also have this problem with the peak oil, the global oil production. By 2015 the peak oil, I think, probably will be very apparent. And China depends on coal for 70 percent of its energy demand, that beyond 2015 you would expect there will be very strong international pressure on China to reduce their greenhouse gas emissions, therefore very strong pressure to reduce coal consumption. And so, you know, it's difficult to see, with that rapid growth of coal, how China could sustain its rapid economic growth.
JAY: Thank you very much for joining us, Minqi.

China, climate change and US dollars



Transcript

PAUL JAY, SENIOR EDITOR: Welcome back to the next segment of our interview with Professor Minqi Li. And today we talk about the global energy crisis in China. Welcome, Professor Minqi.

MINQI LI, PROFESSOR OF POLITICAL ECONOMY: Thank you.
JAY: We're told we're reaching peak oil. Some people debate that concept; they say there's still lots of oil. But one way or the other, the issue of the energy-consumption/climate-change crisis and the geopolitics of oil is determining most of what's happening in the world right now. What is China's role in this?
LI: Well, we're a big role. China's oil consumption grows very, very rapidly, accounting for about one-third of the incremental oil consumption that has happened since about 2000. And so China's oil consumption right now is probably already 10 percent of the world's total oil consumption. The US accounts for about 20 to 25 percent, I guess, 25 percent. China's is growing very rapidly. And moreover, that's the sticking place at the moment, when there's growing evidence that probably—that the world oil production has reached its historical peak. China's growth in oil consumption accounts for about one-third of the world's incremental oil consumption that has happened since 2000, and now China's oil consumption already accounts for about 10 percent of the world's total oil consumption. And the US accounts for 25 percent, but China's is growing very rapidly. And that is taking place, moreover, at the moment when we're probably at the peak, overall peak, of the global oil production or very near to that. And so you have this growing demand from China and some other emerging economies against a background of stagnating or possible declining supply of global oil production in the future. And so that definitely a major factor behind the current global energy crisis.
JAY: Is China putting much resources into alternative energy development?
LI: China is making lots of effort, and China currently has a goal to increase its wind-power generating capacity to about 200 gigawatt. To give you some idea, that's about 20 to 30 percent of China's current electricity-generating capacity. So China has a goal to increase the wind capacity to 200 gigawatts by 2020. However, this is just one of many aspects of China's gradual growth. China's coal consumption is also growing very rapidly, and in the first half of 2008, China's coal production increased by an annual rate of 15 percent. That's a very, very rapid rate. And, moreover, the wind starts from a very small base. And so any revenue growth of renewable energy basically is canceled out by the gradual growth of fossil fuels.
JAY: There's a group in Washington and a circle of thinking that in the long term sees the fundamental strategic enemy, rival, of the United States is China. And many people there, including in the Democrats and in the Republican party, they say that foreign policy issues should all be worked back from the question of someday in a more real, contentious relationship with China. And in that respect, there's a conversation that takes place about the strategic control of oil. Most of China's oil, as I understand it, comes from the Middle East, increasingly from Africa, even from Latin America, all regions where the Americans have usually had a dominant position. And in many of these areas now China is already a serious rival—economic rival, not military. To what extent is China concerned about a kind of encirclement of China when it comes to oil?
LI: Well, obviously, China is a potential big power. And so there is some—you know, you can have some understanding about these concerns of uncertain circles of US ruling elites with respect to this. But, you know, on the other hand, it's very interesting. The relationship between American capitalism and the Chinese capitalism now is very interesting. And China is probably the major support behind the US dollar right now. And China holds about $2 trillion, near $2 trillion, of the foreign exchange reserves, mostly in the US dollar. And if not because of China buying the US dollar, the US dollar would be in free fall, the US economy would collapse. But on the other hand, for China to provide this kind of support to the US capitalism, China has to consume—of course, it has to consume energy, it has to consume oil; and that, in turn, result in conflict with the US' own demand for oil. So I don't know how these two different ruling elites are going to get out of this development.
JAY: Well, in the next segment of our interview, let's discuss the growing entanglement of China and the US deficit. Please join us for the next segment of our interview with Professor Minqi Li.

China and the climate change crisis



Transcript

JESSICA WEATHERUP (VOICEOVER): China is one of the world's leading economies, but its heavy reliance on coal and an ever demanding need for oil is a matter of ecological concern. China has already surpassed the US as the world's largest emitter of greenhouse gases. To discuss how the Chinese have fared in balancing the struggle between economic development and the realities of the climate change crisis, senior editor Paul Jay spoke with Professor Minqi Li on China and climate change.

PAUL JAY, SENIOR EDITOR: Welcome back to the next part of our interview with Professor Minqi Li, where we're discussing winners and losers in the new China. Welcome, Minqi.
MINQI LI, ASST. PROF., UNIVERSITY OF UTAH: Thank you.
JAY: Let's talk today about climate change. I think for quite some time development was everything, and the whole issue of the environment and pollution and all of that received sort of as a Western prejudice, and someday China could deal with it, but the issue of feeding people and industrialization was far more important. Is China really taking the climate change crisis seriously? And if so, what are they doing about it?
LI: Basically, since about 2002, 2003, there has been major change in the discourse of China's government. Instead of talking about just development, just growth, now you have more and more talk about this harmonious society, what they call scientific development, coordinated development, in term of social, economic, and environmental aspects. The government has paid more lip service to environmental issues, including climate change, and there have also been some efforts to lower the energy consumption in relation to the growth of the economic outputs. So, for example, in China's current, eleventh five-year plan, there is a goal to lower the energy intensity of the economy by 20 percent from 2005 to 2010, although so far China has been failing to accomplish this objective. Now China basically has overtaken the US to become the largest emitter of the greenhouse gases. China probably will also soon overtake the US to become the largest energy consumer. Despite all of this talk, China continues to consume the energy at a very rapid pace, and moreover, China depends on coal for about 70 percent of its overall energy demand. And so, so long as China's capital accumulation, industrialization, continue to grow very rapidly, and it's very difficult to hold down the energy consumption.
JAY: What is the issue here? Does China not believe the climate change science? The UN international agencies involved in this, all the scientific organizations, have all been saying that we're facing apocalyptic-type consequences as a result of the climate change crisis, and China certainly will be affected by this. Do they not believe it?
LI: Among the Chinese businesses, among the Chinese scholars, it's remarkable that climate skepticism is still to some degree pervasive. And, you know, in the very recent G8 meeting, after very hard negotiation, the eight industrialized countries finally reached the consensus that we are going to reduce the emissions by 50 percent by 2050, although they failed to reach a consensus on the starting year. And then, when the eight industrialized country meet with the so-called Plus-Five, the five major developing countries, then they even failed to mention the 50 percent deduction goal. So it's not just about whether the scientific evidence is clear; it's also about—right now, apparently, the elites of the various capitalist states, especially in the semi-periphery, and primarily respond to their own national capitalist objective. The latest study which suggests that about one-third of China's greenhouse gas emissions has to do with China's export industries, which is the final products consumed in the Western countries.
JAY: Of course there was quite a lot of news stories about Beijing leading up to the Olympics and how there was half the traffic stopped going into Beijing, and the air did in fact get much clearer and cleaner over the course of the Olympics.
LI: That's just about the visible pollution.
JAY: Right, visible pollution. And I guess one's to assume once the Olympics are over business goes back to usual. Given the strength of the Chinese state, one would think they have the power to intervene on the climate change issues, for example restraining coal and pushing clean-coal technology and other sorts of things; but if anything, it seems more of a free-for-all in China than even in the West.
LI: In the previous segments, we talked about China's rising inequality, rising sort of conflicts. So China has been depending upon this economic growth to deliver some degree of social stability to offset some of the negative effects of rising inequality. And so China probably will need at least 7 or 8 percent growth a year to accomplish some degree of social stability, to make sure there are not serious social breakdown happening. Right now China typically will have more than 10 percent growth a year. And even yet, if you will just have 7 or 8 percent growth a year, how much do you need to accomplish efficiency improvement without hurting the growth?
JAY: I mean, the Chinese argument, I guess, would be that the United States, which has been for decades the most massive consumer and producer of carbon emissions and a consumer of energy, is still doing next to nothing on the climate-change crisis. In fact, in the current election campaign you can barely hear anything more than mild lip service to dealing with climate change. So from China's point of view, I assume, if they think, "If the United States isn't doing anything, how on earth can we, still dealing with so much massive poverty?" And then the Americans use China as their excuse. So they can play a bit of a Punch and Judy show here. But in terms of China's own interests, one would think that they see the necessity for this.
LI: Well, it's not just China's interests; it's the interest of the entire humanity. I think the scientific evidence now is very clear, and it's probably already too late to avoid some major catastrophes. But the problem is that we have this global capitalist system, which in turn have this intense competition between the capitalist corporations, between the capitalist nation states. So, so long as they are still pursuing their private profit or pursue their national capitalist growth goals or objectives, it's not easy to get out of this dilemma within the existing framework of the global capitalism. As I said earlier, they have this five-year goal, and so far China has been accomplishing 2 to 3 percent reduction of the energy intensity a year, but against a background of 11 percent growth. And so that means China's energy consumption continue to grow 8 or 9 percent a year. And being an economist, I know that that means it will double every decade.
JAY: Thank you, Minqi. In the next segment of our interview, let's discuss China and the global energy crisis. Please join us for the next segment of our interview with Professor Minqi Li.

The Chinese Communist Party



Transcript

ZAA NKWETA (VOICEOVER): Beijing Olympics mark China's debut onto the international stage, illustrating the dramatic change that China has undergone since the 1980s. In a series of interviews, The Real News senior editor Paul Jay spoke to professor, former political prisoner, and political economist Minqi Li.

PAUL JAY, SENIOR EDITOR: Welcome back to the next segment of our interview with Minqi Li on the current situation in China. Minqi, what is happening inside the Chinese Communist Party? We understand there is a tremendous amount of pressure that these neoliberal reforms may have gone too far. There's some issue of the Chinese Communist Party's trying to address the inequality, particularly in the countryside. There's a fight against corruption. Every so often we read about a major Chinese official who's been arrested, occasionally even executed. What is the nature of the fight that's taking place inside the party?
MINQI LI, PROFESSOR OF POLITICAL ECONOMY: Basically, after Deng Xiaoping there has been a consensus among China's ruling elites, among the party leadership, in terms that China should move ahead in term of capitalist development, move ahead in term of neoliberal globalization, as well as in the international stage not to challenge American hegemony. That's the consensus. Within this consensus, however, under different administrations there has been different emphases. So, for example, under Jiang Zemin's, the previous administration, you had this full-speed-ahead with privatization and this full-speed-ahead with trade and financial liberalization. And so, by the early 2000s, you have these growing social conflicts, and also you have very serious environmental degradation within China, growing environmental costs. So when this new administration came to stage under Hu Jintao and Wen Jiabao, you have a changing emphasis. There have been some efforts to address the social conflicts, for example by removing the taxes on the peasants, by increasing some expenditures on rural health care and education, although by no means enough, in my opinion. And there has been some effort to alleviate the environmental costs, although the overall environmental situation in China continue to deteriorate. And despite these minor adjustments, the overall consensus has not been changed.
JAY: What is the endgame here? When they look into the future, what do the leaders of the Chinese Communist Party envision? Someday, do they say, they're getting towards a new kind of socialism? Or do they look into the future and just see this managed capitalism for another 100, 200 years?
LI: Well, that's the remarkable thing about China's move. And as Deng Xiaoping said, you know, you just try to touch the stone and then try to cross the river. And I think they still follow this policy. They try to keep the endgame ambiguous, so that it can please everyone as far as the official slogan is concerned, but in fact they are pursuing what they want to pursue.
JAY: But these guys are old Marxists. I mean, they have to know that a capitalist economy inherently has great social inequality, especially a country of that size. Do they have some real plans for dealing with this?
LI: Maybe because after 1989 they were convinced capitalism was in fact superior to socialism, that may be part of the reason. And partly so many things have changed in China. So it's no longer just about ideology; it's also about real material interests. I'm talking about the real material interests for the ruling elites themselves. For example, there are rumors that the sons and daughters of various leaders of the Chinese Communist Party now run top Chinese businesses, including some financial businesses that are closely associated with the various transnational corporations. There are rumors that the wife of China's prime minister, Wen Jiabao, is in fact the largest jewelry businesswoman in China. And there are rumors that one of the husbands of Wen Jiabao's daughters is among the richest in China. So that give you some idea about, you know, where their interests lie. Yeah.
JAY: But to what extent is there a mass movement against this neoliberalism? Is there really oppositional movement? Or are most people going along with this?
LI: Well, you have very many spontaneous mass resistance throughout the country, and some of them are officially reported, some are not. But in term of the urban workers, who still have lots of resistance movement against the privatization, and in the rural areas, you have many spontaneous protests against land privatization.
JAY: But no political organization that would actually threaten the current regime.
LI: They have not yet formed a unified political movement. That's correct. But if the Chinese social conflicts, environmental problems, economic problem continue to develop, and if China could not maintain China's current record on growth 10 or 20 years from now, then all of these accumulated problems then would be very serious by then.
JAY: Well, in the next segment of our interview, let's talk about one of the most serious problems facing China and the world, and that's the climate-change crisis. Please join us for the next segment of our interview with Minqi Li.

Chinese nationalism



Transcript

ZAA NKWETA: Beijing Olympics mark China's debut onto the international stage, illustrating the dramatic change that China has undergone since the 1980s. In a series of interviews, The Real News senior editor Paul Jay spoke to professor, former political prisoner, and political economist Minqi Li.

PAUL JAY, SENIOR EDITOR: Welcome back to the next segment of our interview with Minqi Li on the current situation in China. Welcome, Minqi. The Olympics, if they were anything, were a great source of pride for China. We haven't seen a overt kind of dark-looking sides of Chinese nationalism. It looked quite benign. The opening ceremonies were very global in outlook and seemed very inclusive, not the sort of thing that looks at a kind of virulent nationalism. But what is the state of Chinese nationalism today?
MINQI LI, PROFESSOR OF POLITICAL ECONOMY: Well, that's a very complicated issue. You have the different political tendencies, different intellectual tendencies, that may to different degrees be associated with Chinese nationalism. You may have left-wing nationalism and who are, you know, kind of critical of neoliberal globalization, critical of American imperialism. And so their nationalist sentiments are likely to be directed towards the US. And you also have the right-wing nationalism, who are in favor of neoliberal globalization, in favor of Westernization, but for some reason their sentiments tend to be directed towards targets like Japan. And sometimes you have people who are not necessarily identified with either the left or right and are also associated with nationalist sentiments and also have strong sentiments towards either the US or Japan. So, first of all, it's a complicated issue.
JAY: Well, why don't we focus on one area? To what extent is there a development of a big-power nationalism, perhaps in the armed forces, in the Chinese Communist Party itself?
LI: My own view is that, as far as China's ruling elites are concerned, concerning China's big capitalists, and I would say, you know, nationalism is not so much their own ideology. Their own ideology, if there is anything at all, is primarily neoliberal globalization, and they're very much identified with hegemony. And that's reflected by the official slogans such as China's Peaceful Rise, which is to send a message to the American elites that China's rise is not going to challenge the American hegemony. That's about China's ruling elites. And I don't think nationalist sentiments affect the ordinary workers and peasants a lot either. It really affects China's urban middle class a lot, what used to be known as the intellectuals but now play a crucial role in China's capitalist development, in term of people like the managers, technicians, university professors, other professionals, as well as college students. And most of the overseas Chinese belong to this category.
JAY: And does this nationalism express itself against the US, or more against Japan and some of these other kinds of questions that have emerged?
LI: That's, as I said earlier, varied and depending the particular person's political stand is upon the view, could it be directed towards the US, towards Japan? And Japan for some reason seems to be a common target. But depending on whether you tend to be left- or right-nationalist, you will either be against the US or in favor of the US.
JAY: In the next segment of our interview, let's discuss what is the nature of the struggle inside the Chinese Communist Party. Please join us for the next part of our interview with Minqi Li.

The New Left in China wants socialism




Transcript

ZAA NKWETA: Beijing Olympics mark China's debut onto the international stage, illustrating the dramatic change that China has undergone since the 1980s. In a series of interviews, The Real News senior editor Paul Jay spoke to professor, former political prisoner, and political economist Minqi Li about the current situation in China.

PAUL JAY, SENIOR EDITOR: Welcome back to the next segment of our interview with Minqi Li on the current situation in China. Minqi, in the last segment of our interview, you were talking about the left trend that makes a somewhat positive comparison about the Maoist period to the current period. But certainly we're being told, in terms of popular opinion polls and such, that at least in the urban centers, people's standard of living is much higher now than then. The Olympics and other indicators seems to show there's been a tremendous leap in technology in China. Most people would kind of shake their heads at such a comparison. Can you speak to that?
MINQI LI, PROFESSOR OF POLITICAL ECONOMY: In terms of the rising income for the urban sector, and certainly some among urban sector has benefited a lot from the market-oriented reform, from the capitalist development. Recently it has been reported that now China has something like 100 new billionaires. So that's very dramatic change. But on the other hand, of course, social and economic inequality has also increased a lot. And in one of the earlier segments we talked about between 1 to 5 percent of population controlled about 70 percent of China's financial wealth—that's in term of wealth. And there's another set of data suggesting that the richest 10 percent of the Chinese population earn about 50 percent, half, of China's total national income, while the poorest 10 percent only has access to about 1 percent. So despite China's dramatic economic growth, you still have about 200 million people living on a daily income less than one purchasing-power-parity dollar a day. And if you take into account other aspects of social change, if we do not measure and adjust by material consumption, you have to also take into account access to health care, access to education, general social condition, personal safety, environmental conditions, I would say you could have the bottom 10, 20, or even 30 percent of the population, their quality of life has actually deteriorated since the beginning of the market-oriented reform.
JAY: And is this left trend pushing for a kind of European social democracy, or a return to a full-on state socialism?
LI: Well, that varies. And there are some of them who are in favor of social democracy, more or less in line with the official slogan of the current Chinese administration, the Harmonious Society, and there are some others who argue that for China to further develop, China must manage to upgrade China's technology, must pursue high-tech development, and for that purpose you need a greater role of the state. And so you need to develop something like state capitalism. There are also some people who are in favor of the return to socialism. And so, in addition to intellectual development, another new development that is interesting is that in addition to the New Left intellectual trend I just talked about, you also have, outside of intellectuals, various Maoist activists, who are in favor of a kind of return to Maoist-style socialism.
JAY: I remember about ten years ago there was a small rural village that had refused to give up its Maoist economics, and it was telling the market reformers to stay out of the village. Is that a real trend that's existing?
LI: Well, I would not say that's a real trend right now in the countryside, although it's not just one; in fact, you have several thousands of village that refused to privatize at the beginning of the reform period and continue to maintain some kind of collective form of organization or community ownership. And some of them continue to be prosperous until today. But I'm talking about separate trend. I'm talking about some Maoist activists who have been active in workers movement, who have been active in workers resistance to privatization. And that's another quite challenging trend for China's current regime.
JAY: In the next segment of our interview, let's discuss another rising trend, Chinese nationalism. Please join us for the next segment of our interview with Minqi Li.


The New Left in China



Transcript

ZAA NKWETA (VOICEOVER): Beijing Olympics mark China's debut onto the international stage, illustrating the dramatic change that China has undergone since the 1980s. In a series of interviews, The Real News senior editor Paul Jay spoke to professor, former political prisoner, and political economist Minqi Li about the current situation in China.

PAUL JAY, SENIOR EDITOR: Welcome back to the next segment in our interviews with Minqi Li about the current situation in China. Welcome, Minqi.
MINQI LI, PROFESSOR OF POLITICAL ECONOMY: Thank you.
JAY: The view we get, from the West, of China, we see to some extent the figures of the leaders of the Chinese Communist Party, we know a little bit in history, something called the democracy movement, but we know very little about it in terms of what the different trends are, and we don't really hear about much else other than Chinese consumerism. But we know there's a tremendously vigorous intellectual life in China. So can you talk about the intellectual and political trends as they exist today?
LI: There has been dramatic change in term of China's intellectual life. Back through the 1980s, among most of the intellectuals who were politically conscious or politically active, among most of the university students, it was dominated by neoliberal ideas.
JAY: The ideas of open markets, independent capitalist enterprises, breaking down the sort of state-owned economy.
LI: That was also the case for, basically, virtually all of the leaders of the 1989 democratic movement. But things started to change by the mid-1990s.
JAY: Just to be clear, so you're saying most of the leadership of the Tienanmen Square democracy type of movement were mostly connected to this neoliberal economic reform movement.
LI: Yeah. I would say probably all of them. And by the mid-1990s things started to change. You started to have some intellectuals who criticized the market-oriented reform, the neoliberal ideas, and so that by the late 1990s, early 2000s, you could say that a new trend that was referred to as the New Left emerged in China. In today's Chinese context, this term New Left is used to refer to a very broad category that ranged from everyone from social democrat, nationalist, left nationalist, to Marxist. What they have in common is that they all are to different degrees critical of market-oriented reform, to a different degree critical of neoliberalism, and to a different degree have a generally positive view of the Maoist period, with different emphases.
JAY: They have a more positive view towards the Maoist period.
LI: Right. They are more positive. That's right.
JAY: So you're talking about things like there used to be more of a health care system for people than there is now and examples like that.
LI: In the Maoist period, for example, the people's life expectancy increased from 35 years old around 1950s, and towards the end of Maoist period that's increased to close to 70 years old. And so that's a very dramatic change, probably the biggest increase in terms of life expectancy compared to other countries over the same length of period. And they also have developed some re-evaluation of the Cultural Revolution. So instead of the Chinese official point of view is that the Cultural Revolution has to be totally denied, it's ten years of [inaudible] ten years of disaster, and they tend to emphasize that there have been many positive economic and social accomplishments.
JAY: For example? What are some of those positive examples? Because the picture that's painted in the West of the Cultural Revolution is a sort of tyrannical, crazed period. That's the way it's painted for us.
LI: They actually cited the Chinese official statistics, population in the reform years. And so they used those statistically to argue that, in fact, China's pace of industrialization had to be very rapid in the Cultural Revolution years. And, also, China had accomplished many technical achievements, including such as the hybridized rice. And China was not far behind the US at that time in term of computer development. And they also talk about the initial intention of Mao to start a Cultural Revolution had to do with trying to reverse the trends towards the emerging of a new, privileged bureaucratic caste, which would later lead to the development of capitalism. And they believe that has been, in fact, verified.
JAY: This trend that thinks the way you're describing, this must be quite a small, in terms of population, a small segment of opinion. Is that true?
LI: It's actually not true. Even among the intellectuals these days, and as well as among the politically conscious young students, I would say, you know, anywhere between one-quarter to one-third probably hold this kind of point of view. In terms of general population, not a small number of them have a quite favorable view about the Maoist period, especially, you know, for the workers, because of the negative social consequences of the market development.
JAY: What you're calling the New Left critique of the current period, to what extent does that exist inside the party? Or is this mostly something that's happening outside the Chinese Communist Party?
LI: Well, pretty much outside the Party. The Party itself, in terms of its view of the Cultural Revolution, its view of the Maoist period, it's actually very close to the mainstream Western view, as well as what in China now is called a liberal approach, as opposed to a New Left.
JAY: In the next segment of our interview, let's discuss a little further the comparisons between the Maoist period and the current capitalist period of China. Please join us for our next segment of our interview with Minqi Li.


Protest movement growing in China



Transcript

PAUL JAY: Welcome back to the next segment of our interview with Minqi Li. Minqi, if we talked to the leaders of the Chinese Communist Party, I expect they would make an argument that goes something like this: if you look what happened with the fall of the communist regime in the Soviet Union, the introduction of what was supposed to be something like a Western-style democracy, the introduction in that context of free market reforms, they would say you got essentially chaos and you got the establishment of a kind of mafia state. So they would say that this guided capitalism is better than that. They would also probably say that China has to go through a catharsis of getting rid of inefficient state industries, going through this kind of shock therapy of sorts, in order to get to a stage where China will someday have more of a social safety net and all of that. What's wrong, if anything, with that argument?

MINQI LI: Well, speaking of a mafia state and China's supposed to have guided capitalism. But in terms of the social safety, personal safety, actually, in recent years it has deteriorated a lot. And outside big cities, actually, there are many places now controlled by mafia. And as we just had that mass incident in Weng'An of the Guizhou province, which involved tens of thousands of people that attacked the local government, the local police department. So, you know, even with this guided capitalism, it's not that safe.
JAY: And tell us a little bit more of what happened there. These were local people attacking the government institutions for corruption?
LI: Apparently, although we still don't know the details, because there's no authoritative source on information. And I'm just using this as an example in saying that, you know, the guided capitalism is not that guided. So we have this economic development first and then social welfare later. And the Chinese Communist Party leadership, right now they have actually lost a lot of money in the Chinese treasury. And this year, China is expecting to have a fiscal surplus in the amount of one trillion Chinese yuan, or, in other words, about US$150 billion or US$250 billion. So that amount of huge surplus. And so I don't quite understand, honestly, and why that is not used for social purposes. And so that may speak something about addressing some of the social problems.
JAY: We did an interview recently with Naomi Klein. And she cited the fact that $12 billion had been spent just on Olympic security. How concerned are the Chinese authorities with unrest and oppositional movement, either amongst workers or the rural population?
LI: Apparently, they are very concerned. But, you know, it's not just a question of central government. The Chinese civilization has developed upon where the provincial government, local governments have lots of connections with either the Chinese businesses or the transnational corporations. The authority of the central government is not always that effective. And in many cases, the local governments may want to defend the local businesses at the expense of the interests of local population, and the central government cannot do a lot about it.
JAY: In terms of the expansion of the Chinese economy, we saw a poll recently, Pew, the American polling and research company, foundation, did a poll that said that 86 percent of Chinese are happy with the direction the country's going in. Now, I don't know how reliable the poll is, but we do seem to get the sense that most Chinese are happy with marching into this consumer society.
LI: About middle-class consumers, you are going to get that kind of survey results. In the previous part, we talked about the so-called middle class accounting for no more than 15 percent of the Chinese population. And if you do a survey among the rest of the 85 percent of the population, if you do a survey among the traditional workers lost their jobs from state sectors do a survey among those workers who work in the sweatshop conditions, or you do a survey among the peasants who have lost their health care, then I guess you'll get different results.
JAY: And to what extent are workers and rural people organized to resist what they see as an unfair situation?
LI: Apparently the resistance has been growing in recent years, and even by the official statistics, what they call "the mass incidents" has increased from something like 30,000 a year to now maybe 50,000, 60,000 a year, and that you still have many protests from the traditional-sector workers relating to issues about privatization, corruption that happened in the process of privatization. And now you even start to have some protests, strikes, from the new workers that working in the capital sectors from the migrant workers.
JAY: And are these protests allowed, or are they cracked down on? I mean, is it illegal to organize these protests, or are they more or less alive?
LI: Well, in China, you know, whether something is legal or illegal, allowed or not allowed, is always something ambiguous. And so it's not really a question about whether it's legal or illegal; it's a question about whether, you know, given a situation, and if the workers could get effectively organized, if they could put some pressure on the local government and given the situation, it's not convenient for the local government to simply crack down, then that protest will happen. Otherwise it will be difficult.
PAUL JAY: In the next segment of our interview, let's talk about the growing social disparity in China. How do the rich live? How do ordinary people live? And is this leading to greater social disparity, or, eventually, social equality? Please join us for the next segment of our interview with Minqi Li.

China's top 1% control 70% of wealth



Transcript

PAUL JAY: Welcome back to the second part of our interview with Minqi Li. Minqi, talk a bit about the struggles taking place in China. We're told that these Olympic games, or the ceremonies, were the expression of harmony. The Chinese Communist Party is calling for a harmonious society. But these were the same slogans used by Chinese feudalism, where people are supposed to accept their lot in life. So talk to us about what exactly is happening now in China.

MINQI LI: Well, that's the interesting thing. You know, in the Olympic opening ceremony, there's this celebration of the Confucian rituals. So today you can celebrate Confucianism, you can celebrate the West, but you cannot celebrate anything associated with revolution or socialism.
JAY: Just to emphasize that point, just in case there's anybody in this audience that didn't see the opening ceremonies, which I suppose is possible, there was next to nothing in the opening ceremonies that had anything to do with anything that happened either during World War II, the anti-Japanese war, and nothing, really, about what happened in the revolution in the last 50, 60 years. Go ahead.
LI: Okay. Yeah. It's, you know, about this harmonious society. And, in fact, the Chinese Communist Party leadership today is promoting this harmonious society exactly because they feel that, over the years of market-oriented reform, China has developed so many social conflicts, so many disharmonious aspects in this society. And so, basically, after about 2002, 2003, with the coming of this new administration led by Hu Jintao and Wen Jiabao, and they feel it's necessary to take some steps to address these issues.
JAY: Minqi, can you give us some examples of what you say are a rising disparity or these social tensions? Give us some facts, some statistics on them, that give us a picture of what's happening in general.
LI: Between 1 percent or 5 percent of Chinese population controlling about 70 percent of all of the financial wealth, as far as I can recall correctly. And it's also interesting that a few days earlier I read a commentary article on The Financial Times, which says why China's middle class does not like democracy. Now, it's written by an American who—basically, he is arguing that the Chinese middle class—. The middle class actually a misnomer in the Chinese context. It's actually about the most privileged 15 percent of population. And they would, in fact quite be concerned, given China's context, that if you do have democracy in China, they would be outvoted by the lower classes in China. So that's the—you know, give you some idea about the situation in China today.
JAY: Give us, for example, what's the situation in terms of health care for people, unemployment, some basic statistics about life?
LI: In terms of unemployment the official statistic is not that reliable. But, basically, throughout the 1990s, maybe 70 or 80 percent of the state industrial sector was privatized. And as a result, between 30 million and 60 million of the state-sector and the collective-sector workers lost their jobs in that period of time. And in the meantime, we have, let's say, between 100 million to 200 million of the workers, the so-called migrant workers, meaning they originally came from the rural areas, then work and get employ in the urban sector. So these migrant workers typically work in the sweat shop conditions—that's well known. And in terms of health care, China used to have relatively good, actually a pretty good, basic health care system by third-world standards, and that has completely changed. And so China by now has arguably the most privatized health care system in the world, in terms of most of the workers, peasant, do not have access, especially in the rural areas, do not have access to health insurance, so they have to pay out of their pocket when they see a doctor.
JAY: In the next segment of our interview, let's talk about the idea that this is part of growing pains, that this is a catharsis China has to go through, and that, first, these cities become more affluent, and then the countryside will follow. That's the theory. In the next segment of our interview, let's find out whether Minqi thinks this is true. Please join us for the next segment of our interview with Minqi Li.


Winners and losers in the new China




Transcript

ZAA NKWETA (VOICEOVER): Forty-three billion dollars is the officical amount that China will spend on the Beijing Olympic Games. Some have called it China's global coming out party. Others, one of History's most expensive PR campaigns. But, according to former political prisoner Prof. Minqi Li , all the dazzle of the olympic games does not cover the growing social inequality in China. Senior Editor Paul JAy spoke with Prof. Minqi Li.

PAUL JAY, SENIOR EDITOR: Welcome, Minqi.
PROF. MINQI LI, UNIVERSITY OF UTAH: Thank you.
JAY: Minqi, you were involved yourself in the protests in Tienanmen Square, and after that you went to prison for some time. Could you talk a little bit about those experiences? What did those protests represent? And why did you go to jail?
LI: Well, let's see. First answer, the short question. And, you see, 1990—not '89—1990, and in, I think, on June 3, about one year occasion of the 1989 thing, and I was giving a speech in a student assembly within the Beijing University campus. And I was arrested and later sentenced two year imprisonment.
JAY: What did you say in that speech that the authorities didn't like?
LI: Well, basically, criticizing the government, advocating a workers' democracy. And so that was seen as an anti-government speech.
JAY: What did you mean when you said they were attacking workers' democracy?
LI: Well, it was at a very spontaneous student assembly. And I only had a chance to speak for three or four minutes. So, really, just a few short sentences. And I was, like, 21 years old.
JAY: So you were jailed for four sentences.
LI: Right. Right. Yeah.
JAY: What were those sentences?
LI: Well, as far as I can recall, I said - argued for a workers' democracy, workers' control of the state-owned enterprises, democratization of the education, politics, as far as I can recall. Yeah.
JAY: Now, if you made the same kind of speech today, would you still fear for arrest? Or have things changed?
LI: Well, depending on the nature, because at the time, you know, the spontaneous student assembly itself was obviously a protest related to the 1989 thing.
JAY: By 1989 you mean the big protest in Tienanmen Square.
LI: Right, right. Back to 1989, we are talking about not just one protest. It's a series of protest movements that lasted about two month.
JAY: So my question is: that was a very politically charged time. The authorities felt besieged. Now people say things have relaxed, things have changed, to some extent. How much have they changed? In today's China, could you still be arrested for making a three- or four-minute speech?
LI: Well, depending on the content of the speech. You know, if I call for the overthrow of the Chinese government, and then, obviously, I would get arrested. And otherwise, you know, it depends on, you know, how you are going to deliver your speech. And so many things have changed a lot since then, but I would not say, in general, things have changed for better for the majority of the Chinese population. But things might have changed for better for some of the, let's say, relatively privileged section of the Chinese population, including the intellectuals from all different political perspectives.
JAY: The opening Olympic ceremonies were stunning. China's saying this system works. If you just look at the celebrations in terms of the message they wanted to send with these celebrations, they have been extremely successful. This is modern rising China, a sophisticated, benign, threat to no one. And, the most important, perhaps, is the future vision of bringing the best of consumerism to millions and millions of Chinese peoploe. So, this is the vision they painted forus. How real is that?
LI: Obviously there seems to be a consensus in the media—this is a spectacular success—about this opening ceremony. And I checked the the Chinese Web sites within China. Most of them seem to be enthusiastic about this, but there are also a few dissenting voices. And, for example, someone questioned about the celebration of Confucianism, the celebration of the Confucian ritual, and they pointed out that this Confucianism thing is a symbol of obedience, subservience, oppression, instead of peace and harmony. And it is quite ironic that at the moment, when this Olympics thing is celebrating, supposedly, peace and harmony, a war is breaking out in Georgia. And there are also others who point out that there are many among the Chinese, for example, that they work as peasants and who have lost their jobs, or even some middle class members who are struggling, who pay the mortgage, and not necessarily so enthusiastic about this Olympic thing. And also some people pointed out that those migrant workers who have to build those wonderful architecture for this Olympic will not be among the privileged audience.
JAY: Well, Minqi, in the next segment of our interview, let's discuss just who are the winners, who are the losers of this new Chinese expansion? And just what does this harmonious society really mean? Please join us for the next segment of our interview with Minqi Li.

China and the global crisis




Transcript

PAUL JAY: On Thursday, many leaders of the world—that is, 20 of them—gathered in Pittsburgh for the meetings of the G-20 to discuss the global economic meltdown and what they might be able to do about it. Of course, protesters were in the streets demanding a more democratic global economy. Now joining me to unravel the G-20 and some of the mysteries of the global economy is Minqi Li. He's an assistant professor at the University of Utah in Salt Lake City with a specific expertise in China and the Chinese economy. Thanks for joining us, Minqi.

MINQI LI: Thank you.
JAY: So, first of all, what's your take on what the G-20 set out to do, which was to create some kind of new global regulatory environment that is supposed to put off or stop another meltdown as we have just experienced? Do you think they're going to succeed in any way? And is that actually really the problem anyway?
LI: Well, my understanding is that they have got a very busy agenda at this point. They are going to talk about the regulation, new financial regulations, the correction of global imbalances, what's going to happen to the global economy in the future, climate change. But it's not clear at this point if they are going to achieve anything that's particularly meaningful.
JAY: What would be meaningful? If you could say, "This is what they should come out of the meeting with," what would you have liked to have seen?
LI: Well, the basic problem is that we know that right now the global economy is still experiencing the deepest economic crisis that we have had since the end of World War II. And although right now supposedly the global economy is on the path of recovery, but none of the structural issues have been resolved. And I'm not sure the leaders of the world's leading governments can really achieve a new structural change that can address these structural problems.
JAY: Well, when we talked about a year ago, we talked about the potential of this great global meltdown. This was really before the meltdown melted. And we talked about the fact that China was going to be kind of stuck holding billions of US dollars at a time when the US economy would be tanking. So now we've experienced this. China is holding billions of US dollars. And so what is the expectation, your expectation, in terms of where the recession goes? Are we really bottomed out and are we on the way out? Or are we, as some people say, sort of a bump before another crash? And what does all this mean for China?
LI: Well, technically, right now the recovery has started, but none of the structural problems has been resolved. First of all, before the crisis, a major problem had to do with the global imbalances, which you just talk about and which had to do with China's trade surpluses, the US trade deficits. But now, although technically recovery has started, but because of the collapse of the US financial structure and because of the debt that has been accumulated before the crisis, and I expect that the US private consumption will remain depressed in the coming years. And since the US private consumption accounts for about 70 percent of US GDP, so that is going to drag on the US economy. And so, for the moment, this is to some extent compensated by the massive increase of US government deficit, which now stands at about 13 percent of GDP. But this cannot continue forever. So that's one structural problem. And on the Chinese part, before the crisis, China has relied upon export and investment to lead China's economic growth. Now China could no longer rely upon exports. Instead, China has attempted to buy time with massive investment in infrastructure. But that may not be sustained, because in the future this may leave China with massive excess production capacity. So overall the world is still struggling with these basic imbalances.
JAY: Now, at the United Nations, Barack Obama said that the way out of the economic crisis is to create long-term sustainable demand. But then he didn't talk at all about how that's going to be achieved, other than regulating the finance sector. But wages remain depressed in the United States. Unemployment continues to go up. Real demand in the US, far from going up, continues to go down. So in terms of what the G-20 is grappling with, again, we hear very little conversation there about wages and real purchasing power. And, again, what does this mean for China? If the American consumer can't buy, then who is China going to sell to? And what is happening in China? Because we hear China's economy is still growing. If it's just based on government stimulus, if that's all the growth really is, then, as you said, that can't last for very long. So where is all this headed?
LI: Well, I think you have put it very well. The last time I checked, China's household consumption as a share of GDP is as low as 35 percent, compared with 70 percent in the US. And China's household consumption is so low relative to GDP exactly because that income distribution in China is very unequal and because China's model of growth is based on exportation of cheap labor. And so if this problem is not corrected, it's difficult to say how we can build onto a sustainable path of growth. And, on the other hand, at the moment it's not clear what political force exists in China that will leave China in the direction towards more equal distribution.
JAY: The G-20 talks a lot about regulating the finance sector. I think most people have agreed they're not going to come out with any serious agreements. There's a big debate about bankers compensation, which, again, they probably won't reach many conclusions. But this may be my own naivete. I don't understand how there's any way out of the global crisis unless the conversation begins on how to raise global wages. As long as—we've been covering a strike in Sudbury for example, Sudbury, Ontario, with nickel miners that are in competition with nickel miners in Brazil, nickel miners in Indonesia, all owned by the same global, major firm, Vale Inco. And the same thing when you talk to Detroit: auto workers are competing now with auto workers in Brazil and other countries with much lower wages. So this ability to play workers off, country against country, and keep wages low, if something isn't done about that, there's never really going to be a return to serious—what Obama called sustainable demand. Am I missing something here?
LI: I think what you said is very correct. The problem is that under a capitalist system what is good for the workers is not what's good for the capitalists. If workers get higher wage, capitalists will have lower profits. And for that reason, the capitalists in different countries will resist any pressure to increase the wages. And on top of that, I want to add, in addition to the structural imbalances, on top of that, in response to the credit crisis, all the major governments have responded with massive increase in government deficits, and so that, according to IMF, government debt has increased from about 80 percent of GDP before the crisis to now about 110 percent of GDP. That's for the advanced capitalist countries. So that may lead to a structural fiscal crisis in the future. And in addition there's also the question about the depletion of natural resources, especially oil. I think it's likely that the world oil production has already reached a peak in 2008. And if that indeed is the case, in the future we will have to deal with the potential decline of world oil production. And if China's and India's demand for oil continue to grow, we might again see this surge of global oil price a few years. So I would not be surprised if sometime in the next five years we will again see a major world economic crisis.
JAY: And just finally, how worried is China about all these billions of US dollars that it holds? There's a lot—you know, some people are speculating that the US dollar is going to eventually hit an inflation wall and be debased. Other people are saying deflation is so serious right now, inflation's not really an issue. Where do you stand on this? And how worried is China about all this?
LI: It's hard to say. You know, for the moment, so long as the global demand remain depressed, it's true that deflation is the immediate concern. But after a few years, if we have got this declining global oil production, and then oil prices may again surge, and on top of that you have the fiscal crisis in the advanced capitalist countries, I would not rule out it would develop into a runaway inflation. It's possible.
JAY: Thanks very much for joining us, Minqi.

LI: Thank you, Paul.
JAY: And thank you for joining us on The Real News Network. And don't forget the donate button, because we can't keep doing this unless you click on the "donate". Thanks again.

China and climate change



Transcript

PAUL JAY, SENIOR EDITOR, TRNN: Welcome back to The Real News Network. We're talking with Minqi Li. He's an assistant professor of political economy at the University of Utah. And today we're talking about climate change and China. Thanks for joining us, Minqi.

MINQI LI, ASST. PROF. POLITICAL ECONOMY, UNIVERSITY OF UTAH: Thank you, Paul.
JAY: So we had this climate change conference at the United Nations, and the first headline was: "China's getting serious about climate change". And then the next day the headline was: "China's not so serious about climate change." So where are we?
LI: Well, I guess China is not that serious. But China's paying good lip service.
JAY: First of all, does China believe there is a climate-change crisis? Do they believe what is the preponderance of scientific opinion? And if they believe it, are they doing anything about it?
LI: Well, the official stance right now is that they do believe in climate change. And on the other hand, while I'm in China, I do meet many people who are actually climate skeptics and suspect that this is one of the Western conspiracy to try to slow China's development. As far as the official policy is concerned, has promised to reviews the so-called carbon intensity GDP or emission intensity of GDP. I think we should not confuse the carbon intensity with emissions. And what we do need right now is absolute reduction of emissions on a global level by 50 percent by 2050 from 1990 levels. And China now already accounts for over 20 percent of global emissions. So that basically means China should share roughly the same kind of obligation as the world as a whole. However, instead, right now China is talking about its economy will continue to grow. It will only reduce the ratio of emissions relative to economy. That in fact will mean China's emissions will continue to grow by 4 percent, 5 percent a year in the future. And so that will basically mean, if China's emission continue to grow, there's no hope for the world as a whole to achieve the goal of stabilizing the global temperature below 2 percent warming relative to pre-industrial time.
JAY: Now, China must point to the fact that the United States is doing very, very little itself. Congress is clearly on the path to coal as the main form of electrical energy in what they're—generating electrical energy, which they're saying will be the transition stage to alternative energy. But they're going to have more expansion of the role of coal rather than natural gas, and who knows how serious this investment in alternative energy's really going to wind up being, especially given the debt of the American government. So, I mean, what motivation, in terms of this competition with the United States, how much is this an issue for China that the US is more words than action?
LI: Well, this, of course, I think what people are saying about the US is very true, and the House bill on climate change by itself is inadequate, and we don't yet know what will come out of the Senate. But on the other hand, while the US needs to do much more than what it has, China also needs to share the average global obligation. But, unfortunately, under the current global capitalist system, each nationstate primarily cares about national capital accumulation. And so, despite their rhetorical talk, there's not really substantive progress they are making to actually save the humanity from climate catastrophes.
JAY: Is China really doing any less than the United States?
LI: That depends on how you measure it. What is going on right now is that both the US and China contribute about the same share for the global emissions, and so both contribute about 20 percent. So in that sense both of them share equal responsibility.
JAY: But is China doing any less to reduce their emissions than the United States is? I know there's a lot of good language coming out of the United States, but in terms of real action, is China doing less than the United States? Or are they both just saying a lot of nice words?
LI: Both of them are saying a lot of good words. And if you want some statistics, China's emissions are growing much more rapidly than the US'. And on the other hand, because China's economy is growing rapidly, China is building more renewable energy capacity than the US. So I guess that both of them can claim some credit. In the meantime, both of them continue to make the climate worse.
JAY: Thanks very much for joining us, Minqi.
LI: Thank you very much.
JAY: And thank you for joining us on The Real News Network. And if you want more climate-change reporting—in fact, we would like to hire a producer to do nothing but climate-change reporting—so if you want that, we need you to click the Donate button. Thanks very much for joining us on The Real News Network.


China, America & the economic crisis



Transcript

TRANSCRIPT

PAUL JAY: Welcome to The Real News Network. I'm Paul Jay in Washington, DC. A few days ago, President Obama was in China discussing US-Chinese relations, mostly about the current economic crisis, the size of the American debt, the exchange value of Chinese currency. And joining us now to make sense of all this is Minqi Li. Minqi is an assistant professor of political economy at the University of Utah. Thanks for joining us, Minqi.
MINQI LI: Thank you, Paul.
JAY: So talk a little bit about what are the points of contention, points of agreement between the United States and China. And what do you think President Obama and President Hu really talked about?
LI: Well, my understanding is that during the recent trip of Obama in China, they talk about the exchange rate between the US currency and the Chinese currency. And from the US point of view, China has has been undervaluing its currency; that has given the Chinese exporter an unfair advantage. And another issue they talk about has to do with to have this new climate pact, where US and China are going to collaborate on energy technologies. The third thing is, in addition to climate change and the exchange rate, they also talk about certain possible cooperation in geopolitical areas, like in Iran, Afghanistan, and in North Korea.
JAY: Okay. Well, let's start with exchange rates. Now, certainly there's a lot of American manufacturers and retailers—not the least of all would be Wal-Mart—who are very happy with low Chinese exchange rates, 'cause that means cheap Chinese labor, which has been fueling a lot of especially retail trade in the United States. So why does Obama want to do this exchange-rate change?
LI: Oh, that's—I think what you said is very true. But, on the other hand, of course, many US manufacturers based in the US, and I guess to some extent organized labor, would like to see that the US exported goods would have become more competitive, and if Chinese currency could appreciate, and that might make Chinese goods more expensive, and so that the US would have some relative advantage.
JAY: Now, the US dollar has been going down the last few weeks. Has it been going down in relation to the yuan? And what is that relationship right now?
LI: Well, China used to peg the Chinese currency, the Chinese yuan, to the US dollar back to 2005. And since then, the Chinese currency appreciated. But at the beginning of the crisis, in the middle of 2008, the Chinese currency again pegged to the US dollar. And since then the US dollar has been depreciating against almost every other currency. So that basically means the Chinese currency has been depreciating with the US dollar together against every other currency, and so that means that will contribute to the widening of global imbalances between China and the rest of the world. But on the other hand, if the China jobs, they're pegging to the US dollar now, and if the Chinese currency could appreciate too rapidly, that could also destabilize the global financial structure. So that is a very subtle business.
JAY: And can China sustain an appreciation of their currency? How bad is unemployment in China now? And how much worse might it get if the yuan were to appreciate?
LI: Well, it's reported that during the current crisis about 40 million Chinese workers already lost job. And, of course, if there is a further appreciation of the Chinese currency, that will again hurt the Chinese export business, which is now about 15 percent down compared to a year ago. But on the other hand, the point is that because of the current US crisis, and China cannot expect that the US would depend on debt-financed consumption to lead the expansion of global economy like the situation before the crisis, so sooner or later, China will have to move from export-led model of growth towards one that is led by domestic demand, especially household consumption.
JAY: Now, if I were China, I would say to the United States, "You can't sell me, you know, billions of dollars of your T-bills and bonds at one exchange rate, and then all of a sudden you want me to appreciate my currency, which means all my value of my holdings of your currency go down." So China must say: "Well, why the heck should we? Why should we lend you money, and then you reverse the whole game on us?"
LI: Well, of course, the point is that China right now is still depending on the export markets, depending on export to the US. So in that way, that gives the US a little bit of leverage. But on the other hand, the US cannot expect to hold that leverage forever, because the US will not be able to return to the vigorous growth. That was what happened in the 1990s and the early 2000 based on the debt-financed consumption. And so, one way or the other, these imbalances will have to be corrected in the coming years. The problem is that right now China is still, not willing to abandon this export-led growth model. And so that may bring about a return of the global imbalances and paving the way for the next round of global crisis.
JAY: Now, an export-led model, in other words, is "let's keep our labor cheap", because—
LI: Very true. Very true.
JAY: —if you were going to have a model based on a more vibrant domestic economy, you'd have to have more sharing of the wealth in China and raise wages in China, which isn't something that they don't seem to be doing.
LI: Right. Right.
JAY: So if they're going to keep the current status quo in China, which is—cheap labor is one of their primary export products, in reality—can the US come back as the market? Or are they going to be at an impasse here, where you have cheap labor over here, but no real consumption over there?
LI: Yeah, that's a very big question, because before the crisis, the US economy was led by household consumption, which was in turn financed by the expansion of household debt. But now the households are going to increase savings, so you cannot expect consumption to lead the US economy. And on the other hand, the US economy cannot rely on gigantic federal government deficits forever. And right now the federal government deficit is on the order of about $1.3 trillion a year and more than 10 percent of GDP. That cannot be sustained forever.
JAY: Hang on. When you say that can't be sustainable forever, there are a lot of economists that are saying that the American economy can go a lot further in terms of deficit, that there can be more stimulus, more printing of money, and that there almost is no end in sight for that because we're in such a deflationary period right now. What do you make of that thesis?
LI: That could be true in the short run, maybe in the next one, two, or three years. But if the US continued to accumulate deficits and the debt, and after several years, the debt will be at much higher level. And also, if we do have some kind of global economic recovery, there would be a decline for the demand for the US Treasury bonds, and that might force the rise of interest rate in the US and therefore make the US debt situation much less sustainable.
JAY: Well, it does not look like anything is going to change in the United States in terms of higher wages. If anything, wages are going down the worse unemployment gets.
LI: Unfortunately.
JAY: So then we will be heading, whether it's two years or three years, towards this wall where you could say you can't increase the deficit any further without vastly debasing the currency. Is this a debate going on in China? What I mean by that is: is there a point where China loses faith in the American economy? Or, on the other hand, are the two economies so enmeshed with each other, they're both in the same boat?
LI: Well, the basic problem for the Chinese economy right now is that it seems the Chinese leadership cannot quite make up their mind—and on the one hand, they are still hoping that eventually the US will come back so they could again see a rapid increase of exports to the US; and on the other hand, they to some extent realize that this cannot go on forever, and so then you need to increase domestic consumption; but they don't want to do the massive income redistribution required for that, so they are not sure how to sustain the expansion of domestic demand.
JAY: So to what extent is China debating, and when Obama meets with Chinese leaders, do they say to him, "We're not sure whether we have faith in the long-term viability of your economy"? Do they say that? Or are they kind of so—in such a similar situation? I mean, a lot of people have suggested China's kind of, to some extent, decoupling in this crisis. They've talked how GDP continues to grow in China and that maybe the Chinese economy's not so dependent on the American market anymore.
LI: Well, right now China has come out of this crisis relatively well, sustaining a growth rate of 8 to 9 percent a year. But that is largely based on the massive increase in bank loans, and which in turn goes to infrastructure investment, and that, however, could lead to excess capacity in a few years. And also some of the investment goes to the real estate sector. So there are people who concerned about possible asset bubble in the real estate sector. So these are potential risks.
JAY: So you're talking about government stimulus money. This is state or government stimulus money you're talking about.
LI: Right.
JAY: And to what extent is this growth dependent on that stimulus money? I mean, is it a case that when the stimulus money runs out, the economy starts to sputter, or not?
LI: Well, the latest statistics suggest that for the first three quarters of this year, about 95 percent of the growth is coming from fixed investment. And so if this fixed investment cannot be sustained, there will be real trouble.
JAY: I mean, can you imagine a world in the next five or ten years that simply adjusts to this situation, which is high, 10-15 percent unemployment in the United States, relatively low wages, not that much consumer debt? Because of the crisis on the finance side, people don't want to lend, give credit, and the rest of the world kind of readjusts and moves on based on the domestic market in India and China and Europe. I mean, is this a real possibility, or is it all so intertwined right now it heads towards another global crisis?
LI: Of course, one possibility is that it will just head to another crisis. But if we think about relatively optimistic scenario—and in the US, we may have the consumers to increase saving. But on the other hand, because the government deficit cannot be sustained forever, the US and maybe Europe will suffer from stagnation, but not collapse, in the coming years. And on the other hand, if China will be able to sustain its growth through massive increase in investment, and so long as Chinese economy is growing rapidly, they will increase imports of machines and equipment from Japan, Europe; it will increase imports of raw materials, energy, from Latin America, from Middle East. So that may contribute to a relatively rapid growth in the global economy for some years. But the question is when China's investment cannot be sustained because of excess capacity, and also if China's rapid growth of energy demand cannot be met by the constrained world energy supply (especially there's a concern about the world oil production may have peaked), and then that may lead to the next crisis.
JAY: But you could have, for a time, a situation where American capital decides, well, we can make so much money in Asia, we don't have to worry so much about domestic purchasing power in the United States. I saw yesterday on television a documentary the other day about Wal-Mart, and it turns out Wal-Mart, within—I think it's three or four years—expects to have as many stores in China as in the United States, not just producing in China, but selling into the Chinese market. They may actually surpass the number of stores in China than in the United States. I mean, you could have a situation where the American capital says, listen, we'll make money where the expansion is, and—excuse my language—screw the American workers.
LI: Well, then, in that case, obviously, you will have a divergence of interest between the US corporations and the great majority of the US population, and that, unfortunately, will make a progressive change in the US even less likely.
JAY: Well, you could have a situation where American workers have to decide they'd better do something to defend themselves or they're going to be in real trouble here.
LI: Right. Yeah.
JAY: Thanks very much for joining us, Minqi.
LI: Thank you very much.
JAY: And thank you for joining us on The Real News Network.
END OF TRANSCRIPT