Donald Trump isn’t just a threat to American democracy — he may also be hurting the prospects for democratic rule in the most populous nation on Earth. On Monday, China’s state-owned Global Times published an editorial that casts Trump as proof of democracy’s inherent dangers. The piece opens with a description of the clashes between protesters and Trump supporters in Chicago Friday night.
“Fist fights among voters who have different political orientations is quite common in developing countries during election seasons,” the paper observes. “Now, a similar show is shockingly staged in the US, which boasts one of the most developed and mature democratic election systems.”
In other words: Even advanced democratic systems breed violent divisions among the people. What’s more, such systems are vulnerable to takeover by an “abusively racist” and possibly fascist “clown” like Trump:
“Usually, the tempo of the evolution of US politics can be predicted, while Trump’s ascent indicates all possibilities and unpredictability. He has even been called another Benito Mussolini or Adolf Hitler by some Western media. Mussolini and Hitler came to power through elections, a heavy lesson for Western democracy.”
As the Washington Post notes, the editorial also contains an implicit critique of the American economic system, pinning Trump’s rise on the anger of “lower class whites” in the wake of the Great Recession. While the paper acknowledges that Trump is unlikely to win the general election, it argues, “Even if Trump is a false alarm … The US faces the prospect of an institutional failure, which might be triggered by a growing mass of real-life problems.”
It may be propaganda, but it still has a point: How strong can American democracy be if it’s elevating an authoritarian so brutal, he actuallypraised the Communist Party’s crackdown in Tiananmen Square?
For a longer look at the United States, as seen through the eyes of Chinese state media, check out the newly released 45-minute documentary [HERE].
China is the world’s second-largest economy, after the United States, and it’s been growing so rapidly for so long that rapid Chinese economic growth has become part of the landscape for an entire generation.
Yet in recent years, people have been warning that the model underlying that rapid growth is unsustainable. And it now looks like the summer of 2015 is the time at which the unsustainable trend finally came to an end.
Meanwhile, China has been furiously cutting interest rates in an effort to stimulate its economy. So far, however, that hasn’t seemed to have generated much growth. (It’s not yet clear if this monetary stimulus is at least generating inflation, which would have implications for the possible effectiveness of further rate cuts down the road.)
2) Chinese economic data is low-quality
One very serious issue in writing about the Chinese economy is that to understand what’s going on you often need to make inferences based on data out of Singapore, Hong Kong, Australia, or other places that enjoy strong economic links to China. The problem is that China’s authoritarian political system makes it very difficult to regard any of its economic data as reliable.
Back in 2007, Li Keqiang — now the number two figure in the Chinese government — observed that Chinese economic statistics are “man-made” and therefore unreliable. Some progress has been made since then in improving their rigor. But these statistics are not just man-made, they are the product of a closed and opaque political system with no press freedom, so it would be very difficult for abuses and problems with the data to come to light. What’s more, since the Chinese government clearly engages in censorship and information control to maintain its authority, there is no reason to believe it would be forthright about releasing bad economic news.
Even market-based Chinese data like stock prices is unreliable because the government has taken to intervening forcefully to manipulate share prices. You can infer broad trends from the more reliable foreign data, but to have a finer-grained sense of what’s going on you would really need accurate Chinese data, and it simply doesn’t exist.
3) Chinese growth was based on unsustainable levels of investment
For the past five or six years, Chinese economic growth has been powered by a mind-boggling level of investment spending — both public and private sector.
Investments are things that produce an ongoing flow of services in the future. That means everything from new highways and subway tunnels to new apartment blocks and factories. And, to be clear, investment is good! All else being equal, a nation that spends a large share of its income on investment goods is better positioned for long-term growth than a nation that spends a large share of its income on short-lived consumption goods.
But in practice, there’s only so much useful investment than can be made in any given span of time. In a very poor country, there should be tons of opportunities for investments with high payoff. But over time, you expect diminishing returns to set in and the level of investment to fall. In China, however, investment had been accelerating even as the country got richer — a trend that pretty clearly needed to reverse.
4) China needs to switch to “consumption-led” growth
It’s also been clear for some time now that to put itself on a sustainable basis, China needs to shift to a more conventional consumption-based growth model. In other words, it needs a smaller share of its population employed in things like building roads and factories and a larger share of its population employed in things like driving cabs and selling cars.
In a very short-term sense, you can always swap out a dollar of investment for an extra dollar of consumption. But because useful investments lay the groundwork for future production, this switch has implications for medium-term growth. As economist Tyler Cowen writes, “There is no simple way to switch to a ‘consumption-driven’ economy without the growth rate both falling and staying permanently lower.”
As long as there are useful investments to make, then growth fuels more growth. You build a mine to dig for coal, then you build a power plant to burn the coal, then you build a cement plant to use the electricity, then you build a factory to manufacture more mining equipment, and so forth. Once you start running out of investments, however, this accelerator process is going to collapse, and the sustainable rate of growth will slow dramatically — even if you pull off the switch to consumption.
6) Inequality and a weak welfare state hurt Chinese consumption
Rich people spend a lower share of their income than poor people, and working-age people spend a lower share of their income than retirees. Consequently, a more robust social welfare state that did more to transfer economic resources from the wealthy to the poor and the retired would help bolster consumption and put the Chinese economy on more sustainable footing.
7) A sharp growth slowdown would be historically typical
China’s economic success story over the past 30 years has been incredibly impressive, and due to the country’s vast size it’s been incredibly important. But such success is far from unprecedented. A number of other countries have gone through the basic cycle of very rapid export-led industrialization — often leading internal and external observers to believe that the rapid pace of growth can be sustained indefinitely.
In their paper “Asiaphoria Meets Regression to the Mean,” Lawrence Summers and Lant Pritchett show that this has not been the case for earlier growth miracle countries. It’s not just that growth slows down from its peak blistering pace (which essentially everyone concedes). They find that growth slows all the way down to a global average level, with no persistence whatsoever of past excellent performance.
8) The big question: Will China undergo a slowdown or a recession?
A recession, in conventional terms, is when an economy actually shrinks — something that hasn’t happened for decades in China. But in countries like the United States, the baseline level of “normal” growth is pretty low — 2 or 3 percent per year — so it only takes a relatively modest decline in the growth rate to push you into negative territory.
China is different. Like most countries around the world, it had a bad year in 2009. But in Chinese terms, “a bad year” still meant a growth rate of more than 6 percent followed by a snapback to almost 12 percent. Growth has slowed considerably since then, and by all signs things are much worse in 2015. But one crucial question is whether China is simply going to slow down a lot — to something like 2 or 3 or 4 percent — or whether there’s actually going to be a recession.
9) High levels of debt could make the slowdown worse
One potential problem is that in recent years, Chinese businesses and households have taken on a lot of debt.
Going into debt isn’t always a bad idea. In fact, given the very fast growth rate of the Chinese economy between 1995 and 2015, most Chinese companies probably would have been better off borrowing more money in the 1990s.
But if you borrow money expecting an average 7 percent annual growth rate and only get an average 2 percent annual growth rate, then you could wind up in a world of trouble. Potentially, even, in a spiral of bankruptcies and financial crisis that lead to a recession.
10) Chinese politics hamper an effective response
The combination of rapid 21st-century economic growth in China, political crises in the United States, and China’s authoritarian political system sometimes leads Western commentators to dream hazily about the virtues of Chinese authoritarianism in cutting through the nonsense and letting leaders do what needs to be done.
The reality, however, is that authoritarian political systems still have politics. There are still interest groups, and public officials are still sometimes more loyal to particular interests than to the good of the nation. This is a crucial issue in China’s rebalancing process. It’s easy for an outsider observer to say that inefficient state-owned enterprises should be shut down. It’s harder for a government official who needs to worry about lost jobs. It’s easy for an outsider to say that China needs more income redistribution. It’s harder to defeat the political power of rich Chinese people who would rather the country not do that. It’s easy to say China needs to spend less on construction projects and more on social services. But to do that you need to overcome the entrenched interests of the contractors who benefit from the projects.
China’s leaders give every indication of being broadly aware of the nature of the country’s problems and the kinds of solutions that are needed. What’s less clear is that they can actually deliver these solutions.
11) This summer has shaken faith in China’s leaders
Much of this has been in the air for years. The reason it’s coming to a head now is that the stock market bubble and subsequent collapse have shaken faith in the Chinese government’s ability to form and execute coherent policy.
When the bubble was on its way up, the government tried — and failed — to slow it. Then when it started to pop, the government tried — and, again, failed — to slow the pace of the collapse. China devalued its currency to boost its economy, but didn’t go far enough. It’s cut interest rates repeatedly, only to find that it needs to cut them again. Now the government seems to be arresting people who express negative opinions about the stock market outlet.
This summer’s events have laid bare the reality beneath the incredible successes of the past 20 years. China remains a middle-income country with shaky economic institutions and an opaque and unaccountable political system. Three decades of stellar growth starting from a rock-bottom floor have landed China at a level of per capita prosperity that’s similar to Serbia or Peru or the Dominican Republic — places that nobody regards as obviously amazing investment opportunities even though in some ways their political systems are more solid than China’s.
Loss of faith has a self-fulfilling aspect to it. To the extent that people believe China can conquer its present-day challenges, actually conquering them becomes easier. To the extent that people begin to write China off, then it will have greater difficulties in pulling off the kind of transition the country needs.
Russia and China have allegedly decrypted the top-secret cache of files stolen by whistleblower Edward Snowden, according to a report from The Sunday Times, to be published tomorrow. The info has compelled British intelligence agency MI6 to withdraw some of its agents from active operations and other Western intelligence agencies are now actively involved in rescue operations. In a July 2013 email to a former U.S. Senator, Snowden stated that, “No intelligence service—not even our own—has the capacity to compromise the secrets I continue to protect. While it has not been reported in the media, one of my specializations was to teach our people at DIA how to keep such information from being compromised even in the highest threat counter-intelligence environments (i.e. China).” Many in the intelligence agencies at the time greeted this claim with scepticism. Now, one senior British official said Snowden had “blood on his hands,” but another said there’s yet no evidence anyone was harmed. Snowden eventually fled to Russia via Hong Kong after downloading some 1.7 million documents from U.S. government computers and leaking them to journalists out of a desire to protect “privacy and basic liberties.” The revelations of mass spying outraged populations and governments around the world, at least temporarily damaged relations, and eventually led to changes in the mass surveillance policies of the NSA and British GCHQ.
Office of Personnel Management headquarters. (Mark Wilson/Getty Images)
The president of the union that represents federal workers has claimed, based on private briefings with the government, that the hackers who breached the Office of Personnel Management last week got Social Security numbers for every federal employee.
[AP / Ken Dilanian]
The letter states: “we believe that … the hackers are now in possession of personnel data for every federal employee, every federal retiree, and up to one million former federal employees … We believe that Social Security numbers were not encrypted, a cybersecurity failure that is absolutely indefensible and outrageous.”
[National Journal / Dustin Volz]
Military, intelligence, and congressional staff wouldn’t be affected, but just about everyone else would be.
[AP / Ken Dilanian]
An ABC report cites government sources saying the hack went much deeper than is publicly acknowledged and began with an initial breach more than a year ago.
[ABC News / Mike Levine]
The attacks are believed to have come from China, apparently aimed at identifying Chinese intelligence operatives in the US under surveillance by US law enforcement.
[Vox / Timothy B. lee]
A New York Times report suggested the hackers “obtained the names of Chinese relatives, friends and frequent associates of American diplomats and other government officials, information that Beijing could use for blackmail or retaliation.”
[NYT / David Sanger and Julie Hirschfeld Davis]
I’m Rupert Murdoch, billionaire tyrant
From left: Rupert Murdoch, Sarah Murdoch (Lachlan’s wife), James Murdoch, and Lachlan Murdoch. (Scott Olson/Getty Images)
Rupert Murdoch is stepping down as CEO of 21st Century Fox and handing the position over to his son James.
[Vox / Matt Yglesias]
21st Century Fox is one half of Murdoch’s empire; it separated from the other half — News Corps, which controls Murdoch’s newspapers and publishing houses — two years ago and includes Murdoch’s film/TV businesses.
[Washington Post / Paul Farhi]
Before the split, Murdoch’s business was embroiled in a major 2011 scandal when it emerged that his News of the World newspaper hacked the cell phones of story subjects.
[Bloomberg / Anousha Sakoui]
James, who controlled the Murdochs’ British newspaper businesses at the time, was found by a parliamentary report to have “showed willful ignorance of the extent of phone-hacking.”
[Washington Post / Paul Farhi]
He also, fun fact, cofounded Rawkus Records, which released several classic late-90s underground hip hop albums, like Mos Def and Talib Kweli’s Black Star and Company Flow’s Funcrusher Plus.
[NYT / Emily Steel and Ravi Somaiya]
For more background on Murdoch and the history of his media empire, Tim Lee has a great explainer.
[Vox / Timothy B. Lee]
Delete your account
Costolo with San Franciso mayor Ed Lee. (Justin Sullivan/Getty Images)
Twitter CEO Dick Costolo has resigned; cofounder Jack Dorsey will be interim CEO until a permanent replacement is found.
[The Verge / Casey Newton]
The company has been taking considerable criticism, and enduring stock price drops, for losing money ($578 million last year) and for slow user growth.
[Vox / Timothy B. Lee]
One revealing stat: Twitter has about one-fourth the users of Facebook, but about a tenth the revenue.
One of its major investors, venture capitalist Chris Sacca, has argued that Twitter’s decision to show tweets in reverse-chronological order, rather than highlighting updates it thinks users will like most (as Facebook does), has made it intimidating and too hard for most people to use.
Analyst Ben Thompson has argued that the company’s decision to block most third-party Twitter apps was its most crucial mistake and reversing course there could help it attract new users by offering them different apps with different experiences.
[Stratechery / Ben Thompson]
Matt Yglesias argues the company should just accept it’s not going to grow to be as big as Facebook and adjust accordingly (this strategy, however, would probably disappoint investors who’ve bet on the company growing a lot).
[Vox / Matt Yglesias]
One final option: it could sell to Google, which could do a lot with the vast amount of user data Twitter has at its disposal.
[Vox / Timothy B. Lee]
A Cleveland judge found probable cause for a prosecution against the cop who last November shot to death Tamir Rice, a black 12-year-old who was playing with a toy gun.
[Vox / German Lopez]
In the annals of congressional misbehavior, Mark Kirk calling Lindsey Graham a “bro with no ho” probably doesn’t top Preston Brooks beating Charles Sumner with a cane until he inflicted significant brain damage, but it’s up there.
[Politico / Nick Gass]
In New Hampshire, 53 percent of children live with their married, biological parents. In Mississippi, 32 percent do.
[NYT / David Leonhardt]
This is a great remembrance of the Virtual Boy, an unfair slight against the great game that was Mario’s Tennis aside.
[AV Club / Anthony John Agnello]
“Of course, DPR was right that Green had been flipped—by the very same man he’d just hired as an assassin.”
[Wired / Joshuah Bearman]
“It was an amazing combination of ‘We are ripping you off like no one has ever ripped anyone off as a per-unit basis,’ but ‘We are also building a time bomb that’s going to flatten us forever.'”
[Sasha Frere-Jones to AV Club / Annie Zaleski]
“Even though tuition is almost completely free here, Norwegians whose parents did not go to college are just as unlikely to go themselves as are Americans whose parents did not pursue higher education.”
[The Atlantic / Jon Marcus]
“All too often in our society we confuse financial luck with virtue. As a result, we’re always seeking fully blameless victims.”
[Slate / Helaine Olen]
An Israeli strike hits another U.N. school, an earthquake in China leaves at least 150 dead, and more.
1. Israeli strike kills 10 near U.N. school
An Israeli air strike on Sunday killed at least ten and wounded dozens more near a United Nations-run school in Gaza. A spokesperson for the U.N. said it appeared as though the strike hit outside the gate to the school, which has been converted into a shelter for some 3,000 displaced residents. The strike was the second in a week to claim lives at a U.N. school. [The Guardian, USA Today]
2. Report: Israel spied on John Kerry during peace talks
Israeli intelligence listened in on Secretary of State John Kerry’s private phone calls during the failed peace negotiations between Israel and Palestine over the past year, according to Germany’sDer Spiegel. Israel captured the communications when Kerry spoke on unsecured lines, and then used the intel when it came to the negotiating table. The Jerusalem Post said Sunday it had confirmed the eavesdropping with “several sources in the intelligence community.” Begun last year, the peace talks collapsed in April. [Der Spiegel , The Jerusalem Post]
3. Earthquake kills at least 150 in China
A magnitude 6.3 earthquake rocked southwestern China on Sunday, killing at least 150 and injuring another 1,400, according to state-run media reports. The quake, which hit in Yunnan province, was the strongest to hit the area in 14 years. [The Los Angeles Times, NBC]
4. Toledo warns residents against drinking, bathing in water
Residents of Toledo are effectively without water after the city warned them not to drink nor shower from the tap due to a possible contamination from Lake Erie. The city, Ohio’s fourth-largest, was warned that toxins from algae in the lake could have fouled the water supply, prompting a run on bottled water. Ohio Gov. John Kasich (R) declared a state of emergency, but said it was too early to say how long the water advisory would remain in effect. [CBS, Cleveland Plain Dealer]
5. More than 100 feared dead in Nepal landslide
Nepalese officials said Sunday they were not optimistic that more survivors would be found after a deadly landslide buried villagers in the country’s Sindhupalchok district one day earlier. Rescue crews recovered eight bodies, though the government said around 155 people remained missing. “It has been over 24 hours that people would have been buried in mud,” Yadav Prasad Koirala, disaster management head, told AFP. “We have no hope of finding anyone alive.” [AFP, USA Today]
6. First Ebola-infected patient arrives in U.S.
An American physician who contracted the deadly Ebola virus while working in Africa has been flown back to the states for intensive treatment, making him the first ever infected patient to be treated in the U.S. Thirty-three-year-old Kent Brantly arrived in Atlanta late Saturday on a specially outfitted “air ambulance” and was admitted to an isolation unit at Emory University Hospital. Brantly contracted the virus while working with a charity organization in Liberia, where an Ebola outbreak has already killed hundreds. [The Washington Post, The New York Times]
7. Arizona used 15 lethal doses on executed prisoner
Arizona executioners administered 15 times the mandated dosage of an untested drug cocktail to kill death row inmate Joseph Wood, who took two hours to die in a procedure widely decried as torture. Records obtained by Wood’s attorneys revealed the prisoner was injected 15 times over a two-hour span, the last one coming four minutes before Wood was pronounced dead. Wood reportedly gasped more than 600 times before dying, prompting the state to review its execution protocol. [Associated Press, The Los Angeles Times]
8. Three-year-old killed by stray bullet in Philly
A three-year-old girl was shot and killed Saturday in Philadelphia when a stray bullet hit her in the chest as she sat on a front porch. Tynirah Borum was having her hair braided when two men began arguing, allegedly leading one of the men, 22-year-old Douglas Woods, to open fire. Woods was arrested and charged with murder, as well as multiple counts of attempted murder. [Associated Press]
9. Missing Israeli solider was killed in battle
An Israeli soldier who went missing Friday and was feared to have been captured was actually killed in battle, the Israeli military confirmed Sunday. The disappearance of Second Lt. Hadar Goldin escalated the weeks-old conflict between Israel and Palestine, with Israel initially saying Goldin was kidnapped and “dragged into a tunnel” by Hamas militants. [The New York Times, NBC]
10. Bill Murray joins cast of Jungle Book
Bill Murray has signed on for a reboot of Disney’s The Jungle Book. The legendary comedic actor will voice Baloo the Bear in the animation-enhanced live-action film, which is due out in October 2015. [Variety]
On an extended segment on HBO’s Last Week Tonight, host John Oliver tackled the subject of America’s prison system — from high incarceration rates due to “draconian” drug laws to prison rape and privatization.
Oliver began by pointing out that America has more prisoners than any other country in the world, with nearly one in every 100 adults in America incarcerated.
“That’s true. We have over 2 million behind bars right now,” Oliver explained. “We have more prisoners at the moment than China. Than China. We don’t have more anything than China other than, of course, debt to China.”
Pointing out that America’s prison population has expanded eight-fold since 1970, Oliver stated, “The only other thing that has grown at that rate, since the seventies, is varieties of Cheerios. F*ck you, Fruity Cheerios, you’re trumped up Froot Loops, and you know it!”
Noting that over 50 percent of America’s prison population is incarcerated on drug charges, Oliver said “Our drug laws are a little draconian, and a lot racist.”
“While white people and African-Americans use drugs at about the same amount, a study has shown that African-Americans have been sent to prison for drug offenses at up to ten times the rate for some utterly known reason,” Olver said, drawing laughter from the audience.
“It reminds me of a joke. Black people who commit drug offenses, they go to jail like this,” Oliver said, miming hand held together with handcuffs. “Whereas white people … don’t go to jail at all.”
Oliver pointed out that so many people are incarcerated in America that Sesame Street is forced to to explain prison to children.
“Just think about that,” Oliver asked. “We now need adorable singing puppets to explain prison to children in the same way they explain the number seven or what the moon is.”
Addressing prison rape, calling it the “most horrifying things that can potentially happen,” Oliver shared a collection of clips from popular TV shows and movies — including children’s cartoon Spongebob Squarepants — making light of rape.
Oliver continued on, discussing the privatization of prisons leading to inadequate medical care, increased prison deaths, maggots in food served by outside vendors, and for-profit publicly-traded companies that run prisons pitching investors on growth opportunities due to the lure of high recidivism rates.
The FDA reports that it has received 4,800 complaints of pets becoming ill after eating Chinese imported treats, and an additional 1,000 dogs dying. Only 24 of the reported illnesses were cats.
The FDA says the following symptoms have been observed:
Approximately 60 percent of the cases report gastrointestinal/liver disease, 30 percent kidney or urinary disease, with the remaining 10 percent of complaints including various other signs such as neurologic, dermatologic, and immunologic symptoms. About 15 percent of the kidney or urinary cases also tested positive for Fanconi syndrome, a rare kidney disease that has been associated with this investigation.
I was surprised recently to see that one brand of jerky treats, Happy Hips, is made in China. I threw that bag out and stopped buying it months ago.
I’ve found the country-of-origin labeling on other treats to be almost impossible to read.
Despite predictions all through 2013 suggesting that Japan would walk away the dominant solar PV market, Bloomberg New Energy Finance has revealed that China “outstripped even the most optimistic forecasts” to install a record 12 GW of photovoltaic projects in 2013.
In fact, a massive boom at the end of the year could even have pushed the nation’s market up to 14 GW, a phenomenal feat considering that no country has never added more than 8 GW in a year.
Bloomberg New Energy Finance (BNEF) had predicted that Japan would come out on top in 2013, ahead of China and then the US, but with a feed-in tariff for large PV projects ending on the first of 2014, the year-end rush will not be wholly understood until March.
“The 2013 figures show the astonishing scale of the Chinese market, now the sleeping dragon has awoken” said Jenny Chase, head of solar analysis at Bloomberg New Energy Finance. “PV is becoming ever cheaper and simpler to install, and China’s government has been as surprised as European governments by how quickly it can be deployed in response to incentives.”
Even China’s state news agency could not have predicted the massive boom which took place. And in July it was announced that China aimed to add 10 GW of solar power a year for the next three years — a target they seem to have hit rather easily.
Surprisingly, many market analysis companies scoffed at China’s targets for 2014. IHS and Mercom Capital both released reports earlier this year suggesting that China would struggle to reach their aim of 12 GW for 2014, but with 2013′s impressive stats, one wonders whether analysts will be revising their predictions in the next few weeks, especially in the wake of new estimations suggesting that China is aiming for 14 GW in 2014.
With the majority of solar projects located on the country’s sunny and empty western provinces, China’s state-owned power generators China Power Investment Corporation, China Three Gorges and China Huadian Corporation have become the world’s largest owners of solar assets.