China is allegedly building structures on artificial islands in the South China Sea that could potentially hold long-range surface-to-air missiles.  If this turns out to be true, this move is another step forward by China to lay claim to the South China Sea while simultaneously serving as another poke at the U.S. to see what they’re really committed to doing to ensure the South China Sea remains open and free.  However, China’s most recent alleged provocation is symptomatic of a bigger problem when it comes to the U.S.’ engagement with Asia.  During the Obama years, while he and others in his administration made much about a “pivot” to Asia or a re-balancing toward the region, the words were often much more substantive than the actions undertaken by his government.  Now we have a president who can barely articulate a single policy, let alone an entire grand strategy.

Trump’s idea of policies are not-so-pithy one-liners like branding China a currency manipulator or claiming that Japan does not pay enough for U.S. security.  His actions are meant more to rile up other parties and hew much more closely to the reality show theatrics with which he’s more comfortable , whether it was fielding a call from Taiwan’s president in the aftermath of the election and holding out as long as possible before re-affirming the “One China” policy that undergirded U.S.-China relations since early 1970s. North Korea tests a long-range missile and Trump decides that during dinner at his private club is the best time and place to plot the U.S.’ reaction to such a provocation.  Even the theatrics are of a low-budget variety.

The only action Trump seems to have followed through on was his executive order pulling the U.S. out of the TPP and effectively ceding to China the power to write the rules of commerce for Asia and most likely the rest of the world.  Abdicating a voice in such a crucial policy sphere that is vital to continued American prosperity is going to have the opposite effect of making America great.  Rather than keeping its seat at the head of the table and crafting the evolving rules of global trade, America is going to have to play by the rules set by others that may not be as advantageous to our long-term prosperity as those rules we were able to lay out in the TPP.  Putting aside the merits of the TPP for a second, what was most important about that agreement was continued American leadership in coming up with Version 2.0 of the rules and frameworks that have taken the world to this point from the aftermath of WWII.  If Trump has his way, it won’t only be the TPP, but NATO, our vital alliances with Japan, South Korea, and Australia, and even the EU which has more often than not been a trusted and intellectually equal partner spurring us to do better on many matters of global importance.

We are at an inflection point in Asia and the rest of the world where a grand strategies with  far-reaching and enlightened thinking is needed.  Unfortunately, very little coming out of Washington these days seems all that grand except perhaps that atrium in Trump’s DC hotel.

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Much has made of Trump’s shake-up of foreign policy norms even before he’s officially taken office, whether it’s connecting with Taiwan’s President Tsai Ing-wen, having his daughter sit in on meetings with both Japanese PM Abe and Turkish President Edrogran, or launching misspelled Twitter rants in China’s direction.  I’ll be the first to admit that after Trump’s call with Tsai, I was somewhat elated that someone had recognized how impressive Taiwan’s efforts had been to create an open and democratic society in a little over 20 years.  For someone who has been an amateur Sinologist his entire life, I was also startled that I liked that the two had spoken.  I was startled because I, like many in the foreign policy establishment, had taken the official “One China” policy as a given for maintaining regional stability and had never contemplated challenging it in any sort of way for fear of what the consequences may be. Yet, with his phone call, Trump called China’s bluff and the world did not end.  However, I cannot give him credit for being any sort of visionary possessing a coherent world view or adherent to any discernible tenets of foreign policy.  I think it was purely accidental that this phone call started a dialogue about what the “One China” policy means and to what ends both sides will go to maintain a fiction that has served everyone well for nearly 30 years.  One only has to look at Trump’s subsequent actions to see that this seeming stroke of brilliance was not pre-meditated on his part (his staffers may be a different story) and does not reflect a President-elect with a strategy or plan for advancing U.S. interests abroad.  His follow-up tweets and interview on Fox News that he could use Taiwan as a bargaining chip to extract concessions on trade from China demonstrate that he understands nothing about U.S. – China relations and Taiwan’s place in the middle of that power dynamic, but merely took a phone call from someone congratulating him on and inflating his ego for winning the election.

Where does that leave U.S. – China relations when Trump assumes office next month?  If we try to extrapolate the type of foreign policy he and his team are going to conduct once in office, it might be instructive to examine his reaction to China’s seizure of an underwater drone off the coast of the Philippines.  Upon hearing about the incident, he blasted out a tweet calling the act “unpresidented” and once it had been settled that China would return the drone, he then tweeted to “[l]et them keep it!”  While there is seemingly not much to go on here, the worrisome takeaway from all of Trump’s commentary on U.S. – China relations, commentary being a generous word to use to describe his tweeting, is that the man does not have a clue as to what he’s doing and the people surrounding him are encouraging this no-nothing behavior.  At worst, Trump and his team believe unpredictably poking China like a third-grader to provoke a reaction is the best approach to calibrating U.S. – China relations and advancing his “America First” agenda.  This approach completely ignores the nuances of U.S. – China relations and the search for common ground on issues like climate change and North Korea that the Obama administration worked so hard to achieve.  While U.S. – China relations are anything but easy or predictable, it is one of the most important bilateral relationships in the global order and will only continue to become more so as China continues to rise and the U.S. seeks to maintain its influence in the Asia-Pacific.

I have argued here before and perhaps now believe it even more, but the U.S. needs a new grand strategy when it comes to the Asia-Pacific region.  Recent history shows us to be reactionary throughout the region, whether it’s stationing more U.S. troops in Darwin or carrying out more multilateral military exercises to respond to a rising China or slapping even more punishing sanctions on North Korea after their latest missile test.  Rather than reacting, we need to be proactive to create a regional architecture that promotes peace and prosperity in the region for everyone, including China.  Even the TPP, which would have gone a long way towards laying one part of the foundation for such an architecture, was flawed in that it kept China outside.  The U.S. decision to remain outside of the AIIB was another such decision that was more a reaction to China having created the institution rather than actually thinking about what the U.S. could do to shape it as a founding member.  Unfortunately, we now have a President and his attendant team taking power that barely knows the meaning of the word strategy when it comes to foreign affairs, let alone something that requires more forethought and nuance like a grand strategy for the Asia-Pacific region.

I’m giving some solidarity with my snowbound friends and family on the East Coast of the US right now as they get hit with their first major snowstorm of the year.  While there isn’t any snow here in Shenzhen, it’s damn cold.  We’re experiencing a polar vortex of our own with temperatures hitting record lows.  It’s 45 degrees in Shenzhen and it feels even colder because most homes don’t have heat and even with heat, they are built without any real insulation since it’s normally warm and humid.  Add the humidity factor into it and it feels even colder because it’s that raw, wet cold that gets into your bones.  I am sitting here at . . . where else?  . . . Starbucks in the mall in my winter parka and wool beanie because someone had the bright idea to leave the front doors of the mall open even though it’s freezing outside.

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Freezing at the mall

Trying my best to type without gloves, but it’s not easy.

I’ve been meaning to write for the past couple of days, but the combination of work and Internet problems from being behind the Great Firewall have made it hard to sit down and do so.

You’ve probably noticed that the stock markets have had a wild week with most of the turbulence being traced back to the much-discussed slowdown of the Chinese economy.  The government reported it’s growth for 2015 of 6.9%, which while the envy of most other countries, was the slowest rate in 25 years.  It’s hard though to tie the gyrations of the market to just the slowdown of the Chinese economy.  That would completely leave out human nature and the irrational impulses of investors or perhaps the all the rational follow-the-herd mentality that often pervades markets.  A sell-off in one market is usually going to lead to a sell-off around the world, especially in this day and age when everything is so interconnected.  But I did not set out to turn this post into a lesson about markets, investing, or even the global macroeconomy.

China never ceases to amaze me in how screwed up and fascinating a place it can be, usually all in the same moment.  The five booksellers from Hong Kong are still missing, though two have kind of turned up.  One who was allegedly abducted from Thailand (and is a Swedish national) went on national television to confess to killing a young girl in a drunk driving incident in 2003 and the other, Lee Bo, who is a British national, is somewhere in Guangdong province, but no one knows exactly where or why.  It’s galling that nearly a month after Lee Bo went missing, we still do not know where he is. Worryingly, the Hong Kong government has asked the central government and Guangdong officials and all they could get out of them nearly three weeks after he went missing is that he is indeed on the mainland.  Chinese officials do not think that the HK government merits a detailed response and so the HK government and its people still remain in the dark about whether mainland law enforcement officials actually came down and abducted Lee Bo, as well as the other four missing men who are connected to this particular publishing house.  What’s more troubling is that the mainland allegedly took these men away because they did not like the content of the books these men were publishing, which tended to be gossipy take-downs of top mainland officials.  All of this adds up to some serious violations of “one country, two systems”, which was the policy that has undergirded the handover of HK from the British to the Chinese.  China has become more and more brazen about violating this policy and the Hong Kong people are truly powerless to stop it.  In the grander scheme of things, it unfortunately dovetails with a number of other moves on the mainland that reflect a central government still attempting to snuff out any sort of dissent.  From President Xi telling government officials that some questions should not be asked to the continued takedown of government officials on charges of corruption to the conducting off war exercises off the coast of Taiwan the other day, nearly a week after the election of Tsai Ing-wen, reflecting a Taiwanese electorate that increasingly sees itself as Taiwanese and not Chinese.  In one bizarre move last week, nearly 45,000 people, mostly from the mainland, criticized Tsai for her pro-independence stance.  It’s known the comments came from the mainland because they were using simplified Chinese characters versus Taiwan, which uses the traditional ones.  It’s bizarre because Facebook is still blocked on the mainland unless you have a VPN, so many suspect it was the work of government-enlisted individuals who were able to evade the Great Firewall to post on her page.  While some Taiwanese supporters pointed out this irony in reply comments, Tsai probably had the best post of all replying, “”The greatness of this country lies in how every single person can exercise their right to be himself or herself.” (“這個國家偉大的地方就在於每一個人都有做自己的權利”)

Tsai FacebookPretty brilliant reply to what was probably a coordinated mainland response seeking to rattle her so soon after being elected.

And that my friends is a bit of what went down this week that leaves me sitting here shaking my head wondering what’s next, but still insanely intrigued and fascinated by the things that happen in this country.  Stay tuned for more.

I’m sitting here in a restaurant/cafe/space called Oolaa on the border of Soho and Sheung Wan.  It’s the kind of place that did not exist in Hong Kong ten years ago or even five years ago.  They have good coffee, a brunch menu reminiscent of New York bunch, and free wifi.  Today is a Special Administrative Region holiday celebrating the 15th anniversary of the handover of Hong Kong from the U.K. to China.  Hu Jintao, the Chinese president was in town to swear in the new chief executive, Leung Chun-ying, who is replaced every five years.  Keeping in line with the theme of succession issues on the mainland that have dogged this year’s transition, the swearing in and concurrent anniversary in Hong Kong were anything but smooth.  There were protests in the streets, hecklers at the swearing in ceremony, and a general dissatisfaction with Beijing.  I’ve often remarked over the years that the city felt different since the handover in 1997 with more and more Chinese influences creeping in, but being here this time things feel yet again different.  It’s as if a pendulum is swinging in another direction, a direction Beijing is not happy with.  I was first in Hong Kong in the summer of 1998, a year after the British handed the city back to the Chinese.  Right up to the handover there was fear for Hong Kong’s freedoms and whether Beijing would come down with a heavy hand on the relative laissez-faire attitude that prevails in this city.  People made plans to flee if that happened by getting Canadian, Australian, and British passports and moving assets offshore.  After the handover and when Hong Kongers realized that the sky was not falling, aided by the massive inflow of money from the mainland, people began to relax about being under China’s control.  However, in recent years as the gap between haves and have-nots has widened and China plays fast and loose with its promise to let Hong Kongers elect their own chief executive, people have begun to sour again on Beijing’s rule.  The protests and botched chief executive selection process this year have only exacerbated these feelings.  I’m not sure what’s going to happen, but there has been a steady awakening of Hong Kongers political consciousness over the years and it’s only going to increase with time.  Will Hong Kong demand independence and try to go the Singapore route?  Doubtful, but the city will continue to be a thorn in Beijing’s side.  Complicating matters is the fact that Beijing uses the One Country, Two Systems model in effect here as possible enticement for Taiwan to return to the motherland’s fold.  Thus, Beijing is in a bind because to show that it is serious about maintaining Hong Kong’s autonomy until at least 2047, it has to carefully balance this commitment with the desires of the Hong Kong people, which may make for some interesting compromises in the future.

On a different note, last night I had dinner with an old colleague and friend from my investment banking days.  He and his wife moved here from Europe and we were talking about the increasing number of Europeans that I have noticed in my travels throughout the region, whether it’s here, Beijing, or Shanghai.  He said that the most pronounced increase has been in the number of French people abroad and mentioned that there’s something like 100 new French people arriving in Hong Kong each month.  The number sounds small, but that’s over 1000 people a year.  It’s such a phenomenon that even the New York Times picked up on it.  I knew this was a trend, but to have some confirm it based on his own experience was extremely interesting.

For now, I am just glad to be here and enjoying the sunshine, but not the humidity.  I guess it will prime for my eventual return to New York.

Here are some pictures from Shek O that I took yesterday just to remind everyone that Hong Kong is more than skyscrapers and malls.

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Today is the 20th anniversary of the Tiananmen Square massacre that took place on June 4, 1989 and you would have no clue that such an event ever took place from spending a day here on campus in GZ.  There are no commemorative events that I have heard of, the closest one being the annual march in Victoria Park in Hong Kong.  Even my students, who are normally quite cheeky with me, did not make any mention of the day.  Usually they like to goad me with comments about Taiwan and Tibet, but they were silent in all three of my classes today.  I doubt they even know much about the event given that most of them were only one or two years old at the time it happened, but I would have expected one of them to come across something on the Internet and perhaps ask me about it to see my thoughts on the subject.

The Enormity of Tiananmen Square, April 2009

The Enormity of Tiananmen Square, April 2009

There are less than two weeks left in the semester and about three weeks before I permanently return to the States.  It’s really hard to believe that my one-year fellowship and relationship with this fascinating country is quickly drawing to a close.  I’ll still be keeping my eyes and ears open while I am here, but it also means that my posts will be tinged with some of that inevitable sentimentality that comes with the end of an amazing experience.

It seems that with the 20th anniversary of Tiananmen looming, all sorts of news outlets took it upon themselves to amp up the China coverage.  Two of the more interesting pieces are the Economist’s Banyan column from this week’s issue, “The party goes on” and Nicholas D. Kristof’s op-ed piece in today’s New York Times “Bullets Over Beijing”.

In the Economist, the main argument being made is that the Party is stronger today than it has ever been and that hopes for political reform are almost nonexistent since there is no force willing or able to take on the Party’s stranglehold on power.  Kristof’s op-ed makes a similar point and reiterates the familiar line that as long as Party delivers economic growth and all its attendant consumerism, it will remain in power.  However, he makes an interesting comparison between China today and Taiwan and South Korea in the 1980s with their sizable educated middle classes at that time, which were precursors for the democratic changes that swept across those countries.  It’s unclear if he believes that China is truly on the same path as those two nations.  Without going into the specifics of why those two countries are very different than China, suffice it to say that the Chinese government has been far more effective at sedating its citizens and giving them amazing economic growth than those two aforementioned countries.

After spending a year teaching at a university filled with thousands of bright students, I have been amazed at how much their spirits and curiosity have been dampened by an education system that leaves them uninterested in all things political, able to spout received wisdom at the drop of a hat on all sorts of issues of national importance, and scared to challenge or question things as they are.  The exceptions I have blogged about are just that – exceptions.  There is no critical mass of students with such ideas and the students with those ideas would never dare share them with other students for fear of either being ostracized, or worse being turned in for having thoughts against the Party.  

On the anniversary of this sad and tragic event, I tend to err on the side of the Economist and look on as the Chinese government consolidates its hold on power without acknowledging its own past mistakes or tragedies.

This past week, I miraculously became a mini-expert in both anti-monopoly law and Jewish culture in America.

One of my graduate students, Maggie, asked two weeks ago if I would speak at the university’s business English salon  this past Thursday evening about a topic of my choosing.  The salon is open to the public and a lot of the attendees actually live and work in GZ.  

I figured that I would use my legal background and interest in antitrust law to give a talk about the recent attempted acquisition by Coca-Cola of Huiyuan (汇源), a successful Chinese juice company.  The government rejected Coke’s bid under the country’s new anti-monopoly law and it was the first cross-border merger to be rejected under this law, which has only been in effect since August 2008.  Since the Chinese government only provided a vague explanation for the rejection, many are speculating that the decision was politically motivated because Huiyuan is a profitable private company and the government did not want it to fall into foreign hands.  Since that decision last month, Australia has made taken some negative actions against Chinese companies looking to acquire Australian companies.  The first point of my speech was the importance of implementing laws in a fair and transparent manner, whether it’s in China, the US, EU, or any other country.   The second point was that the world should be working to fight the impulse to let political or nationalistic concerns rule over sound economic policies.  I was careful not to blame any one country because most of the world is to blame in this era of rising protectionism.  

The speech was well attended with at least 50 or so people in the audience, even though my Powerpoint presentation did not work.   Initially the questions were relevant to my topic.  However, as soon as someone asked me my opinion about the Chinese currency and how China is buying all of the US government’s debt, the Q&A session turned into one of “ask Peter his opinion about anything and everything pertaining to America”.  Thus, I began fielding questions about whether it was a good time to buy stocks, the NBA, why only rich people could go to Ivy League schools, what city one guy should live in when he moves his family t to America, real estate prices, troop withdrawals from Iraq, whether Obama was printing too much money, and whether I was scared about China’s rise.  All of the questions were prefaced with, “In your opinion . . . ” and then the topic of their choosing.  I was done speaking and answering formal questions around 9pm, but ended up staying until nearly 10:30pm answering all of these random questions and becoming the mouthpiece of America.  By the end I was so tired and the questions so far removed from what I came to talk about that I just did not have an opinion about whether there was anything wrong with partially lifting the embargo on Cuba. 

However, I could not turn the tables and ask in their opinion how they felt about Tibet, Taiwan, Mao, the Cultural Revolution, Tiananmen or any other number of topics off limits when talking informally with most Chinese people.  Even if I did ask about these things, I would receive some received wisdom echoing the party line and it would be almost impossible to find any difference in opinion.  Whereas when I answered these questions, I made sure to make it clear that these were my opinions and did not represent those of all Americans.

Then Friday morning my friend Michael invited me into his culture class that he is taking as part of his master’s program to talk about Jewish culture, which was interesting because I am not at all religious, but consider myself very culturally Jewish.  So I was brought into the class to debunk some myths about Jews in America including the ones that they are all rich and all clever.  It was another interesting talk, but ended more quickly than the other one because it was limited to a class period.  Of course I gave the students the requisite lesson on grammar.  You cannot say he is a “Jewish”, but rather that he is a “Jewish person”.

I am still recovering from the week of mini-lectures and think I may need a Golden Girls mini-marathon to regain my composure.