I recently started reading Frank Dikköter’s book Mao’s Great Famine, The History of China’s Most Devastating Catastrophe, 1958-1962 and am about halfway through. Reading it is not a pleasant experience. Nothing about the Great Leap Forward makes for pleasant storytelling. You can feel the author’s rage on every page, even while his style remains calm and restrained. It is clear he sees the GLF not only as a man-made calamity, which it was, but one for which Mao deserves nearly all the blame. It is a crime that Dikkoter believes ranks with the Holocaust, one that Mao supported with full awareness of its consequences, and even with malice.

The other famous book on the GLF, Yang Jisheng’s Tombstone (discussed in an earlier post here) takes a more measured look at the nightmare years, and is not so quick to accuse Mao of intentionally and maliciously wreaking suffering on his people. Or so at least we are told in this superb book review by Xujun Eberlein, one of my favorite bloggers and someone I had the pleasure to meet in Chongqing a few years ago. Everyone who reads this blog will want to see this side-by-side comparison. She clearly sides with Yang Jisheng.

“Understanding the complexity of human behavior in times of catastrophe is one of the aims of the book,” Dikötter states, and he does a good job fulfilling that goal in terms of ordinary people. But when it comes to the behavior of Mao and his colleagues, he has a tendency for simplification and caricature. The Mao under his pen is simply one of history’s most sadistic tyrants; consideration is not given to the complexity of his behavior. The reader gets the impression that Mao knew about the famine all along, but either deliberately let people starve, or was indifferent to their fate. Dikötter’s indignation toward Mao is understandable, but this representation is neither factual nor insightful.

In contrast to Dikötter, Yang Jisheng, despite his sorrow and resentment over the catastrophe, does not let personal sentiment get in the way of factual reporting and serious exploration. Aptly casting Mao as “China’s last emperor,” Yang nonetheless provides a more complete portrait.

Mao’s policies were the main cause of the famine, and nothing can excuse him from that responsibility. But the catastrophe was not a deliberate act of mass murder like the Holocaust, as Dikötter suggests. Rather, it was the result of policy failures from a governance system based on the control of ideology and information. Culminating in the Great Leap Forward in 1958, the utopian policies, enthusiastically shaped and promoted by the entire leadership, were intended to bring about China’s high-speed development. They instead resulted in the collapse of the nation’s economic pillar: agriculture. The central government’s inflated production targets and export quota led to unreasonably high procurements of grain from the peasants, while local governments under political pressure responded with inflated grain production statistics. The two types of inflation fed each other to form a vicious cycle that exhausted agricultural capacity, while the backyard steelmaking that took workers away from the land further worsened the grain shortages. After the famine started, it was prolonged because bad news was blocked from feeding back to top policy makers. Mao, thus, went through a long period of delusion and denial before, in late 1960, making a partial concession: “I myself made mistakes, too; I must correct.”

So perhaps Mao’s saving grace is that when he actually did recognize the tragedy of his policies in 1961 he took steps to reverse them. Either way, epiphany or not, Mao must assume the lion’s share of the blame, especially considering how he purged anyone who dared question his revolutionary plan to modernize China. And he didn’t seem to learn from his mistakes. Only a few years later he would seek to rehabilitate himself by launching a new campaign, one that equaled the GLF in terms of insanity, cult worship and suffering.

Like the Holocaust, the GLF is a subject of endless fascination for me, making me wonder how men can surrender their critical faculties and their humanity. And no, I am not saying the GLF equals the Holocaust.I’m not say Mao has blood on his hands the way Hitler does. But both featured certain key ingredients: blind obedience and blind faith, an ideologically twisted leader who assumed cult status, and an unfathomable lack of compassion for the suffering.

After reading this remarkable review I’m keen to read Tombstone, though the fact that it’s 900 pages in two volumes might be beyond my stamina. It is set to be published later this year. Luckily, Xujun has broken the books down to at least give us a taste of both. Read the review, and tell me how two brilliant researchers/writers could come to such different conclusions.

Update: Please note that Xujun’s excellent blog has moved to this address. You can read the sad story of how she lost her domain name here. Maddening.

Please take a look through the set of photos my friend Ben took on his recent trip to Dali, one of my favorite cities in all China. What is it about Yunnan that makes life so peaceful?

This is an open thread.

It’s next to impossible to imagine what it was like on the ground at Hiroshima when the atomic bomb fell on August 6, 1945. But what if the blast had been ten times more devastating than it was? Utterly inconceivable. There is no way to visualize it. And yet the Tangshan earthquake that tore the coal-mining city into rubble on July 28, 1976 was equal in magnitude to 400 Hiroshimas. In the 23 seconds that it lasted it killed about a quarter of a million Chinese and left only about three percent of the city’s buildings standing and usable.

James Palmer, in his wonderful book Heaven Cracks, Earth Shakes, brings the calamity to life.

The 23 seconds of the earthquake were probably the most concentrated mass of destruction humanity has ever known. In Tangshan alone it did more damage than either Hiroshima or Nagasaki, more damage than the firebombing of Dresden or Hamburg or Tokyo, more damage than the explosion of Krakatoa. It took more lives in one fraction of northeast China than the 2004 tsunami did across the whole Indian ocean.

The full name of the book is Heaven Cracks, Earth Shakes: The Tangshan Earthquake and the Death of Mao’s China. The earthquake is at the epicenter of the story, but it is framed by the story of the end of Maoism and the rise of Deng. The cracking of the heavens is the fall of Mao’s China. The earth’s shaking is literal and figurative, of course. Nothing shook China like the Tangshan earthquake, or the political upheavals that would follow it only a few short months later.

No year was as pivotal for China as 1976. The Cultural Revolution was dying; the public was sick of the empty sloganeering and endless denunciations and rallies as the Chinese economy worsened. Zhou Enlai’s death in January and the huge nationwide outpouring of grief was a signal that the Chinese were thirsting for change. Millions came to mourn Zhou in huge demonstrations in Tiananmen Square three months after his death. The masses were restless. It scared the Gang of Four to death. The Chinese people were exhausted. Most of them hated the Gang and wanted a return to sanity. They no longer had any confidence in their government. On top of this, everyone knew Mao was in poor health. China seemed on the brink of a precipice. And it was.

I’ve been lucky enough to meet James Palmer on several occasions (I still need to return a book he leant me in 2004) and I can safely say he’s about the most brilliant person I’ve ever known. No exaggeration. His panoramic knowledge of history and literature has never failed to amaze me. This is the first of his books that I’ve read and its scholarliness and meticulousness do not surprise me.

What James does that I found most impressive was to crunch the history of the period, from the start of the Cultural Revolution in 1966 through the ascension to power of Deng in 1978. It is difficult to jam so much information into so little space and keep it from reading like a Wikipedia entry. James has a talent for telling a story that is brimming with facts, names and events that reads like a thriller. I read the entire book in two days, and felt I learned more about this brief period than I had from countless articles and more than a few books.

Your blood will boil as he recalls the murders and suicides, beatings and torture of the Cultural Revolution. This story is nothing new to anyone who bothers to read this blog, but Palmer manages to zero in on its very essence, giving us more than enough specifics, facts and figures to bring the period to life. He makes it seem so effortless, but this must have been painstakingly difficult to write. His thoughts about Mao and all that he wrought mirror my own. They are not good thoughts.

The earthquake itself is sandwiched in between the story of gathering political unrest in the spring of 1976 and the death of Mao in September. Palmer made several trips to the site of the catastrophe and interviewed survivors. He tells how when the earthquake struck at three in the morning people who were lucky enough to be practicing tai qi outdoors or farmers up early to head to market with their products had a far better chance of survival than those sleeping in their beds. Luckiest of all, surprisingly, were coal miners working the late shift deep under the earth. Only seventeen of the 10,000 miners at work died. The stories of horrifying deaths and inspiring heroics make the book a page-turner. So much went wrong. It took days for the PLA soldiers to arrive; they had to travel largely on foot, as the railroad lines had been ripped apart. When they did arrive, they were as exhausted and hungry as many of the survivors. The government arrogantly refused offers of foreign aid that could probably have saved thousands. Citizens whose sole crime was trying to get some food from the granaries to keep from starving were shot as looters. The soldiers, at great risk to themselves, pulled thousands from the rubble. But sheer chaos reigned for the first few days. There was no leadership. no one to turn to for counsel.

What to do about a broken limb with no doctor within a hundred miles? How to get a bull driven mad by fear back behind a locked gate? How do you move a broken bedstead out of the way to reach a trapped child when the bedstead may be the only thing holding up the mound she’s buried under from collapsing? With the well blocked, where’s the nearest source of clean water?

The unluckiest, as always, were the victims in the countryside. Tangshan was a major coal-mining center. The government had only one concern, to get the mines back in operation and to rebuild the city so business could be performed as usual. Those in the countryside simply didn’t matter. Practically none of the food and other aid that poured into the city made it to the rural villages.

With all the tales of heroism and sacrifice, Palmer notes that the story People’s Daily featured on its front page was of a cadre who, despite the shouts from his thirteen-year-old daughter to help pull her from the rubble of their home, ignored her (and his son buried alongside her) to dig out a local party chairman who lived nearby.

The article praised his political commitment, noting approvingly that he ‘felt neither remorse nor sorrow’ for the death of his children, but had sown ‘a willingness to benefit the majority at the expense of his own children’, which was an example to everyone.

As thrilling as the descriptions of the earthquake are, it was the political side of the story that most gripped me. Palmer takes us to Mao’s deathbed and lets us know just how much of a shrew Jiang Qing was (not that I ever doubted that). He paints the Gang of Four as spectacularly incompetent and out of touch with the Chinese people, and we feel delighted to read of Hua Guofeng setting the traps leading to their arrest. We learn of the challenges the doctors encountered as they tried to pickle Mao’s corpse for permanent display. The public mourns, but their sorrow never comes close to what it was for Zhou. People wanted Maoism to come to an end.

Although mention of Deng himself is relatively brief, it is clear that after Mao’s death he had come to clean up Dodge, and immediately set the stage for a whole new Chinese mindset. For all his mistakes, he was what China needed at that moment, and he took control with his characteristic competence and shrewdness.

I can’t recommend the book strongly enough. I knew next to nothing about the Tangshan earthquake and now I can picture it in living color, and I can hear the moans of trapped survivors. Even if you know China’s history of the period, James casts it in enough of a new light to make it fresh and enthralling. It is not a fun read, although James injects plenty of wry English humor where appropriate. Beautifully written, meticulously researched, full of suspense and drama, Heaven Cracks, Earth Shakes belongs on the shelf of anyone who wants to better understand China at its most critical juncture in modern history.

For a minute I thought I was reading a post on Hidden Harmonies:

President Hu Jintao has said that China must strengthen its cultural production to defend against the West’s assault on the country’s culture and ideology, according to an essay in a Communist Party policy magazine published this week. The publication of Mr. Hu’s words signaled that a new major policy initiative announced last October would continue well into 2012.

The essay, which was signed by Mr. Hu and based on a speech he gave in October, drew a sharp line between the cultures of the West and China and effectively said the two sides were engaged in an escalating war. It was published in Seeking Truth, a magazine that evolved from a publication founded by Mao as a platform for establishing Communist Party principles.

“We must clearly see that international hostile forces are intensifying the strategic plot of westernizing and dividing China, and ideological and cultural fields are the focal areas of their long-term infiltration,” Mr. Hu said, according to a translation by Reuters.

“We should deeply understand the seriousness and complexity of the ideological struggle, always sound the alarms and remain vigilant, and take forceful measures to be on guard and respond,” he added.

At least he admits the CCP is paranoid and scared shitless of a citizenry that is well informed and free to express itself. Hu should read what Han Han wrote just the week earlier:

“The restriction on cultural activities makes it impossible for China to influence literature and cinema on a global basis or for us culturati to raise our heads up proud,” Han Han wrote.

That really says it all. You never stimulate creativity by limiting what your citizens can think, say and do.

This is an open thread. Feel free to comment on this article or anything else. I’ll be busy with my China project the next few days.

One of my favorite journalists, Peter Ford of the Christian Science Monitor, has a report on some new and bound-to-be-controversial blog posts published on line over the weekend by author/race-car-driver Han Han. Apparently the essays are being denounced by many in the online community — for not being pro-democracy enough.

The essays are on three of the government’s least favorite subjects: “On Democracy,” “On Revolution,” and “On Wanting Freedom.”

The outspoken Mr. Han reaches more than a million followers and readers whenever he sounds off, which gives him a degree of leeway that the Chinese censors do not grant to everybody. And his popularity means that all of a sudden the sensitive subjects he broached have moved out of the shadows of intellectual or dissident websites into the glare of the Chinese Web’s most visited portals.

Han is all for increased freedom of expression. “I believe I can be a better writer, and I don’t want to wait until I am old,” he says.

But he is ambivalent about democracy in China because he doubts whether enough Chinese people have sufficient civic consciousness to make it work properly, and he is against a revolution because “the ultimate winner in a revolution must be a vicious, ruthless person.”

This is the old argument, is China ready for democracy now? It may seem disappointing that Han Han has, in effect, toed the party line, namely that China is not ready and that any dramatic change would only lead to something worse. BUT I can well see where he’s coming from. What, after all, can fill the void that would follow if the CCP were ousted from power in a fair election (if there could ever be such a thing in China)? It’s a fair question, and one the fenqing love to answer by pointing to Russia in 1991.

Han’s argument, as much as I hate to say it, aligns pretty well with my own observations when I lived in China, namely that the desire for democracy ranks pretty low on the wish list of most Chinese people, while fear of what change would bring ranks far higher. But both of those issues pale in comparison to what Chinese really worry about: inflation and feeding their families.

Ford’s thoughts pretty much echo my own — not that I don’t want to see democracy in China, but that I don’t see it as a viable option anytime soon, if ever:

[A]s I read Han’s essay on revolution, something chimed with what I had come across in a very different sort of document that I had been perusing earlier in the morning, the biennial “Comprehensive Social Conditions Survey” just out from the Chinese Academy of Social Sciences (CASS).

That report listed the top 10 issues of current public concern in China, led by food price inflation (59.5 percent of respondents), health care availability and costs (42.1 percent) and the wealth gap (28 percent) ahead of a string of other bread-and-butter worries such as unemployment and housing prices.

It was a Chinese version of the famous note pinned to a board in Bill Clinton’s campaign headquarters when he was running against George Bush Sr., “It’s the economy, stupid!” And nowhere on the list was there any mention of restrictions on freedom of expression, or the lack of democracy (although official corruption angers 29.3 percent of the population, according to the survey.)

When I went to see Li Wei, one of the CASS researchers who had carried out the study, I asked him why this was. Had he not asked about political issues, or did people just not care about them?

He was frank. Initially, he said, he and his colleagues had planned to ask about Internet censorship and the lack of freedom of expression. “But when we tested our questions in preparation for the survey, we found that villagers did not know what we were talking about,” he recalled. “They thought they had complete freedom because they don’t talk about politics, so they don’t have any problems.”

Do we all get that — that the priority for most Chinese people is not abolishing censorship or implementing free elections? As much as some of us would like democracy to be top-of-mind for the Chinese people, it simply isn’t so. They have far more practical considerations to worry about. Censorship for most Chinese isn’t an issue at all, and democracy is the farthest thing from their minds. Of course, this isn’t the case with activists like Liu Xiaobo and his followers, but the numbers remind us of what really matters to the majority of Chinese right now, and it’s not the right to free, democratic elections. It’s going to take many, many Wukans to get us to that point, and I have to wonder whether we’ll ever see it in our lifetimes.

Han Han, for better or for worse, is speaking for the majority of Chinese, and, alas, for the government. For all the pollution and unfairness and blind activists under house arrest, the people of China don’t believe the nation is ready for radical change, like the imposition of democracy. Most simply couldn’t care less about it, while others, like Han Han, see inherent dangers in it. True or false, that’s just the way it is.

First-off, go see this excellent post over at the excellent blog China Geeks about CNN’s controversial cooperation with actor Christian Bale as he sought to interview blind activist Chen Guangcheng. I happen to agree with Charlie that whether CNN crossed an ethical line or not (and I’m not convinced they did), the ends in this case justified the means: the video was released and the world has learned about this inexcusable crime against humanity. If you want to talk about ethics, talk about the way the CCP has treated this man whose crime was exposing forced abortions in the countryside. And keeping his six-year-old daughter under house arrest, too. How noble.

Two wrongs don’t make a right, and if CNN violated journalistic ethics they deserve to be called on it. But as Charlie says, at the end of the day who cares? The story is Chen Guangcheng and the fact that thugs are holding him, his wife and his daughter under house arrest for his being a whistle-blower. Aside from some indignant Chinese bloggers and microbloggers, CNN hasn’t taken a lot of flak for breaching journalistic ethics, nor should they. (See the China Geeks thread for journalist Adam Minter’s complaints about the story.)

Watch the video and see the “unethical” journalism for yourself. What Bale has to say is pretty spot-on.

Of course, there’s one pundit who is aghast at CNN’s sins, and is getting all Anti-CNN about it. From the Harvard graduate who married into a rich Chinese family and goes fishing with high-ranking CCP officials and runs a marketing company and has written a new book on China, we get the following:

CNN’s China team, in a complete failure of journalistic integrity, decided last week to become the news rather than just report it. The actor Christian Bale called CNN to follow him as he drove for eight hours to confront police to try to see Chen Guangcheng, a blind legal activist being held in his home in the eastern Chinese village of Linyi. Bale was in China to promote his movie about the Rape of Nanking by Japanese troops in 1937.

CNN did Bale one better. It became complicit in Bale’s activism by actually planning the trip and driving him to Linyi. CNN reporter Steven Jiang then translated for Bale as he argued with Chinese police officers and refused to comply with their directives to leave. CNN posted video of the trip on its website, calling it exclusive, showing police forcing Bale to leave while Bale chastised the government, saying its treatment of Chen ”represents the power structure and their attitude towards their own citizens, which is disgusting.”

So they drove him to his destination and translated for him. I understand that this is perhaps (big perhaps) questionable journalism, but only borderline, and like Charlie said, “Who cares?” They didn’t lie or trick anyone, but they followed what sounded like a great story, a celebrity confronting thugs holding a blind man and his family under house arrest. Would it have been okay if they followed him in a taxi and he brought his own translator? Those are very small things. And Bale’s calling the treatment of Chen “disgusting” was, to say the least, justified. An understatement, really.

But Shaun Rein can see only treachery. In Shaun’s eyes, by working with Bale, CNN is facilitating the (false) notion held by many Chinese that the US media works in cahoots with the CIA and the NED and intentionally manipulates the facts they report on.

Shaun gives his cards away pretty early on:

My issue here is not with Bale. In general, I believe one should follow the laws of nations that one visits, and that Bale should do so, but I also generally believe in free speech, no matter how misguided.

Ah. He believes in free speech, no matter how misguided. You see, what Bale was trying to do is misguided. Exposing the inhumane detention of a blind activist is misguided, a publicity stunt. Note the “I generally believe in free speech” as well. That puts him in the clear to decide when to be for it and when not to. A smart thing to do if you’re going to cozy up to the powers that be in China.

In order to get why I bother to write about Shaun Rein’s columns at all, you must think very seriously about his next remark:

I have no idea about Chen’s detention, and if he is being wronged or not, but if there are issues with his case, I am not convinced that calling the entire political class “disgusting,” as Bale does, can help.

He has no idea. Wait. Stop. Fail. Unless you are willfully ignorant there is no way on earth you don’t know about the plight of Chen Guangcheng. Especially if you live in China and write for at least two media organizations. Yes, this speaks volumes. He can banter on about all the good the CCP does and cite example after example of things that prove his point. But here, he knows nothing. Nothing. No idea. And he’s writing a column in Forbes about it.

I made a promise to myself not to go after Shaun Rein any more because I don’t want to hurt his feelings, and I’ve been pretty quiet even though he keeps doling out lots of ammunition. But this is inexcusable. It’s like looking at an MRI of the Anti-CNN mentality. Oh, and note how he plugs his book throughout the column.

More vintage Shaun drivel:

Far too many in the West indict China’s whole governing class and system when a single local official does something stupid or brutish. Yet they criticized only a lone thuggish police officer in New York for pepper-spraying Occupy Wall Street protesters. They didn’t called President Obama evil for what that one officer did, or call for an overthrow of all of America. Yet Bale did that in China’s case, and, worse, CNN helped him.

False. The national outrage over the Oakland pepper-spraying was NOT directed only at one officer. It was directed at the abuse of authority in America. Scroll down a few posts to see my own story about it, where I direct my shame at “my country.” And this wasn’t an isolated incident, we saw just as bad in NYC a few weeks earlier, and the rage has never been solely at the individual sprayer but at the system that allows them to brutalize innocents. Really, this paragraph is among the dumbest yet. As if one lone local official is behind this detention, and the poor little CCP off in Beijing is powerless to take charge, all they can do is watch, knowing it’s atrocious, but, you know, what the hell, it’s just a local official doing it and he’s a few hours away so, like, what can we do? “A single local official.” Think about that. The CCP can be off the hook for anything that doesn’t happen within walking distance of the Great Hall of the People.

And then he puts up another of his signature straw men: “They didn’t called President Obama evil for what that one officer did, or call for an overthrow of all of America. Yet Bale did that in China’s case….” Did Bale call Hu JIntao evil? Did he call anyone evil? Did he call for the overthrow of an evil Chinese government? Did we watch the same video? Shaun, as usual, is simply making things up so he can get on his moral high horse. This is straight out of the Anti-CNN playbook.

He closes sanctimoniously:

The last thing the world needs is increased tension between the world’s two superpowers. CNN should be ashamed for becoming more like a tabloid and inserting itself into the story rather than maintaining journalistic integrity and providing an objective view of its subjects.

So there we have it; calling China to the carpet for its shit threatens fragile global relationships so we should shut the fuck up and keep things status quo so marketing companies can keep making money. Sorry, but I’ll take CNN’s journalism over this any time.

Again, go to China Geeks and see how Charlie replies to the criticisms of CNN one by one. No need for me to repeat them here.

Shaun, do you really have “no idea” they are holding a six-year-old girl under house arrest? Look into your heart and tell us the truth, do you really not know? Really? Whether the answer is yes or no, you are the one who should feel ashamed. Hear no evil, see no evil….

A six-year-old girl.

(Correction. The six-year-old girl is now being allowed to go to school, under police escort, of course. How good of them.)

UPDATE: Please be sure to check out China Geek’s post on the same article. And note the comment below. The commenter dared to ask Shaun if he really had “no idea” about this story — Shaun immediately blocked him on Twitter. The maturity of a five-year-old.

Note: If you are new to this site, you will want to see my other posts about Shaun Rein, most notable this one and this one. Don’t miss those comments. Nothing seems to light up the discussion like this subject.

In 2008 I annoyed some of my readers by predicting China would weather the economic crisis better than the US would. I know, the US fundamentals are stronger and China has all these really bad problems, but my argument was relatively simple: China had enough money in the bank to buy itself out of the recession, at least for a few years, while the US, mired in debt, would be in a far less enviable position.

Then I wrote four months ago:

The bottom-line prediction: things will continue more or less the same, with a sharp, painful drop in property prices at some point and a steady decrease in GDP as domestic consumption fails to live up to expectations and deficit spending clogs China’s economic arteries. As always, we’ll just have to wait and see.

Two years earlier I wrote:

Friends have been telling me about the deranged property prices in Beijing, and once again, as with the malls, it just strikes me as common sense that this is not sustainable. And you have to consider all the ripple effects a housing bust would foment – all those migrant workers on construction sites, all the construction machinery makers, the cement and lumber providers, all the ancillary businesses, door-knob makers and house painters.

What Epstein [of Forbes] is describing mirrors to the letter what we saw in the US five years ago, and is even more reckless: flipping properties and creating massive pools of debt and the same insane mass hypnosis: “Property values can only increase!” We all know how that goes.

I do not want to see this happen… But again, my common sense tells me there’s no way he can be wrong. Any student of bubbles, from tulips to dot-coms, can see the gathering storm. I wouldn’t want to be owning any property in China when it meets land.

Now, I’m getting the distinct feeling that the inevitable may not be too far away: China’s real estate bubble really may pop. From Foreign affairs today:

For years analysts have warned of a looming real estate bubble in China, but the predicted downturn, the bursting of that bubble, never occurred — that is, until now. In a telling scene two months ago, Shanghai property developers started slashing prices on their latest luxury condos by up to one-third. Crowds of owners who had recently bought apartments at full price converged on sales offices throughout the city, demanding refunds. Some angry investors went on a rampage, breaking windows and smashing showrooms.

Shanghai homeowners are hardly the only ones getting nervous. Sudden, steep price reductions are upending real estate markets across China. According to the property agency Homelink, new home prices in Beijing dropped 35 percent in November alone. And the free fall may continue for some time. Centaline, another leading property agency, estimates that developers have built up 22 months’ worth of unsold inventory in Beijing and 21 months’ worth in Shanghai. Everyone from local landowners to Chinese speculators and international investors are now worrying that these discounts indicate that “the biggest bubble of the century,” as it was called earlier this year, has just popped, with serious consequences not only for one of the world’s most promising economies — but internationally as well.

The biggest unanswered question is whether existing investors — the people holding all those sold but empty “ghost” condos and villas — will join in the sell-off, which could turn the market’s retreat into a rout.

What makes the future look particularly bleak is the lack of escape routes. If Chinese investors panic and rush for the exits, they will discover that in a market awash with developer discounts, buyers are very hard to find. The next three months will be a watershed moment for a Chinese investor class that has been flush with cash for years but lacking a place to put it. Instead of developing a more balanced, consumer-based economy, an entire regime of Beijing technocrats — drunk on investment-led growth — let the real estate market run red hot for too long and, when forced to act, lacked the credibility to cool the sector down. That failure threatens to undermine the country’s continued economic rise.

Hours after I read that, Paul Krugman’s latest column came out and it is even more pessimistic.

The obvious question is, with consumer demand [in China] relatively weak, what motivated all that investment? And the answer, to an important extent, is that it depended on an ever-inflating real estate bubble. Real estate investment has roughly doubled as a share of G.D.P. since 2000, accounting directly for more than half of the overall rise in investment. And surely much of the rest of the increase was from firms expanding to sell to the burgeoning construction industry.

Do we actually know that real estate was a bubble? It exhibited all the signs: not just rising prices, but also the kind of speculative fever all too familiar from our own experiences just a few years back — think coastal Florida….

Now the bubble is visibly bursting. How much damage will it do to the Chinese economy — and the world?

Some commentators say not to worry, that China has strong, smart leaders who will do whatever is necessary to cope with a downturn. Implied though not often stated is the thought that China can do what it takes because it doesn’t have to worry about democratic niceties.

To me, however, these sound like famous last words. After all, I remember very well getting similar assurances about Japan in the 1980s, where the brilliant bureaucrats at the Ministry of Finance supposedly had everything under control. And later, there were assurances that America would never, ever, repeat the mistakes that led to Japan’s lost decade — when we are, in reality, doing even worse than Japan did.

Let me be clear: I don’t want to see China’s economy slow down, let alone fall into serious recession. There are too many people I love in China and I hate the thought of them, and the rest of the Chinese people, suffering the consequences of such a catastrophe. But I think, especially at the level of local government, that officials are playing with fire, counting on ever-rising property prices to pay for insanely huge development projects. That is a house of cards. It sounds like the US and Ireland and Greece all over again.

The Foreign Affairs article at least ends with a note of optimism:

While frightening, the popping of China’s real estate bubble is not all bad news. Cheaper, more affordable housing could also unlock the savings of China’s working-class families, unleashing greater consumer demand and helping to rebalance the global economy. Investment long bottled up in idle real estate could flow to more productive pursuits. These adjustments have been put off too long. This is why at least some of China’s leaders appear determined to force a correction despite the risks. But they know they are walking a razor’s edge.

I hope he’s right, but wonder if China could pick itself up off its feet so easily if it has a hard landing. I am just hoping the central government has enough control to let the bubble slowly deflate as opposed to popping. This has been the consensus among the more optimistic China pundits, that the central powers can navigate the economy through the most treacherous waters because they control all the levers. Authoritarianism, the argument goes, can get things done, and I agree to a point — but sometimes, as America learned in 2008, forces can gather that simply can’t be controlled and then take on a life of their own. I hope the optimists right.

You absolutely must see the new Next Media Animation’s great video on Kim Jong Il’s passing. Go there now.

You should also see the Global Times’ special page on what China’s Foreign Minister calls “the unfortunate passing of Kim Jong Il.” They also print the reactions of Chinese netizens, my favorite of which makes a plea to Kim’s successor, “Don’t abuse the people by stripping them of democracy and imposing authoritarian rule.” Because, as we all know, the utopia of North Korea enjoyed a thriving democracy.

It’s not good to speak ill of the dead, but this is a glaring exception. Kim, I hope you enjoy the flames of hell for all eternity.

This is an open thread.

Because the one below is driving me nuts, and I can’t put up a new post right now.

One commenter below linked to this intriguing article. I think it’s well worth discussing.

For months, the 20,000 villagers who live in Wukan, near Shanwei city in Guangdong province, have protested first at having nearly £100 million of their land seized and sold off by the local government, and then at the brutal tactics used by police to regain control of the village.

The latest protests began on Sunday, when police attempting to arrest a villager were repelled by villagers armed with sticks. The police fired tear gas before retreating.

At the same time, the local government brought the village’s simmering anger to a boil by admitting that Xue Jinbo, a 43-year-old butcher who had represented the villagers in their negotiations with the government, had died in police custody of “cardiac failure”.

Mr Xue was taken into custody last week and accused of inciting riots. Mr Xue was widely believed to have been tortured, perhaps to death, and his family were rumoured to have found several of his bones broken when receiving his corpse.

I know, we do this sort of thing — and much worse — in America every day.
[Update – that closing line is strictly for my trolls, who feel compelled always to make this comparison.]

Below is a contributed post from my friend in Taiwan Bill Stimson. This post was printed yesterday in the Taipei Times.

Taiwan Matters

by William R. Stimson

For the U.S. to stop defending democratic Taiwan from China’s military in return for the $1.14 trillion of America’s debt that China holds? That so harebrained a scheme made it onto the op-ed page of the New York Times this past week shows that there are those who really believe the myth that with China looming ever bigger on the horizon, Taiwan assumes less and less strategic importance. Nothing could be further from the truth.

That China is on course to becoming tomorrow’s superpower is not the issue at all. The issue is that if this super-powerful China of tomorrow thinks and acts anywhere near the way it does today, it is on a collision course with the interests of the rest of the world – and, as we can already see beginning to happen today, the rest of the world can very easily come out the loser. China does not play by the same rules as everybody else. It cheats on everything, bullies everybody, and demands that far and wide the lies it defines as truth be seen as true. Its Nobel Peace Prize winner sits in jail – as do so many of its noblest spirits who have dared to fight illegally polluted lakes, censorship, official corruption, and the like. The line we hear from China’s leaders, not too different from what we hear from dictators everywhere, is that these reformers and protestors seek to impose on China alien outside ideas and norms that have no place in a Chinese society or a Chinese culture. Taiwan’s existence as a real free market Chinese economy, thriving Chinese democracy and two-party Chinese system – a sovereign and independent Chinese republic whose Chinese people enjoy all the basic human rights and freedoms as do those who live in America or Western Europe shows China’s party line to be a lie and by doing so lights the way for another path of development China might pursue. For this reason, Taiwan matters.

It is very much in the world’s and in America’s strategic interest to protect Taiwan’s right to determine its own destiny. Whether Taiwan becomes part of China or not is much less important than that the Taiwanese themselves, and only the Taiwanese, make that decision. This is what China actually fears more than Taiwan’s independence – that the example might be made, the idea might get out, to the far-flung corners of the People’s Republic that the power can come, should come, and deserves to come from the people themselves. This idea very badly needs to get out if the culture, economy, and political system of tomorrow’s super-powerful China is to more closely resemble a global leader that can be a co-operating partner and friend to the world and to America, not a more powerful, selfish, and conniving adversary than it is today. And so Taiwan’s strategic importance is out of all proportion to its small size and unfairly marginalized role in today’s world. Like a catalyst, it has the power to change everything all around it.

Trade this possibility in for a piddling $1.14 trillion? The idea of ditching Taiwan for money is absurd. By publishing the piece the New York Times did us all a wonderful service by showing the festering depths of the economic determinism that has crept into and corrupted America. Were America to ditch Taiwan, it would be ditching just about the only thing it has left – its core values. Because of a narrow-minded focus on material gain on the part of more than a few, it has already ditched its own economy and that of the free world, ditched the future of the promising young men and women pouring out of its universities and universities everywhere, ditched its worker’s jobs and with them its competitive edge in so many manufacturing technologies, and even ditched the pretense that it is a democracy as the very bankers it bailed out spend the billions given them to buy up its elected officials.

It’s time Americans as a whole stood back and took a look at their currency. The faces on it are those of George Washington, Alexander Hamilton, Thomas Jefferson, Benjamin Franklin, and Abraham Lincoln. The vision of these men, not money, is what America primarily stands for, and what America has to give, not just to the disenfranchised and downtrodden in China and everywhere – but, as the Occupy movement demonstrates, to those at home as well.

In Asia, Taiwan stands in a unique way for everything America’s founding fathers believed in and it deserves America’s support, today and in the future.

* * *

William R. Stimson is an American writer who has lived in Taiwan for nine years now.