Asides

Bill Murray in the film Groundhog Day
Bill Murray in the film Groundhog Day

Ed Snowden claims the NSA conducts industrial espionage – which is what the US accuses China of doing.

Everything in story seems to hang on one quote, which forms the basis of headline. Snowden says:

“If there’s information at Siemens that’s beneficial to U.S. national interests — even if it doesn’t have anything to do with national security — then they’ll take that information nevertheless”

It’s still far from clear that this is same state-directed economic/industrial espionage fed back into business, of the sort the US accuses China of. In fact, the industrial espionage story doesn’t seem different from claims made September 2013 articles regarding the NSA tapping Brazilian state oil company Petrobras.

The big question is what does the NSA do with the information that has economic/industrial uses? Snowden says the NSA will take the information, yes. But is it leaked/given/fed to/sold to to US business?

It would be surprising if there was the kind of cooperation reportedly seen between China’s PLA and the SOEs, and which gives the minds behind the information-economy in the US such headaches. This is important because Snowden’s claim goes to the heart of the US grievances with China. If this is truly new news, (e.g. the NSA is working hand-in-glove with US business to help enrich insiders) then the US will have lost this battle and any moral authority on this issue.

If there is a sort of willful confusion about this between Snowden and the media, it simply obscures the fundamentals of a huge issue dividing the US and China. The fact that Snowden, who is reportedly not in possession of the NSA information, is rehashing some earlier claims makes it a kind of Groundhog Day revelation.

If that’s true, it may signal a renewed urgency on Snowden’s part to bounce himself out of diplomatic limbo, back to the US.  It may also signal an pause, if not end, to the string of revelations linked to him. We’ll see.

NSA industrial espionage and Snowden

If there were more Malcolm Frasers in Australia in the 1930s, he could have saved the country from the whole WWII bother.

But seriously, the irony is that Australia followed the US into two flawed wars in Iraq and Afghanistan. Now that Australia could quite seriously need the security support of the US, you have its ex-prime ministers urging the country to spurn it.

Don’t forget Paul Keating’s assertion that the US couldn’t win a land war in Asia, which conveniently excludes the one major uncontained land and sea war in the Pacific that the US participated in during the 20th century.

The truth about Australia and China was summed up by yet another prime minister, when John Howard counselled against Australians becoming mesmerised by China’s rise. Part of the issue of the Senkaku-Diaoyu tensions and South China Sea tensions arise from the fact that China, superpower to be or not, doesn’t enjoy the chain of command that a country like the US would. As stated here there is “dysfunctionality of decision-making in China” even in issues as crucial as border disputes. Imagine how China would function in an actual war.

Where was this guy in the 1930s?

Aka…Moving the goalposts

Recent skepticism about Chinese export numbers points to what I think will become another area where China and the west part ways.

But to the export figures, first. They rose 14.1 per cent in December, to the disbelief of economists at Goldman Sachs, UBS and ANZ Bank, who said the monthly jump didn’t agree with the volumes of goods ship though ports to trading partners, as well as defying the movements of the manufacturing index.

As anyone who has watched China knows, this disconnect is hardly new. The Wikileaks data drop showed a Communist Party leader telling the US ambassador that Chinese statistics were “man-made.” Of course, global markets live and die by these numbers.

But over time, as China becomes even more central to the global economy, the credibility issues around their statistics may prove problematic for economies and policymakers reliant on China. No doubt the issues won’t be big enough to derail China’s eventual emergence as the largest economy in the world. And no doubt, the Chinese will celebrate when this milestone is reached.

But something is going on in the West that may sorely disappoint the Chinese when that does occur because it has to do with the very notion of a nation’s success, and should this change in the West fully take hold, it would deny Beijing the Pride of Being Number One.

There is an effort in advanced Western economies to move away from the gross domestic product as a measure of a nation’s standing. Instead, a so-called Happiness Index, devised by the Stiglitz-Sen-Fitoussi commission, appointed by then-French PM Nicholas Sarkozy in 2009 to devise a new measure of a society’s progress will appeal to both sides of the political spectrum in the West.

Environmentalists who blame the consumption-based approach to economic growth will embrace it, as it encourages a more balanced thinking about an economy’s relative success. Further, this may occur as the corruption of statistics continues in China, providing yet another signal that the GDP measure as the best measure of success has surely passed its use-by date.

Sadly, the Chinese economy will become the largest in the world on eternally surging GDP growth, with only suspiciously muted cycles. The numbers will be stunning, but increasingly minds in the advanced West will be looking at measures more suited to their economy’s relative out-performance.

While there is no guarantee it will pan out this way, the West, in its eternal ability to invent and innovate, will have an incentive to adopt these new measures and champion them.

Macro-trend: The coming China-West numbers divide

Former Australian prime minister Kevin Rudd has laid out a compelling assessment of where China-US relations stand, and the contradictions and preoccupations of both sides.

Chinese-speaking Rudd is a long-time student of China, with deep contacts in the nation. At the same time, he has risen to the top of politics as a Labor prime minister in Australia, serving from 2007 until a leadership change in the Labor Party in 2010. His insight into the systems and worldviews of the West and East make him one of the better minds to follow on subject of China’s rise. Sure, he looks like a dentist, but he speaks like a particularly broad-minded diplomat. And his suggestions for a Pax Pacifica are to my knowledge just what is needed at this critical time in geo-politics.

While sounding a pessimistic note (“I have studied the relationship between [China and Japan] for all of my professional life. But I have never seen it as bad as this.”) in the speech in Beijing, Rudd gives an unvarnished views of how China, the US, and the rest of Asia’s views China’s rise. In fact, if you are just coming in to the issue of heightened tensions in East Asia, it’s definitely worth a read.

But Rudd’s otherwise deft analysis falls down when he says.

what we tend to see as the general trend across Asia is two competing forces at work. One is the force of globalisation. The second is the force of nationalism. The force of globalisation brings economies, peoples and countries closer together. The forces of nationalism tend to tear economies, peoples and countries apart. Globalisation is the force of the 21st century. Nationalism is the leftover force of the 19th and 20th centuries. Globalisation has become a positive force. Nationalism has increasingly become a negative force. And nationalism is spreading across Asia.

In as much as globalisation is a global trend, Rudd’s description of it smacks of 1997-era business utopianism, which has been discredited – although not so much in Australia where the economy is relatively strong.

Elsewhere, after the bank failures and the financial crisis, not to mention slumping household income, it’s hard to see globalisation as anything but the precursor to the current crisis. So it is simplistic to say globalisation is a “positive force” that brings countries together. Globalisation may unite countries “on paper” smearing together economies across political borders, but it if the experiment in globalisation in the past 30 years is anything to go by, it’s fair to say it causes plenty of division within nations – both developed and developing.

For people with the means, cross-border trade and investment creates previously unimaginable opportunity. For those without the means, or those who unable or unwilling to engage the world over the border, globalisation has left them behind. This would also be true in Asia, I would suspect.

And it’s this reality on this new disparity of wealth in the US and Europe that will be animating politics in those regions for some time to come. So it’s worth bearing that in mind, when describing the American and European public’s view of China’s rise, that Beijing’s growth has occurred as the middle class in the US has floundered, raising the risk of further social and political disorder.

Where globalised capitalism hasn’t helped drive income inequality, it has freed up migration flows creating social strains between new and existing populations, particularly during recessions. This has happened in the US and Europe.

Francis Fukuyama published a piece last year on liberal democracy’s decline in the time of globalisation.

The takeaway from that piece: the current form of globalized capitalism is eroding the middle-class social base on which liberal democracy rests.

While nationalism is clearly on the rise in Asia, I wouldn’t doubt if a more considered approach to globalisation takes hold in countries of the West. Where there are elements of nationalism increasing in Europe (think: Greece, for example), in the US, it’s the reemergence of the citizen activist, seeking to impose rules and laws on the excesses of the private sector.

But don’t let any of this prevent you from reading up Rudd’s unique take on Where Things Stand, especially if you are living in China or the US.

Ex-PM of Australia speaks out on US-China risks