MESSENGER - CHINA'S ECONOMY

CONTENTS KEEP CALM AND CARRY ON

p3 P5

DON’t WORRY ABOUT A SLOWDOWn

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Forging New norms

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THE GLOBAL ECONOMIC DRIVING SEAT

CHINA US RELATIONS in the year 2015

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p16 TIGERS & FLIES P17

MORE OF THE SAME

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PLA GETS in on the trend

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REGAINED CONFIDENCE Guarded Optimism

p20 HANDLING FUTURE CHALLENGES p23

will 2015 shed light on better flight tracking?

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BANNING is rarely the answer

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reshaping asia

Editor’s note With constant talk of a hard-landing for the Chinese economy, this issue of MESSENGER assesses the Chinese government’s stance on the topic, with suggestions that concerns of such a slowdown have been over-exaggerated. As well as examining China’s economy and the concerns that abound both domestically and internationally, this issue also looks at the work of the central government as they attempt to put their own house in order, following the establishment of an anti-corruption campaign by President Xi Jinping last year. The obvious question for many when contemplating such a campaign is whether the so-called tigers, or top officials, will still remain fair game as the “hunt” continues into 2015. Alongside these topics, MESSENGER also presents two extended interviews, with Cheng Li of George Washington University and David Shambaugh of the Brookings Institution, on the state of China-US relations in the new year.

Editor-in-chief Stuart Wiggin

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EXAMINING CHINA’S ECONOMY HEADING INTO 2015 4

Don’t Worry about a China Slowdown

By Zhao Yang At the end of January, Premier Li spoke at the Davos forum. One day after China’s GDP came in at 7.4 percent, Li assured the packed audience, of international business and government leaders, that China will avoid a hard landing, continue its ongoing reform and restructuring and ensure a prolonged period of sustainable future medium-to-fast growth.

Even before the release of the GDP numbers, a number of Western media outlets and policy pundits were predicting a China stall. Issues with the real estate sector, local government debt, SOE intransigence, shadow banking, over-capacity and a weak global economy were cited as the factors which would continue to push growth rates lower in the future. But even amongst the hardened doubters, there were signs of dissension, with the Wall Street Journal grudgingly indicating respect for China’s handling of its economic affairs.

The 2014 results represented the slowest growth in 24 years and the first time the government has missed its target on the downside. But Li was in no way defensive, while acknowledging China’s 10-trillion-dollar economy will continue to face downward pressures in 2015, Li indicated that the country will avoid systemic financial risks and will improve its quality of growth to ensure an “appropriate” pace of expansion. The rise in urban and rural employment numbers, rising real income levels, moderate inflation, a 50 percent individual savings rate, a 5 percent decrease in energy per unit of GDP, significant growth in China’s tertiary industries/services and record numbers of new businesses, added meat to his assertions.

Li, in essence continued the line of thought he voiced at the Summer Davos in Tianjin, where he indicated China’s actions are predicated on the

realisation that its economic growth pattern wasn’t sustainable and that to avoid the “Middle Income Trap” China’s economic engine needed t o b e restructured to be more efficient and competitive.

Highlights of Li’s Davos Speech “We will continue to pursue a proactive fiscal policy and a prudent monetary policy,” Li said. “We will step up anticipatory adjustment and fine-tuning as well as targeted macro-regulation, in order to stabilise economic growth, upgrade its structure and achieve better quality and performance.”

Li is clear that China does not regard the fiscal and monetary policy tools Western governments are limited to, as an effective means of transforming its economy.

“For the Chinese economy to maintain medium-to-high speed growth and achieve a medium-to-high level of development,” Li said, “China must properly use the hand of the government and the hand of the market, and give full scope to both the traditional and new engines of growth.”

This highlights a sharp contrast between China’s “Big Hand” (government) over the “Invisible Hand” (market) approach, and Western democratic/capitalist models, which put the market on top and governm e n t as a kind of enabling and clean-up mechanism.

“To foster a new engine of growth,” Li said, “we need to encourage mass entrepreneurship and innovation, and mobilize the wisdom and power of the people.”

The word innovation was repeated 33 times during Li’s Summer Davos speech and it continues to be central to Li’s vision of a more prosperous China. With 3 of the top 5 mobile phone manufacturers and a host of other technological innovators like Alibaba and Tencent, there is a

new sense of confidence within and outside about China’s future.

“To transform the traditional engine of growth, we need to focus on increasing the supply of public goods and services, and strengthening the weak link of the economy,” the premier said.

This references the need to make China’s SOEs, government and financial sectors more efficient and responsive to the needs and pressures of the market.

China, he added, “will continue to promote trade and investment liberalisation and facilitation, and open up its service sector, central and western regions as well as the capital market wider to the outside world.”

This is a list of areas which China will be opening up to more investment internally and externally. The Shanghai FTZ has been used as a model and will be extended to Fujian, Tianjin and Guangzhou. They represent the cutting edge of a new kind of economic development platform which will be extended inland once the models have been proven.

“China will encourage its companies to explore the international market, and work for common development with other countries through greater openness towards each other,” Li said.

Premier Li is signalling strong support for globalisation and indicating a desire to work regionally and internationally to create better trade mechanisms.

The New Silk Road, extension of transportation infrastructure into Southeast Asia, AIIB, and the BRICS Bank are strong indicators of this desire which is essential to China’s resource imports and finished goods exports.

So, what can we expect from China, the second largest economy in the world, during 2015?

Some say the single biggest risk for the economy is still the interlinked and rising problems associated with shadow banking, local government 5

and corporate debts and a stagnant real estate sector. But at about 54 percent of China’s GDP, China’s debt is far below most developed nations. The key will be how local governments are funded and regulated. This touches on the real estate sector as well which is badly in need of reform but because it represents 25 percent of the economy it must be handled carefully.

Continued increase in consumption Consumption now accounts for 51.2 percent of GDP in China. Though it is still considerably lower than the 70 percent average for developed countries, it continues to move in a positive direction. The services sector has now overtaken the industrial sector as the largest segment of the Chinese economy and seems to be following the government’s playbook to re-balance the economy.

China is developing more confidence in its ability to innovate and lead cutting-edge FMCG markets and this trend will continue further balancing the public-investment and export-driven forces which drove the economy in the past.

China has also taken some steps to solve its overcapacity issues. A two pronged approach which is shifting heavy industrial capacity in areas like transportation infrastructure to

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projects in neighboring areas and the world stage; for instance, the merging of China’s major railroad companies and the projects they will be doing in the Mekong delta region. The second prong is the identification and closing of first and second generation industrial plants, which is how China has been able to achieve a 5 percent efficiency increase in energy use per unit of GDP.

ily on structural reforms. A thought which was expressed during the Davos forum, by Zhou Xiaochuan, governor of the People’s Bank of China, who also expressed a willingness to sacrifice growth for stability.

In the financial sector expect more pressure on the big banks to be more SME focused in exchange for more liberal controls of lending and deposit rates. An example: the lifting of the deposit rate ceiling, the deposit insurance draft plan being considered and the new property registration system will standardize the markets and provide new financial product opportunities.

To make things more transparent the government has adopted new budgetary laws, local government debt regulations and encouraged stateowned enterprises to adopt mixed ownership structures.

China’s growth cannot be delinked from the global context. As the main driver of the world’s economy since the US mortgage crisis meltdown, China has taken on a new role. Just as importantly, an expanding China needs access to raw materials if it intends to consume and export finished goods.

A resurgent US will help China, but a stagnating EU will hurt it. These seem to be the dominant trends which the WTO started and which will carry on for some years.

It is clear though that fiscal and monetary policy will be part of the symphony not the main players. Premier Li was clear that he opposed another monetary stimulus to push growth rates and instead would rely primar-

“If China’s economy slows down a bit, but meanwhile is more sustainable for the medium and long term, I think that’s good news,” Zhou said.

Premier Li said China will go full speed ahead with liberalizing interest rates, allowing markets to play a greater role in setting prices, and in forging trade agreements and opening up its financial system.

“We will not be afraid of difficulties, and we will continue to move along the path of reform and restructuring,” Li said. All of this, he suggested, was not only in China’s interests but also that of the global economy. Ultimately, “China’s reform and development will bring more opportunities for the world.”

New economic norms established in 2014 are chipping away at China’s previous growth framework.

Stuart Wiggin Slower growth may have become a new norm for the Chinese economy in 2014, but strong resilience and timely structural adjustments have kept the economy buoyant. China’s GDP, which grew by around 7.4 percent in 2014 still represents an admirable rate of growth especially when compared with other major developing countries.

Healthy employment and sustained income growth have turned consumption into an ever stronger driver in regards to overall economic growth.

But as China enters 2015, many feel that a weak property market could provide the government with a difficult obstacle to overcome.

Banking reforms, especially, the rise of privately-owned banks, have allowed the market to play a more decisive role in credit issuance, while the establishment of more pilot free-trade zones signifies greater liberalization afoot in previously closely-guarded key sectors. Internationally, China’s growing economic strength is being felt like never before. The inking of Free Trade Agreements, for example most recently between China and Australia, means China is more open for business.

The internationalization of the Yuan, the Chinese currency, has gained greater momentum and more offshore RMB trading centers were established and currency swap deals signed with China’s major trading partners. But the Chinese economy is never without its challenges and of those challenges, overcapacity remains a prominent issue. This was compounded by a rapid cooling-off of the property market, a

main pillar of the economy. Furthermore, China’s growing local debt has yet to be contained effectively.

Ultimately, a number of new norms have been recognized in relation to the Chinese economy, revolving mainly around the idea of a new normal economic growth rate, down from the highs of 10 percent growth which China experienced in the past.

A slower speed of growth, around 7 percent, which is expected to be revised downwards by half a percentage point over the next five years; a more balanced structural framework which shifts towards consumption as a driver for growth; and a fundamental shift in the nature of growth, away from polluting industries, represent the new norms that many within the press and academia speak of.

“If you look at what matters to China, then maybe the concerns (of a hard landing)are a little bit overrated” Shen Hong, Shanghai Bureu Chief Wall Street Journal

As mentioned above, China still maintains a respectable rate of GDP growth, causing many to ask whether concerns of a Chinese slowdown and the impending so-called hard landing have been over-exaggerated. On this point, Shen Hong, the Shanghai Bureau Chief of the Wall Street Journal explains, “It depends on how you look at it. If you look at what matters to China, then maybe the concerns are a little bit overrated.”

Shen added, “The evidence is that the labor market remains pretty healthy… That’s why I think the leadership in general has taken a pretty relaxed approach in handling the situation.” But as Shen goes on to explain, “If you’re an outsider, a foreign country like Australia or Brazil that depends increasingly on exporting resources to a robust economy like China, they will become extremely worried if there is even a slight slowdown in China’s economic growth.”

Observers agree that the property market remains a big risk for the Chinese economy going into 2015. In explaining the context of the Chinese property market slump, Arthur Kroeber, Head of research at Gavekal Dragonomics and Editor of China Economic Quarterly, points out, “In each of the last two years, Chinese cities have completed somewhere around 11 or 12 million units of new housing.”

“We think that the underlying demand for new housing in China is probably no more than 10 million units, and over the next several years it will probably decline even further to around 9 million units a year, which is still a lot and you need a lot of construction activity. But the point is that more housing has been built in the last couple of years than the market can absorb.”

Clearly, talk of such figures is bound to make for grim reading for the central government, but local governments in second, third and fourth tier cities are likely to be most anxious of a deteriorating property market. As Shen Hong of the Wall Street Journal explains, the situation of the market in cities like Beijing and Shanghai is drastically different compared to second, third and 7

fourth tier cities with huge over-capacity and over-supply.

“We’re going to see a divergence between these two groups of cities in the future when it comes to the state of the property market. In other words, demand for property in Beijing, Shanghai, Guangzhou and Shenzhen will remain pretty healthy, because it attracts not just local investors but also global investors.”

“But if you look at a city like Changzhou, or a very small city in Sichuan province, you’ll have to think twice about it. But in general it’s inevitable for the Chinese property market as a whole to undergo some sort of correction after years of robust growth because it’s certainly overheated. I think the trick is how to manage a so-called soft landing. If there’s a soft landing for the Chinese property market, there’s a soft landing for the Chinese economy.”

Measures used to stimulate the market in 2014, such as the wholesale lifting of property purchase restrictions in all cities, alongside a slight easing up on credit, led to improved activity and confidence within the market for several months, only to tail off towards the end of the year.

However, the options that the government pursued to support the market in 2014 will not be available for 2015.

According to Arthur Kroeber of China Economic Quarterly, the only option available to the government going forward is to loosen credit.

However, Kroeber believes authorities will be reluctant to pursue such a course too strongly as pumping credit into the market could lead to bubbles.

Furthermore, loosening credit and taking further steps in quantitative easing could make it difficult for the country to rebalance its economy and reduce industrial overcapacity in areas such as shipping and steel.

As Shen Hong notes, “you cannot make funding costs too cheap otherwise it will encourage (the) use of cheap credit to commit to inefficient investments.”

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The Global Economic Driving Seat Zhao Yang As we forge ahead into 2015, the question is what is going to happen to the world’s economy?

The consensus of international economic commentators is that it will be “not bad”. So what does that mean and what should you be paying attention to, as you look towards the future. Putting things in context, we are in a decade still struggling with the fallout of the 2007 economic meltdown, increasing wealth disparity, growing unemployment, rising nationalism, waxing geopolitical competition, unstable governments, ineffective leadership, severe pollution, water crises, increasing severity of weather disasters, ageing populations in developed countries, rampant population growth in undeveloped countries and conflicting ideologically based world views.

Against this backdrop, 2015 will in part be shaped by these larger issues, but more immediately by the political events in the Ukraine, Middle East and Africa, and economically on the effects of lower energy and commodity prices, and the various quantitative easing programs in the US, EU and Japan.

The two biggest positive economic drivers will be the US and China. As the US economy heats up, China “normalises”, the EU drifts, Russia suffers,

Afghanistan, the Middle East and Nor t h Af r ic a unravel and Ab enomics rules Japan, the world’s number one and two economies will need to be the world’s engine.

The IMF predicts a 3.8% world growth rate for 2015, up from 3.3% last year; an optimistic projection, which is largely negative on growth in the EU, Russia and Japan. If it comes true it would be the fastest growth since 2011.

So what are the major economic and political issues to watch in 2015?

Oil and commodity price declines will provide a positive boot for consumers in developed countries, which rely on imported energy and materials, but will put more pressure on energy and resource dependant exporters, many of whom are already on politically unstable ground. The extra money in consumer pockets will help with consumer purchases, which should help lower cost exports from China and other developing nations.

Quantitative easing - As the US continues to unwind is fiscal stimulus efforts, and as the EU and Japan embark on another round to try to stimulate their flagging economies, questions remain about when and how Janet Yellin and the Federal Reserve will hike interest rates. We believe the answer will come at

the June Fed meeting. The danger to the world economy is that a resurgent US economy, geo-political uncertainty and actions by the Fed will reverse hot money flows which had been supporting investment led growth in underdeveloped and developing countries. On a macro level, the question is what, if anything, can/will China do to protect and stabilise its neighbours in Asia.

On a micro level, China should be largely insulated by its booming domestic markets, reserves and safe haven status. Questions remain about the impact of the EU’s and Japan’s quantitative easing programs, both domestically and internationally. We doubt that there will be much if any effect, as the issue is not the availability of money; it’s on the demand side which has to do with falling wages and viable loan applications.

Ukraine will continue to be a sore spot between Russia and the US, but an economically fragile EU may be a reluctant ongoing sanctions partner, as the realities of low growth continue to push populist dissatisfaction.

It will continue the game of musical economic chairs, as Russia is forced to adjust its import and exports markets eastward, as EU companies seek to replace lost markets. The decline in energy and resources is the most serious threat to Russia. All of these factors will continue Russia’s move towards China as much out of political as economic necessity.

With a fresh electoral victory Shinzo Abe will continue to implement Abenomics in Japan. The question is will it work; so far it has produced little other than temporary stock market gains.

Japan should be a net gainer as energy and resource prices go down, but will it be enough to get the reluctant Japanese industrial combines to invest in Japan?

negative effect on spending as it did when it was tried previously in 1997.

Why a second round of tax increases would succeed, where the others failed, has not been addressed.

The EU will continue to struggle with its lack of fiscal union and increasing political dissatisfaction. Individually, EU member countries will continue to struggle with the high costs of their social welfare net, rising right wing factions and stagnant economies. Great Britain, although looking better in the short run, has a long term property asset bubble issue.

India will continue to be on hold economically until 2016. This is the minimum amount of time Modi needs to consolidate his party’s power in the upper house (short of a political alliance) in orders to pass his sweeping economic proposals.

Afghanistan, the Middle East and North Africa will continue to be a source of political, economic and social instability, exacerbated by terrorism, unemployment, wars, refugees, water/ food crises and the decline in energy and resource revenues.

For China, 2015 will be an important year in its ongoing economic reform and restructuring. To avoid the “middle income trap” China must become more efficient and competitive. As wages and the cost of doing business go up in China, the point where cheap labor can counterbalance the inefficient use of resources is fast disappearing.

China must climb the value chain or watch the economic miracle come to a halt. Balancing an investment led export driven economy with consumption, ser vices and innovation is a difficult undertaking.

As part of the efforts, China is following a new political economic model which reverses the Western concept of market on top, government below and instead puts social values and goals on top and uses the market as an efficiency tool.

China is currently benefitting from the political and economic winds and together, its economic, political and social reform measures are taking hold. For those who want to understand in detail China’s road map, they should read Xi Jinping’s The Governance of China.

For China the tasks will be in the details, as its seeks to stimulate SME driven innovation and efficiency, which has produced three out of five of the top cell phone makers, while still retaining the market heft of SOE’s who can compete domestically and internationally in areas like energy and the high-speed train market.

The good news is that despite rumbling sources of potential trouble, there is a decent chance that 2015 w i l l be another year of rehab i l i t a tion so long as the US and China can act as the engine for the world’s lagging economy.

Photo: CFP

After engaging in the same give-away politics, he criticised previous governments for, to get reelected, Abe is looking to impose a sales tax increase to solve Japan’s massive debts and chronic deficits. The difficulty is the first round of sales tax increases had the same 9

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China US Relations: 2015 Despite refocusing diplomatic attention towards its own backyard, it can be argued that China’s most important diplomatic relationship lies with the United States of America; a point confirmed by the number of column inches this magazine devotes to the subject across issues.

But as we continue to progress through 2015, where are China-US relations heading and how are they likely to influence world affairs in this increasingly uni-polar world?

In an effort to delve deeper into the topic of China-US relations for the coming year, MESSENGER presents two interviews with US-based scholars Cheng Li, Director and Senior Fellow at the John L. Thornton China Center of the Brookings Institution, and David Shambaugh, Professor of Political Science and International Affairs at the George Washington University.

Cheng Li, Director and Senior Fellow at the John L. Thornton China Center, The Brookings Institution in the US How different are China-US relations now compared to the early and mid1980s, the period during which you first started to study this topic?

I wish we could learn more lessons from the mistakes, and I think the real lesson is that sometimes, perception or misperception dominates our thinking (thus) mutually reinforcing fears, which could be quite dangerous. But again this is what I’ve said; the real problem is that we do not learn many lessons from history. Ronald Reagan visited the Soviet Union, I think in the middle of the 1980s; then when he came back, he had a press conference.

He told the American people that he found that Russians smile, they laugh, they cry, they are human beings.

But a journalist from the White House, Helen Thomas, asked, “Mr. President, suppose you visited the Soviet Union in the 1960s or 1970s, you will probably find that Russian people smile, they laugh, they cry. They are human beings.” Then Ronald Reagan said, “No, they have changed.” This tells us about how mutually reinforced fear dominates our thinking, and we try to see others through eyes that really did not exist.

In a blog article that you wrote for the Brookings Institute, you noted that while many in China presume that the United States is not ready to accept China’s rise, the surprising reality is that majority of Americans believe that China is already the world’s largest economy; so how do you view the current state of US-China economic relations?

This actually is not only based on my observation, but also based on a lot of surveys; surveys that ask what do you think, which country has the largest economy, the No.1 economy?

Actually, most people in the United States (believe that the answer is) China. So, that reflects that kind of view. Because it’s important.

Most Chinese people think that China’s rise makes a lot of people in the United States unhappy, which has some truism, but on the other hand, I think it’s largely wrong. Because if that’s happening, it’s already reality, you cannot change too much.

For most Americans, when they talk about this dramatic rise and fall of great powers, those intellectuals, and middle class Americans, will say that China’s rise actually reflects that they are doing something right and we are doing something wrong. So they will try to criticize some of the things in the United States.

For example, no saving, over-spending, self-indulgence, et cetera. So again, those findings from surveys are actually quite revealing. But in China, people always perceive that the United States wants to contain China to stop (China’s) economic rise.

But the reality is I think the United States and China are the two countries probably benefitting most from economic globalization than any other

It is quite different because the Cold War was not over at that time and China was not perceived as a major competitor. And China, which has just (implemented) Deng Xiaoping’s reform and opening-up policy I was among the first group of Chinese who benefited (from) the education exchange. So, I experienced the tremendous enthusiasm and interest and friendship during my first few years in United States. So that was a good time.

What lessons and experiences have both sides learned from the 35 years of diplomatic relations?

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countries in the world. Trade opening and economic integration really benefits the Chinese economy and also benefits the United States which maintains their leader (status) in the world.

Otherwise international integration, international institutions really do not serve that purpose and those kinds of institutions actually are not in line with what the world needs.

After Xi Jinping came to office, China initiated a number of new international mechanisms, several of which are considered to be competitors to mechanisms that the US has already led. The Free Trade Agreement of the Asia Pacific (FTAAP) is considered to be a competitor to the Trans-Pacific Partnership and the BRICS development bank and the Asia Infrastructure Investment Bank (AIIB) are considered as competitors to the World Bank. How do you view the competition and tensions between the two countries in terms of the global world order and leadership?

At this year’s APEC meeting, China strongly promoted its plans for the FTAAP. What does the future hold for the FTAAP and the TPP in general in the Asia area?

First, you simply cannot foresee a world, or international organizations, or international integration without the United States, without China. Any effort to exclude one of them is self-defeating and self-deceiving. Secondly, in terms of the AIIB, I think it’s also quite interesting because the current international institutions of the World Bank and the Asian Development Bank (ADB) are really not doing great because they’ve become very bureaucratic, not effective, and not so much money is being spent on infrastructure.

Now they are doing some good things like poverty relief, or public health (initiatives), but in terms of infrastructure development, you could ask a Chinese village head, they will tell you - start with building a road, then the village can benefit. This is common sense.

But look at the World Bank and the Asian Development Bank; they are not doing too much on infrastructure.

Now China wants to establish the AIIB. So what’s wrong with that? You cannot do it, but you ask other people not to do it. That stance, in my view, is quite bizarre. So, I think that the United States needs to adjust to that reality.

But at the same time, I think that any international institution should be more inclusive rather than exclusive, and should really serve the world.

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I think both the United States and China and many other countries in the world should really change their perception. I think we should participate in similar or different international economic institutions but none of these institutions should have the aim to exclude others. Rather they should be broad enough to include any partner that can follow, and work in line with other international institutions.

At the same time I think that the United States and China should really take up leadership roles to facilitate the global economic integration rather than get caught in a kind of trade war and only try to pursue a narrow interest via which only several countries can benefit rather than the international community at large.

Last year you wrote about China’s rising middle class, an important, growing force, and you stated that it cannot be neglected from the process of shaping China’s future political and economic landscape. Do you think this large bloc of people will have any impact on US-China relations, and if so, what impact are we likely to see?

class interests. So, I’m confident that China’s middle class will gradually contribute to China’s own political development. So, my point is that the middle class will contribute to China in a profound way. Consumption, environmental protection, food safety, you name it; all these issues. They will contribute to China’s urbanization, and reduce economic disparity.

So it’s the race between economic disparity and a more equal middle class country. I think that if China can expand its middle class, the Chinese economy should be much more healthy. So that will contribute to China’s social-political development as well, and also contribute to global economic prosperity and also peace.

How do you define the US-China relationship?

It’s a new type of international order.

So in a way the world is in the midst of a major transformation. You do see geopolitical, geo-economic change and transformation. You see the rise of the BRICS nations; you see the rise of Asia; you see the rise of South America. But at the same time there’s a tremendous opportunity to have international economic integration, which benefits the entire world.

But you also see the tensions. You see that some of the areas, (with regards to) the most important economic breakthroughs, will only benefit a small amount of people rather than the large number of people. Therefore, I think the key word is governance.

China is a normal country; it’s like many middle class countries such as the United States, such as South Korea, Japan, Germany. And these middle class groups come with similar middle class consumption (habits) which will contribute to the global economy, which contributes to China’s continuing (growth) or the sustainability of China’s economic growth.

It is global governance that will deal with the common challenges. And challenges could be to the environment, they could be cyber-security related, they could be economic disparity or public health crises. I think it’s important to know in the 21st century that we should get rid of the 19th century mindset of a Cold War mentality. I think that’s crucial.

The middle class also eventually wants to (achieve) political demands when you come to protect middle

I think that the United States and China for all reasons should work together. You cannot see a kind of sce-

nario where one country is doing very well, and the other country is going to experience disaster. Larry Summer said that you can see both China and the United States doing well or neither country doing well. But one country doing well and one country doing badly is not a scenario we will see. So that tells us that the United States and China should cooperate with each other in all aspects.

David Shambaugh, Professor of Political Science and International Affairs at the George Washington University in the US. In a previous commentary, you stated that the US-China relationship has exhibited both elements of cooperation and competition. But the relationship has lasted 35 years; so what lessons and experiences have both sides learned during this sustained period of time?

exchanges. We’ve worked really hard to expand contacts between our two societies on all levels. For example, there are 300,000 Chinese students in American universities.

There are increasing numbers of Chinese tourists coming to the United States, increasing numbers of businessmen and investment from China into the United States, and all kinds of interactions from mayors and governor levels. So the people-to-people (aspect) is really the foundation of the relationship. That’s the strength of relationship.

A growing number of Chinese organizations, agencies, big companies and also the Confucius institutes are now based in America. How would you characterize their performance in the United States?

Well, I think both sides have learned that it’s a very complex and complicated marriage you might say, and it’s a marriage in which divorce is not an option. We have to work together when we can and we have to manage our differences.

There are [97] Confucius Institutes [and 357 Confucius classrooms] in the United States today and my personal view is that they are quite good and doing what they should be doing, which is teaching Chinese language and culture to Americans, particularly at the high school secondary level, but also at universities.

And after 35 years, I think we have learned pretty well to manage our differences, at least to keep them from becoming more adversarial.

We have learned a few other issues, I would say. We have learned how to manage the Taiwan issue.

But it has to be said that there’s perhaps an overreaction in the American media and several American universities have now discontinued their contracts with Hanban. So, Confucius Institutes have actually become another kind of sensitive issue in the relationship.

At least the American side I think has become adjusted to the sensitivity of the Taiwan issue for China. We’ve learned to work together in certain limited areas of global governance and I think we are learning that we can share the Pacific Ocean; I’m not sure though, there’s a lot of strategic competition in East Asia between not just the United States and China but a number of other countries and China as well.

(With regards to) Chinese business in America, (they) are quite frustrated, I think. Trying to invest in the United States, there are a number of laws and regulations that they encounter in the US that they don’t encounter in other countries and they’re beginning to learn to navigate those laws in fact a little bit better. And direct investment is increasing quite rapidly in fact, in virtually every state of the United States; and I expect that’s going to go up now that the Chinese side is learning a little bit about the difficulties of doing business in the United States.

What kind of contribution do you think local employees are having on Chinese agencies based in the United States?

Well, look at how Chinese companies operate overseas in the last two or three years under the “Going Out” policy, they’ve tended not to hire foreign nationals in their operation. (Hiring foreign nationals) is a rather new development and it’s a good development. In fact, most levels of Chinese multinational corporations find that Human Resources, HR is the greatest weakness of Chinese companies that China operates abroad.

So this recent development (of) hiring foreign nationals, I think it’s a good step forward. It’s what all multinational companies do… China has traditionally not done that but is now beginning to and I think that’s going to help their competitiveness in the US and other countries.

Over the years we’ve learned each other’s sensitivities and how to work together I think in diplomatic ways.

We’ve also learned economic and commerce and people-to-people 13

In a recent paper, with regards to the meeting between Obama and Xi Jinping in Beijing this November, you noted that while the two sides did not issue a lengthy joint statement detailing the two sides’ respective positions on dozens of national issues, this time it was determined to be more modest but practical in their aspirations and achievements. Why do you think there has been such a change?

Well, it’s pretty clear talking with officials in both governments, I’ve talked with officials in the White House who managed the American side of the summit, and I’ve talked with Yang Jiechi and others who managed the Chinese side of the summit, and both sides recognize that previous summits have issued these long joint statements with 60 or 70 different elements to it. And the problem is that they were overly aspirational and they were not implemented.

So this time it was decided to pick 3 or 4 really key central issues in which progress could be made; the climate change agreement; the information technology agreement, and the two military confidence building agreements. And those were agreed to by both sides and they’re very positive and tangible and achievable.

There are a number of other areas that the two presidents talked about; 27 different areas in fact, and that ranges from working together to combatting the Ebola health pandemic in West Africa to antipiracy operations in the Gulf of Aden, and a variety of other issues. So they discussed a lot, they achieved a lot and we really need to build on that momentum going forward into the new year.

Since Xi Jinping came into office, China has initiated a number of new international mechanisms. Several of these mechanisms are seen as being competitive to the initiatives that the US has already led. How do you view the competition and tensions between the two countries in terms of world order and leadership?

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Well there is a difference in the two countries’ views about world order and international institutions. The United States very much believes in the liberal institutions that have existed since the Second World War. We’re seeing China begin to set up its own institutions such as the BRICS Development Bank and the Asian Infrastructure Investment Bank.

But I would also note the Shanghai Cooperation Organization, the Forum on China-Africa Cooperation, the China-Arab Cooperation Forum, and a number of others. And these are somewhat competitive with the post-war liberal order that the United States has been so central in creating. But I’m not sure that they’re a bad thing.

I think that there’s a lot of room for many levels, you might say, of global governance and different architectures, different institutions. There’s a lot of development that needs to take place in the world. The World Bank, the Asian Development Bank and the IMF can’t do it all.

Myself and a number of other Americans and other observers don’t actually see these new Chinese initiatives are necessarily a bad thing, but complementary rather than competitive.

But they’ve not really been implemented yet. They’ve been created and funded and we’re going to have to wait and see how they play out over the next few years.

How would you define a good or healthy US-China relationship?

I don’t think we should have any illusions about the difficulties of the US-China relationship and what we disagree on. The United States and China disagree on a whole lot of things and we cannot just pretend that those differences don’t exist.

What we have to do is try and managing those differences and keep them from bleeding into a more full adversarial relationship; becoming more fully adversarial. That’s the first big challenge; how to manage strategic

differences, trade differences, ideological, cultural and soft power differences, diplomatic differences, world order differences, and to build on the areas of cooperation that we do have in place.

I think, again we go back to the people-people level, and all the interactions between our two societies; that’s the real foundation of the relationship. So, it’s a mixture, intrinsic to the nature of rising powers, established powers, the differences in our political systems, our competing geo-economic and even geo-strategic interests in the western Pacific.

So that doesn’t mean we cannot cooperate together very practically in various areas in both countries’ interests. That’s what we’ve been doing since President Nixon, Chairman Mao, and Zhou Enlai met in Zhongnanhai in 1972.

But we’re into a new stage of relations now and China’s the second leading power in the world. China has its own interests in Asia and in the world.

Those interests are not always congruent with American interests and vice versa.

So it’s natural, it’s the new normal; we should expect it. It’s not unusual that these two countries are going to clash.

What we really need to do is learn how to manage those differences and to really expand the zone of cooperation.

I think President Xi Jinping’s recent speech to the Foreign Affairs Work Conference, for example, is very encouraging because he suggested that China is going to have a more activist foreign policy, activist diplomacy.

That’s good, that means that China is going to contribute more to global governance, he said, and that’s exactly what the United States and the European Union and many other countries have been calling on China to do for several years; to contribute proportionally to its capabilities to global governance. We have to give back to the international system. And I think that China’s leaders have now begun to recognize this.

anc

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China’s Anti-Corruption Drive; more of the same for 2015?

2014 saw an unprecedented crackdown on corrupt officials, partly for expediency and partly to meet the desires of the public. In the coming year, the Chinese government will step up its anti-corruption drive, listing a series of priorities at the start of the year to signal their intentions.

The CPC’s Central Commission for Discipline Inspection (CCDI), the department tasked with tackling the corruption problem, has vowed to the general public that the fight against corruption is more than simply a “whirlwind campaign”.

In January 2015, the CCDI put forward seven priorities for fighting corruption in 2015, including tighter scrutiny of senior officials and intensified efforts to track down corrupt fugitives hiding abroad. The major task, however, will be the tightening up of the Party’s internal management and supervision via a series of new rules and regulations. In November 2012, shortly after becoming leader of the Communist Party,

Xi Jinping stated that with corruption becoming more rampant, “eventually the Party and the country will fall. We have to be vigilant.”

The anti-corruption campaign is not only a sign of the vigilance that President Xi called for back in 2012, it is also a clear sign of President Xi’s strength within government and presumably amongst the general public who are keen to see corrupt officials dealt with accordingly.

Professor Zhu Lijia with the Chinese Academy of Governance believes the CPC is moving to address the root causes of corruption. “To root out corruption, an effective mechanism must be established to control, manage and supervise the power of officials,” Zhu explained to CRI. “The Party has done a great deal of work in creating a strong sense of deterrence for those who tend to be corrupt. What we need next is a system under which officials cannot and would not abuse their power.”

Another key priority in this year’s fight against corruption will be the targeting of major state-owned enterprises (SOE), as more than 70 senior SOE officials were put under graft-related investigation last year. Inspectors will be sent to all major SOEs while supervision will be tightened across the board.

Professor Zhu says that this represents a move in the right direction.

“As most SOEs provide basic public services such as water, power, and gas, how well they are managed will directly affect people’s daily lives as well as the public’s trust in the government. Reining in the abuse of

power by SOE officials will be significant in the fight against corruption.

We should focus more on the SOEs in order to achieve greater results in the fight.”

The targeting of SOEs as well as dealing with so-called “tigers” and “flies”, for example the expulsion last year of Zhou Yongkang, the country’s former security chief, from the CPC and this year’s investigation of Ma Jian, Vice Minister of State Security, provides a clear signal that no one individual is beyond the reach of the campaign, and that includes physical distance.

The CCDI has vowed to strengthen international cooperation in the hunt for corrupt fugitives and asset recovery, following the successful Fox Hunt operation in 2014 which saw nearly 700 fugitives brought back to face justice. Last year, China’s fierce anti-corruption campaign saw a number of high profile cases that shocked the country, including former security chief Zhou Yongkang, military leader Xu Caihou and political advisor Ling Jihua. Nearly 72 thousand officials were punished for violations of the eight-point anti-graft rules.

The nature of the corruption cases being brought to light, revolving mainly around sex and cash, is sure to repulse many and the punishments handed down to those individuals caught up in such cases will no doubt help bolster support for the campaign and in turn increase the overall satisfaction with Xi Jinping’s presidency.

Hopefully, the vigilance that President Xi called for back in 2012 will not waver going forward and the tigers will still be fair game for investigation alongside the flies.

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PLA Gets in on the Trend In January, 2015, the Chinese military publicized a list of 16 senior officers, corps level and above, who were put under investigation for alleged corruption in 2014. The move underlines the People’s Liberation Army’s resolve to fight corruption in the military, an area where abuse of power has rarely come to light in the past.

The list included a number of names that had been released before, including former vice chairman of the Central Military Commission Xu Caihou, the most senior military leader to be probed for corruption since 1949. But cases involving three senior officers were made public for the first time.

They included Liu Zheng, deputy head of the PLA’s General Logistics Department; Yu Daqing, deputy political commissar of the Second Artillery Force; and Fan Changmi, deputy political commissar of the Lanzhou Military Area Command. Liu Zheng is not the first deputy head of the PLA General Logistics Department to come in the crosshairs of the anti-corruption campaign.

Previously, Liu’s predecessor Gu Junshan was charged with embezzlement, bribery, misuse of state funds, and abuse of power. At the time of publishing the list, among the 16, one had already been convicted and sentenced to life imprisonment. For many observers, the past year saw a major cleanup of the armed forces as part of the top leadership’s effort to ensure a combat-ready military.

The most high-profile case that first came to light was that of the aforementioned Gu Junshan of the Logistics Department. He is alleged to have accumulated goods and property worth more than 600 million yuan, 98 million US dollars. Following this high profile 18

takedown, the case of Xu Caihou went on to shock the nation.

As one of the most powerful officials in the PLA, Xu was found to have taken advantage of his position to assist the promotion of others and of accepting

huge bribes. President Xi Jinping, Chairman of the Central Military Commission, has on multiple occasions stressed that the “bad influence” left by such high-profile graft cases must be fully eliminated within the armed forces.

Regained Confidence, Guarded Optimism

achievements made so far are indeed encouraging, with some widely applauded as nice surprises.

Lin Shaowen

The public once doubted the resolve of the government to chase after real big “tigers”; but they now see that even former political and military leaders at the highest level are not immune from the anti-corruption drive.

2014 witnessed regained public confidence in China thanks to the ongoing anti-corruption drive launched by the ruling Communist Party. People are excited to see “fat cats” brought down one after another, with some eventually put behind bars.

The official website of the Party’s watchdog, the Central Disciplinary Commission, is now the ninth most p opu l ar on line ne ws s ource; representing a rare case for a highly-political outlet to be among the top ten. The commission’s leader, Mr. Wang Qishan, together with President Xi Jinping, enjoys a high public approval rating in opinion polls.

Self-telling yet thought-provoking; an in-depth look at the progress made in the crack-down on corruption and its remaining challenges would lead to guarded optimism. Mr. Wang once outlined a three-phase anti-graft goal - namely that officials first dare not be corrupt, then are unable to be corrupt and finally have no intention to be corrupt. This three-phase goal can be simplified to the pithy slogan of “dare not, cannot, will not.”

To me, those three goals may mean, firstly, fighting corruption case-by-case with high-profile, harsh measures; secondly, preventing corruption via systematic and institutional efforts, including laws and regulations to contain powers or power abuse as well as privileges; and thirdly, cleaning up the public service sector by introducing people with moral integrity into official positions.

To help achieve these goals, the Party Central Committee, in its fourth plenary session, issued a document on achieving rule of law for China; stressing that ever y decision should be made on a legal basis and that no one is above the law. This represents a lofty mission and the

Five rounds of disciplinary inspections carried out nationwide over the past two years have brought down dozens of officials at or above the vice-ministerial level. Public accusations and online exposure of immoral and unlawful behavior accompanied by evidence are being answered more quickly, and followed by swifter action.

Casual weekends are routinely a time for big news of yet another case coming under investigation.

There is also the added aspect of international coordination with Interpol and foreign governments, under the “fox hunting” move to bring back fugitives to face justice. China has signed extradition treaties with 36 countries and it has also entered deals, or is teaming up with a number of countries on information sharing. Hundreds of fugitives have been brought back or surrendered themselves to prosecutors.

There are also systematic efforts being taken designed to deal with the root causes of corruption; or in other words, efforts to prevent corruption through mechanism-building. Measures range from regulations on inspections, which cover overseas visits and use of public funds; standards on office sizes, real estate registration, use of official cars; and even barring “naked officials” (those whose family members are all abroad) from taking up key positions.

The Party’s Central Organisational Department also has rules on the nomination, promotion and removal of officials; no doubt representing a long list beyond the limited number of measures listed above. Still, the effect may be limited in achieving Mr. Wang’s three-phase goal.

Yes, there is now a clear strong signal of zero-tolerance towards corruption (approaching the “dare not” effect).

But prevention, in order to achieve the “cannot” phase, is much more difficult.

To that end, the judicial system should play a leading role; public scrutiny is a must; media supervision must be a more powerful leverage.

And there should be greater exposure of official performance to achieve government transparency under comprehensive institutional rules, as well as laws and regulations.

The biggest challenge lies in achieving the “will not” phase. It involves both subjective and objective elements - the mind and will to serve public interests and moral integrity on the part of the candidate, and then the nomination, election, promotion, demotion and removal of that person.

What’s more, people, especially those who know the person well, must have a greater say in his/her political life, present and future.

That’s why I express guarded optimism when I talk of confidence regained. For instance, I would not be surprised at all to hear of yet another case involving yet another fat cat, for there is absolutely no mercy at all if someone is caught breaking the law.

My initial reaction, then, apart from excitement, would also be to question who chose and promoted that fat cat in the first place, and who made the ultimate decision.

Illustration: Robert Wiggin

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Discussion related to methods of governance for China has long been a tradition amongst Chinese intellectuals. But over the course of the past decade, the study of comparative government with a focus on the Chinese system has become a more popular topic for politics students outside of China.

Questions such as where the source of legitimacy lies for the Chinese government, or what agents of political socialization are important in reinforcing proper conduct and values are regular questions being asked of students abroad as part of their courses.

These same questions are not necessarily being asked of the younger cohort of civil servants who will look to maintain the stability of the political system that the CPC has been keen to foster. With the benefit of being able to look at the developmental history of established nation-states, the Chinese government can form a blueprint, with the often talked about Chinese characteristics, in order to tackle future impending challenges that the party is all too well aware of.

In order to explore some of the most pressing challenges faced

by China and its governing party today and how they can be tackled, MESSENGER presents the views of Professor Alice Ekman, Research Fellow at the China Center for Asia Studies, in the French Institute of International Relations based in Paris, France.

2020

The many challenges ahead If I were myself a CPC cadre I would feel a lot of pressure on my shoulders and I would maybe feel tired just by the amount of challenges. We all know that China has to face a set of domestic challenges as well as international challenges If we list just the domestic challenges, first of all we know it’s to maintain economic growth; [as well as] a set of challenges related to urbanization and integration of the migrant population within cities; you also have challenges related to the development of the welfare state, the development of medical care, the development of the pension scheme, better access to education.

All these are all related to the reduction of social and economic inequalities in the country between rural areas and urban areas and within the cities themselves, between permanent residents and migrants; the newly arrived urban population. So, in this context I think the party is facing a number of challenges that it has never faced at the same time.

Also, in the new media landscape you also have the rise of social networks that are positively powerful in China so you have a new power emerging in China which is diffusing information much faster and which is also developing a debate that may also raise tension or at least raise new questions that the party has to address. If you look also at the international challenges, first of all on a regional scale, you have a tense regional situation with territorial disputes in the East China Sea as well as in the South China Sea. And you also have a restructuring of the region which is itself a major challenge for China.

Polic y manipulation and implementation at the local authority level The key challenge is coordination; coordination between central government and local governments, but also coordination at the central level. Since the launch of the era of reform and opening up in 1978, you have an increasing number of new institutions taking part in the policy-making process within China. You have new institutions emerging, with the intention of coordination.

Under the Xi Jinping leadership, there is a new attempt to coordinate the decision-making process. So, there is an idea, some form of initiative; but I don’t know completely how the implementation would take place. Streamlining is needed at the institutional level. At the same time, party officials themselves recognize that there is sometimes overlapping between institutions, between central government, and sometimes even between party institutions and between government institutions, between ministries for instance.

There is a need in China for coordination at an institutional level but also at a reform level. I guess the anti-corruption campaign can partly help in coordinating reform and institutions, but also it can generate tension at the senior level but also at the medium level and lower level. I wonder today what is the mood and general

motivation of civil servants at the time of the anti-corruption campaign.

I believe part of the population believe this campaign is justified, given the scandals that were noticed in recent years and given that there was some excess noticed at various levels in terms of expenditures and privileges.

At the same time, this anti-corruption campaign has been implemented at a very fast pace, and I believe that civil servants even at medium and lower levels are facing some pressure and have to readjust their working style and also the way they perceive their own mission in a very short time.

I wonder whether this anti-corruption campaign will bring cohesion for the consensus within the Party and central institution or if it will also create more tension. It’s too early to assess, but this is very interesting to assess as a China watcher.

Striking a balance between the haves and the have-nots I think the CPC is conscious about the gap between the expectations between the normal people and the elite, and is trying today to reduce the gap by listening to expectations. Of course, in the current political system there is also ways to look at satisfaction and to listen to expectations (collecting polls, online polls, or looking at hot topics and main comments on the internet). I think this concept of the Chinese Dream, for instance, is a way to be appealing to the less privileged part of the Chinese population, maybe the rural areas.

Parts of the urban areas now have reached a more comfortable lifestyle, but the majority of people living in the rural areas are still struggling to improve their daily life. So, the Chinese Dream is still giving some form of hope to this population that it’s possible to some extent to reach “Xiaokang Shehui” a small prosperity level. So this kind of public political communication is a way to try to maintain a form of legitimacy of the party in this changing context.

I think the anti-corruption campaign itself is a response to one of the most pressing expectations of the population, developing a fairer system, less unjust apparently. So, it’s a symbol as well; you have also cases that have been broadcasted about leading officials that have been charged for corruption issues. So, this is public political communication.

You also have effective decisions that have been made. But there is also expectations regarding the overall relation regarding poverty and social inequalities and I think if there is no result in the next two or three years, popular expectations, popular pressure will grow and may generate a real challenge for the stability of the country; as the party is worried about. It’s a real challenge for the current political system. I would say, at the same time, the current government is conscious about the gap and partly helps to reduce it but this is only part of the solution.

Guiding moral value systems and establishing an ethical framework Ethical framework is important but it’s a personal issue. Sometimes, you may have guidelines from the top or advice to follow a specific orientation but you may not integrate them in your life just because someone is saying you should go back to traditional culture or to values of Confucius; that someone may believe it is relevant to the current context or may feel it is appropriate to one’s own personality or ambition.

peared, and at the same time the progressive coming back of traditional Chinese culture but also the development of a consumption society. So, in this context, I understand that part of the Chinese population may feel a bit lost, especially because there’s a lot of pressure, pressure for young graduates to enter the work environment.

In this situation I would say that it’s more a matter of self-personal consciousness. Moral values are ethical, at university level fighting against plagiarism, at work level having a specific set of conduct with colleagues and not being able to develop specific behaviors for carrying a promotion only. So, it’s also related to the anti-corruption campaign.

I guess this campaign can help in building a framework but I would say it’s more thorough reform, thorough reform even in the vocational system; reinforcement of meritocratic recruitment of students; reinforcement of meritocratic recruitment of civil servants which is already partly meritocratic. But fairer access to education, fairer access to white collar jobs and serving in public service, and also fairer practice in the civil service might provide an interesting example for building a stronger more ethical framework in China.

It’s true that there is an issue that has been generated since the erosion of traditional Marxist ideology with the era of Reform and Opening up; progressively traditional ideological framework that was widespread during the Cultural Revolution and before has disap-

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Will 2015 Shed Light on Better Flight Tracking?

Xie Tingting

At the time of going to press, search vessels equipped with deep-sea sonars are still combing an area in the remote southern Indian Ocean, striving to find clues of the Malaysia Airlines Flight MH370, which disappeared last year.

The aircraft, a Boeing 777-200ER mysteriously vanished into thin air on March 8, 2014, with 227 passengers and 12 crew members on board, en route from Kuala Lumpur to Beijing.

About 40 minutes after takeoff, MH370 disappeared from air traffic control radar screens. Its transponders appeared to be either switched off or had failed.

Primary radar, which didn’t rely on transponders to detect aircraft as the air traffic control’s secondary surveillance radar did, soon picked up a signal and for a while was able to track what was believed to be MH370 as it diverted from its scheduled route. The plane was last seen above the Strait of Malacca, heading northwest, before it dropped off the radar altogether.

MH370 continued to fly for hours, according to a series of satellite communication logs recorded by the British satellite telecommunications company Inmarsat. Months of ground-breaking analysis of the satellite data by both official and independent experts has brought the search to its current area, thousands of kilometers away from

the plane’s last known position. Even so, finding MH370 is no easier than finding a needle in a haystack. In fact, authorities are not even 100 percent sure they’ve found the right haystack.

People have heard various theories that vividly lay out every detail as to where MH370 went and what happened to it. But the truth won’t be learned until the search team locates the aircraft’s two black boxes - a flight data recorder and a cockpit voice recorder - and has the luck to retrieve useful information from them, since the cockpit voice recorder usually captures sounds in the cockpit in a two-hour loop, but MH370 presumably continued to fly for at least six hours after the critical moments that defined its fate.

“The keys to a r e l i able aircraft tracking system lie in whether it is smart enough to detect anomalies, alert those on the ground in time, and send positional data back without having a deactivation switch that can be easily accessed.”

Commercial airliners are tracked by air traffic controls using primary and secondary radars, based on technologies originally developed during World War Two. But radar coverage has its limits over sea, and so tracking aircraft with radar becomes unreliable in the case of transoceanic flights.

Today, many airlines have added to their fleets a new technology known as Automatic Dependent Surveillance-Broadcast (ADS-B), which relies on satellites to track and report aircraft positions in real-time and appears to be a promising replacement for radar.

MH370 was equipped with ADS-B equipment. The problem, however, is ADS-B still relies on transponders to relay data to the ground, and transponders can be turned off manually.

It’s still unclear whether MH370’s ADS-B equipment was deliberately turned off or failed, but this new technology didn’t provide useful information in this case.

It seems that the keys to a reliable aircraft tracking system lie in whether it is smart enough to detect anomalies, alert those on the ground in time, and send positional data back without having a deactivation switch that can be easily accessed. In the wake of MH370, aviation decision-makers have been pondering a new global standard for aircraft tracking.

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A new system, called the Global Aeronautical Distress and Safety System (GADSS), is being mapped out with a mission to “ensure that information is provided in a timely fashion to the right people to support search and rescue, recovery and accident investigation activities,” according to the International Civil Aviation Organization (ICAO), an agency of the United Nations specialized in international aviation.

This February, ICAO is holding a high-level safety conference at its headquarters in Montreal, Canada.

Attendees will discuss the GADSS concept and how the standard can be implemented. Based on feedback from this conference, ICAO will finalize its GADSS blueprint by the third quarter of 2015.

Under ICAO’s current blueprint, GADSS will be a globally integrated system that maintains an up-to-date record of an aircraft’s progress. GADSS will contain an automatic aircraft tracking system that will be activated at takeoff and remain operational throughout the flight.

The system will broadcast the aircraft’s position at least every 15 minutes, and report more frequently with a one-minute interval when an abnormal event is detected. A separate autonomous distress tracking system can be automatically or manually activated, in case of failure or risk of failure of the related aircraft tracking systems.

In worst scenarios like crashes, a tamper-proof flight recorder designed to be automatically separated from the aircraft in extreme events will be deployed at the start of an accident. The flight recorder will be equipped with an emergency locator transmitter, and will be able to land at low speeds on hard objects or float on water, making it easier to be located than the current black boxes.

GADSS is still at a concept level, but an ICAO spokesman has told Reuters that if adopted, the system could go into effect in the near term because it wouldn’t require new technology on planes.

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On December 28, 2014, exactly 42 weeks after MH370 disappeared; the Indonesia AirAsia Flight QZ8501 was lost over the Java Sea on its route from Surabaya, Indonesia to Singapore. Because QZ8501’s radio and ADS-B contacts were lost without warning, just like MH370, widespread speculation of another MH370 quickly surfaced.

QZ8501 was not another MH370. The wreckage of QZ8501 was found and confirmed within days; but it took two weeks to locate and recover its black boxes, and more weeks to analyze all the data in order to know what caused the crash.

In the event of an aviation accident, tracking the plane is one thing; getting to know what happened is another and maybe more important issue. Currently, a plane’s black boxes are usually fixed at its tail section, which makes immediately-getting-to-know-what-happened near impossible.

Even the deployable flight recorder proposed by ICAO would still require time to locate and recover. While technologies continue to advance, some companies have made it possible to live-stream black box data in case of an emergency.

Not long ago, Canadian airline First Air became one of a few in the world to be able to live-stream black box data when needed. The airline has adopted a system designed by the company Flyht Aerospace Solutions, which monitors data about a plane’s location, altitude and performance, and can automatically begin streaming information every second when something goes wrong.

The system reportedly costs 120,000 US dollars per plane. Inmarsat, the satellite communications company, also said it had been developing similar “black box in the cloud” services.

It will take time for such new concepts to be accepted by every airline, budgets and necessity among other concerns.

It will also take time for ICAO to make its new flight tracking system a

requirement. Yet, since Henk Hof, who chairs ICAO’s ad-hoc working group on flight tracking, has said that aviation has the culture to react and take lessons from rare events, let’s hope that every member in the aviation industry really makes every effort to learn from the past, and take action.

Let’s also hope that no one in the future will go through the same, painfully long wait that has been haunting the families of those on board MH370 to this day.

OPED

Op

Banning is Rarely the Answer Liu Yan In a somewhat controversial move, China’s Ministry of Transport has banned private cars from offering unlicensed taxi services via mobile-phone apps. In other words, private-car owners are not allowed to use the country’s slew of ride-hailing apps to pick up passengers for profit.

The logic behind the move is, this will “allow passengers who use these services to travel at ease”. I’m more than willing to acknowledge that safety is always a legitimate concern.

If private-car owners can provide taxi services via mobile applications such as Didi and Kuaidi, amongst others, as they please, then in essence, they are no different from all those “black cabs”.

However, I can’t help but feel like this is yet another “too simple, too lazy” type of solution China is prone to toss out. The decision-makers seem to have a default ban button, and anytime something goes wrong or may go wrong in the future, they immediately ban it.

I’m not saying banning is never called for. Take smoking in public places for instance. In theory, people should have the right to smoke anywhere they want, but considering the second-hand smokers who are forced to suffer, the already-terrible air, and many smokers’ ghastly habit of flicking cigarette butts willy-nilly, the ban makes sense. There is no “absolute freedom” after all. Cliché as it sounds, it’s for the greater good.

Unfortunately, in most cases, banning is not the answer. The original intent may very well be to “nip it in the bud”, “it” being whatever potentially bad thing that may harm our society or country. But in the end, all it does is make life more difficult for the vast majority of the law-abiding citizens.

Just ask anyone in China who wants to keep in touch with their overseas friends or family members on Facebook.

So the crux of the problem is whether the ban is indeed for the greater good.

And by that, I mean judged by the result, not the intention. In most Chinese cities, cab fares and the number of total taxis available are both under tight control. At the same time, there’s a double threshold for anyone who wants to be a professional taxi driver.

On top of meeting all the qualifications for a cab driver, you also have to work for an employer that meets all the qualifications for a taxi company.

As such, there is always a huge gap between demand and supply for cab services, and so for taxi companies, prof-

it

just keeps coming in. It’s practically guaranteed. That’s why they have this natural animosity toward private-car owners who want to join the game and eat away at their profit.

Like taxi companies, cab drivers also fiercely object to private-car owners.

But in fairness, it’s not all about that “don’t encroach on my turf and steal my business” mentality. They simply don’t have much of a choice.

Currently in Beijing, each cab driver must pay over 5,000 yuan (US$806) per month to taxi companies to cover their overheads. Even with the price hike last year, Beijing’s taxi drivers earn about 6,000 to 8,000 yuan per month. Subtract 5,000 from that, how much is there left? So of course, they steadfastly refuse to let private-car owners swoop in and take more money away from them.

How then, do you give private-car owners an in without wreaking havoc?

My gut instinct is to say “no way”. Apparently the Ministry of Transport feels the same, hence the ban. It’s a heck of a lot easier than cutting the huge profits of taxi companies and consequently having to deal with the havoc.

But here’s the thing. I’m just a regular Joe. I can shrug my shoulders and be done with it. Authorities, on the other

hand, shouldn’t cop out. Their decisions affect millions of people. Since the Internet is quickly changing the commercial landscape as we know it, old business models have to be adjusted and old profit chains have to be restructured.

Sure, the undertaking is going to meet resistance, and it’s much more difficult than pushing the default ban button so to speak, but handling difficult tasks goes with the territory, doesn’t it? They are the “authorities”. They need to step up to the plate and face the challenges head on. on. They need to be daring and not afraid to make tough decisions. After all is said and done, they need to do what’s good for the people.

You know, the greater good.

Interestingly enough, the Ministry of Transport has also said, “apps for premium car services have an innovative service model and play a positive role in meeting the high-end and differentiated transportation market.”

In that case, put your money where your mouth is. Do more research, and come up with a feasible mechanism to regulate private-car owners instead of banning them altogether. Remember, people need more and better taxi services, not less.

Reshaping Asia

construction materials, machines and technologies to other countries. The strategy is regarded as a reasonable choice to meet the need of the Chinese economy at this particular stage, where it is necessary to ensure economic growth while transforming the economy from relying on exports and investment towards a reliance more on domestic consumption.

and inclusiveness. Related to the “One Belt and One Road” initiatives is a new financial institution called the Asia Infrastructure Investment Bank, or AIIB. As the leading force behind the initiative, China has adopted an open attitude toward the membership of both the Silk Road Fund and the AIIB, noting that all countries are welcome to invest in these schemes.

Asian countries are expected to benefit tremendously from the Chinese investment. Nepal is a case in point. Beijing will increase official aid to Nepal by more than five times in 2015 in order to develop infrastructure in the landlocked nation which is a key stop on the “One Belt” project.

The AIIB is different from the U.S.-led Trans-Pacific Partnership, or TPP, which is an exclusive club of 12 countries that shut the door on China. In contrast, Beijing proposed the idea of a Free Trade Area in the Asia Pacific, which groups all 19 member economies of APEC.

Such a grand initiative originates partly from the understanding that China’s economic future relies to a largel extent on sustainable economic growth in surrounding countries, or Asian countries in general. According to Chinese Customs’ figures, trade with Asian countries in 2013 reached 2.2 trillion U.S. dollars, representing more than 53 percent of China’s total trade with the rest of the world. In comparison, trade with Europe, the U.S. and Japan stood for only 33.5 percent of China’s total trade volume during the same year.

Along with infrastructure construction comes people-to-people exchanges, stronger trade and commerce links and closer ties between China and the rest of the countries situated in Asia.

Economic connectivity will be created among Asian countries in the process of the implementation and realization of these initiatives, thus achieving long-term stability and a shared prosperity in this region.

By investing overseas, China can also alleviate its overcapacity in the manufacturing sector by exporting

Another positive and significant element being introduced by China to Asia has been the spirit of openness

The U.S. efforts have been lobbying Asian allies not to join the AIIB, but Asian nations are warmly embracing the initiatives, as shown in the fact that more than 20 Asian countries have signed up to the AIIB already.

By launching these global initiatives, China is reshaping Asia not only by creating a solid foundation to spur trade and economic growth in Asia, but also bringing about a new tone for Asia - be open and inclusive.

By Xu Qinduo I did a bit of translation work the other day, or provided some advice, to be accurate, to a friend who was organizing a forum on China’s “One Belt and One Road” project. The program, together with related initiatives, are not known to everybody yet, but they are poised to reshape the landscape of Asia.

There was not much meat to the “Belt and Road” concept prior to the recent APEC summit held in Beijing, when China announced the establishment of a 40-billion-dollar Silk Road Fund, which is designed to support the “One Belt and One Road” program.

The “Silk Road Economic Belt” refers to a network of highways, railways and other infrastructure to link China to countries in south and central Asia and Europe. The “21st Century Maritime Silk Road” will connect China with Southeast Asia, the Middle East and Africa through high-speed rail links and the funding of roads, ports and bridges that will play a role in upgrading economies in these regions.

In short, the ultimate goal is to create economic connection between China and the neighboring regions.

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