Monday, August 18, 2014

Keeping an Eye on the Long Game: Part LXI

WSJ has a wide ranging must-read article on China. It doesn't address any of the military aspects - but that does not matter. 

From economics to demographics, there are plenty of non-military aspects to the China story that arguably are more important than how many ships they are pushing out each year.

The Chinese are on the move, and most of them are not wearing uniforms. They leave for a variety of reasons; economic, political, educational, ecological, or just wanderlust. For decades, the Communists kept them inside the borders, but no longer.

Just a few of the topic areas:

Get used to more Chinese ... and perhaps Canada is on to something;
Politics, though, isn't the most important issue on the mind of Ms. Sun, a 34-year-old Beijing resident who's bailing out. (She requested anonymity because she doesn't want publicity to spoil her plans.) The main reason she's planning to pack up: Her 6-year-old daughter is asthmatic, and Beijing's chronic pollution irritates the girl's lungs. "Breathing freely is a basic requirement," she says. The girl also has a talent for music, art and storytelling that Ms. Sun fears China's test-driven schools won't nurture.
Last year, the U.S. issued 6,895 visas to Chinese nationals under the EB-5 program, which allows foreigners to live in America if they invest a minimum of $500,000. South Koreans, the next largest group, got only 364 such visas. Canada this year closed down a similar program that had been swamped by Chinese demand.
Just don't call their actions imperial;
But China's cross-border political activities are creating unease. Consider Australia—one of the most popular destinations for Chinese students, emigrants and tourists, and a country where Mandarin Chinese is now the second-most widely spoken language after English.

"Chinese Australians are being lectured, monitored, organized and policed in Australia on instruction from Beijing as never before," wrote John Fitzgerald of Swinburne University of Technology, one of the country's foremost China experts, in an article published by the Asan Forum, a South Korean think tank.

In the U.S., a vigorous debate has broken out in academic circles about the role on American campuses of Confucius Institutes, which are sponsored by the Chinese government and offer Mandarin-language classes, along with rosy cultural views of China. Critics say these institutes threaten academic independence; supporters say they offer valuable language training that would not otherwise be available. In June, the American Association of University Professors stepped into the controversy and recommended that universities "cease their involvement" with the institutes unless they can gain "unilateral control" over them.
Want to know where your Walmart dollars are going?
In the global market for high-end real estate, Chinese buying has become a key driver of prices. According to the U.S. National Association of Realtors, Chinese buyers snapped up homes worth $22 billion in the year ending in March.
Anyone who has had the displeasure to show up somewhere right after two busloads of Chinese tourists show up at a location will perhaps want to stay home;
The Chinese have overtaken Americans to become the world's biggest tourist spenders—and they're rapidly moving upmarket. Mei Zhang, the founder of Beijing's high-end travel operator WildChina, offers family holidays to destinations such as Kenya, Patagonia and Alaska at $10,000 per head. Chinese are now the third-largest group of nationals landing in Antarctica, where tourists zip around the ice floes in Zodiac inflatables to watch penguins.
And the outflow has only just begun. The Hong Kong-based brokerage firm CLSA forecasts that departures from China will double to 200 million by 2020.
And finally - are we subsidizing the education of our competitors ... or are we sowing the seeds of their next uprising?
The Chinese government has no desire to slow the flow of students. Its attitude is simple: Why not have the Americans or Europeans train our brightest minds if they want to? President Xi's own daughter went to Harvard.
I think China is betting on the former, and we lack the long-term strategic thinking to do the later. Anyway, our major institution of higher learning are not exactly hotbeds of pro-Western, pro-American, and pro-liberty thinking.

Watch the Chinese economy as well. How they react internally to a contraction will have a lot of impact externally. If things really go south inside China, it will be interesting to see how much the anchor-baby hotels and 2nd home buying is used as an exit plan.

Buy chicken feet.

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