Golden delta
Hu Yue

THE sprawling U.S. financial meltdown has sent a chill through some of China’s export-oriented regions as they have shown symptoms of the American ailment in the form of declining exports. But you would not know it from watching the country’s Yangtze River Delta, one of the growth engines of China’s robust economy. Despite some nervousness about its slackening export machine, the delta has avoided following the Western world into an economic abyss. Instead, it is drawing some strength from a well-designed blueprint for developing a tertiary, or services, industry. On September 16, the State Council issued a circular, approving the development program of the Yangtze River Delta as a world-class city cluster based on the productive service sector. The circular defines the Yangtze River Delta as the region covering Shanghai and neighboring Zhejiang and Jiangsu provinces.
The circular said the government aims to bolster the service sector as the leading economic powerhouse for the delta area by 2020 and vows to turn Shanghai into an international financial and shipping center. Moreover, the area would strive for a more advanced manufacturing sector by advancing its technological innovations for industrial upgrading, it said. Du Ying, Vice Minister of the National Development and Reform Commission, told a press conference in Beijing on October 16 that the region is on course to grow into a well-off society by 2012, eight years in advance of other regions in the country.
Fear factor
The delta’s ambition to develop a tertiary industry is motivated by fears that global economic growth may grind to a standstill and wind up eating farther into demands for Chinese exports. Labor and land cost surges also have set the stage for a recessionary environment for the area’s manufacturing industry.
Several indicators have already hinted that the region is under pressures of an economic slowdown. According to the National Bureau of Statistics (NBS), Jiangsu Province’s total volume of imports and exports from January to September grew 23.9 percent year on year, 4 percentage points lower than the year-earlier period. Meanwhile, the value of the industrial output of enterprises in Shanghai above a designated size, namely with an annual output value exceeding 5 million yuan ($731,500), only climbed a dismal 6 percent in September, slower than the average rate of 11.5 percent during the first three quarters of this year. Guo Tianyong, Director of the Research Center of the Chinese Banking Industry under the Central University of Finance and Economics, told Beijing Review that a buoyant tertiary sector could help insulate the delta’s economy from external downturns and make the composition of growth healthier given the region’s unmatched weight in the national economy.
The latest data from the NBS indicate that although the region covers only 2.1 percent of the country’s territory, it produces 22.5 percent of national gross domestic product, contributes 31.5 percent to national fiscal income and attracts 35 percent of all foreign investment to China.
Zuo Xiaolei, chief economist at China Galaxy Securities Co. Ltd., echoed Guo’s opinion. “The focus switch of the delta is the latest in a string of extraordinary steps taken by the government to balance the economic structure’s over-dependence on exports that are facing some headwinds,” Zuo told Beijing Review.
An advanced manufacturing sector
While the drop in exports is partly because of overseas economic downturns, the seeds of real threats to China’s manufacturing sector are more homegrown.
“The region’s labor-intensive manufacturing boom has proved to be more than the local environment and resource reserves could withstand,” said Chen Min’er, Executive Deputy Governor of Zhejiang Province, at the press conference. Some of the province’s polluting enterprises engaged in manufacturing low value-added products are being shut down or moved out of the region, while hi-tech and energy-efficient ones are favored with tax breaks, he said.
“At the same time, we have extended a helping hand to the private enterprises buckling under pressure in terms of financing, land use and power supplies,” Chen said. “Since this year, the total number of the province’s enterprises has been definitely on a rise.”
“The government has subtly left open the possibility of further tax relief for enterprises in the service sector, such as the reform of the value-added tax system and the cancellation of business tax,” said Guo Tianyong. The advanced manufacturing sector would provide a solid base for tertiary industries, which in turn could serve the next round of national industrialization, he added.
Integrated city cluster
Analysts said gearing up the region for a ballooning tertiary sector has other rewards. Shanghai and the two provinces could join their tertiary forces and benefit from the interplay between each other. Besides this, the three areas within the region would each have their own sets of priorities. According to the government circular, Shanghai would make efforts to maintain its advantage in logistics and finance, while Jiangsu and Zhejiang would explore the productive service sector focused on software, logistics, tourism and real estate.
But Zuo Xiaolei stressed that it was unnecessary for the government to rush ahead with dividing up industries. Instead, its most pressing job would be to optimize the market environment for enterprises to find their best roles, she said. Basking in the region’s dramatic tertiary endeavors would also be a flurry of small and medium-sized cities that would play host to some labor-intensive industries forced out of the big cities. Guo said this would make the task of building the delta into an international urban agglomeration as part of the country’s urbanization efforts achievable.
The formation of a city cluster could maximize the scale effect of industrial production and precipitate a consumption-driven economy, Zuo said. Shanghai obviously would play a vanguard role in leading the development of surrounding areas, just like Wuhan has become the beating heart for the economic circle of central China, she added. With an unprecedented integration of the region on the way, policymakers have pledged to remove administrative barriers hindering the free movement of the workforce and production materials within the region. In another move, a regional high-speed rail network is taking shape with a plan to build three intercity lines, namely, the Shanghai-Nanjing Railway, Nanjing-Hangzhou Railway and Shanghai-Hangzhou Railway. Nanjing and Hangzhou are the capital cities of Jiangsu Province and Zhejiang Province, respectively. Yang Xiong, Executive Vice Mayor of Shanghai, said the 2010 Shanghai World Expo would be a long-awaited catalyst for the delta region to power ahead. “Since the U.S. economy is expected to bottom out in 2009, the expo is expected to further provide us with more recuperative power to regain lost ground,” he said.

—The Daily Mail-Beijing Review Articles Exchange Item

The return of American soft power
Dr Paul Kennedy

THERE are many things to say — and are being said — about Barack Obama’s historic victory in the US presidential election, and analysts of the fascinating transformations of today’s American society will do a far better job than myself at explaining the outcome. But as I surveyed the extraordinary non-US response to Obama’s solid, undisputed achievement the morning after his victory became clear to the world, I was tempted into a further thought:
Will the sheer appeal of this man across the globe actually make an impact upon America’s capacity to persuade other nations to follow its lead and agree to measures that Washington wants but fellow members of the system of states may not initially be so enthusiastic about? Will it convince governments and peoples abroad that policies “made in the USA” are good for humankind as a whole?
For this, after all, is the definition of the term “soft power”, as it was first systematically argued by Joseph Nye of Harvard University in a series of books, he composed during the early 1990s. For too long, Nye suggested, realist scholars had focused far too heavily upon the hard-knuckled dimensions of military and economic/financial power and ignored the significance of national characteristics that allowed certain countries to “win friends and influence people” better than others.
An attractive way of life, an appealing culture, a capacity to be marching with (or at the head of) world opinion rather than standing against it were thus as potentially useful parts of a nation’s toolkit as were clever diplomats, financial solidity or even large aircraft carriers.It is clear that when Nye developed these ideas he believed that the United States possessed most of the attributes of “soft power”: that is, he rightly felt that Hollywood, MTV and American youth culture had much greater worldwide appeal than did the collapsed Soviet Union or the lack of freedoms in China.
Moreover, vast parts of the globe were marching in the direction pointed to by the Founding Fathers — democracy, the rule of law, economic liberty and so on. All of this reinforced America’s special position in the world. It also confounded scholars who were writing about American decline. The three-legged stool of US military power, economic power and soft power would keep the Republic at the top for generations to come. Then came George W. Bush, Dick Cheney, Donald Rumsfeld and the neo-con agendas of military activism, ideological assertiveness, over-riding of some basic human rights, unbalanced stress upon “the war on terror” and pathological John-Bolton-like distaste for multilateralism — a collective bag of prejudices that the efforts of more moderate Republicans such as Colin Powell and Condoleezza Rice could only rarely ameliorate.
By all measures of ranking world opinion — for example, the Pew Foundation global polls — the Bush administration became the most unpopular in recent American history. Unsurprisingly, therefore, America’s “soft power” collapsed. The capacity of the White House to persuade other countries to do what it deems best was battered; the worldwide empathy that followed the 9/11 attacks steadily evaporated, even among countries traditionally most friendly to, or most reliant upon, the United States. The recent collective global rejoicing at the end of the “Bush era” was testimony to how far the nation of Lincoln, Wilson, FDR and Kennedy had fallen into international dislike over the past eight years.
Yet soft power, perhaps by its very nature, is volatile. And it is surely more easily adjustable and amendable than, say, a long-term relative decline in military-strategic power. So the interesting question remains: Will the electoral victory of Barack Hussein Obama give back to America that third “leg” of the stool, the triple undercarriage that supports its world position, the grand if immeasurable advantage of political and ideological appeal? Judging from the media reports from far and wide, the answer is an unreserved “yes.” Predictably, the ever-tumbling-forward French President Nicolas Sarkozy cabled Obama with the message: “Your election raises in France, in Europe and elsewhere in the world, an immense hope,” offering a Gallic embrace that the next incumbent of the White House would be wise to accept with care even if the sentiments are sincere.
The jubilation across Africa and Indonesia, both claiming an Obama relationship, is widespread. The New York Times reported a 24-year-old bookkeeper in Caracas, Venezuela, as saying “It’s kind of nice to feel good about the United States again.”
Regimes that do not permit free and open elections are clearly disturbed at the ripple effects, just as their political opponents are heartened by this amazing example of democratic openness. Even the most purblind Hezbollah or Iranian fundamentalist is going to find it hard to accuse someone called Barack Hussein (descendant of the Prophet) of inherent anti-Muslim prejudice.
To be sure, if Obama attempts to rely upon international goodwill alone to push for policies advantageous to America, that would be like an automobile seeking to run on hot air rather than high-grade gasoline; and the honeymoon effect would soon be over.
What the next president needs to do is recognise clearly what the hopes are that have made him so popular in so many different parts of the world: the African hopes that he will give sustained attention and real help to their troubled continent; the desires across Latin America that he will keep to liberal policies on trade and immigration, offer to ease the impasse with Cuba, and pay their subcontinent real respect; the yearnings in Europe, Canada and Australasia that he will take seriously America’s obligations towards international institutions and treaties, including environmental and anti-protectionist commitments; and the moderate-Arab hopes that he will offer more than lip service to the Palestinians.
All of these aspirations are much easier stated than realised, as Obama surely knows, and all of them will involve compromises between certain of his campaign promises to American voters and the larger “constituency” he has picked up overseas. Yet if he really wishes to recover this country’s soft power in the world, he will have to begin by offering the world something of what foreigners yearn for, not the whole stall of course, but items that look good and agreeable and helpful to quelling our many global fears and discontents.
Here a close study of the rhetoric and the actual policies of his predecessors Wilson, FDR and JFK will come in very handy indeed. For, as historians of their presidencies will tell you, none of those great “internationalist” statesmen did anything other than pursue America’s “national” interests. What they had in common was the wit and wisdom to see how they could merge what was good for their country with what was good for the world, or at least large parts of it.They convinced millions of people worldwide to have faith in America’s commitment, judgment and leadership . . . and thus to take more seriously reform proposals that would emanate from the White House. And that, in a nutshell, is what “soft power” is all about.
But because it is “soft,” it can dissipate fast. Large parts of a rather anxious world are waiting with hope for the coming of an Obama presidency, and most are sensible enough not to expect a sort of first-hundred-days miracle. But they are sitting in judgment, like the voters of Ohio and Florida, and willing to give “the new man” the benefit of the doubt — but not forever, perhaps not for long. Like many other things in life and politics, Obama’s bid to restore American soft power has term limits.

—Khaleej Times

How will we cope in changed world?
Amit Chaudhuri

LATE last week came the announcement from the intimidatingly named National Intelligence Council that the end of American hegemony is imminent; that the unipolar world will, before long, cease to exist; that new locations of power are emerging. The shift has been heralded for some time, if not by the US authority that provides ‘unvarnished’ intelligence to US policy-makers; so we already have an idea of what those new locations are. Nevertheless, I found myself scouring the report in the paper to see if my country of birth had been mentioned. In the third paragraph, like characters in a frequently perused novel, I found the emerging economies of India, Brazil and China, which, predictably, seem to be a source of a great deal of the anxiety. Two things, however, gave this fairly unsurprising assessment a new meaning and urgency. The first was that the pronouncement came from the National Intelligence Council and not from a liberal columnist or a developing-world economist. The second was that the familiar names of China, India and Brazil were being mentioned, in this instance, in the wake of calamitous damage to the market earlier this year. Not long ago, the emergence of the Chinese and Indian economies was a confirmation of the transformative powers of the free market and fitted in perfectly with its triumphalism. Now, with America and Europe set to borrow money from India and China, this reassuringly optimistic, self-congratulatory, but one-dimensional narrative may have to be reconfigured.
Yet, despite this subtle but decisive shift in the balance of power, it feels stupid to gloat, which is why I felt embarrassed to catch myself reading the news with a personal frisson and excitement, a lack of reflection and seriousness. It was as if there was, for a moment, a characteristic member of the India diaspora in me, waiting to get out; a diaspora which, in my waking moments, I am deeply wary of for its conservatism and its arriviste ambitions on the world stage. Yet reading about the National Intelligence Council’s report, I was surprised to find in myself a haunting of the contemporary Indian’s romance with power. But that excitement has a history. Many things have been happening, some of them in the last three months, that would have seemed implausible 15 years ago. The great, unprecedented phase of calm and plenty we entered after the collapse of the Berlin Wall, marred, here and there, by some irrational and unpersuadable terrorists, appeared to be here to stay. No one expected it to be struck so hard at its heart — not by aircraft flying out of nowhere, but by the workings of its own institutions. Then there was the American election and Barack Obama. Six years ago I’d spent about four months in New York, and discovered that it was far less multicultural than London. It had educated neighborhoods, posh neighborhoods, black and Hispanic neighborhoods, but having spent some months in America’s most liberal city, I wouldn’t have dreamed of the emergence of a figure like Obama.

—Arab News