December 01, 2018

Why Congress may win yet again

Dilip Apte

Someone's interesting take:

Read carefully again and again, and understand! ...

Reasons why Congress is winning for the past 65 years and why it will win in the future:
(A view Point)

Currently, on an average (over states) there are:
15% Muslims,
8% Christians,
7% Others and
70% Hindus.

That means: out of 100 people, there are 70 Hindus, 8 Christians, 15 Muslims and 7 others.

Voter registration is as follows:
90% of Muslims,
90% of Christians and
60% of Hindus and
90% of Others.

This means: out of 100 people, 42 Hindus, 14 Muslims, 7 Christians and 6 'Others' will register for vote.

Now, interesting point
Out of the registered voters having voter ID or at least having interest in selecting their representative.

Have a look at the number of turnouts:
50% Hindus will vote,
90% Muslims will vote,
90% Christians will vote and
90% others will vote.

This means:

Ultimately 21 Hindus will vote,
13 Muslims will vote,
6 Christians and
5 'Others' will vote during
election and these 45 (45%) people are responsible for selecting the representative and deciding the future of our dear Great mother land (India!!!)

Now see Out of these 45 people of total population who votes for whom!
It is highly likely that out of 13 Muslims, 10 will vote for Congress,
Out of 6 Christians, 5 will vote for Congress and
Out of 5 others, 3 will vote for congress.
it means: Congress will get 18 non Hindu votes, BJP may get 1 Muslim or Christian and 1 others vote.
So what BJP has got? BJP has got 2 non Hindu votes!

Other parties, that are third front, may get 2 Muslim or Christian and 1 vote from others. That is, 'Others'
may get 3 non Hindu votes.

VERY IMPORTANT

Coming to Hindu votes:
Out of 21 Hindus. >
If 5 vote for Congress,
10 vote for BJP and
6 vote for other parties

Final result will be:
Congress 23 votes,
BJP 12 votes,
other parties will get 9 votes.
This has been the trend since 1990, therefore,
Congress does not bother for Hindu votes!!!!

Congress loses in States where the Muslims do not vote for them.
If Congress scares minority from majority, which is easy in the name of burka "secularism",
their 90% work is done........
and they have been doing so religiously.........

It is highly likely that the trend will continue and may vary by few percent
and the Congress will remain in Power, as minority population increases, for
the next 100 years..

So what is the Mantra to thrash congress and defeat Islamic Terrorism?
1. Register yourself for Voter ID;
2. Get the Voter ID as soon as possible;
3. Do not go for picnic or movie on Election Day;
4. Vote for Nationalist and Patriotic leader like Narendra Modi on Election Day;

*If celebrate picnic's and go for movie on election day, our children will not be able to celebrate life truly*

VOTE THIS 2019 WITHOUT FAIL

Our dear mother land is calling us, Vote this time,

Wealth and debt for Gen Xers

AXIOS FUTURE Steve Levine

Data: Kurz et al. 2018; Chart: Naema Ahmed and Harry Stevens/Axios

When Generation X was as old as millennials are now, they had significantly more financial assets — more even than the Boomer generation before them, according to a new report by the Federal Reserve Bank.

Axios' Stef Kight writes: If any generation could be called "entitled," it might have been Gen Xers — if it weren't for the typically large debt that ultimately crushed their chances of wealth.

The economic environment in the years immediately before the financial crash made it easy for young adults at the time — members of Generation X, born from 1965 to 1980 — to buy homes, cars and other properties, and to invest in stocks.But when you subtract the average Gen Xer's debt — mostly the easy-to-obtain mortgages — they weren't much better off than young Boomers before them, Bill Emmons, assistant vice president at the Fed in St. Louis, tells Axios.

By the numbers: More than half of Gen Xers owned homes when they were 21 to 36, around the age of millennials today. Just 33.9% of the same age group in 2016 owned homes, the Fed said.

Young Gen Xers were also more likely to own stock at that age than millennials or boomers, at 28%, compared with 15% and 14%, respectively.Millennials lacked the same financial opportunity to buy homes as Gen Xers at their age, and "as house prices have grown, they haven't been able to cash into that in the same way," said Lowell Rickets, of the St. Louis Fed's Center for Household Financial Stability.But even with the student debt crisis, millennial median and average debt is less than that of the generation before them when they were the same age, according to the report.

The bottom line: With the financial crash, the investments that Gen Xers made when they were young still haven't really paid off, according to Emmons, and ultimately left them worse off. Millennials may not bear the same risk as Gen Xers did, but they are still having trouble accumulating wealth partly because of student debt.

Over 300 policemen deployed along border with Balochistan after Chinese consulate attack


Imran AyubUpdated November 30, 2018


63 posts have been set up in Jacobabad, Kashmore and Qambar. — AFP/File

KARACHI: Sindh has deployed more than 300 police personnel along its border with Balochistan after investigators found that the suspects involved in last week’s foiled attack on the Chinese consulate here had come from the neighbouring province, a senior official said on Thursday.

The move, he said, was a follow-up to the decision taken at a meeting presided over by Sindh Chief Minister Murad Ali Shah and attended by Chinese Consul General Wang Yu, Chief Secretary Mumtaz Ali Shah, Inspector General Dr Kaleem Imam and other senior officials of the provincial government.

He agreed that the available resources and manpower of the Sindh police did not allow the law enforcement agency to properly man all the 63 Balochistan border posts and it was incidents like the consulate attack which pushed the authorities towards adopting temporary measures.

“A total of 323 policemen have been deployed at 63 Balochistan border posts,” he said. “It’s the sanctioned strength for a dedicated purpose which [is] keeping an eye on the movement of people and spotting terrorists or outlaws on the [inter-provincial] borders. These posts were supposed to check regular movement of people from the two sides. Of the 63 posts, 31 are in Jacobabad, 19 in Kashmore and 13 have been set up in Qambar.”

ARTICLE CONTINUES AFTER AD

63 posts have been set up in Jacobabad, Kashmore and Qambar


Three heavily armed militants were shot dead in an encounter with law enforcers during a gun-and-grenade attack on the Chinese consulate in the city that also claimed the lives of two police officials and two visa applicants last Friday morning. The assault on the consulate, situated in the “high-security zone” of Clifton’s Block-4, also left a private guard of the foreign mission wounded.

Later, the banned Balochistan Liberation Army promptly claimed credit for the terrorist attack and the police during the investigation traced their route to reach their target. An initial probe convinced the authorities that its planners, handlers and perpetrators had come from the neighbouring province.

Though the Balochistan border posts were built years ago, the officials said, their effectiveness always came under question whenever such an incident hit Karachi.

“These posts were actually set up in 2006 after the killing of Nawab Akbar Khan Bugti in the wake of growing threats from separatist militants,” said the official. “However, it has always been a tough job due to limited resources, poor infrastructure on the border and a large part of the terrain which cannot be manned round the clock. In 2016, the same move was initiated after twin suicide attacks targeted an Eidul Azha prayer congregation in Shikarpur that killed a policeman and left around a dozen people wounded. The decision was made to strengthen security after it was established that the handlers and perpetrators had come from Balochistan. The move proved short-lived.”

This time, he said, the police authorities had made detailed plans and taken effective measures that would prove fruitful in tracking the movement of people at the inter-provincial borders.

Published in Dawn, November 30th, 2018

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https://www.dawn.com/news/1448449

China excerpts from "Insane Mode: How Elon Musk’s Tesla Sparked an Electric Revolution to End the Age of Oil"

AXIOS Bill Bishop


Dec 1Public post

Hi everyone, this is another in the irregular series of book excerpts for Sinocism readers.

Insane Mode: How Elon Musk's Tesla Sparked an Electric Revolution to End the Age of Oil is by Hamish McKenzie, a New Zealander in San Francisco who has worked as a journalist and in communications for Tesla.

In the interest of full disclosure, Hamish is an old friend of Sinocism, having done a profile of me (Bill Bishop: The Invisible China Hand) for Pando Daily back in 2012. He is also a cofounder and senior executive of Substack, the platform that powers this newsletter and in which I am an investor.

But those are not the reasons I am excerpting some of the parts about China and the development of electronic vehicles in the country. Hamish’s work gives some interesting and useful context to the booming EV industry in China.

Before we get to the excerpt I have a couple of housekeeping announcements:

Sinocism now offers a 70% discount to current students. You have to sign up here. I will only honor the discount for new subscribers who are students using emails with .edu or .ac.uk right now (email me if you are a student with a different education top-level domain), and none that are alumni accounts;

You can now give the gift of Sinocism. Seriously, what could be better for someone interested in China than a year’s worth of Sinocism, truly a gift that keeps giving?

Give a gift subscription

On to the excerpt from Insane Mode: How Elon Musk’s Tesla Sparked an Electric Revolution to End the Age of Oil:

“Build Your Dreams”

You never have to look far to find scenes of change in China, but the sense of dynamism is perhaps nowhere more profound than in the border city of Shenzhen. In the 1970s, Shenzhen was an unremarkable fishing village at the end of the Kowloon-Canton rail route. Since President Deng Xiaoping established it as a Special Economic Zone in 1980 as part of the opening up of China’s economy, it has been on a mercantile tear, its population exploding to twelve million people. Today, Shenzhen is a booming metropolis, overflowing with energy and optimism. It is a beacon for young people who want to get ahead in business or score a job at one of the city’s tech companies, like electronics manufacturer Huawei, Internet giant Tencent, or the iPhone-producing Foxconn. Migrants from other parts of China make up more than 80 percent of the city’s population.

Shenzhen stretches its arms thirty-five miles wide as it hugs Hong Kong’s New Territories. To drive from one side to the other is to pass bright new skyscrapers, shopping malls, convention centers, entertainment venues, and sports arenas of geometric radicalism, each competing to attain new levels of gobsmackery, preening under the weight of reflective domes, fine latticework, structural cowlicks, honeycombs, razor edges, suspended ledges... It’s not a mere excitement of the architectural senses—it’s a raging orgy.

The city interior is mostly gray, a dirty clamor of buildings, roads, and sky, occasionally offset by verdant greens that grow rampantly in the subtropical climate and feast on carbon dioxide. The air is gritty with particulates, and one’s breath seems to come out in clods. The streets confront pedestrians with a conflict of the senses: beef broths bubbling in sidewalk stalls; a faint chemical whiff, like new-tire smell, emanating from nearby factories; an undertone of sewage. Buckets in underpasses catch leaks just downstairs from bus shelters that advertise the Apple Watch. Car horns are leaned on without relent. Chinese pop music blares from open-doored shops. Busy people in their twenties, with tight jeans and pretty summer dresses, rush from somewhere to somewhere. It is impossible to imagine the sleepy fishing village that this place once was, and it is unlikely anyone bothers to try. Everyone in Shenzhen looks forward.

“Build Your Dreams.” There could be no more apt promise for this city in this epoch, but the slogan happens to be under the ownership of BYD Auto, one of the world’s largest sellers of electric cars (the largest, if you count hybrids). BYD’s auto division has been based in Shenzhen since 2003, when its parent, BYD Company, acquired a failing local manufacturer called Tsinchuan Automobile Company. Its first car, a gasoline sedan called the F3 that retailed for about $10,000, rolled off the production line in 2005.

To get to BYD Auto’s headquarters, you have to drive twenty-five miles east from the center of Shenzhen to the industrial suburb of Pingshan, past a dribble of drab manufacturing buildings, bleak apartment complexes with laundry hanging outside the windows, and men selling car seat covers from the side of the highway. En route to my destination, my taxi passed a crane that had dropped a shipping container. Cardboard boxes carrying bottles of motor oil had spilled onto the road.

BYD Auto’s campus sits behind an arch of steel pipes and aluminum roofing at its entrance, a faded attempt at industrial grandeur. The sides of the soccer-field-size hexagon that serves as BYD Auto’s global headquarters are painted the same sky blue as the shirts that every worker has to wear. My guide for the day, a young woman on the marketing team, was proud to be at BYD, a rare Chinese company that can claim a global presence. Outside of China, it has offices and factories in the United States, Canada, Japan, Korea, India, Mexico, and Europe. Overall, the company brought in about $11 billion in revenue in 2015.

Wang Chuanfu, an engineer and chemist, cofounded BYD in 1995 at the age of twenty-nine with $300,000 in start-up capital he had raised from relatives. The company earned its early fortune by making rechargeable batteries for mobile phones and counted Motorola, Nokia, Sony Ericsson, and Samsung among its clients. After listing on the Hong Kong Stock Exchange and then acquiring Tsinchuan, Wang plotted a course for BYD to become a leading producer of electric cars and solar power systems—a move that would eventually lead to Warren Buffett, through a Berkshire Hathaway subsidiary, buying 10 percent of the company for $230 million. Buffett’s investment partner Charlie Munger had told the “Oracle of Omaha” that CEO Wang was like a mix between Thomas Edison and Jack Welch—“something like Edison in solving technical problems, and something like Welch in getting done what he needs to do.”

As we walked around the hexagon—a Tetris-era predecessor to Apple’s “spaceship” headquarters—my guide told me that she loved living in Shenzhen. The weather’s good, and, for a major city, it is accommodating of newcomers, she said. In Beijing and Shanghai, the local governments’ anti-speculation policies made it difficult for nonresidents to buy property, but in Shenzhen, it was easy to fulfill their dream of home ownership. The city, after all, is nothing but outsiders—just as eight in ten people are migrants, so are eight in ten home buyers.

BYD’s dream is for a zero-emissions world. We completed our circuit of the building—strolling past packed parking lots of BYD cars and dozens of the Denza model, an electric crossover utility vehicle that was a product of the company’s joint venture with Daimler—and stepped inside the hexagon. The interior had the feel of a semi-abandoned hospital, with faux marble floors and an almost total lack of natural light.

After a brief tour of BYD’s greatest hits in a museum-like showroom for electronics and battery products, my guide led me to a diorama that exhibited the company’s vision. Implanted in a desert in the miniature landscape were solar panels and windmills that fed imaginary power to a battery base station on the edge of a green, populated area. A few electric trucks roamed the miniature streets, while a car sat parked in the garage on the ground floor of a luxury house. Electric vehicle charging stations were dotted around like gas stations.

BYD has a mixed approach to electric transport. For private cars, it’s not betting on full electrification in the short term. Instead, for the next few years, its SUVs and sedans will mostly be hybrids. The company’s belief is that China’s charging infrastructure isn’t yet ready to support electric cars for most people’s living situations. In China’s cities—home to 55 percent of the country’s population—few people live in standalone houses with their own parking spaces, and most live in high-rises with shared parking lots, or none at all. Plugging in is a problem.

By selling “dual mode” plug-in hybrids, which carry both a battery and a gas tank, BYD still qualifies for government subsidies, which can take as much as $8,000 off the sticker price and, crucially, exempt owners from a license plate lottery that would otherwise complicate their efforts to get on the road. In an attempt to mitigate pollution and control the number of cars that pour onto their roads, local governments in major cities have placed strict limits on who can get a license plate. A new car owner’s chances of having their name drawn in the monthly lottery are extremely low. In Beijing in January 2016, for example, the success rate for obtaining a license for a conventional car was 0.15 percent. Those who do get lucky have been known to pay $14,000 at license auctions, a cost that in some cases exceeds the price of the car. To encourage the adoption of new-energy vehicles, however, the governments have waived the license plate lottery system for owners of electric or hybrid vehicles. Unfortunately, what often happens, as Shaun Rein, head of the Shanghai-based China Market Research Group, told me, is that people buy a BYD hybrid so they can get a license plate, but seldom bother to plug it in. Instead, they just rely on gasoline to charge the battery.

BYD is focusing its full-electric efforts on taxis and buses, which, according to the company, account for 20 percent of all vehicle fuel consumption in China. BYD’s electric buses are already in operation in downtown Shenzhen and in several US states, including Washington and California. It has electric taxis on the road in Chile, Uruguay, Hong Kong, the UK, and the Netherlands. The company also produces electric forklifts, sanitation trucks, mining trucks, and concrete mixer trucks, which it sells to emissions-conscious businesses and agencies around the world. The California Air Resources Board, for instance, offers grants for companies to make their industrial fleets zero-emission, as part of its California Climate Investments Program. In June 2016, San Bernardino County, one of the state’s most polluted air basins, was awarded a grant of $9.1 million to purchase twenty-seven electric trucks made by BYD. The company makes the heavy-duty vehicles for the US market in a factory in Lancaster, California.

While my guide said she liked the company’s cars, others I spoke to weren’t so sure. A young Beijinger who worked for one of the electric vehicle start-ups that hoped to surpass BYD felt its cars were “cheap but ugly,” with outdated functions “not suitable of the needs of young people in the city.”

Indeed, BYD’s cars are the opposite of sexy. Their exteriors are blocky and their interiors feel plasticky. The company’s image is about as staid as the uniform shirts that it forces its employees to wear—and it seems to know. In April 2016, a BYD executive, looking enviously at Tesla, said BYD had made branding its top priority for the next two to three years. “We don’t have the ability now to sell tens of thousands of cars before producing a single one,” Senior Vice President Stella Li told Bloomberg, referring to the Tesla Model 3, which attracted hundreds of thousands of preorders more than a year out from the first deliveries. “The day we can do that will be the day our brand is established.” BYD hired a brand consulting firm and made a significant change for a sales event ahead of the 2016 Beijing Auto Show. For his keynote speech, CEO Wang roamed the stage and stressed the company’s mission to clean up the air and make roads safer. He was almost like Elon Musk. The year before, Wang read his speech from behind a lectern.

While BYD attempts to buy market appeal, however, a new generation of Chinese electric car companies are hoping to earn it from the get-go by borrowing some Silicon Valley sizzle.

***

On a sunny day in May 2016, I walked with Li Xiang up a dusty concrete alley in an industrial district in the northeast of Beijing. There wasn’t much in the area except a few car repair shops and the research center for Che He Jia, one of China’s most intriguing new auto start-ups. Li, who was also a founding investor in Nio, started the company in 2015 as a thirty-four-year-old and, by the time I met him, had raised $300 million in start-up capital from his founding team, venture investors, and the LEO Group, which specializes in water supply, power station construction, and petrochemical engineering, among other things.

Che He Jia was renting office space in a building in front of one of the car repair shops, so we walked past open garages and crumpled Volkswagens as we headed to the back section. Li walked with a light step in Nike running shoes and blue jeans. As we approached a door in the side of a concrete slab of a building, he waved his hands. “No photos.” He opened the door and we stepped inside. The first thing I saw was a Renault Twizy, a buggy-like two-seater with a one- speed transmission and a seventeen-horsepower electric motor. Beside it was an electric moped. I figured they were being used as benchmarks.

I turned to my left and saw three clay models, built to scale, of dinky-looking cars with steep windshields and straight backs. The cars, identical except for minor design variations, were each 3.3 feet wide and 8.2 feet long, with room enough for two people, one seated behind the other. They were painted black and silver, so they looked like mechanical snails from a Daft Punk music video. Their squarish noses added a dash of tough-guy attitude to a dainty physique. This was never intended to be a muscle car, though. Che He Jia calls it a “smart electric vehicle” (SEV) and it’s designed purely for city driving, so it has a top speed of forty miles an hour and up to fifty miles of range. It’s small enough that four can be (autonomously) parked side by side in a regular parking spot. The company planned to start selling it at the end of 2017.

Che He Jia is one of a rash of new auto start-ups in China, and Li, founder of the publicly listed automotive site Autohome, is one of several Chinese Internet entrepreneurs intent on creating a car company for the twenty-first century. Li and company have been encouraged by the early success of Tesla in the United States, emboldened by government incentives for clean transport, and convinced that the convergence of electric power trains, connectivity, and autonomous-driving technology has created a once-in-a-century opening for newcomers to enter the market.

As well as Nio and Byton, the list of car start-ups funded by Chinese Internet companies also includes Xiaopeng, whose investors include Alibaba, Foxconn, and Russian billionaire Yuri Milner; Sokon, which acquired Martin Eberhard’s battery start-up Inevit and named him chief innovation officer at its US subsidiary, SF Motors; WM Motor, started by a former executive at Volvo’s Chinese parent company, Geely; Singulato Motors, started by a former Qihoo 360 executive; and a joint effort between Alibaba and the state-owned Shanghai Automotive Industry Corporation (SAIC). Established car companies such as CH-Auto and Changan Automobile are also making electric vehicles. Going by the current birth rate, it’s likely that a dozen more electric car companies will have materialized by the time anyone reads these words. In fact, a 2016 study by the China Automotive Technology and Research Center found that the country had more than two hundred manufacturers of new-energy vehicles. Many lagged behind global standards for quality, reliability, and technology. The government has considered imposing strict limits in an effort to improve standards, with one Chinese Communist Party–linked newspaper suggesting that such a move could wipe out 90 percent of the hopeful start-ups.

The central government plays an outsize role in China, where mandates, incentives, and limits are frequently dished out in five-year plans, policy documents, and statements to the press. A company cannot hope to succeed without at least the government’s tacit consent— companies are dependent on government-issued operating licenses and other allowances—and it helps to have cordial relationships with the regulators (the Chinese call this guanxi). On a macro level, the government controls interest rates, the exchange rate, and the price of energy, among other key levers of the economy. It also has control of major sectors it considers strategic, through state-run oligopolies in banking, energy, and telecommunications, to pick a few.

Electric vehicles fall into a sweet spot of strategic importance (energy) and an industry (auto) already replete with state-owned enterprises, such as BAIC and SAIC. The global ascendance of electric vehicles has also come at a time when the Chinese government is approaching crisis mode over concerns about air quality. The pollution in Beijing is so bad that breathing the air does as much damage to your lungs as smoking two packs of cigarettes a day. Pollution protests have been mounting. At the same time, the government has been attempting to wean the country’s economy off its reliance on natural resources—coal, steel, and iron in particular—to instead emphasize innovation. The 2011 Chinese National Patent Development Strategy highlighted seven industries to focus on in the coming decade: bio- technology, high-end equipment manufacturing, broadband infrastructure, high-end semiconductors, energy conservation, alternative energy, and clean-energy vehicles. In 2017, it added artificial intelligence to the list.

New-energy vehicles have been the subject of special attention. In its most recent five-year plan, the government set a goal of having five million new-energy cars on the road by 2020. Accordingly, it promised financial rewards to companies that surpass targets for such things as electric car sales and battery capacity, and it’s investing in charging infrastructure while encouraging local governments to offer subsidies to reduce charging fees. It has ordered all government departments to own new-energy vehicles made in China; and it has offered financial incentives to encourage investment in car rentals, battery recycling, and charging infrastructure operations, among other areas. Looking further ahead, government officials have also expressed support for autonomous driving. China is aiming for half of the vehicles on the road to be equipped with advanced safety software by 2020, 20 percent to be highly autonomous by 2025, and 10 percent to be fully self-driving by 2030. It will set a deadline after which automakers must stop selling gasoline cars.

Back in Che He Jia’s workshop, Li turned around and walked me over to the SEV’s “buck,” a polystyrene shell wrapped around a mock-up of the vehicle’s interior. I slid into the seat and felt like I was sitting in an arcade-game version of a race car. The steering wheel was a rounded rectangle. There was a touch screen on top of the dashboard, protruding a little into the windshield view. The screen displayed a picture of Taylor Swift, as if an app were playing one of her albums. There were air-conditioning vents, automatic door locks, and a series of controls on the wheel for playing music. I pumped the pedals, imagining I was weaving in and out of Beijing’s clogged beltway traffic. It would not be comfortable to be struck by another vehicle—or even an errant watermelon—in this car, but it’s unlikely you’d be traveling at high enough speeds to suffer serious injury.

The SEV would be marketed to young consumers in China’s major cities—Beijing, Shanghai, Shenzhen, Guangzhou—and was set to retail for about $7,000. As much as it would be a first car for many buyers, it was also like a high-tech upgrade of the electric bikes that Chinese urbanites have been driving for the last couple of decades. Li wanted to supplant the electric bike by providing a low-cost option for people to own a car. “We don’t want to challenge Tesla or any other giant automaker,” Li wrote on the microblogging site Sina Weibo for his 600,00 followers in October 2015. “We just want to make compact, attractive, and affordable smart cars for everybody.”

Li is a multimillionaire high school dropout who grew up under the care of his grandmother in the northern city of Shijiazhuang, in Hebei province. He has always been into technology and an early adopter. As a teenager in the 1990s, he wrote gadget reviews for tech websites and then, as an eighteen-year-old, started his own, PCpop.com. The venture was a success, becoming one of the most well- known electronics review sites in the country and earning millions of dollars in annual revenue. But Li had greater ambitions. At twenty-three years old, he spun off PCpop’s auto vertical to create the car information portal Autohome. Autohome started as a simple reviews site like Edmunds.com but evolved into a comprehensive online marketplace that carried independent news and reviews while linking dealers and manufacturers with a trove of consumer data. Autohome quickly became one of China’s most trusted sources of automotive information and grew into a highly profitable business. In December 2013, it listed on the New York Stock Exchange for an initial public offering that raised $133 million and valued the company at $3.2 billion, making Li rich. He now lives in a wealthy area called Shunyi, outside Beijing, amid elegant villas and an abundance of Teslas.

Li, in fact, was one of the first nine people in China to own a Tesla Model S. In front of a crowd of reporters and fans numbering in the dozens at a launch event outside Tesla’s Beijing office in April 2014, Elon Musk, dressed in a suit and accompanied by his then wife Talulah Riley, handed Li a Model S key. Interviewed by a TV station after the ceremony, a smiling Li mixed praise with skepticism about his new purchase.

“Its external design is that of a million-dollar car. Its driving experience is that of a car costing more than $200,000. But its back seat is that of a $15,000 to $20,000 car.” Li later wrote a more damning review of the Model S, praising its smooth driving experience and acceleration but criticizing its leaky sunroof, wipers that made his windshield dirty, “nightmare” rear seats that were too hard, and a substandard interior, which he compared to a Honda Accord’s. “There are no cupholders!” he would later joke to me, echoing a major concern of early Tesla owners in the United States. (Tesla now offers cupholder solutions for all its vehicles.)

Like Musk, Li is a hands-on chief executive. At Autohome, he test-drove and reviewed many vehicles himself. His public relations employees at Che He Jia were at pains to stress to me that he has granular knowledge of every aspect of his businesses, and indeed he didn’t hesitate to answer each question in careful detail. He is a tycoon in the Silicon Valley mold—geek first, businessman later—and much admired by China’s millennials, who see in Li a self-made success willing to turn his back on the country’s restrictive education system to pursue his dreams. Unlike many other prominent business figures in China, Li dresses casually and cuts a humble figure, eschewing the self-promoting tactics of, say, Jia Yueting or Zhou Hongyi, the controversial cofounder of Internet security company Qihoo 360.

Li’s company prides itself on an Amazon-like understanding of its customers. “We think, ‘What does the real Chinese customer need?’” Li said. The electric vehicles the world had seen to date had not been built with the average Chinese consumer in mind, he noted. Tesla’s cars were products of California, where there were large highways and long commutes, and people lived in houses with garages that they could charge in. BMW’s compact i3, on the other hand, was a product of Europe, where there were condensed urban layouts and short distances between cities, so ninety miles of range was enough to serve most driving needs. In China, by contrast, people were geographically dispersed among hundreds of far-apart but heavily populated cities. China has forty-one cities with more than two million people; more than a dozen cities with a population of more than five million; and five megacities with populations exceeding ten million. Che He Jia’s SEV plan made sense for driving within these cities, but the company needed to come up with something else for driving outside them.

Back in the workshop, after I slid out of the buck, Li walked over to a pair of pinboards near the door. He smiled as he showed me sketches of Che He Jia’s second vehicle, a long-range SUV planned for release in 2018. It looked pretty badass. It was muscular, with the bulldog nose that was on the SEV, but also speedy-looking, with sharp ridgelines that gave the machine some handsome chops. The side panels came up high to meet squinting windows, and the battery pack sat flat below the floor pan. It was designed for families and luggage, with room to seat five people and an extra storage area in the front trunk. It would be built to withstand a high-speed impact, so people could feel safe driving it long distances on highways.

The SUV won’t be purely electric. It will carry a gasoline range extender to allow it to drive 370 miles on a single charge—a concession to China’s lack of charging infrastructure. By contrast, the SEV will carry a twenty-two-pound battery pack that can be removed by hand and plugged into a normal power outlet so it can be charged under a desk at the office or at home overnight—a practice familiar to almost every one of the approximately 200 million electric-bike riders in China. The battery pack’s lithium-ion cells come from Panasonic, which also supplies Tesla. It takes six hours to charge the SEV’s battery fully, Li said, but it can accrue twelve miles of range in half an hour—enough to serve in a pinch.

But maybe people won’t have to drive at all. That’s the other thing that convinced Li that 2015 was the right time to get into the auto industry. He and his cohorts are convinced that the self-driving car era is imminent. “Autonomy may come even earlier than electric,” Li posited. “There’s a faster revolution in autonomous driving software than there is in battery technology.” Che He Jia was building its cars from the start to be ready for the autonomous era.

Excerpted from “Elon Musk's Tesla Sparked an Electric Revolution to End the Age of Oil” by Hamish McKenzie

November 30, 2018

Podcast: China's Belt and Road Initiative, and the Rise of National Populism

https://www.chathamhouse.org/file/undercurrents-episode-22-chinas-belt-and-road-initiative-and-rise-national-populism

 

Ben speaks with China expert Yu Jie about the country's flagship economic project, and Agnes discusses the concept of national populism with Matthew Goodwin.

22 November 2018

Speakers

Dr Yu Jie (Cherry), Research Fellow, Asia-Pacific Programme, Chatham House
Professor Matthew Goodwin, Visiting Senior Fellow, Europe Programme, Chatham House
Agnes Frimston, Deputy Editor, The World Today
Ben Horton, Communications Manager, International Affairs

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In 2013 China launched its flagship economic project, the 'Belt and Road Initiative' (BRI). In the five years since the initiative has rapidly expanded trade and infrastructure relationships between China and 88 countries in Eurasia and Africa, covering over 60% of global GDP. Ben speaks to the Asia-Pacific Programme's Yu Jie to find out more.

The rise of populism is a phenomenon affecting political systems across the West. From the 2016 electoral shocks of Brexit and Trump through to the victories of Salvini and Bolsonaro in 2018, conventional ideological divisions between left and right are being dismantled and replaced by a politics of polarization and identity-fuelled tribalism. Agnes speaks to the Europe Programme's Matthew Goodwin about his new book on 'national populism'.

Read the Chatham House Expert Comment:
Money, Might  Mindset: China's Self-centred Global Ambition

Listen to the BBC interview:
Yu Jie on China's halloumi craze [from 27:00]

Find the book:
National Populism: the Revolt Against Liberal Democracy

You can also listen and subscribe here:

LibsyniTunesStitcherSpotify

'Spy' Dispute Highlights Shifting Balance of Power Between the UK and the UAE

27 November 2018

Britain's diplomatic weight prevailed this time, but the old relationship is changing.

Dr Neil Quilliam

Senior Research Fellow, Middle East and North Africa Programme

@NeilQuilliam1

2018-11-27-UKUAE2.jpg

Daniela Tejada, wife of Matthew Hedges, speaks outside the Foreign and Commonwealth Office after meeting with Foreign Secretary Jeremy Hunt on 22 November. Photo: Getty Images.

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The pardoning of a British student sentenced to life imprisonment in the United Arab Emirates (UAE) for spying has been welcomed by the UK government. But the balance of power between the countries is changing.

The imprisonment of Matthew Hedges posed a real dilemma for the UK. It had to decide whether to stand up to the UAE, a country with which it does £15 billion of trade, or cave in and risk the perception that it is now the junior partner in the relationship.

Its strong response - and the fact Hedges can now return home - is testament to the UK's diplomatic weight; this time the UAE flinched. But the UAE's continued insistence that the Durham PhD student is '100% a secret service operative' - a claim Hedges denies - marks a significant shift after a century of UK supremacy in the countries' relationship.

A clear danger

The UAE is clearly not Iran, which continues to detain UK nationals on similar charges including Nazanin Zaghari-Ratcliffe; it is a close and trusted partner. But in the case of Mr Hedges, the UK has been reminded that the UAE's de facto leader, Abu Dhabi's Crown Prince Mohammed bin Zayed al-Nahyan (MBZ), is no pushover. He is used to getting his own way.

Unlike his counterpart in Saudi Arabia, Crown Prince Mohammed bin Salman (MBS), MBZ is a strategic thinker. He has stayed very close to US President Donald Trump, but has also developed his relationship with both Russia and China. The UK is in danger of losing its favoured status in the UAE unless it can demonstrate that it is both a useful and reliable ally.

There are deep historical ties between the UK and the families governing the seven emirates, but the nature of the relationship has changed over the years. The economic power that came with the the arrival of oil money has allowed the UAE's leaders to build new military and economic relationships.

Today, it remains the case that a defining principle of the relationship with the UK is that Britain - along with the US and France - guarantees the UAE's security against external and internal threats. But Abu Dhabi has come to doubt the integrity of such promises following the overthrow of another US ally - former Egyptian President Hosni Mubarak in 2011.

As a result, it has begun to move away from its dependency upon Western powers. The crown prince has watched Russia's intervention in Syria and has come to admire the willingness of Moscow to stick with its ally through thick and thin. He has contrasted this with the positions adopted by the US and UK during the Arab uprisings; it seems he has never forgiven them for working with the elected Muslim Brotherhood government in Cairo.

At the same time, Abu Dhabi has drawn lessons from former US President Barack Obama's failure to enforce his 'red lines' over the Syrian government's use of chemical weapons. In the event that the UAE faces a major security threat, MBZ is concerned that the US or UK would drag their feet before responding - intervention is no longer in vogue.

This has had a profound impact upon how he views traditional and new partners. Hence, MBZ will have wanted to test London's resolve around the Hedges case and he knows that Theresa May's government is under significant pressure, particularly as it looks for new trade deals to strike after Brexit.

Arguably, the balance in the relationship has now reached equilibrium and the UK needs the UAE more than ever before.

Brands and beaches

Indeed, there is a lot at stake. The UAE is the UK's largest export market in the Middle East and its fourth largest export market outside the EU. The UK exported £9.8 billion of goods and services in 2016, which marked a 37% increase from 2009.

There are more than 5,000 British companies operating in the UAE, including BP, Shell, Rolls-Royce, BAE Systems, Mott MacDonald, Serco, Standard Chartered, HSBC and John Lewis. More than 779 commercial agencies and 4,762 British brands have invested in the UAE. It has also been reported that UK arms exports to the UAE rose last year by 94% to £260 million, a figure that does not take into account bumper sales of cyber-security support.

Moreover, the UAE is not only an important market for the UK, but also a popular tourist destination visited by more than 1.25 million British tourists in 2016. It is also home to 120,000 British residents, whose livelihoods and way of life will be put at risk if the relationship between the two countries is damaged beyond repair.

The Hedges case has been a real test of nerve for both governments and while the UAE may have issued a pardon, there is no guarantee that MBZ will blink in any future dispute.

This article was originally published in BBC News.

CHINA: Legislature starts using AI

TRIVIUM CHINA

 Legislature starts using AI

China’s legislature is not just studying AI (see October 30 Tip Sheet) and formulating laws for AI (See November 26 Tip Sheet) – they're also using AI.    

First, the body is building a huge database of legislation, regulations, government rules, and administrative measures from across the country.

Officials are then using a set of algorithms to identify rules and regulations that are in conflict with more authoritative laws.

📌A case in point from Tianjin (Procuratorial Daily):

The Tianjin municipal legislature screened all regulations for the phrase “fiscal guarantee.”

The search found more than 151 lower-level resolutions related to fiscal guarantees.

Of those 151, four were found to be in violation of higher-level rules; all four were rescinded.

It gets better: The legislatures are building ever-larger keyword screening pools, to have a robust review process in place to check the consistency of regulations and rules across the country.

Next step: They plan to make the database public in 2019.

Get smart: Lots of people are worried about potential abuses of AI in China. But there are genuine efforts underway to use it to improve governance as well.
 

READ MORE
Procuratorial Daily: 2018年底国家法律法规数据库将初步建

Democracy defeated the coup



Commentary

José Ignacio Torreblanca 
23rd November, 2018

Generalitat de Catalunya (cropped) - CC BY 2.0

A year on, it is clear that the Catalan parliamentary coup d’état of 2017 has strengthened the Spanish political nation

It is just over a year since the attempt to overturn the constitution – by bypassing the Catalan parliament, stepping on the rights of the representatives of the majority of Catalans, and disregarding the will of all Spanish people to coexist in peace and freedom – was defeated. Undoubtedly this was the most delicate moment that Spanish democracy has passed through since the coup d’état in 1981.

It was not, as some still claim today, a peaceful democratic effort to consult Catalan citizens about their future, but an illegal referendum on self-determination. A referendum based on an express law passed in defiance of the Constitutional Court, with neither mandatory reports of the Counsel of Statutory Guarantees or participation by the opposition. A law disguised as a harmless civic celebration leading to the proclamation of the independence of Catalonia in the 48 hours following a vote held without guarantees or rules for a minimum turnout to consider the result valid and binding. A law by which the parliament, without having passed through the UN General Assembly, the Security Council, and the International Court of Justice granted itself the right to self-determination. A law that postulated itself as unabolishable and “hierarchically superior to all others”, therefore putting itself above the Spanish constitution and the statute of autonomy of Catalonia.

The number of hours dedicated to discussing whether that event was a coup or not is surprising. This is a nominalist, dishonest discussion aimed at generating noise to mask and dilute the seriousness of what happened. It is clear that the secessionists attempted to carry out a coup against democracy, constitution, and coexistence. By doing so from the institutions of self-government using the regional government, the Catalan parliament, the administration, the regional police forces, and schools, and by trying to legalise their coup with a law (actually two laws), there is a distinction between Puigdemont and Junqueras together (on the one hand) and Tejero (on the other) in their means, but not in their ends (to subvert the constitution).

The parliamentary coup d’état (or non-violent self-coup) is nothing new. Many democracies have abolished themselves using parliamentary majorities or popular plebiscites. From the Constituent Assembly in Venezuela, the very existence of which perpetrates a coup d’état every day against the Bolivarian constitution itself, to the demise of the Weimar Republic, which did not require a gun-wielding Hitler to storm into the Reichstag, but instead granted all state powers to the Führer. Let us consider, then, the substance, which is the attempt to abolish the constitution and the statute of autonomy, rather than the technique by which the coup was executed.

If secessionism has been defeated it was not just by luck, but by democratic virtue


Certainly, Carl Schmitt, the states of exception theorist, would have not hesitated to approve of so a perfect coup as that designed by Catalan secessionists. And, certainly, any democrat anywhere in the world would have warned against the aberration of staging such an attack against a democracy on its own behalf. Despite the self-praise for 1 October as the crowning moment of the Catalan democratic path to the republic, no democrat can speak of either “results” or “referendum” in a process whose integrity even international observers invited by the Catalan government certified as unverifiable. But even omitting the non-existence of an independent electoral board or any valid census, every democrat knows that a consultation where the half of the census does not participate, and the half that does participate overwhelmingly supports the option promoted by the Catalan government, is a vote lacking in sufficient consensus and legitimacy.

On the Catalan issue, much remains to be done. The wounds from the deep divide sown in our society will take a long time to heal. Nevertheless, I am convinced that the Catalan crisis has led citizens to strengthen, not weaken, their regard for democracy, constitution, and rule of law. Apart from Podemos and nationalists, most politicians have been able to see this. While opportunist and risky, if the current Socialist government can afford the twisting, gestures, contradictions, altering its narrative and “empathetic” approaches to secessionism is precisely because it knows the latter has been defeated by democracy.

If secessionism has been defeated it was not just by luck, but by democratic virtue. It was so because of the civic courage of hundreds of thousands people that took to the streets to defend our common project. The rest was achieved by our political representatives, who temporarily put their differences and partisan agendas aside, the judges and police and civil guard, acting jointly to enforce the rule of law and democratic institutions, as well as our diplomats who defended the legitimacy of Spain’s position before the world and the justness of the reasoning in Spanish democracy.

The independent media must be honoured as well, since they fulfilled their duty to provide plural factual reporting to refute the fallacies and lies of secessionism, which was able to count not only on the official apparatus of propaganda in the public Catalonia broadcasters and pro-secessionism media, but also on the active support and interference from media in the Russian orbit and their operators in social media, like Julian Assange.

This triumph of democracy is also a triumph of our European partners, from which we have received support and solidarity beyond noisy exceptions whose role was merely to reveal the sweeping support for Spanish democracy abroad. Neighbouring governments and friends understood the need to stop the worst version of nationalism we know: irredentism and chauvinism, which aspire to transform the alleged moral, social, and economic superiority of a group into a right to exclude and discriminate against those who are different and think differently. This was the best international mediation we could have benefited from, from those who declared clearly and unequivocally that they would not tolerate a unilateral illegal secession carried out against the majority of the Spanish people, openly violating the constitution. This refusal by European capitals and institutions also brought down the attempted lethal blow to the 1978 constitution.

For Spanish democracy, 2017 was a traumatic year. For an entire Spanish generation, who did not experience the coup d’état in 1981, or witnessed it from a distance, the dramatic moments of September-October last year will strengthen their sense of belonging to this political community. Now, Felipe VI, like Juan Carlos before him, has faced and overcome a critical democratic constitutional moment. The damage done has led the Spanish people to rediscover the values of coexistence in peace and freedom under the same rules in a democracy where all of us fit in and in a Europe where 40 years since the proclamation of the constitution we are still admired for our civic compromise to the values of an open, democratic, plural society. Secessionism believes it has awakened Spanish nationalism, and thinks that this gives it legitimacy to negotiate on an equal basis, but what it has strengthened instead is the political nation and the sense of belonging to it.

 

This article was originally published by El Mundo on 7 November. You can read the original (in Spanish) here.

Read more on: European Power


https://www.ecfr.eu/article/commentary_democracy_defeated_the_coup

Strategic autonomy: towards ‘European sovereignty’ in defence?

30 November 2018

Daniel Fiott

Briefs

Security and Defence

Defence cooperationDefence industry

Strategic autonomy. Two familiar words that are yet again in vogue in Europe but which cause confusion and, in some quarters, even alarm. The last time strategic autonomy stirred controversy was in 2003 during the run-up to the Iraq War, but perhaps the most well-known instance followed the Balkan crisis of the 1990s.

The objective of this Brief is to better comprehend how the EU conceives of strategic autonomy, rather than dwell on a broader focus on ‘Europe’ or ‘NATO Europe’. To this end, the Brief compares the range of defence initiatives that have been developed by the EU since 2016 against three different conceptual visions of strategic autonomy: autonomy as responsibility, autonomy as hedging and autonomy as emancipation. Each of these forms of autonomy have implications for transatlantic burden sharing and the EU’s level of ambition on security and defence.

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https://www.iss.europa.eu/content/strategic-autonomy-towards-%E2%80%98european-sovereignty%E2%80%99-defence

Guns, engines and turbines – The EU’s hard power in Asia

Guns, engines and turbines – The EU’s hard power in Asia

27 November 2018

Edited by

Eva Pejsova

With contributions from

Mathieu DuchâtelFelix HeidukBruno HellendorffChantal LavalléeLiselotte OdgaardGareth PriceZoe Stanley-Lockman

Chaillot Papers

Asia

Security and Defence

Defence industryEast AsiaSouth-East Asia

Considering arms trade an integral part of the EU’s foreign policy toolbox, what is the status of security cooperation between Europe and Asia? Who exactly benefits from European military technology and know-how and how does that affect the overall strategic balance in the region? And how might the EU coordinate its policies to best secure its strategic interests in Asia?

This Chaillot Paper sheds light on the new security dynamics in EU-Asia relations from the ‘hard security’ perspective. By looking at the burgeoning arms trade, dual-use technology transfers, and the emerging connections between new defence markets, it challenges the conventional perception of Europe as a ‘soft’ security actor on the global stage and in Asia in particular. It also shows how the debate on European arms sales highlights the discrepancy between a values-based foreign and security policy discourse at the EU level on the one hand and the economic interests and activities of its member states on the other.

Download document





https://www.iss.europa.eu/content/guns-engines-and-turbines-%E2%80%93-eu%E2%80%99s-hard-power-asia

How the German Economy is Connected to Eastern Europe

Ged-project.de

Part 3 of our mini-series on Global Value Chains

16 November 2018

Photo by Hannes Egler on Unsplash

In our mini-series on Global Value Chains (GVCs) we look how three German key industries – motor vehicles, chemicals and machinery – are part of complex international production networks that illustrate the key role of comparative advantage. This week: the relevance of economic ties between Central and Eastern European Countries and Germany.

Germany’s integration with Eastern Europe has been a modern success story. The value chains with Eastern Europe have helped Germany to retain a competitive edge and have helped the Eastern European economies grow quickly and converge gradually to the levels of Western Europe.

For the purpose of this post, we understand Eastern Europe as the countries of Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Russia, the Slovak Republic and Slovenia. While individually, most of these economies are small, together they actually constitute a very important market for Germany.

Two historic moments mark Germany’s economic relationship with its eastern neighbors: the end of the Cold War and the Eastern Enlargement of the EU in 2004 when many of the countries in Eastern Europe became part of the EU eliminating a large share of the trade barriers and which led to an alignment of regulatory systems. This facilitated not only trade but also the emergence of close production networks – value chains – across borders.

Eastern Europe as an Important Source of Imports for German Economy

As in the previous blogposts of this mini-series, we are looking at the value added contribution to three German key industries: automotive, chemicals and manufacturing. As you can see in the figure below – here for the automotive industry – you can see that the value contribution from Eastern European countries to the value chain has steadily risen over time. The biggest surge occurred between 2000 and 2007 – clearly facilitated by the enlargement of the EU. Subsequently, the growth continued, albeit at a slower pace. The picture for the other key sectors is similar, although at slightly lower levels.

 

 

Eastern Europe is one of the Most Important Export Markets

Eastern European economies are not only important import markets for Germany and the German Economy, they are also important export destinations. The figure below compares exports to this region in value terms to other important German export destinations. As you can see, for the machinery sector, the Eastern European region is just as important as China or the US. It’s similar for the other sectors.

 

For the key industries we study in this mini-series, Eastern Europe is not just a source of inputs for German goods – it is also an important market for selling German goods – a clear win-win situation.

If you enjoyed this post feel free to also read our answer to the question: “Are the G7 countries no longer Germany’s top trading partners?

Money and Muscle Pave China’s Way to Global Power


Home

WORLD

China Rules

They didn’t like the West’s playbook. So they wrote their own.

PART 3

阅读简体中文版 閱讀繁體中文版

Liu Ping, center, president of China’s state-owned Bright Food Group, sampling local yogurt at a dairy farm near Momchilovtsi. A Bright Food yogurt brand is named for the village.

Beijing is leveraging its commercial and military might to redraw the terms of trade, diplomacy and security, challenging the liberal democratic order.

By PETER S. GOODMAN and JANE PERLEZPhotographs by BRYAN DENTONNOV. 25, 2018

Under a merciless sun, a dozen Chinese construction workers survey an empty expanse of desert, preparing to transform it into the heart of a new Egyptian capital.

The workers are employed by China’s largest construction conglomerate through a $3 billion contract from an Egyptian company, with financing from Chinese banks. They are erecting a thicket of 21 skyscrapers, one as tall as the Empire State Building.

The presence of Chinese labor and largess on the sands of Egypt is a testament to China’s global aspirations. After centuries of weakness and isolation, China is reclaiming what its leaders regard as its natural destiny — supremacy in Asia, and respect around the planet. Through the ventures in Egypt and elsewhere, China is exploiting its formidable economic clout to expand its geopolitical influence, directing investment to woo governments that control vital assets.

A traditional ally of the United States, Egypt controls the Suez Canal, a vital shipping passage where a threat to access could impede China’s movement around the globe. In constructing a central piece of the futuristic capital, China is ingratiating itself with the canal’s ultimate gatekeeper, President Abdel Fattah el-Sisi, while rendering his grandest visions dependent on friendly relations with Beijing.

How China became a superpower

The American Dream Is Alive. In China.

How China Made Its Own Internet

How China Took Over Your TV

How China Is Rewriting Its Own Script

The World, Built By China

China’s reach for commercial expansion along with diplomatic influence guides an array of Chinese undertakings, from rail networks and highways taking shape across Africa and Latin America to ports and power stations being constructed in Eastern Europe and South Asia. In Southeast Asia, Chinese entrepreneurs are engineering a crop of web companies just as China projects growing military power in the South China Sea.

Little more than a decade ago, China’s forays beyond its borders were mainly about bringing home energy, minerals and other resources, often from countries forsaken by the West as pariah states like Iran, Sudan and Myanmar. In foreign policy, China pursued a sole obsession — peeling off diplomatic recognition of Taiwan, the self-governing island that Beijing claims as its territory. Even as China skirmished with neighbors over contested islands, it accepted the dominance of the United States Navy.

Those days are over.

Chinese banks are lending $3 billion to finance the first phase of the new Egyptian capital, which is expected to be completed in three years. A second phase is expected to cost $3.2 billion.

Chinese visitors at the pyramids of Giza in Egypt, which is using workers and financing from China to build a new capital city.

Under the muscular leadership of President Xi Jinping, China has cast off previous restraints, rejecting deference to an American-dominated global order as an impediment to national revival. In matters of commerce and national security, China is competing with the United States, even in traditional American spheres of influence.

From a Chinese perspective, this reordering is merely an overdue reversion to historical reality as Beijing demands consideration commensurate with its stature.

In the telling of the ruling Communist Party, China’s modern history is the story of Chinese mastery degraded by colonial depravity. China is the land that invented the compass, gunpowder, paper and printing, amassing stupendous wealth while Europe was still backward. Then came centuries of humiliation — Britain’s profiting from forcing opium on the populace, Japanese brutality, demeaning lectures about human rights from hypocritical Americans. Now, China is intent on securing its own fate.

“China wants to be a great power in the world,” says Paul Heer, a former chief national intelligence officer in East Asia for the United States, who now teaches at George Washington University. “They think the rest of the world owes them recognition, and a return to what the Chinese see as their rightful place.”

Nowhere are China’s designs clearer than in Asia. China has overtaken the United States as the leading trading partner with Asian nations while pushing back against American naval primacy in the South China Sea. China is disrupting American alliances in the region, from Japan to Singapore to Australia.

Beyond its backyard, China’s ambitions are boundless. It celebrates its Belt and Road Initiative, a vast collection of infrastructure projects around the world, as the means of recreating the Silk Road, the trails navigated in ancient times by merchants carrying goods between Asia and Europe.

“Xi Jinping is leading a China that has influences in all corners of the globe,” says Zhang Baohui, a professor of international relations at Lingnan University in Hong Kong. “The 2008 financial crisis in the West was the turning point for China. Beijing started to embrace a triumphal mind-set, and pursued global leadership with new confidence on the back of the West’s perceived flaws.”

China’s assertive role in world affairs is grounded in its domestic needs. It is at once spreading into new markets, generating fresh demand for its factory wares just as growth slows at home. It is projecting military strength and influence when the legitimacy of the Communist Party rests on bolstering economic fortunes and international esteem.

Among its neighbors, China’s rise provokes fears that an unwanted piece of history is being resurrected — the old tribute system that cemented China’s status as the Middle Kingdom. For centuries, other nations bowed in recognition of China’s imperial might, bestowing gifts on the emperor and accepting vassal status to secure trade and peace.

Beijing now confronts accusations that it is directing investments to ensnare partners in debt traps as a means of seizing their assets. Last year, Sri Lanka handed control of a port to a Chinese venture after failing to pay back Chinese loans. Malaysia recently canceled a pair of projects involving Chinese financing. Faced with pushback abroad and concerns about mounting debts at home, China is reassessing the breadth and cost of its global ventures, although the scope remains vast.

For the Western powers whose order has prevailed since the end of World War II, China poses a foundational challenge. The United States and its victorious allies erected institutions that were — at least rhetorically — designed to keep the peace by promoting trade and fair competition. The World Bank and the International Monetary Fund have dispensed aid with conditions, though frequently drawing accusations that they have failed to comply with their standards on protecting human rights and the rule of law.

China’s investments come with no such strictures. China bankrolls autocrats who control geopolitically valuable real estate. China demands only that its companies gain a piece of the action while recipients eschew criticizing Beijing.

China’s challenge to the Western-dominated order is amplified by the reality that its primary architect, the United States, is now led by an avowed nationalist. As President Trump wages a trade war and derides international cooperation, he has generated doubts about the perseverance of the liberal democratic philosophy the United States has long championed.

Mr. Xi has sought to fill the vacuum. He has cast himself as the leader of the rules-based international trading system, even as China faces accusations of stealing intellectual property, subsidizing state-owned companies and dumping products on world markets at unfairly low prices.

“What’s happening in the United States gives China this golden opportunity to portray itself as the defender of the international order,” says Jessica Chen Weiss, a China expert at Cornell University.

Threatening Competition and Cohesion

If the new Silk Road is in part about moving goods from Chinese factories to customers in the rest of the world, the trail seems certain to pass through Central and Eastern Europe.

Already, Chinese investment has turned the Greek port of Piraeus into the busiest shipping hub on the Mediterranean, a gateway to the rest of the European Union, with its 500 million consumers. China has promised to help finance the construction of a high-speed rail link from the Serbian capital, Belgrade, to the Hungarian capital, Budapest. It has also pledged to turn the region into a transportation corridor laced with highways, airports, rail, ports and power stations.

This reality frames the proceedings of the “16-plus-1” group, an economic bloc that China has forged with 16 Central and Eastern European nations. Its latest summit meeting convenes on a drizzly day in July in the Bulgarian capital, Sofia. Officials from the 16 governments — among them the newest, least-affluent members of the European Union — pose for photos with the delegation from China, the one nation wealthy and ambitious enough to finance their visions.

Leaders in the rest of the European Union construe the group as a stealth assault on the rules and cohesion of their bloc. In offering financing for infrastructure projects, China has positioned itself as an alternative to European Union development funds.

Europe’s money comes with rules protecting labor and the environment, while requiring that projects be awarded to companies on the basis of competitive bidding to ensure fair competition. China tends to distribute its funds with far simpler demands: Chinese companies must gain work, free of competition, while Beijing secures an international ally.

European Union officials are especially worried that Chinese money could weaken the pressure Europe is applying on members that have been breaching democratic norms. Europe has threatened to withhold development funds from Poland and Hungary as punishment for their turns toward authoritarianism. Both have packed courts with government-friendly judges and menaced the press.

“It’s a mutually beneficial cooperation based on mutual trust without any kind of attempts to interfere into domestic issues,” Hungary’s foreign minister, Peter Szijjarto, says in an interview before the summit meeting in Sofia.

Bulgaria has high hopes for Chinese investment on highway projects linking its ports. The Bulgarian government has broken with other European Union members in declining to join international statements condemning China’s human rights record. As Bulgarian officials prepare at the gathering to meet China’s premier, Li Keqiang, they plan to stick to business.

A Chinese noodle chef’s demonstration at a festival in Momchilovtsi, Bulgaria. Bulgaria is one of 16 Central and Eastern European nations that have formed an economic bloc with China.

Bulgaria’s plans to have a Chinese conglomerate run the airport in its second-largest city, Plovdiv, fell through this year.

“We are talking about different conversations, concrete conversations related to infrastructure, and other conversations related to the level of democracy and human rights in China,” Deputy Prime Minister Tomislav Donchev of Bulgaria says in an interview the day before the event. “It would not be polite and constructive if we try to merge them into one.”

The summit meeting convenes in a hulking convention center that harks back to era of Soviet domination. At a news conference, the Chinese and Bulgarian prime ministers offer assurances that the 16-plus-1 bloc does not aim to divide Europe.

Mr. Li seeks to allay European worries that China poses a challenge to its rules. He promises that Chinese-financed projects will be awarded on the basis of competitive bidding.

“There needs to be open and transparent tendering,” the Chinese premier declares.

But the Serbian prime minister, Ana Brnabic, has just undercut that assertion. Asked moments earlier about the high-speed rail from Belgrade to Budapest, she says Chinese companies have been promised construction work.

“China is a strategic partner,” she says. “We are not putting out tenders.”

Investing for the Future

As a currency crisis ravaged Indonesia two decades ago, angry mobs tore through West Jakarta, killing hundreds of ethnically Chinese merchants. Yet Cheng Tao, a Chinese software engineer turned venture capitalist, can look down from his high-rise office on the same neighborhood and see a tranquil center of Chinese life — grocery shops, restaurants and his own son’s school.

Mr. Cheng, 34, is part of an influx of young Chinese financiers, engineers and web designers who rent space in an area full of technology companies. He first came to Indonesia a decade ago with the Chinese telecom company Huawei. He and other veterans of large Chinese conglomerates are increasingly unleashing their own start-ups.

“Ten years ago, there were no mainland Chinese here,” Mr. Cheng says as he sips tea imported from China. “We see opportunities here that no longer exist in China.”

The thriving Chinese start-up scene in a neighborhood once devastated by anti-Chinese terrorism illustrates China’s deepening engagement in Southeast Asia. Only a few years ago, Chinese companies in the region were mainly focused on purchasing natural resources. Today, China is investing for the future, seeding innovative industries with money and brainpower.

Last year, Chinese investors participated in funding rounds for Indonesian start-ups that accounted for 95 percent of the value of those companies, according to a survey by Google and A. T. Kearney, a global management company.

“China is Indonesia’s Silicon Valley,” says Adrian Li, a venture capitalist who has a Stanford M.B.A. and moved to Jakarta from Beijing in 2014.

China’s place in Southeast Asia has proceeded deliberately, and just as the United States has ceded ground.

Programming notes written on a window of Tokopedia’s high-rise headquarters in Jakarta.

Engineers at Tokopedia, an online marketplace in Indonesia. Jack Ma, the founder of the Chinese e-commerce giant Alibaba, invested $1.1 billion in Tokopedia last year.

Back in 2003, the prime minister at the time, Wen Jiabao, addressed the yearly gathering of the Association of Southeast Asian Nations. A decade later, President Barack Obama did not attend the annual conclave, held that year on the Indonesian island Bali. It was a noteworthy absence given that Mr. Obama had spent time in Indonesia in his youth.

China’s new president, Mr. Xi, showed up. He even addressed the Indonesian Parliament, using the occasion to announce a new institution — what would become the Asian Infrastructure Investment Bank, now a rival to the World Bank.

While heads of state forge ties amid pageantry, Chinese businesses have been quietly yet persistently making inroads in Indonesia, guided by bottom-line concerns. At home, Chinese web companies are running out of new customers. Indonesia, a land of 260 million people, is adding more internet users than anywhere else on Earth.

Jack Ma, the founder of the Chinese e-commerce company Alibaba, was early to appreciate this reality, pouring major investments into local shopping start-ups, including $1.1 billion last year into Tokopedia, a thriving online marketplace. During the Muslim holy month of Ramadan this spring, the Tokopedia site drew 78 million people, a 70 percent increase from the previous month.

Such potential fortifies Mr. Ma’s determination to stay ahead of his biggest global competitor — Amazon. The American e-commerce company operates in Singapore but has yet to significantly penetrate Southeast Asia.

Alibaba has put more than $3 billion into a former regional competitor, Lazada. Its Alipay digital payment system operates across Southeast Asia. Mr. Ma sits on advisory boards in the region that will help set standards and shape consumer perceptions, expanding China’s traditional reach.

Military Buildup

Beyond money and clicks, China projects its power through a more traditional display of strength — military might.

Alex Pama has watched it unfold from uncomfortable proximity. In the 1990s, when he was a junior officer in the Philippine Navy, he saw Chinese boats landing on Mischief Reef, a glorified collection of rocks claimed by the Philippines in the South China Sea. Chinese crews erected shelters to mark the territory, then began pouring concrete for larger buildings.

The Philippines sought help from its former colonial overseer, the United States. But the Clinton administration demurred. The American Navy was still smarting over losing access to Subic Bay, its longtime base in the Philippines.

That decision was a historic turning point, says Mr. Pama, who would rise to become admiral of the Philippine Navy. From then on, the United States shrank from the region, relinquishing the seas to China.

“That’s when the appeasement started,” Mr. Pama says.

Two decades later, President Xi ordered the buildup of Mischief Reef and other outcroppings in the Spratly archipelago into islands bristling with reconnaissance gear, aircraft hangars, runways, deepwater harbors and, most recently, short-range missiles. Those bases and China’s maritime buildup have given Beijing effective control over one of the most heavily trafficked waterways on the planet.

Subi Reef, one of the outcroppings that China has built up in the Spratly archipelago to assert its presence in the South China Sea.Adam Dean for The New York Times

A security guard at the Indian Ocean port at Hambantota, which Sri Lanka handed over to Chinese control last year after failing to pay back Chinese loans.Adam Dean for The New York Times

“The U.S. should have been more assertive back then and now,” says Mr. Pama, now retired.

Dominating the South China Sea and unseating the United States have become central objectives in Mr. Xi’s bid to return China to glory. Last year, China for the first time staged aircraft carrier drills using advanced fighter jets in the South China Sea.

Chinese state-owned companies control two Chinese-built ports on the Indian Ocean, in Sri Lanka and Pakistan. Two more are on the drawing board for Myanmar and Bangladesh, helping China achieve its maritime strategy of a “string of pearls” stretching from the mainland to Port Sudan in Africa. Last year, China opened its first overseas military base, in Djibouti on the Horn of Africa.

China has presented these moves as defensive. But the United States and its Asian allies warn that Beijing has positioned itself to hold global trade hostage while diminishing the American presence. China’s emergence as the region’s dominant commercial power combined with its moves toward maritime supremacy has heightened the sense that a changing of the guard is underway.

“Over the long term, China’s power and influence will undoubtedly weaken and ultimately abolish U.S. dominance in the region,” says Shi Yinhong, a professor of international relations at Renmin University in Beijing, who advises the government.

The perspective gained momentum during the 2012 standoff at Scarborough Shoal, a horseshoe-shaped chain of reefs that is much closer to the Philippines than to China.

As the Philippine Navy challenged Chinese fishing boats, the Obama administration brokered a deal in which both sides would withdraw. The Philippine vessels departed, but some of the Chinese boats stayed.

China has controlled the shoal ever since. Emboldened, China began construction of seven artificial islands in the Spratly archipelago.

China appears reluctant to build a full-fledged military base on the shoal, lest it stoke nationalist anger in the Philippines, damaging relations with its pro-China president, Rodrigo Duterte.

“Any reclamation will outrage the Duterte government,” says Zhu Feng, the executive director of the Center for the South China Sea at Nanjing University. “China can’t afford to lose a good friend like that.”

But many Philippine officials fear that this is merely a pause before an inevitable Chinese expansion.

Two large maps of the South China Sea cover the walls of the office of Gary Alejano, a Philippine congressman and former marine. He shows visitors how the Scarborough Shoal sits on the edge of the Bashi Channel, the Chinese Navy’s entryway into the western Pacific. He points out the artificial islands in the Spratly archipelago. He notes Mischief Reef, where Chinese fighter jets have landed.

Unless someone confronts them, those jets will remain there, using the hangars China built, Mr. Alejano says. Philippine Navy vessels rarely patrol the area, he laments.

“Right now, you can feel that China controls the South China Sea,” Mr. Alejano says. “And the U.S. comes in and out.”

Owning the Choke Points

As China charts its global reach, six zones demand special attention: the maritime choke points.

The entryway to the Black Sea from the Mediterranean. The passageway from the Pacific to the Indian Ocean via the Strait of Malacca. The corridor separating Europe from Africa at the Strait of Gibraltar. Bab el Mandeb, off Djibouti in the Horn of Africa. The Strait of Hormuz in the Persian Gulf. Access to the Mediterranean from the Red Sea through the Suez Canal.

At any one, an outbreak of hostilities could imperil China’s free movement around the globe, jeopardizing its exports and access to resources.

These zones have historically been policed by American naval power, which has made China’s access dependent on peaceful relations with the United States. To liberate itself, China has been lavishing investment on governments that control the choke points.

Which is how China became financier and developer for the grandiose capital being constructed by President Sisi in the reddish-brown desert east of Cairo. Mr. Sisi craves investment and allies at a time when much of the world has recoiled from his brutal crackdown on dissent.

A Chinese worker in his bunk at a stone-quarrying company jointly owned by Chinese and Egyptian investors outside Cairo.

Egypt is using workers and financing from China to build a new capital city.

In an interview, Gen. Ahmed Zaki Abdeen, who heads the Egyptian state-owned company overseeing the new capital, railed against American reluctance to invest in his country.

“Stop talking to us about human rights,” he says. “Come and do business with us. The Chinese are coming — they are seeking win-win situations. Welcome to the Chinese.”

In backing the new capital, China has furthered an age-old aspiration for the Egyptian powers that be: taming the desert. The project aims to construct a city of 6.5 million people, replacing crumbling Cairo with a technological metropolis engineered to rival Dubai. Construction is expected to take 15 years while costing 200 billion Egyptian pounds, more than $11 billion.

Under a master agreement signed in October 2017, China Construction is building the capital’s central business district. A consortium of Chinese state-owned banks is lending $3 billion to finance a first phase expected to be completed in three years. Egypt is obligated to spend the money by hiring the China State Construction Engineering Corporation. A second phase is expected to run $3.2 billion.

Yu Wenchuan dons a yellow safety vest as he works security at the China Construction site. Born and raised in the southwestern Chinese province of Sichuan, Mr. Yu, 24, complains about the 100-degree heat and the conspicuous absence of spicy noodles. But he is resigned to spending the next eight years in Egypt.

“This is a good way to get experience,” he says.

Under the contract, 35 percent of construction materials can be brought from China. Even some of the 65 percent procured from domestic sources stands to enrich China, given the presence of entrepreneurs like Xin Zhu.

Seventeen years have passed since Mr. Xin landed in Cairo from his native Hubei Province. There, he oversaw a factory that processed slabs of granite and marble into flooring and countertops. He had heard that Egypt was rich with quarries full of high-quality, low-priced rock.

He took control of a lot in an industrial area outside Cairo. He endured terrible roads and power failures. “I was like a pioneer,” he says.

Today, Mr. Xin’s company employs more than 100 people, mostly migrants from China. He ships most of his production to China. But he aims to sell into the new capital, profiting as Beijing erects a veritable Pharaonic monument for Egypt’s authoritarian leader.

“I was looking for new opportunities outside China,” Mr. Xin says. “More development is good for our business.”

Peter S. Goodman, The Times’s global economics correspondent, spent six years in China as the Shanghai bureau chief for The Washington Post.

Jane Perlez is The Times’s bureau chief in Beijing, where she has covered China’s relations with the United States and Asia since 2012.

Design: Matt Ruby, Rumsey Taylor, Quoctrung Bui Editing: Tess Felder, Eric Nagourney, David Schmidt Photo Editing: David Furst, Craig Allen, Meghan Petersen, Mikko Takkunen Illustrations: Sergio Peçanha


https://www.nytimes.com/interactive/2018/11/25/world/asia/china-world-power.html