Skip to content

Flying the Pan-Blue Flag Over Red China

On June 22, 2006, authorities in the southwest city of Chongqing arrested a 23-year-old student for marking the 17th anniversary of the 1989 Tiananmen Square Massacre by publicly flying the flags of the Republic of China (ROC), which was the pre-communist Chinese state, and the Chinese Nationalist Party (KMT), which ruled China before losing the mainland to the communists in a bloody civil war and retreating to the island of Taiwan in 1949. The student, named Zhang Qi, was detained for 20 days for "illegally organizing activities."

It is hardly surprising for China’s communist authorities to keep an unruly student behind bars for a few weeks. But unexpectedly, this incident caused an uproar in mainland’s cyberspace and attracted a lot of media attention in Hong Kong, Taiwan, and overseas Chinese communities.

Symbols from the Past

Though the detention itself was little more than a routine exercise of a repressive regime, the action that led to the detention was by no means ordinary. The symbolism and audacity of this rare act of flag-waving on the regime’s most sensitive date caught people’s attention and provoked imagination.

The detained student, Zhang Qi, is a member of an increasingly influential Internet-based community—China Pan-Blue Alliance—which brings together hundreds of young people who call themselves "spiritual members of the KMT" and aspire to restore the Republic of China to the mainland.

Before Chongqing, other members of the alliance had publicly shown the ROC and KMT flags in Wuhan. Digital pictures of both events were widely circulated on the Internet both in China and overseas.

Similar stunts had been performed before. Last year, when then Taiwan KMT Chairman Lien Chan visited Beijing University to give a speech, one person in the welcoming crowd unfurled a ROC flag and started waving it. He was quickly snatched and whisked away from the scene. It was unclear if he belonged to the same group.

Waving the flags from a past government was not just an act of open defiance against the one-party rule of the Chinese Communist Party (CCP) but also a bold challenge to the legitimacy of the People’s Republic of China (PRC), which the communists founded after overthrowing the ROC.

As discontent with the communist regime grows, the political and national symbols from a past era seem to have gotten a new lease on life. For many people, these old symbols can evoke nostalgia and intensify their yearnings for change.{mospagebreak}

Such symbolism could gain momentum and become a powerful influence, as the history of Eastern Europe testifies.

The Return of the Republic

Since the Republic of China government retreated to Taiwan in 1949, the PRC has ruled over the Chinese mainland without any serious challenge to its power. In the communists’ eyes, the ROC is just a historical term.

Indeed, even on the small island of Taiwan, the last patch of land under its name, the ROC is not faring well. Since the KMT lost the 2000 election to the pro-independence Democratic Progressive Party (DPP), the new administration has seen the national title, which includes the word "China," as an eyesore that should eventually be ditched to make way for an independent "Republic of Taiwan."

For many, the ROC is an anachronism left over from a confusing historical period, and has become a laughable misfit for what it actually represents. Surely, it can no longer pose any threat to Beijing, which controls vast territories with an iron hand.

But destiny works in mysterious ways. Now some unsettling signs have emerged that the ROC is coming back to haunt the CCP, not from across the Taiwan Strait, but from within people’s minds.

Ironically, it was the communist government itself that started it.

True History of the War Against Japan

In the CCP’s orthodox history textbooks, though the KMT’s founder Sun Yat-sen was credited with overthrowing the imperial Qing Dynasty, the KMT was demonized in almost every possible way, and its most important leader—Chiang Kai-shek—depicted as a stereotypical bad guy.

But in the mid-1980s, buoyed by the initial success of the economic reforms and improved ties with the West, a confident CCP decided to tackle its long-term rival-the KMT in Taiwan—with a new strategy. In a bid to lure the KMT administration into a political settlement toward reunification, the CCP, on the 40th anniversary of the end of World War II, recognized 85 KMT generals who were killed during the war as "martyrs," and admitted that the KMT did play a role in the war, even though not as important as that of the CCP itself.{mospagebreak}

The CCP had always held that it single-handedly defeated the Japanese. The role of the allied forces was deliberately downplayed, and any talk of the KMT’s war effort had been taboo. But Beijing’s new "united front" ploy opened a crack in the tight restrictions on studies of China’s contemporary history, and led to an explosion of academic and literary works on the KMT forces’ heroic resistance against Japanese aggression in the 1930s and 1940s.

It soon became clear to many Chinese people, especially intellectuals, that it was the KMT who did most of the fighting in the war, and that what the CCP did was not much more than hiding in a corner, preserving and developing its strength, and waiting for the Japanese to weaken the KMT so that it could overthrow the KMT government in the end.

These revelations were extremely damaging to the CCP. As the communist ideology became completely bankrupt after the Cultural Revolution, the CCP had to use nationalism to legitimize its continued rule and rally the population around it. However, when it was exposed that the CCP not only failed to defend the country during its most perilous times but also took advantage of the Japanese invasion to grab power, the very nationalistic feelings it had encouraged to its own advantage now turned against it.

Who Is the New China?

Throughout the late 1980s and the 1990s, many academic papers and novels about China’s Republican era were published. As more and more historical facts were revealed, veiled calls for a reassessment of the KMT and the ROC began to emerge.

Of course, a complete overhaul of the official version of history can never be allowed to happen as long as the CCP remains in power, as the KMT’s gain would unavoidably mean the CCP’s loss. A thorough reassessment of history could only be done from outside China.

And so it happened. In 1999, an important book entitled Who is the New China (in Chinese) was published in the United States. The author of the book, Mr. Xin Haonian, is a distinguished Chinese historian now living in the United States. He wrote the book after more than a decade of painstaking and risky research in China.

Mr. Xin rejects the CCP’s assertion that it founded a "New China." According to his book, the CCP was responsible for rebelling against the Republic of China at the instruction of the Soviet Union, refusing to defend the country against Japanese invasion in order to preserve its own strength, starting a civil war immediately after China’s victory over Japan to overthrow the Chinese government with Soviet support, and setting up a totalitarian regime in mainland China that led to an unprecedented calamity to the Chinese nation-costing 80 million Chinese lives.{mospagebreak}

So, if the PRC is not the "New China," then who is? According to Mr. Xin, it is none other than the Republic of China founded by the KMT, which replaced the imperial Manchu Court with a Chinese republic based on democratic institutions, brought the warlord-held provinces under central control, defended China against Japanese aggression, abolished all the unequal treaties imposed on China by Western imperialist powers, and won China a permanent seat on the U.N. Security Council. Even after its defeat in the civil war, the Republic of China thrived in Taiwan, resulting in a democratic and prosperous society unprecedented in Chinese history.

In Mr. Xin’s view, the way forward is to go back to Sun Yat-sen’s Three Principles of the People (which can be roughly translated as nationalism, democracy, and people’s welfare) and rebuild a democratic and unified Republic of China.

As Mr. Xin made clear in his book, he did his thinking on the back of a vast amount of research conducted by mainland scholars over the past decade. He simply built upon all the preceding work and said what many in China had wanted to say but could not.

Not surprisingly, Mr. Xin’s book had a ready readership. Though it cannot be published or sold in China, its electronic version is easily circulated over the Internet. Its impact cannot be overestimated.

Unexpected Change in Taiwan’s Political Landscape

Shortly after Mr. Xin published his book, the political situation in Taiwan took an abrupt turn. In the spring of 2000, the KMT lost the election to the pro-independence DPP, and Chen Shui-bian, a hardline advocate of "Taiwan independence," became the president. On the surface, it was a huge setback for the Republic of China, which appeared to be losing its last foothold.

But things are never as simple as they look. Worried that Taiwan was drifting away from the mainland, Beijing began courting Taiwan’s pro-unification opposition in a bid to curb the pro-independence Chen administration. As a result, the KMT and its sister parties, collectively known as the "Pan-Blue Coalition" (a name derived from the KMT’s party color), suddenly became the good guys in the CCP’s book. Even the "Republic of China" became less of a taboo because it was seen as a connection between the mainland and Taiwan, which the pro-independence forces wanted to sever.

In mainland China, most people genuinely dislike the idea of "Taiwan independence," mainly because of an inbred sense of national pride and patriotism. And their patriotic feelings naturally make them like the KMT and the "pan-blues" in general, who are on the front line fighting against the pro-independence forces.{mospagebreak}

But their patriotism is toward China, not necessarily the PRC, though the communists have been trying to mix the two different concepts for the last six decades. If the ROC means national unification and Taiwan-style prosperity and democracy, most mainlanders will probably find it hard to resist.

In other words, as a result of the rise of "Taiwan independence" forces, the KMT, the "pan-blues" and the ROC have not only become less unacceptable to the communist regime but have also gained popularity among many mainland Chinese people.

China Pan-Blue Alliance

It was against this background that the China Pan-Blue Alliance was established on the Internet in August 2004. It borrowed its name from the Pan-Blue Coalition in Taiwan. But, while the pan-blues in Taiwan seem to be falling into the CCP’s "united front" trap, the mainland Pan-Blue members, many of whom were inspired by Mr. Xin Haonian’s book, have stuck to the KMT’s traditional anti-communist principles.

On its homepage, the China Pan-Blue Alliance clearly states its agenda: "Oppose communism, agree with the Three Principles of the People, and work together with the Chinese Nationalist Party for national unification." In their view, a unified China will not be an enlarged PRC, but will have to be a revived Republic of China-which is democratic and free.

Recently, the China Pan-Blue Alliance has become increasingly active. At present, hundreds of people regularly go to the Alliance’s online forum for discussion. The Alliance also holds meetings in Beijing, Wuhan, Chongqing, and Chengdu.

Last year, immediately before the 60th anniversary of Japan’s surrender at the end of World War II, the group’s convener Sun Buer was detained for 15 days for organizing activities in honor of the KMT’s resistance during the war.

Apart from nationalism, the China Pan-Blue Alliance has also supported democracy and human rights. It took part in the labor rights movement of Chongqing Special Steel Group workers, and has published articles in support of the human rights of Falun Gong. It also lent its support to the spread of the book Nine Commentaries on the Communist Party published by an overseas media, The Epoch Times, and the movement to quit the CCP.{mospagebreak}

Although the China Pan-Blue Alliance still exists largely in cyberspace, the communist authorities have seen it as a grave threat. It was labeled an "illegal organization," and many members have been called by the police for interrogation.

These young people appear undaunted. Now, many members of the Alliance are planning to participate in the local elections in their personal capacities for seats in the "People’s Congress," in a bid to change these rubberstamps toward genuinely representative assemblies.

Different Shades of Blue

The mainland-based "spiritual KMT members" did try to get in touch with the "real" KMT in Taiwan. Chen Rongli, a member who fled from the mainland to Taiwan, even met with the current KMT leader Ma Ying-jeou in May. But the KMT, whose priority is understandably Taiwan’s domestic politics, has looked very much baffled by the whole thing and doesn’t seem to know how to deal with its eager "spiritual members" on the mainland.

Unlike his predecessor Lien Chan, Ma Ying-jeou seems to be genuinely concerned about democracy and human rights in mainland China. He attends memorials of the June 4th Tiananmen Massacre every year, and has repeatedly said that unification is not possible if the mainland fails to redress the Tiananmen Square tradegy.

Mr. Ma is also ambitious about the KMT’s future on the mainland. In a call-in program with the BBC’s Chinese Service in February, several callers from the mainland asked how they could join the KMT. Ma responded by saying, "If one day the mainland lifts its restrictions on political parties, the KMT will definitely go there."

However, as the KMT’s current political platform is based on making peace and developing economic ties with the mainland, Ma Ying-jeou’s attitude toward the mainland-based pan-blues is lukewarm at best.

When Chen Rongli, a mainland Pan-Blue member now living in Taiwan, applied for formal KMT membership in February, his application was politely turned down on the grounds of his not being a ROC citizen.

When Zhang Qi was detained, in spite of calls from pro-democracy and human rights activists for the Taiwan KMT to use its influence to rescue him, Ma Ying-jeou kept his silence. This greatly disappointed the mainland-based Pan-Blue members.{mospagebreak}

Taiwan’s ruling DPP seized this opportunity to score political points. Lai Yi-chung, director of the DPP’s Department of China Affairs, openly called on the CCP authorities to release Zhang Qi. Taiwan’s pro-independence media also used this incident to accuse Ma of being hypocritical.

Disproportionate Impact

Zhang Qi was released on July 13, after 20 days of detention. For a regime known for its merciless and brutal treatment of dissidents, this appeared to be a particularly feeble punishment for what it sees as an organized subversive act. In contrast, members of the China Democracy Party could be sentenced to 10 to 20 years in prison for a much lesser offense.

The mainland pan-blues, unlike traditional pro-democracy activists, have put the CCP in an awkward situation. As the CCP is actively developing its relations with the KMT, it probably fears that a severe crackdown on the mainland-based pan-blues could rattle the pan-blues in Taiwan, or at least provide ammunition to the pro-independence forces.

Though the pan-blues have not paid too high a price for their activities, they could potentially make a disproportionately big dent in the CCP’s armor.

Successive generations of Chinese pro-democracy activists have spent most of their time criticizing the regime, but have failed to come up with meaningful alternatives. As a result, their criticisms often sound as if they were targeting China, rather than just the CCP. Understandably, such "China-bashing" does not always go down well with the Chinese people. The regime has found it easy to simply dismiss them as "anti-China."

But the pan-blues are different. Proudly waving the ROC flag, they are at a vantage point from which they can show themselves as real patriots and real democrats at the same time. Also, the ROC and the KMT are old, tested brand names and can be presented as credible alternatives to the status quo.

On the key issue of Taiwan, few traditional activists have been consistently vocal in opposing "Taiwan independence," because most of them are sympathetic to democratic Taiwan and do not want to be seen as saying the same thing as the CCP. With most Chinese people favoring unification, such ambivalence cannot win them points.{mospagebreak}

But the pan-blues, again, are in a good position. Recognizing the ROC as the only legitimate government of China, they can easily be anti-communist and against "Taiwan independence" at the same time without sounding self-contradictory. Their opposition to Taiwan’s pro-independence forces is a matter of principle, but their criticisms have been rather polite and rational because they recognize the DPP as a force for democracy.

A "Pan-Blue Revolution"?

It is hard to estimate how strong this "Pan-Blue" movement on the mainland is at present. That is one of the reasons why the Taiwan KMT has been so cautious in its dealings with the mainland pan-blues.

However, recent happenings appear to suggest that more and more mainlanders are accepting the pan-blues’ ideas. When a large section of the society is looking for political alternatives, a relatively known quantity like the ROC could prevail over other proposals. And when one political alternative gains momentum, it could gradually evolve into a rallying point.

It is not hard to find precedents. After the fall of communism in Eastern Europe, most countries there reverted to their pre-communist national titles and national flags. For people living in communist countries, going forward seemed to mean going back and undoing what communism had done to their country.

Everyone knows China needs change, and most believe the country eventually will change. In the last few years, there have been a number of largely peaceful "revolutions" around the world, each associated with a specific color. When the moment inevitably comes for China, it could well turn out to be a "pan-blue revolution."

Yue Wei is a U.K.-based journalist.

Former Secret Agent Reveals Strategies for Entrapping Taiwanese Businessmen in China

[Editor’s Note: Hao Fengjun is a former secret agent with the Tianjin Public Security Bureau. After graduating from Nankai University in 1994, Hao worked in the Heping District Bureau of the Tianjin Public Security Bureau for two years as an anti-riot police officer and spent another two years as a safety patrol officer. In 2000, he went to work for the "610 Office," which was organized by former head of state Jiang Zemin on June 10, 1999, for carrying out the campaign to persecute Falun Gong adherents.

In February 2005, Hao fled China and applied for political asylum in Australia. On June 7, 2005, in Melbourne, he publicly denounced the Chinese Communist Party (CCP). Since then, Hao has been traveling around the world participating in forums and conferences on the Chinese Communist Party and the mass movement of resignations from the Party.

On December 17, 2005, Hao was invited to Taiwan to speak at a lecture and expose the strategies that China uses to frame Taiwanese businessmen in order to confiscate their investments and coerce them into spying. The Taiwan Hsinchu Science Industrial Park, located in the "silicon valley" of Taiwan, sponsored the lecture. It was one of a series of lectures to educate Taiwanese businessmen on how to stay safe when doing business in mainland China. Below is the summary based on the audio recording of Hao’s speech.]

In 2000, Hao was randomly picked by computer to work for the 610 Office in Tianjin. After witnessing several torture cases of Falun Gong adherents, he started to question the legitimacy and purpose of the 610 Office. He requested to be transferred back to the district office but was denied due to a staff shortage in the 610 Office.

In 2003, the 610 Office changed its name to the "Bureau for Handling and Taking Precautions Against Crimes Committed by Evil Cults." The main function has expanded to oversee 14 religions, such as Catholicism delegated by the Vatican and some Christian sects.

The CCP allows only the "patriotic" Catholic and Christian churches recognized by the Three-Self Patriot Churches, and considers the rest illegal "evil cults." The CCP takes religious belief as a major threat to its ideology, and people who participate in independent religious activities can be charged with "breaking the law by being involved in evil cult activities."

In 2003, Hao was transferred to the division that monitors the activities of Taiwan businessmen who hold religious beliefs. Whether Taiwanese nationals are businessmen or students, the CCP regards them as potential spies, and the CCP’s intelligence organization closely monitors them.

Citing a case from 2003 in which he was personally involved, Hao said, "We knew everything about him." The object of surveillance was a Taiwanese businessman, a Christian who had invested two million yuan (US$244,000) in Tianjin.{mospagebreak}

The minute that Taiwanese businessman set foot in China, he was closely monitored and followed. His hotel and business phones were tapped, and his daily contacts and activities were recorded. For instance, any activities such as contacting other Taiwanese, joining prayer congregations, or going to baptism ceremonies, as well as the location of the hotels where such ceremonies are held, how the ceremonies are performed, what songs are sung during the ceremonies, who sings the songs, who presides over the ceremonies, and who baptizes the babies are videotaped. In one instance, when this businessman intended to spread his religion to some local university students in a large park, all activities, including singing hymns and praying, were put under surveillance.

In October, the Ministry of Public Security formed the plan for his arrest. It was to be carried out by the offices of the Public Security Bureau of the 610 Office, the Commercial Bureau, the Bureau of Taxation, and the Commodity Pricing Bureau. The detailed plan was to have the Commercial Bureau confiscate his property, including manufacturing facilities and warehouses. The Bureau of Taxation would audit the company’s financial books for accounting fraud. The Pricing Bureau would find loopholes in the company’s exporting procedures. Lastly, the Public Security Bureau would complete his arrest.

The arrest was supposed to take place before his trip back home prior to the New Year. But when the businessman made a sudden decision to visit a different city to purchase a piece of land for a new manufacturing site, the arrest plan was then suspended under orders of the Ministry of Public Security in order to wait for all of his investments to come in before taking any action.

Hao Fengjun warned the businessmen to be on guard for any special treatment, including dinner parties, bath and massage services, and prostitution arranged by Chinese officials since their aim was to confiscate all the investments they could get from him. "They will do anything to make it happen," he said.

The most common ploy used for arrest is tax fraud. For example, one chooses to invest in Tianjin to build a factory and has paid all the taxes. The government tells him that if he chooses to build another site in the suburb of Tianjin, he won’t need to pay taxes since the new site will be under the same license permit. But later when the CCP officials are ready to take action against him, they can easily charge him with "tax evasion" on the piece of property for which he hasn’t paid taxes.

Prostitution is another common trap used to frame Taiwan businessmen. In China, engaging a prostitute is subject to a six-month to two-year detention and a fine of 5,000 yuan (US$600).{mospagebreak}

Hao illustrated a typical example, which is still being played out today. Besides being a special agent, Hao had another identity as a government official, which made it easy and legitimate for him to have personal contact with Taiwanese businessmen. He would introduce himself as an officer from a certain department of the municipal government with connections to the top of the chain of command. In the meantime, a few people would be assigned to contact the targeted businessman and take him to some nightclubs or Karaoke bars. The arrest could be easily arranged and a setup implemented in order to show evidence of prostitution.

The Taiwanese businessman would be asked whether he knew anyone in the government who could bail him out. Not knowing many people, he might think, "I know a high-ranking official in the municipal government. He may help me." Because the officers who made the arrest were from the same group as the official, he would be released "with the help of the high-ranking official."

After that, the businessman would be asked directly to offer some information about Christians and Falun Gong activities in Taiwan or else his investments will be in danger. "We can’t go to Taiwan, so we would like you to bring some information to us." Since the information is not related to Taiwan’s military intelligence or politics, most Taiwanese businessmen will quickly cooperate, Hao said.

Such schemes are also used to take over Taiwanese businessmen’s investments. Many businessmen who were entrapped often did not dare to speak up to expose the conspiracy for fear that their investments would be jeopardized. They were led to believe that they could still hope to recoup their investments. For example, the government might confiscate their assets in two provinces, while leaving the assets in the third province intact. Officials would then threaten that the third piece of property would also be taken away if they chose to disclose the entrapment scheme. Another game the government officials play is to convince the businessmen that the problem can be corrected in a year or two, so they should just wait and keep quiet.

Hao reminded the Taiwanese businessmen to use "self-discipline" because the CCP’s secret agents often use various means to frame, exploit, and coerce Taiwanese into spying for them while at the same time confiscating all their investments. He said that the CCP is not afraid of having its crimes exposed in Taiwan since most Chinese media organizations in Taiwan have been infiltrated by the CCP. However the Party is concerned about exposure by the Western media, and don’t want them reporting on its schemes.

Lukun Yu is a writer based in New York.

Government Compound Or Luxury Resort?

Eighty-seven million dollars of investment, approximately 82 acres of land, an "ancient tree garden," a man-made lake, a rockery, six stylish office buildings, a thousand-seat convention center… Could this be a palatial resort?

This is the office compound of the not-so-affluent district government of Huiji, on the outskirts of Henan Province’s capital city Zhengzhou.

Opulent District Government Compound

Surrounded by a moat, the compound sits on an 82-acre landscape filled with more than 3,700 trees. Nearly 900 of the trees are ancient; three of them are over 1,000 years old, and dozens are over 500 years old. You can find over 30 varieties, such as papaya, sweet osmanthus, Chinese tallow tree, ginkgo, American royal purple, silk tree, and magnolia in this small forest. Besides the man-made lake, the compound also has nine acres of lawn ornamented by two gigantic boulders weighing 60-80 tons that were shipped in. There are also a tennis court, a basketball court, and other recreational facilities.

Outside of the front entrance is a five-acre square, flanked by two rows of expensive trees shipped in from afar. Situated in the middle is a statue named "Children of the Great River." The square is big enough to build an elementary school on, but the white and black marble décor makes it a bit too extravagant for that purpose.

This resort-like compound is a perfect place to forget about the crowds and stress of the city.

Officials Say the Compound Was Built for the People

It is said that the U.S. White House sits on an 18-acre lot. It consists of the main building and the East and West Wings. The three-story building has 132 rooms, the biggest of which is the East Room, which can host more than 200 guests.

You could put almost five White Houses on the Huiji government compound.

When the compound got attention in the press, the owners of the compound downplayed its grandiose scale. The public relations director of the district propaganda office said, "We are hardly number 1. There is a municipal government compound that occupies more than 260 acres, much bigger than ours."{mospagebreak}

Although this statistic needs to be verified, it’s without a doubt that Huiji District is not the only local communist government that has built a luxurious office compound. Affluent local governments along China’s coastline have raced to erect luxurious office buildings. Some of them were modeled on the White House or Zhongnanhai, China’s central government compound. Inland regions with fewer resources have no intention of missing out on the fun and are following in the footsteps of their rich comrades.

So why are these local governments so keen on building opulent office compounds? The reason may be a mix of personal interest and business.

Construction has always been a hotbed for corruption in China. There is even this saying in China: "Buildings go up, officials fall." Recently the Tianjin Maritime Court Building scandal brought down a series of corrupt officials who were involved in graft and embezzlement during the construction of this $12 million building.

As for business, it’s all about power and authority. Thousands of years of feudalism did not disappear without leaving some deep marks in China’s officialdom. Historical government buildings—towering architecture, wide entrances, deep hallways, and huge office desks—spell "importance" and "authority." Such structures psychologically dwarf the commoners who dare to enter.

Obviously the ancient influence has left its mark in the minds of today’s Chinese officials, especially those from the rural areas. The more palatial the building, the more daring the leader; the more luxurious the decorations, the more accomplished the leader; the more magnificent the style, the higher the authority. Material objects, such as swanky office buildings and luxurious sedans, are symbols of power and authority.

Huiji government officials claim that it’s the people who are benefiting from the opulent office buildings. They’ve even gone out of their way to prove this by engraving the Mao-style slogan "Serve the People" on a stone in a prominent location on the compound. Yet, taking advantage of the power and spending taxpayers’ money to build these complexes is hardly a service the commoners are seeing.

This compound is so controversial that it has generated anger and debate. Local residents and TV pundits alike have raised pointed questions that have triggered an uproar over corruption and mismanagement in local government. Just how swanky does the local government office need to be? How can a district government that has just come under a budget deficit and with revenue of US$24 million, justify spending US$84 million to build this huge, extravagant headquarters next to the small, underdeveloped villages it governs?

Helen Chou is a writer based in New York.

Lao Zi and the Dao

Dào: The Way, The Great Ultimate, or The Secret of the Universe

Lao Zi was a great philosopher, thinker, educator, and the founder of the Daoist school of thought in ancient China.

Lao Zi was not his real name, but an honorific given the sage, meaning "Old Master." The specific date of Lao Zi’s birth is unknown. Legends vary, but scholars place his birth between 600 and 300 B.C.E. Lao Zi is attributed with the writing of the "Dao De Jing," the scripture for the Daoist school.

"Dao," frequently written as "Tao," literally means "The Way," "The Great Ultimate," or "The Secret of the Universe."

Lao Zi’s wise counsel attracted followers, but he refused to set his ideas down in writing. He believed that written words might solidify into formal dogma. Lao Zi wanted his philosophy to remain a natural way to live life with goodness, serenity, and respect. Lao Zi laid down no rigid code of behavior. He believed a person’s conduct should be governed by instinct and conscience.

Daoism holds that the universe, far from being a complex web of tangled events, is actually very, very simple. All forms of matter and being are merely manifestations of Yin (female cosmic element) and Yang (male cosmic element), surrounded by Qi (energy).

Lao Zi believed that human life, like everything else in the universe, is constantly influenced by outside forces. He believed "simplicity" to be the key to truth and freedom. Lao Zi encouraged his followers to observe and seek to understand the laws of nature, to develop intuition and build up personal power, and to use that power to lead life with compassion and without force.

Legend says that in the end, Lao Zi was saddened by the evil side of mankind and set off into the desert on a water buffalo, leaving civilization behind. When he arrived at the final gate at the great wall protecting the kingdom, he stopped for a cup of tea with the gatekeeper. The gatekeeper was so stunned at Lao Zi’s wisdom that he begged him to jot down a few revelations for posterity. Lao Zi grabbed a brush and dashed off a few ultimate truths before heading on his way. The result was the 5,000-word philosophical poem in the verses of the "Dao De Jing," in which Dao (The Way) is expounded. Next to the Bible, this ancient Chinese text is the world’s most translated classic.

As for the reclusive Lao Zi, he ended up in Heaven. Now deified as one of the San Qing (the supreme trinity of Chinese Daoism, known as The Three Pure Ones) under the name Lao Jun, he advises the Jade Emperor on do-nothing policy and spends eons refining doctrine.

The Four Abnormalities of China’s Economy

Although Chinese college graduates have difficulty getting jobs these days, it is still quite shocking when the United Nations Development Program (UNDP) says in its research report published on June 29, 2006, that China is "facing a challenge of growth with high unemployment." The United Nations is not the first one to have found the coexistence of high growth and high unemployment in China. Several years ago, there were already debates among Chinese economists on whether high growth is incompatible with high unemployment. Apparently, such a phenomenon has already been recognized in mainland China.

In economic theory, it is believed that high economic growth accompanies high employment. Would China be an exceptional case that defies the conventional economic norm? Comparing China with the three other BRIC (Brazil, Russia, India, and China) countries, the economic growth in Brazil, Russia, and India has brought about a high growth of job opportunities. Among the BRICs, two are great powerhouses of natural resources, and the other two are countries with large populations. The economic boom in the four countries has not only given birth to a three-year-long bullish global commodities market, but has also become the major reason for the highest world economic performance in the past 10 years.

The comparison has also revealed three additional phenomena inconsistent with economic theory: divergence between the economic growth and the performance of the stock market, coexistence of low inflation and high housing prices, and coexistence of an overheated economy and extremely low interest rates.

Coexistence of High Growth and High Unemployment

It is no secret that China’s job opportunity growth rate is lower than its economic growth rate. We can just look at the annual college graduate’s job market. The State Statistic Bureau once estimated that in the 1980s every percent of GDP growth brought about 2.4 million jobs, while in the 1990s the number shrank to 0.70 million. The key to the problem lies in the large increase in the number of college graduates, which was 1.15 million in 2001, 1.45 million in 2002, 2.12 million in 2003, 2.80 million in 2004, and 3.38 million in 2005. This series of figures depicts a pattern: Ever since 2000, the faster the economy has grown the more difficult it has been for a college graduate to find a job. According to the UNDP report, "trade has deteriorated the inequalities. Behind the successful stories in East Asia, there lie the challenges of ‘jobless growth.’ Young people and women are experiencing ‘jobless growth,’ with the growth of the labor force being much faster than the growth of job opportunities." The Asia Pacific Human Development Report 2006 stated that in the 1990s China’s economy had been on a growth track as high as 10.1 percent boosted by a continuous climb in exports, while during the same period the growth rate of job opportunities was only 1.1 percent.{mospagebreak}

Economic Growth Has Not Been Reflected in the Stock Market

The stock market has always been called the barometer of macroeconomics. However, this barometer often does not work in China. Though there has been a noticeable increase in the price of stocks since last December, it is only minor compared with the huge downslide in the past four years. Therefore, the increase is only regarded as a technical bounce at best. It is, in fact, nothing to be proud of compared with the other three countries (Brazil, Russia, and India).

In the past four years, the stock markets in all of the BRIC countries, with the exception of China, had excellent returns. Last year alone, the Russian stock market increased by 100 percent, and Brazil’s and India’s by 50 percent. So far this year, the Brazilian and Russian stock markets have recorded another 10 percent increase, and India about an 8 percent increase. What is worth noticing is that the Indian stock market expanded three-fold in the past three years. Though it had a little correction recently, it still hovers near its all-time high. In June 2003, the SENSEX in Bombay was at about 3,000 points; it was over 10,000 points on February 17, 2006, rising at extraordinary speed.

Coexistence of High Growth and Low Inflation

In general, economic growth will be coupled with inflation-it is a commonplace and reasonable occurrence. However, China has been enjoying high growth in the past decades, yet it has no serious inflation. On the contrary, in the past two years, it has had some deflation, a phenomenon that is hard for economists to explain.

In comparison, the other three BRIC countries have all experienced inflation to different degrees. In June, the inflation for India was 5.24 percent, Russia 6.2 percent, and Brazil 8 percent—all far exceeding China. Mild inflation is one of the signs of a booming economy, and not something problematic. Strangely, China does not have inflation, but deflation, even with years of high growth. What’s more, the low inflation in China occurred when the real estate prices were shooting up. Is there a relationship?

Coexistence of Long-Lasting Overheating Economy and Very Low Interest Rate

This is something worthy of our attention. Many Chinese official media have talked about how the Chinese economy has been overheating for quite some time, yet its real interest rate is nearly zero. Generally speaking, this very low interest rate policy is only used as a tool to stimulate the economy when it sags, for example, Japan’s zero interest rate following the bursting of the bubble. However, when the economy is overheating or inflation is in sight, in order to keep the economy healthy, the interest rate should not be this low any longer. For example, the Fed in the United States increases the interest rate to curb the economy when it is overheating. For China to insist on a low interest rate while its economy is overheating sounds like a self-defeating paradox.{mospagebreak}

These are a few examples of how China’s economy differs from others. Since traditional economic theory cannot explain the phenomena, we temporarily use the term "the abnormalities of China’s economy."

Translated by CHINASCOPE from http://www.hinews.cn/news/system/2006/07/12/000114880.shtml

China’s Role in the North Korean Missile Crisis

On the Fourth of July, North Korea test-fired at least seven missiles, including a long-range Taepodong-2 multistage missile alleged to be capable of reaching some parts of the United States. The launch caused an immediate international furor. North Korea not only shocked the international community by the inferior quality of its missiles but also baffled the entire world as to its motives for provoking the missile crisis.

U.S. military intelligence was among those confused. Defense Secretary Donald Rumsfeld openly expressed his bewilderment: "I’m not a psychiatrist. I don’t know why they are doing what they are doing." Other Bush administration staff showed comparable perplexity.

China Replaced the Soviet Union in Missile Crisis

The North Korean missile crisis was a reminder of the 1962 Cuban missile crisis, when the United States and the Soviet Union were close to nuclear war. In the Cuban missile crisis, it was the Soviet Union that backed Cuba. A would-be war was averted because Khrushchev eventually calmed down and accepted JFK’s deal. Is history repeating itself in the sense that China is playing the Soviet Union’s role in the North Korean missile crisis?

It is interesting to observe China’s behavior before and after the crisis. China was the only country that North Korea notified of the missile test plan beforehand, while Russia, allegedly North Korea’s secondary ally, was kept in the dark as to the launch date until the Taepodong-2 plunged into the sea near Russia’s coast. Russia thus joined the international outcry. China was unconcerned over media reports on the missile test until a week before the launch—June 28—when Chinese Prime Minister Wen Jiabao first called on North Korea to abandon its missile testing plans and requested all parties to restrain their passion. China’s last-minute gesture served a diplomatic function: to divest itself of any involvement with the test plan.

It would be unfair to say that China did nothing about North Korea. In the wake of the missile tests, China demonstrated obvious displeasure with the international furor. China blamed the United States for the missile tests. On July 6, Deputy Minister Wu Dawei told interviewers that "this latest act" by the North Koreans "was in large part caused by American financial sanctions." China even accused the United States and Japan of "causing further tensions and complications." Through the dispatched Chinese delegation, General Secretary of the Chinese Communist Party Hu Jintao sent Kim Jong-il a personal message that offered "warm felicitations." Hu also praised the "friendly and cooperative Sino-North Korea relations."

As usual, China objected to the U.N. Security Council resolution against North Korea proposed by Japan and supported by the United States, Britain, and France, calling it "an overreaction." While threatening to veto the resolution of sanctions, China, along with Russia, presented a counter-resolution that endorsed only voluntary measures aimed at restraining Pyongyang’s ballistic missile and nuclear weapons programs. China’s stand in covering for Pyongyang and blaming the United States on the current missile crisis demonstrated a high consistency with its policy since the North Korean nuclear crisis began in October 2002.{mospagebreak}

Ironically, while China could not exercise its leverage to discourage North Korea from launching the missiles and its influence to bring North Korea to the six-party negotiations, it certainly demonstrated how hard and effectively it worked to avoid sanctions against North Korea. China’s behavior in the missile crisis did nothing more than affirm, once again, its unbreakable brotherhood with North Korea—a relationship historically boasted about by Chinese leaders as being the "lips and teeth."

International Law Meets Communist Hooliganism

Is Kim Jong-il really a lunatic? He openly bragged about North Korea already having nuclear weapons and he threatened to use them. His fanatic words, such as "If we lose, I will destroy the world," certainly have made many think he is. Then, was the missile crisis just a harebrained yet dangerous bit of blackmail?

After North Korea’s missile tests, South Korea held a ministerial-level meeting with North Korea to ease the tensions. At the meeting, North Korea told South Korea that the missiles were needed for the defense of both Koreas—North and South—not just North, and that South Korea should therefore not protest by ceasing to supply food and fertilizer. This logic certainly shocked South Korea. However, it indicated that Kim Jong-il, the maestro of this crisis strategy, clearly had sober loss-gain calculations in mind and that rumors of his being "mentally handicapped" were exaggerated.

On the surface, North Korea fashioned the missile crisis to extort a bigger "ransom" from the United States and Japan. Many believe that North Korea had figured from the beginning that it would confront the international community with a challenge that no amount of maneuvering in the U.N. or tut-tutting among the other "five critical regional powers" could address. Then the United Stated and Japan would have to ask China for help. China would help by asking the United States and Japan to give in. Every international move following the missile crisis seemed to follow the rules of this particular game.

Although the extortion assumption might offer something of an explanation, the main reason that North Korea provoked the missile crisis was to ingratiate itself with China. As a little brother in the communist bloc, North Korea owes China so much, yet it still needs more and more. North Korea needed a way to take some credit and, at the same time, to seek further rewards for its achievements. This is typical of communist hooliganism. The rule goes like this: "Even if a little brother makes trouble for a big brother, the big brother need not get his hands dirty." In other words, while North Korea was creating an international uproar, China only had to seem to be neutral and then to mediate between the different parties to protect the little brother. North Korea did the dirty work while China helped to cover up and diffuse the situation. When international conventions met communist hooliganism in the form of North Korean missiles, Kim Jong-il was very confident that the international community had no cards to play.{mospagebreak}

Has China Helped North Korea or Vice Versa?

For a long time, China has been a major patron of North Korea. On an annual basis, China provides North Korea US$500 million in food and more than 90 percent of its petroleum. Last year alone, when Chinese Communist Party leader Hu Jintao visited North Korea, China gave North Korea US$2 billion in one-time assistance. China’s aid plays a pivotal role in sustaining North Korea’s survival and in maintaining the comrade relationship as stipulated in the 1961 Economic and Military Alliance Treaty. The alliance was concluded at the sacrifice of 54,246 American soldiers killed during the Korean War in the early 1950s. For 45 years, the China-North Korea military alliance has served as a legal foundation for China to commit military forces in case of another Korean war with the United States.

North Korea’s first act of ingratiation to endear it to China was threatening Japan. Given the tense relations between China and Japan, the missile crisis helped China send Japan a clear, intimidating message: China may not need to personally settle with Japan; North Korea could punish Japan with its missiles at China’s whim. The crisis also served as an opportunity for China to take further advantage of domestic anti-Japanese nationalism and help alleviate an accelerating Communist Party legitimacy crisis. Japan was fully aware of this attack by innuendo. In refusing to compromise on the punitive resolution, Japanese Foreign Minister Taro Aso told national broadcaster NHK, "It would be a mistake to alter the stance for the sake of ONE country with veto power [China], even though many countries agree." Commenting on the prospect of China being isolated in the Security Council, Aso told TV Asahi that Beijing should not be backed into a corner.

Secondly, North Korea attempted to please China by using the missile crisis to engage the United States in a two-way squeeze: Iran from the West and North Korea from the East. In a continuing missile and nuclear technology transfer, China is the connector between Iran and North Korea. China was indubitably the invisible hand behind the pincer attack. Reportedly, ten Iranian missile engineers traveled through Beijing last month en route to North Korea’s missile launch bases. They checked the quality and performance of Chinese-made components in the North Korean missiles Iran plans to purchase. By transferring nuclear technology to Iran and North Korea through Pakistan and abetting the sale of Chinese missile components to Iran and North Korea, China created tensions in both areas. While the United States has been hard put to cope with the Middle East and the East at the same time, China experienced relief from international pressure with regard to its deteriorating human rights records and was able to go all out to crack down on popular opposition at home.

North Korea seems to be draining China’s resources. In fact, the two countries are mutually interdependent. China cannot simply abandon North Korea, which is not only a convenient buffer on its northern border but also an indispensable ally in the communist bloc. Pyongyang’s bellicose words and reckless actions—a rather desperate attempt to gain some political leverage—helped Beijing increase its diplomatic maneuvering power and play directly into the hands of Chinese communist leadership. North Korea functioned more as an assistant than a burden to China.{mospagebreak}

China Cashed In on the Six-Party Talks

The United States was able to defeat the Soviet Union but has been humbled by North Korea. A layman would perhaps ask a simple question: Why couldn’t the United States eliminate the North Korean regime just as it did Iraq’s? And why does the United States have to rely on six-party talks to deal with North Korea? The unspoken and bottom-line truth, for all the reasons noted above, has been, in a word, "China." Because of their military alliance, to attack North Korea is to attack China. The United States could afford to go to war with North Korea but not with China. That is why President Bush has persistently rejected solo talks with North Korea and demanded that six-party talks be renewed. In point of fact, five rounds of six-party talks have not changed North Korea one bit. North Korea has continued to develop its nuclear bombs and test its missiles, and it has repeatedly violated its signed agreements. Regional tensions and insecurity were never so menacing when the talks were taking place. North Korea has become more skillful at using military threats to wrest aid from the West and thereby finance its survival.

As a Chinese proverb says, "One stone may kill many birds." Six-party talks have worked for China in multiple ways. First, in the name of promoting the six-party talks, China could brazenly supply economic and military assistance to North Korea without generating criticism from the West, thus sustaining North Korea in the long run. Second, in return for complying with the U.S. request to bring North Korea to the negotiating table, China compelled the United States to soften its condemnations of China’s human rights violations. Third, using U.S. endorsement, China has strengthened its strategic position in the region, which is a traditional Chinese tactic: "The fox borrows the tiger’s ferocity by walking in the latter’s company." Fourth, by deliberately making the North Korea issue a live volcano, China has commandeered a valuable deterrent in its confrontations with the United States in the post Cold War era. Fifth, in return for arranging the multilateral talks, China expects concessions by the United States in its policy toward Taiwan.

Six-party talks have become China’s trump card, which it can cash in at any time. Even though China’s leverage with North Korea may never have been as great as many have assumed, the U.S. attempt to use such leverage has added to China’s power in the region while possibly leading to important U.S. concessions. China’s strategy to become the dominant regional power has already benefited from its role in the North Korea talks. For China to continue to sustain North Korea best serves its interests in an eventual world power struggle with the United States.

Conclusions

By closely and effectively working with its "blood" ally, China has been gaining strength and reducing American influence in the eastern Asian and Pacific regions. Communist China’s support of North Korea in the current missile crisis—and its unbroken support of North Korea over more than 50 years—resemble Russia’s role in the Cuban missile crisis and similarly poses a serious threat to regional stability and security.{mospagebreak}

A total settlement of North Korean missile and nuclear crises can hardly be reached without a regime change in North Korea. A regime change in North Korea is unlikely to happen without a disintegration of the Chinese Communist Party rule in China.

Dong Li holds a Ph.D. in Political Science from Columbia University. He is a China specialist who analyzes news for New Tang Dynasty TV.