What initially only applied to leading party officials gradually spread. Next came the CEOs of state-owned companies, followed by investment bankers and university professors. Now, however, the Communist Party’s ideological obsession with control is also targeting parts of the average population – teachers, educators and even students are affected. The authorities are now forcing many people to turn in their passports so that they can no longer freely travel overseas.
The obligations that some Chinese have to fulfill in order to be granted permission to travel reveal just how paranoid the government’s control mania is, writes Fabian Kretschmer. Out of concern about “intellectual pollution,” the Communist Party would rather isolate its citizens than foster international exchange. In doing so, the state leadership is making one thing clear: It does not trust its citizens to improve relations with foreign countries. It prefers to do this itself, ignoring the fact that such restrictions tend to disturb foreign countries.
Meanwhile, Joern Petring looks at the Chinese stock market, which has made an impressive recovery since the end of September. However, analysts warn that the positive sentiment could quickly evaporate if the Chinese government does not follow up on its stimulus program.
At first, it only applied to leading CP officials, dissidents and ethnic minorities such as Tibetans or Uyghurs. Then followed CEOs of state-owned companies, and finally investment bankers and university professors. But now, the Communist Party’s ideological control mania is also targeting large sections of the average population – from teachers to ordinary students. The authorities force many people to hand in their passports to prevent them from freely traveling abroad.
The Financial Times has documented the extent of the repression in a comprehensive investigation. According to the report, employees of state-owned companies and teaching staff in several provinces had to hand over their documents. However, it is unclear how centralized the measures are. The so-called “personal foreign travel management” authorizes local authorities to regulate border crossings and prevent them if necessary.
Due to the massive censorship, many Chinese themselves are not even aware of the extent of the restrictions. “The Financial Times report has a very negative impact on China’s image abroad,” writes the renowned Professor Fan Hongda, a researcher at Shanghai International Studies University, on his Weibo account: “If this is a false report, please urge the relevant national authorities to refute the report as soon as possible!”
However, the authorities in question may find this problematic. The Financial Times presents documents that give an idea of how paranoid the Communist Party leadership is about shielding its citizens from foreign influence. For example, teaching staff at a school in the eastern Chinese city of Wenzhou not only have to collect several signatures from superiors and the disciplinary inspectorate when applying for a trip abroad, but also sign a form before departure. Among other things, this form obliges them to “not watch reactionary films” or “discuss internal matters with strangers” while abroad. It is also strictly forbidden to change the planned itinerary without prior authorization.
In some cases, even retired teachers have had their passports revoked, even if they have relatives living overseas. And there are reports on the internet of several universities forcing students enrolled in certain faculties to hand in their documents. One documented case of a secondary school in the western Chinese city of Lanzhou asked the head teachers to make a list of all students who have passports.
Xi Jinping’s government has long imposed travel bans on human rights activists, dissidents, human rights lawyers and their families. Similar measures have been taken in Tibet and Xinjiang since the mass protests and uprisings by ethnic minorities in 2008 and 2009.
The measures were extended in 2022 when the National Immigration Administration asked Chinese nationals to leave China only in extreme emergencies. During this time, there were frequent reports of Chinese citizens’ passports being invalidated after their return from abroad. The severity of the measures at the time was due to the country’s restrictive Covid policy. However, a few months ago, Radio Free Asia quoted sources announcing a continuation of the de facto travel ban on many levels.
“I was an English major, my life-long dream is to visit an English-speaking country,” one teacher wrote on the Chinese app Xiaohongshu: “It feels like that is about to be shattered.” It has also long been standard practice for professors to always appear with a “supervisor” when they attend embassy appointments. They usually avoid meetings with diplomats anyway, because the mere request for authorization from the university’s CP cell raises suspicions.
Government employees are also only allowed to meet foreign citizens under supervision. One Beijing-based correspondent, for example, spoke of a private party at which an employee of the Foreign Ministry once had to leave for this very reason.
When the October holidays end this Tuesday, many eyes will be on the Chinese stock markets. After the roughly one-week trading pause, investors will be asking one question in particular: Will the rally continue? Shortly before the start of Golden Week on October 1, the Chinese stock markets experienced a wave of euphoria.
The markets reacted enthusiastically to Beijing’s plans for economic stimulus. The Shanghai Composite Index rose by around 20 percent in the last week of September, while the technology-oriented Shenzhen Component Index rose by around 30 percent. Both indices thus recorded their biggest weekly gain since the end of 2008.
At the time, Beijing saved the Chinese economy from the effects of the US financial crisis with the most extensive aid package in the country’s history. However, it is precisely this comparison that causes concern today. Economists fear that the latest stimulus package may not be strong enough to have a lasting effect. The government is also aware of this and has already held out the prospect of further fiscal policy measures.
The National Development and Reform Commission (NDRC) will hold a press conference on Tuesday to provide information on the topic of “systematically implementing a package of incremental policies to effectively promote economic growth, structural optimization, and sustainable development momentum.” In plain language, this could mean that the NDRC will announce details of fiscal support to boost consumption and thus provide long-term support for the stock markets.
“What we really need is demand-side policy, especially on fiscal, which is what the market is waiting for,” says Lu Sun from the US investment bank Goldman Sachs. China’s Ministry of Finance reportedly may issue an additional two trillion yuan (284 billion dollars) worth of government bonds. This money could be used partly to boost consumption. But according to Sun, this will not be enough. “We really need more fiscal, more demand-side measures than what market is currently expecting,” says the analyst.
Otherwise, the economic stimulus package could quickly fizzle out, fears the British bank HSBC. And the Japanese Nomura Bank paints an even gloomier scenario in which a crash could follow the stock market boom of the past few days. Especially as the stock market has repeatedly crashed in the past after significant rallies. After the end of the pandemic measures in summer 2022 as well as in spring 2023, stock prices initially rose sharply in anticipation of a recovery, but quickly resumed their downward trend.
However, since the start of the recent rally, some are confident that the Chinese stock market has finally put the worst behind it. Now is the time to invest massively in China and buy “everything,” says US billionaire and hedge fund manager David Tepper.
Optimists like him point to the massive valuation gap that now exists between Chinese and, above all, US stocks. Around 2017, Amazon and Alibaba still had a similar market value. Both companies had a market capitalization of between 400 and 500 billion US dollars at that time. Amazon is now worth almost two trillion US dollars, while Alibaba is only worth 270 billion US dollars. Tencent and Facebook have also developed in similarly different ways.
However, some foreign investors are reluctant because they don’t really trust it yet. “Is this time different? We have seen these fits and starts where China puts in place some kind of stimulus and it has not resulted in a long-term constructive recovery,” Saira Malik, chief investment officer of US asset manager Nuveen, told the Financial Times. “This time it still looks to us that its impact is greater for the stock market than the economy.” She believes that only a structural revival can fuel optimism.
Some analysts believe that one of the main reasons for the sharp rise in Chinese stocks could have been the previously prevailing extreme pessimism about the market. Hedge funds, which had bet on a decline, now bought back stocks to cover their short positions, causing prices to rise. Short positions involve selling stocks that one does not own with the intention of buying them back later at a lower price. They borrow the stocks from someone who owns them and sell them on the market.
This could be an indication that the stock market has probably already passed the best phase of the rally.
Other than a few glib remarks, surprisingly little was said about China at this month’s US presidential debate. Former President Donald Trump asserted that his proposed import tariffs would punish “China and all of the countries that have been ripping us off for years.” Vice President Kamala Harris, for her part, disparaged China’s pandemic response, stating that President Xi Jinping “was responsible for lacking and not giving us transparency about the origins of COVID.”
The failure to focus on China was in one sense predictable. US voters have been largely fixated on other anxieties during this election cycle: abortion and women’s reproductive rights, immigration and border security, and inflation and pocketbook issues. The moderators and their preselected line of questioning did little to probe what could well be America’s most consequential foreign-policy issue of the twenty-first century, even though the Commission on the National Defense Strategy and the White House’s National Security Strategy have elevated China risks to near existential status. A failure to address this issue made no sense.
China has invariably been an important topic of discussion in past campaigns, starting with the October 1960 debate between Richard Nixon and John F. Kennedy, which featured an extended back and forth over the disputed islands of Quemoy and Matsu in the Taiwan Strait. Almost all subsequent presidential debates, including the three encounters between Trump and Hillary Clinton in 2016, have included exchanges on Sino-American relations. (Trump’s constant references to “Chai-nah” that year were even the subject of a viral video.) Is the American electorate so overwhelmed by polarized social-media discourse and the 24-hour news cycle that it has lost its appetite for substantive policy discussions?
Of course, both parties’ agreement on the severity of the China threat may also explain their inclination to ignore it. Moreover, given the tendency of US politicians to blame others for problems of their own making, the shared scapegoating of China is hardly surprising. A case in point is blaming China for America’s massive trade deficit, which is an outgrowth of an equally massive budget deficit and a concomitant shortfall in domestic saving. The same can be said of US paranoia over Huawei, the poster child of the Sino-American tech war – it is far easier to blame China than to acknowledge that inadequate spending on research and development is a risk to America’s innovation potential.
No, I am not naive enough to expect US politicians to come clean on contentious issues like China. The political expediency of false narratives, as I stress in my book Accidental Conflict, has reached a new level in the 2024 presidential campaign. Consider Trump’s tariff fixation: he misrepresents not only who pays for them but reverses their impact, arguing incorrectly that tariffs will cut inflation at home while raising prices for foreign exporters.
At the same time, one can criticize Harris for embracing the Biden administration’s decision to maintain Trump’s China tariffs and impose new ones. As I have argued ad nauseam, going after China without addressing the root cause of America’s domestic-savings shortfall is like squeezing a water balloon: the pressure merely forces the water to the other end. Likewise, the supposed bilateral fix (tariffs on China) has simply diverted the US trade deficit to Mexico, Vietnam, Canada, South Korea, Taiwan, India, Ireland, and Germany – largely higher-cost producers, which boosts prices for hard-pressed American families. But try telling that to a US politician these days.
So, if it were up to me, I would attempt draw out the candidates on three key pieces of the China puzzle:
First, can the US really hope to eliminate a multilateral trade deficit (with 106 countries in 2023) by targeting its largest trading partner? The government tried that with Japan in the 1980s and failed, so why do politicians think this same approach will now miraculously work with China?
Second, what are the chances that this trade war will backfire? It has happened before, with the Great Depression of the 1930s being the most painful example. When countries are hit with tariffs, they tend to retaliate. When companies are singled out by sanctions, they focus on competitive survival. Huawei’s new generation of smartphones and laptops could be viewed as especially striking examples of this.
Third, what would victory in a Sino-American trade war look like for the US? Mutual concerns over national security have made conflict inevitable. Chinese leaders fear that America is pursuing a strategy of comprehensive containment, a claim that the US denies, arguing instead that it is creating a “small yard and a high fence” to protect sensitive technologies. Is there a compromise that might be more palatable to both countries? Engagement is not a four-letter word. Nor should it be mistaken for appeasement. What would it take to consider the possibility of a new era in US-China engagement?
These are not trick questions. I myself have taken a stab at answering them over the past several years. What most worries me is that incurious voters have no interest in probing these and other aspects of the China debate, let alone considering alternatives to conflict.
America is in the grips of a toxic Sinophobia that makes the first Cold War seem like a drill. Surely there is a better way to engage with China than seeing threats around every corner. It will be exceedingly difficult to find constructive solutions if US presidential candidates are not pushed to debate the country’s toughest problems.
Stephen S. Roach, a faculty member at Yale University and former chairman of Morgan Stanley Asia, is the author of Unbalanced: The Codependency of America and China (Yale University Press, 2014) and Accidental Conflict: America, China, and the Clash of False Narratives (Yale University Press, 2022).
Copyright: Project Syndicate, 2024.
www.project-syndicate.org
Increased cab traffic at Chongqing airport on Monday also heralded the end of Golden (Holiday) Week in China. Over the past few days, the travel wave has set hundreds of millions of Chinese people in motion. Airlines have lowered their ticket prices by more than 20 percent on average compared to last year to boost people’s appetite for travel. The tense economic situation is prompting many Chinese people to be thrifty.
What initially only applied to leading party officials gradually spread. Next came the CEOs of state-owned companies, followed by investment bankers and university professors. Now, however, the Communist Party’s ideological obsession with control is also targeting parts of the average population – teachers, educators and even students are affected. The authorities are now forcing many people to turn in their passports so that they can no longer freely travel overseas.
The obligations that some Chinese have to fulfill in order to be granted permission to travel reveal just how paranoid the government’s control mania is, writes Fabian Kretschmer. Out of concern about “intellectual pollution,” the Communist Party would rather isolate its citizens than foster international exchange. In doing so, the state leadership is making one thing clear: It does not trust its citizens to improve relations with foreign countries. It prefers to do this itself, ignoring the fact that such restrictions tend to disturb foreign countries.
Meanwhile, Joern Petring looks at the Chinese stock market, which has made an impressive recovery since the end of September. However, analysts warn that the positive sentiment could quickly evaporate if the Chinese government does not follow up on its stimulus program.
At first, it only applied to leading CP officials, dissidents and ethnic minorities such as Tibetans or Uyghurs. Then followed CEOs of state-owned companies, and finally investment bankers and university professors. But now, the Communist Party’s ideological control mania is also targeting large sections of the average population – from teachers to ordinary students. The authorities force many people to hand in their passports to prevent them from freely traveling abroad.
The Financial Times has documented the extent of the repression in a comprehensive investigation. According to the report, employees of state-owned companies and teaching staff in several provinces had to hand over their documents. However, it is unclear how centralized the measures are. The so-called “personal foreign travel management” authorizes local authorities to regulate border crossings and prevent them if necessary.
Due to the massive censorship, many Chinese themselves are not even aware of the extent of the restrictions. “The Financial Times report has a very negative impact on China’s image abroad,” writes the renowned Professor Fan Hongda, a researcher at Shanghai International Studies University, on his Weibo account: “If this is a false report, please urge the relevant national authorities to refute the report as soon as possible!”
However, the authorities in question may find this problematic. The Financial Times presents documents that give an idea of how paranoid the Communist Party leadership is about shielding its citizens from foreign influence. For example, teaching staff at a school in the eastern Chinese city of Wenzhou not only have to collect several signatures from superiors and the disciplinary inspectorate when applying for a trip abroad, but also sign a form before departure. Among other things, this form obliges them to “not watch reactionary films” or “discuss internal matters with strangers” while abroad. It is also strictly forbidden to change the planned itinerary without prior authorization.
In some cases, even retired teachers have had their passports revoked, even if they have relatives living overseas. And there are reports on the internet of several universities forcing students enrolled in certain faculties to hand in their documents. One documented case of a secondary school in the western Chinese city of Lanzhou asked the head teachers to make a list of all students who have passports.
Xi Jinping’s government has long imposed travel bans on human rights activists, dissidents, human rights lawyers and their families. Similar measures have been taken in Tibet and Xinjiang since the mass protests and uprisings by ethnic minorities in 2008 and 2009.
The measures were extended in 2022 when the National Immigration Administration asked Chinese nationals to leave China only in extreme emergencies. During this time, there were frequent reports of Chinese citizens’ passports being invalidated after their return from abroad. The severity of the measures at the time was due to the country’s restrictive Covid policy. However, a few months ago, Radio Free Asia quoted sources announcing a continuation of the de facto travel ban on many levels.
“I was an English major, my life-long dream is to visit an English-speaking country,” one teacher wrote on the Chinese app Xiaohongshu: “It feels like that is about to be shattered.” It has also long been standard practice for professors to always appear with a “supervisor” when they attend embassy appointments. They usually avoid meetings with diplomats anyway, because the mere request for authorization from the university’s CP cell raises suspicions.
Government employees are also only allowed to meet foreign citizens under supervision. One Beijing-based correspondent, for example, spoke of a private party at which an employee of the Foreign Ministry once had to leave for this very reason.
When the October holidays end this Tuesday, many eyes will be on the Chinese stock markets. After the roughly one-week trading pause, investors will be asking one question in particular: Will the rally continue? Shortly before the start of Golden Week on October 1, the Chinese stock markets experienced a wave of euphoria.
The markets reacted enthusiastically to Beijing’s plans for economic stimulus. The Shanghai Composite Index rose by around 20 percent in the last week of September, while the technology-oriented Shenzhen Component Index rose by around 30 percent. Both indices thus recorded their biggest weekly gain since the end of 2008.
At the time, Beijing saved the Chinese economy from the effects of the US financial crisis with the most extensive aid package in the country’s history. However, it is precisely this comparison that causes concern today. Economists fear that the latest stimulus package may not be strong enough to have a lasting effect. The government is also aware of this and has already held out the prospect of further fiscal policy measures.
The National Development and Reform Commission (NDRC) will hold a press conference on Tuesday to provide information on the topic of “systematically implementing a package of incremental policies to effectively promote economic growth, structural optimization, and sustainable development momentum.” In plain language, this could mean that the NDRC will announce details of fiscal support to boost consumption and thus provide long-term support for the stock markets.
“What we really need is demand-side policy, especially on fiscal, which is what the market is waiting for,” says Lu Sun from the US investment bank Goldman Sachs. China’s Ministry of Finance reportedly may issue an additional two trillion yuan (284 billion dollars) worth of government bonds. This money could be used partly to boost consumption. But according to Sun, this will not be enough. “We really need more fiscal, more demand-side measures than what market is currently expecting,” says the analyst.
Otherwise, the economic stimulus package could quickly fizzle out, fears the British bank HSBC. And the Japanese Nomura Bank paints an even gloomier scenario in which a crash could follow the stock market boom of the past few days. Especially as the stock market has repeatedly crashed in the past after significant rallies. After the end of the pandemic measures in summer 2022 as well as in spring 2023, stock prices initially rose sharply in anticipation of a recovery, but quickly resumed their downward trend.
However, since the start of the recent rally, some are confident that the Chinese stock market has finally put the worst behind it. Now is the time to invest massively in China and buy “everything,” says US billionaire and hedge fund manager David Tepper.
Optimists like him point to the massive valuation gap that now exists between Chinese and, above all, US stocks. Around 2017, Amazon and Alibaba still had a similar market value. Both companies had a market capitalization of between 400 and 500 billion US dollars at that time. Amazon is now worth almost two trillion US dollars, while Alibaba is only worth 270 billion US dollars. Tencent and Facebook have also developed in similarly different ways.
However, some foreign investors are reluctant because they don’t really trust it yet. “Is this time different? We have seen these fits and starts where China puts in place some kind of stimulus and it has not resulted in a long-term constructive recovery,” Saira Malik, chief investment officer of US asset manager Nuveen, told the Financial Times. “This time it still looks to us that its impact is greater for the stock market than the economy.” She believes that only a structural revival can fuel optimism.
Some analysts believe that one of the main reasons for the sharp rise in Chinese stocks could have been the previously prevailing extreme pessimism about the market. Hedge funds, which had bet on a decline, now bought back stocks to cover their short positions, causing prices to rise. Short positions involve selling stocks that one does not own with the intention of buying them back later at a lower price. They borrow the stocks from someone who owns them and sell them on the market.
This could be an indication that the stock market has probably already passed the best phase of the rally.
Other than a few glib remarks, surprisingly little was said about China at this month’s US presidential debate. Former President Donald Trump asserted that his proposed import tariffs would punish “China and all of the countries that have been ripping us off for years.” Vice President Kamala Harris, for her part, disparaged China’s pandemic response, stating that President Xi Jinping “was responsible for lacking and not giving us transparency about the origins of COVID.”
The failure to focus on China was in one sense predictable. US voters have been largely fixated on other anxieties during this election cycle: abortion and women’s reproductive rights, immigration and border security, and inflation and pocketbook issues. The moderators and their preselected line of questioning did little to probe what could well be America’s most consequential foreign-policy issue of the twenty-first century, even though the Commission on the National Defense Strategy and the White House’s National Security Strategy have elevated China risks to near existential status. A failure to address this issue made no sense.
China has invariably been an important topic of discussion in past campaigns, starting with the October 1960 debate between Richard Nixon and John F. Kennedy, which featured an extended back and forth over the disputed islands of Quemoy and Matsu in the Taiwan Strait. Almost all subsequent presidential debates, including the three encounters between Trump and Hillary Clinton in 2016, have included exchanges on Sino-American relations. (Trump’s constant references to “Chai-nah” that year were even the subject of a viral video.) Is the American electorate so overwhelmed by polarized social-media discourse and the 24-hour news cycle that it has lost its appetite for substantive policy discussions?
Of course, both parties’ agreement on the severity of the China threat may also explain their inclination to ignore it. Moreover, given the tendency of US politicians to blame others for problems of their own making, the shared scapegoating of China is hardly surprising. A case in point is blaming China for America’s massive trade deficit, which is an outgrowth of an equally massive budget deficit and a concomitant shortfall in domestic saving. The same can be said of US paranoia over Huawei, the poster child of the Sino-American tech war – it is far easier to blame China than to acknowledge that inadequate spending on research and development is a risk to America’s innovation potential.
No, I am not naive enough to expect US politicians to come clean on contentious issues like China. The political expediency of false narratives, as I stress in my book Accidental Conflict, has reached a new level in the 2024 presidential campaign. Consider Trump’s tariff fixation: he misrepresents not only who pays for them but reverses their impact, arguing incorrectly that tariffs will cut inflation at home while raising prices for foreign exporters.
At the same time, one can criticize Harris for embracing the Biden administration’s decision to maintain Trump’s China tariffs and impose new ones. As I have argued ad nauseam, going after China without addressing the root cause of America’s domestic-savings shortfall is like squeezing a water balloon: the pressure merely forces the water to the other end. Likewise, the supposed bilateral fix (tariffs on China) has simply diverted the US trade deficit to Mexico, Vietnam, Canada, South Korea, Taiwan, India, Ireland, and Germany – largely higher-cost producers, which boosts prices for hard-pressed American families. But try telling that to a US politician these days.
So, if it were up to me, I would attempt draw out the candidates on three key pieces of the China puzzle:
First, can the US really hope to eliminate a multilateral trade deficit (with 106 countries in 2023) by targeting its largest trading partner? The government tried that with Japan in the 1980s and failed, so why do politicians think this same approach will now miraculously work with China?
Second, what are the chances that this trade war will backfire? It has happened before, with the Great Depression of the 1930s being the most painful example. When countries are hit with tariffs, they tend to retaliate. When companies are singled out by sanctions, they focus on competitive survival. Huawei’s new generation of smartphones and laptops could be viewed as especially striking examples of this.
Third, what would victory in a Sino-American trade war look like for the US? Mutual concerns over national security have made conflict inevitable. Chinese leaders fear that America is pursuing a strategy of comprehensive containment, a claim that the US denies, arguing instead that it is creating a “small yard and a high fence” to protect sensitive technologies. Is there a compromise that might be more palatable to both countries? Engagement is not a four-letter word. Nor should it be mistaken for appeasement. What would it take to consider the possibility of a new era in US-China engagement?
These are not trick questions. I myself have taken a stab at answering them over the past several years. What most worries me is that incurious voters have no interest in probing these and other aspects of the China debate, let alone considering alternatives to conflict.
America is in the grips of a toxic Sinophobia that makes the first Cold War seem like a drill. Surely there is a better way to engage with China than seeing threats around every corner. It will be exceedingly difficult to find constructive solutions if US presidential candidates are not pushed to debate the country’s toughest problems.
Stephen S. Roach, a faculty member at Yale University and former chairman of Morgan Stanley Asia, is the author of Unbalanced: The Codependency of America and China (Yale University Press, 2014) and Accidental Conflict: America, China, and the Clash of False Narratives (Yale University Press, 2022).
Copyright: Project Syndicate, 2024.
www.project-syndicate.org
Increased cab traffic at Chongqing airport on Monday also heralded the end of Golden (Holiday) Week in China. Over the past few days, the travel wave has set hundreds of millions of Chinese people in motion. Airlines have lowered their ticket prices by more than 20 percent on average compared to last year to boost people’s appetite for travel. The tense economic situation is prompting many Chinese people to be thrifty.
