China and Japan

I’ve been reading a wave of books in the last few weeks about modern Japan –  the rapid economic rise from the mid 19th century, the out of control militarism that led to the war from 1937 to 1945, and the post-war revival (rather than the last few decades).   And as I read, it left me pondering the relative economic fortunes of Japan and China.

According to the standard reference source for such things – Angus Maddison’s collection of estimates of GDP per capita since the year 1 AD –  in earlier centuries Japan and China were more or less level-pegging for centuries, with China a bit ahead of Japan (a thousand years ago, China is generally accepted as having the highest material living standards anywhere).  Here are the estimates (in 1990 international dollars) through to the 18th century.

maddison chjp

There was, of course, a great divergence between economic progress and living standards in the leading European (and offshoots) economies and those of east Asia, but today I’m more interested in the less-highlighted, but scarcely less dramatic, divergence between economic performance in Japan and that in China.

Maddison’s estimates report that –  despite having turned its back on the world –  Japan had moved ahead of China over the 18th century and the first half of the 19th century: for 1850 the reported estimates are Japan $679 and China $650.   There are only scattered estimates for China for the following few decades, but here is the reported estimate of average per capita real GDP per capita, China as a per cent of Japan.

China GDP pc as % of Japan
1850 88
1870 72
1890 53
1900 46
1913 40

A bit later, the annual estimates start –  with a break when Japan was attempting to conquer China.  Here is the chart to 2008 when Maddison’s estimates end.

chinajp

The Conference Board has estimates through to the present day, but they only start from 1950.   Here is the PRC’s real GDP per capita as a percentage of Japan’s.

chjp conf board

Productivity estimates are available only for even more recent periods, but on Conference Board numbers they show a pretty similar picture: as at last year, average productivity in the PRC just over 30 per cent of that in Japan.   And that is still probably worse than the situation at the turn of the last century (when –  see above –  China’s real GDP per capita was about 45 per cent of Japan’s).

Of course, it isn’t only Japan that China has fallen so far behind.  Taiwan was a Japanese territory for 50 years after the Sino-Japanese War in the 1890s, and Korea was a Japanese colony/conquest for 40 years.  On the Maddison estimates, 150 years ago both Korea and Taiwan had GDP per capita (estimated at) not much different from that of China.    These days, South Korea (historically less well-developed than the north) has real GDP per capita about 10 per cent less than that of Japan, while Taiwan has real GDP per capita about 15 per cent more than that of Japan.    Both, in other words, are far ahead of the PRC.

taichi conf bd

Relative to Taiwan, the PRC has just now managed to get back up to the relative living standards just prior to the Cultural Revolution.  (And yet this is the regime whose “successes” Simon Bridges lauds.)

There isn’t really much debate about why the PRC has over recent decades still been the disastrous laggard among the historically more advanced east Asian economies (North Korea of course marking out an even worse extreme) –  absence of the rule of law, absence of the sorts of incentives that make for the efficient allocation of capital, primacy of the Party etc etc will do that to a country (the Soviet Union in the 80s was closer in living standards to Japan then than the PRC is to Japan now).

But in some ways I’m more interested in how the gaps opened up in the first place –  before 1950, or even before the overthrow of the Manchu emperors in 1911.  It is easy to say that Japan embraced greater openness, Western technology etc –  initially under external pressure –  but what was it that meant Japan (having, if anything, been more isolated than China for the previous few centuries) made that choice and China did not?   In looking around, I’ve found a couple of relevant journal articles, but if any readers happen to have suggestions of good treatments of the issue (book or article) I would really welcome them.

The Bridges kowtow

In his Herald column last week Matthew Hooton offered some thoughts on what sort of Prime Minister Simon Bridges might be.   It seemed optimistic to me.  For example, according to Hooton.

Like Bolger, Bridges’ ambition is not just joining the prime ministerial club for its own sake, but to be one of the few to achieve genuine intergenerational change.

I racked my brains, dredging the recesses of my memory, and still struggled to think of anything –  whether in what he said as a minister in the previous government, or as Opposition leader in the last 18 months –  that would offer even a hint of such ambition, or of policy proposals that might bring about such change.   What sort of “intergenerational change” does Hooton have in mind I wonder?    Judging by the economics discussion document last week – which had some good, but not very ambitious, bits –  not something about reversing our decades of disappointing economic performance.

But one thing we have every reason to be “confident” of is that Simon Bridges as Prime Minister would be every bit as deferential to Beijing and its interests as Jacinda Ardern or John Key and Bill English before her.    All while, no doubt, trying to tell himself and us that somehow this shameful pandering is for our own good, in our interests.  The only interests it actually serves are (a) those of the PRC, (b) those of the political party fundraisers, and (c) a few exporting companies, including our universities, that made themselves (conscious choice to sup with the devil) too dependent on the PRC market, and thus exposed to the threats and pressures of the regime and Party.     Selling out the values of your people for a mess of potage never ends well.

It is only quite recently that Simon Bridges has been directly accountable for most of the National Party’s choices in this area.   Even in John Key’s final ministry, Bridges was only the 9th ranked minister, with internally-focused portfolios.   But by 2017, he’d climbed further up the Cabinet rankings and was Minister of Economic Development.  In that capacity, he was the minister who signed, on behalf of the New Zealand government, the memorandum of arrangement on the Belt and Road Initiative of the PRC.

I wrote about that document here.   I’m going to do Bridges the courtesy assuming that he (a) read, and (b) believed what he was signing.     Among those commitments was that the participants (Bridges’ government and the PRC) would promote a ‘fusion among civilisations”, and “coordinated economic, social and cultural development”.   There was also the commitment to advance “regional peace and development”, as if the PRC had any interest in such peace, except on its own terms (‘submit and you’ll be fine”).

Perhaps Bridges didn’t really mean it.  Perhaps the boss just told him to sign.  But there has never been any suggestion he didn’t mean it.  If he’d objected to this unsubtle attempt to suggest that the PRC system and our own are somehow equally valid options, I’m sure they could have found another minister to sign.  But Simon Bridges did.

Since then, of course, he has been elevated to the leadership.   Perhaps, as Hooton claims, the Bridges leadership style is a consensus one.  But things leaders care about tend to happen, and things leaders don’t care about don’t.     Perhaps as a mere minister, Bridges had known little or nothing about Jian Yang’s background in the Communist Party and in the PLA military intelligence system –  perhaps not even why he’d been moved out of the foreign affairs committee of Parliament –  but next week it will be two years since all that went public.   I’m sure Bridges back then didn’t know what Jian Yang has subsequently told us: that he misrepresented his past to get into New Zealand, and did so on the instructions of the PRC authorities.  But he has known it all for the entire time he has been leader.     Perhaps he didn’t know that serious figures –  not flame-thrower types –  would take the view that because of Jian Yang’s closeness to the PRC embassy it was important to be careful what was said in front of Jian Yang.   But he has now known that for a long time too.   Jian Yang sits in caucus meetings every week, and presumably Bridges is not particularly careful what he says.

Bridges didn’t control the National Party list in the 2017 election.  But he controls caucus rankings and responsibilities now.    And not only has he never expressed any public unease about the Jian Yang situation, only recently Jian Yang received a promotion (chair of Parliament’s Governance and Administration Committee) from Bridges, and this very week we learn that Jian Yang is part of the Simon Bridges/Gerry Brownlee official visit to the PRC.  No one really doubts that if Bridges had any serious concerns at all, not only would Jian Yang not be receiving these signs of favour, he wouldn’t even be in the caucus any longer.   (Of course, it is shameful that the other parties do nothing to call out the Jian Yang situation, but he is primarily the responsibility of the National Party, and of Simon Bridges in particular.)    Far too valuable as a fundraiser I guess, and if Bridges had said or done anything other regime-affiliated people and institutions might have looked on him with disfavour.  And he wouldn’t have wanted that would he?   Yikun Zhang, for example, mightn’t have invited him and Jami-Lee Ross to dinner.

Of course, the indications of how far gone Simon Bridges is in his deference to Beijing aren’t just about the Jian Yang situation.  No one heard him express any concern either about the ridiculous situation earlier in the year when regime-affiliated Labour MP Raymond Huo was going to chair the inquiry into foreign interference in our electoral processes etc.

And when a defence policy document uttered some mild, and pretty factual, statements about the PRC, what did we hear from Simon Bridges?  Not some support for a robust defence of New Zealand interests, values, and historical alliances, but rather complaints that the PRC might be upset.    There is no sign that he has reined in party president Peter Goodfellow’s enthusiasm for singing the praises of the PRC/CCP.   And when he senior MP, and close ally apparently, Todd McClay was defending the concentration camps in Xinjiang as “vocational training centres” and really nobody else’s concern, was there any apology, any distancing himself from McClay’s stance.  Not a bit of it.

When there were doubts about how ready the PRC were to invite the Prime Minister to visit, Simon Bridges was early into the fray to criticise –  not the PRC but –  the Prime Minister.  Can’t have Beijing being upset at all, ever, can we?  Not like a normal relationship.  For Bridges it appeared to be all about abasing ourselves (well, himself) and asking only “how high” when Beijing says jump.

Or, when the current government quietly (and embarrassedly) signed up the recent multi-country letter of protest about the Xinjiang concentration camps, did you see words in support from Simon Bridges or his senior spokespeople?  No, it was all quiet on the National Party front.  Nothing about supporting a robust stance on Huawei either.

Has anyone ever heard Simon Bridges utter a critical word about the regime in Beijing, even as ever-more evidence of its excesses (whether political, religious, civil, economic, or whatever) comes to light?  I haven’t.  And I’ve searched and found nothing.  And that despite the values of the regime being antithetical to what used to be the stated values of the National Party.   When something more than deals and donations mattered.  I still recall as a university student in 1980 Don McKinnon coming up to a lunchtime meeting on campus to defend the then National government’s stance discouraging New Zealand participation in the Moscow Olympics. I think we can imagine how Bridges (and McKinnon) would react to any suggestion that a New Zealand government might discourage participation in the next Winter Olympics, to be held in the PRC.   Are there any limits to National’s deference to Beijing?   None have been apparent under Bridges.

Oh, and then there are the donations.  There was the Yikun Zhang business last year, where Bridges was not exactly rushing to suggest that donations from a donor with strong regime-affiliations might “buy” another place on the National list (recall too Jian Ynag’s involvement in getting Yikun Zhang an official honour for –  in effect – services to Beijing).   All Bridges was reduced to was the claim that any donation wasn’t illegal.  Lots of things aren’t illegal, but it doesn’t make them right.   It was much the same story when the Todd McClay donation story came out just recently –  our foreign trade minister had been actively involved in securing a very large donation from a PRC billionaire, routed through a New Zealand registered company.  “It wasn’t illegal” was again the only Bridges line.   As if large donations from known donors don’t create expectations of future relationships etc –  nothing so crass as a specific policy purchase, but cast of mind and all that.

We’ve had no leadership at all from Bridges on the foreign donations issue more generally.  No suggestion that if you can’t vote here you shouldn’t be able to donate.  No suggestion –  proactively –  that the National Party would not seek, and would not accept, significant donations from anyone with close ties to a foreign government (although, of course, the PRC is the main issue).  Bridges seems quite happy to keep the current compromised regime, and the flow of tainted money to the party.

And then, of course, there is the current trip to the PRC.  The timing is pretty extraordinary, and perhaps telling of the National Party’s utter lack of interest in expressing any sort of moral dimension to our foreign policy.  1 October is the 70th anniversary of the Chinese Communist Party takeover.  The tyrants of the Party will no doubt be making great play of their accomplishment – holding onto near-absolute power for that long –  but why would anyone else, anyone of decency, associate themselves with the regime right now.  Do you forget the tens of millions who died in the Great Leap Forward, do they forget the Cultural Revolution, do they forget Tiananmen Square, do they prefer to ignore completely Xinjiang, do they prefer to pretend that the renewed suppression of any domestic dissent, the heightened persecution of religions of whatever stripe just isn’t happening, are they unbothered about the renewed threats to Taiwan, or in the East and South China Seas, or the state-sponsored intellectual property theft (called out by GCSB last year, with not a word from Bridges) just aren’t happening?  Or are no concern of ours, things we can simply walk by on the other side, and trade merrily with the repressors.

Perhaps we will be told quietly that in their meetings Bridges, Brownlee, and Jian Yang will have raised “human rights concerns”.  It is the standard official defence.  But it should be no defence at all.  Embarrassed shufflings and pro forma private comments count for nothing if you aren’t willing to say anything in public.   National doesn’t, and won’t (neither of course does the government, but this post is about the Opposition –  who are freer to talk, freer not to travel etc but who chose the path of deference and submission.  Not so different from vassaldom.    It is all the more extraordinary that they proceed with the trip just after the Todd McClay revelations.  Bridges has been blathering about seeking spiritual blessings on the India leg of the trip, but you can’t help thinking that making obeisance before Beijing and receiving their words of approbation isn’t more the point.

And then, not least, there is Hong Kong.   Freedom is dying by the day in Hong Kong, and there is no doubt that the PRC itself is calling the shots (see, for example, the Carrie Lam tape). Police brutality is rampant, and protestors –  who see only the prospect of complete absorption by the totalitarian PRC (whether now, in 2047, or some point in-between) –  have courageously taken to the streets week after week to stand up against the threat to  the sort of freedoms we take for granted, that National once claimed to stand for.  A decent and courageous political leader –  a man of faith, or morals, of a belief that freedom matters even when it costs –  would have recognised the climate and chosen to call off his trip to Beijing.  The PRC wouldn’t have liked it one bit.  Nor would MFAT.  Nor would Goodfellow and the party fundraisers.   But it is just an idle fantasy anyway, the idea of some leading political figure in New Zealand ever making a stand, be it ever so modest –  from the position of Opposition even.  And never more so, it seems, when Simon Bridges leads the National Party.  And Jian Yang –  CCP membership, misrepresented past and all – remains at his right hand.

Are there any limits?

(And, to repeat, Jacinda Ardern is quite as bad, but this post is about National.)

 

Political donations, National, and Jami-Lee Ross

Jami-Lee Ross, MP for Botany, appears to be a somewhat odious character.  Between his repeated betrayals of his wife, on the one hand, and his apparently quite-central role in National Party’s large-scale fundraising from PRC-affiliated sources (New Zealand citizens and not), there seems to be little that is at all appealing.  And yet……for whatever reason (and since I’ve never heard an apology to the New Zealand public for his part in the process it is hard to believe it is totally public-spirited) he has been drip-feeding material to the media about the details of several such donations.    The first involved non-English-speaking Auckland businessman and close affiliate of various CCP/PRC groups, Yikun Zhang.  And this week we’ve had some details of the (previously disclosed) large donation from a New Zealand registered company owned and totally controlled by a PRC billionaire.  And, amid these disclosures, he is now calling for law changes, to prevent some of the practices he was formerly so adept at, and apparently untroubled by.   We should be thankful for small mercies, although it would be better if he –  and all those involved –  departed the political scene, and the swamp was drained.

On Twitter yesterday afternoon, Anne-Marie Brady drew her followers’ attention to the fact that Jami-Lee Ross was speaking on this issue in Parliament’s general debate –  presumably one of his rare speaking opportunities, and no doubt the Herald story was timed with this slot in mind.

Two things were striking about this event. The first is that no other MP speaking after Ross even mentioned these issues. Sure, each MP has his or her own barrow to push, but it goes to the apparently general desire among our political parties to avoid confronting what has been, and no doubt is still, going on.

And the second – prompt for this post – was realising that despite the coverage given to the Todd McClay story on Monday, there seemed to be no media coverage at all, anywhere, to Ross’s speech. Perhaps I missed something, but I searched myself, and I checked the Politics Daily email listing compiled by Bryce Edwards, and couldn’t see a single mention. Sure, probably no one has much time for Ross personally, but the issues he is raising aren’t imaginary.

And so, since Hansard is in the public domain, here is Jami-Lee Ross’s speech.

JAMI-LEE ROSS (MP—Botany): A regulation we do need in this country is greater restrictions around foreign donations to political parties. Yesterday, we saw in the New Zealand Herald a very good example of how the current rules around donations do not work for our democracy. I don’t need to go into depth around that particular donation, but what it does highlight is how our current laws around donations are wrong. It’s true—I was one of the sources for that story. It’s true—I was able to outline for the journalists my phone records and email records and contacts around that particular donation, because at the time I was asked by someone who held ministerial office to collect the donation. I did so because I wasn’t “OIA-able”; the person that asked me to do so was subject to the Official Information Act (OIA).

The issue that that donation highlights is that our current laws do not adequately restrict the ability for foreigners to make donations to political parties. It is true that that donation in the Herald yesterday was lawful. It is true no laws were broken, but we’re in the business of making laws and fixing laws where they are wrong. It is wrong, in my view, for a foreigner who has interests in New Zealand, who wants to donate to a political party, to be able to utilise a New Zealand-based company. It is wrong for an individual who has no other links to New Zealand other than business through a company to be able to make a donation, and have influence by making that donation to a political party.

Our laws are wrong. In my view, if you are unable to influence an election by voting, you should be unable to influence an election or our democracy by making a donation. It’s a fairly simple concept, and it’s one that we should be looking at in this House. Correct, the donation was not unlawful; our law is wrong and needs to be changed.

When we talk about foreign interference, it’s very easy to look at donations, and look at the way in which we interact with people that have connections to foreign States, and just dismiss what might be going on. But when we look at it very clearly and carefully, when we try and understand the connections and the influences that people from offshore are trying to have on our democracy, it can be very chilling. Does anyone really believe that a Mongolian oligarch wants to, out of the goodness of his heart, make six-figure donations to a political party after meeting the person who has responsibility for the very policy that he’s interested in, when it comes to the exporting of livestock? I don’t think he did so out of the goodness of his heart. I don’t think any laws were broken, but I think we need to fix the system. We need to ensure our democracy is safe from foreign influences, and ensure that we tighten up the rules.

I’ve heard that there is a lot of support in the House for banning foreign donations. That’s great, but simply lowering the threshold from $1,500 down to zero will do nothing, because any foreigner, at any point in time that they wish, can set up a New Zealand company or use an existing one to make a large donation. We have politicians in this House, and those seeking election, that have a lot of connections to people that have offshore influences and offshore interests. We should ensure our democracy and our electoral laws are much tighter.

There is a foreign interference inquiry under way, through the Justice Committee. Unfortunately, that inquiry is going very slow. Unfortunately, the committee that is looking at that inquiry may report back too late for us to make changes to our electoral law. It’s important we move now and we move swiftly because election year is very close. That same committee is also looking at the Electoral Amendment Bill right now. Unfortunately, that Electoral Amendment Bill is too tight and does not allow the committee to consider foreign donations or consider donation laws at all. The very same people sitting on the inquiry are also considering that bill. It’s my view that the House should give that committee the power to look at donations; give those same people doing the inquiry around foreign interference and around elections the power to make recommendations around amendments to the Electoral Act, with regards to donations. We need to move on this. Election year is not far away. There is a very good example out there, and there will be many others, that foreigners—and we heard directly from the spy agencies yesterday at the select committee, in both an open session and then in much more detail in a secret session—about—

SPEAKER: Order!

JAMI-LEE ROSS: —influences in our democracy, and we need to take them seriously.

I’m going to seek leave in a second to have a Supplementary Order Paper (SOP) in my name—SOP 324—which does seek to make some changes referred to the Justice Committee.

I seek leave for Supplementary Order Paper 324 in my name to be referred to the Justice Committee, and for the committee to, in its consideration of the Electoral Amendment Bill, have the power to consider, and if it thinks fit, adopt the amendment set out on SOP 324 or any other amendments relating to electoral donations.

SPEAKER: Is there any objection to that process? There is objection.

I thought the central line was this one

In my view, if you are unable to influence an election by voting, you should be unable to influence an election or our democracy by making a donation. It’s a fairly simple concept, and it’s one that we should be looking at in this House. Correct, the donation was not unlawful; our law is wrong and needs to be changed.

It isn’t clear how anyone could reasonably take a different view but –  based on their comments this week –  Simon Bridges (now heading off to Beijing) and Todd McClay do.

But the other key aspect was the Supplementary Order Paper Ross intends to introduce at the Committee stage of the Electoral Amendment Bill currently before the House.  The link is here.   As I understand it, the proposed amendments would prohibit anonymous donations and would allow donations only from registered electors in New Zealand (thus prohibiting donations to political parties from companies, unions, or any individual not eligible to vote in New Zealand).   All of those sorts of changes make a great deal of sense to me.  I hope Ross is able either to bring these amendments to a vote –  which would force individual MPs to make an on-the-record choice about what influences they regard as acceptable –  or perhaps up the pressure on the government – which has done precisely nothing about these issues, and was never keen on an open inquiry by the Justice Committee on foreign interference (government departments would tell the Committee all they needed  to know, or so the PM’s office told us) –  to propose serious reforms of its own.   As you’ll see in the record from Hansard there was objection –  apparently from National –  which blocked Ross’s SOP being referred to the Justice Committee.

Perhaps I shouldn’t be surprised, by I still am anyway, that none of this seems to have been covered by our media.   But I imagine that the PRC embassy will have taken note, and the welcome accorded to Bridges and Brownlee in Beijing will be a little warmer for knowing they are not willing to be pro-active and initiate or champion steps to fix these gaping holes in our electoral law.

And we are left wondering whether Todd McClay’s defence of the PRC’s conduct of Xinjiang was because of the large donations from regime-affiliated sources (including the Inner Mongolian one he was directly involved with) or because he genuinely believed it.  It isn’t clear which option would be worse.   Either way, the whole business reflects very poorly on McClay, his leaders, and his party.   (And not much better on Ross.)

Contemptible

I’m sure many, perhaps even most, of those who purport to be “leaders” in New Zealand are at some level decent people.  Mostly, they probably love their spouses, hope for the best for their kids, and at some private level many probably conduct themselves according to some sort of values and morality the rest of us might recognise.

But I’ve increasingly come to doubt that many (if any) in their public roles care for anything much at all beyond deals, donations, keeping their job, and perhaps the sugar-high of costlessly cheering on popular causes.  If the only true measure of the values of a (purported) leader is what they are willing to pay a price, or incur a cost, for, there aren’t many other values on display at all.

There is a myriad of issues which could be used to illustrate my point: in the economic sphere one could point to the utter failure to deal with the regulatory disaster that puts home-ownership out of the reach of so many (at a time when it should –  global low real and nominal interest rates –  be more readily achievable than ever), or the indifference and lets-pretend approach taken to the decades-long disaster that is the New Zealand productivity performance.  How does almost anyone who has been in elected government over the last 25 years not hang their head in shame?

But the issue that finally crystallised my own total disillusionment with “leaders” in New Zealand is the obsequious, deferential, cowardly, values-free approach taken to the People’s Republic of China, which continues to deepen even as the regime’s excesses, including attempts to exert influence in New Zealand, become more apparent and better known.    Perhaps  –  not really though, these were the butchers of Tiananmen –  there were excuses 15 years ago (all those somewhat-deluded dreams of the PRC evolving towards (semi-free) Singapore). But even if there were excuses then, there are none now.  It is hard to think of a single dimension on which the CCP-controlled PRC operates according to the sorts of values, practices and precepts which New Zealanders have typically sought to live by, and which New Zealand has been willing to fight for.  No rule of law, no freedom of speech, no political freedom, no religious freedom, mass incarceration of minorities who fall foul of the regime, kidnapping of law-abiding foreigners, sustained and intensifying threats to a free and democratic neighbour, claims to the loyalties of ethnic Chinese in other countries (regardless of citizenship), wholesale state-sponsored intellectual property theft, attempts to shutdown critics in other countries, and so on.   There is mounting evidence of the aggressive activities of the regime in New Zealand and countries like ours.

And yet our leaders –  political, business, religious or whatever – almost without exception say nothing, ever.  And do nothing either, other than continue to pander, to ask only “how high?” when the regime suggests that jumping might be a good idea.  Deals, donations, customers I guess.  Never mind any sort of morality, any sort of decency.  Any meaningful values.

We’ve seen it on display this week, in two cases that directly involve the activities of the PRC embassy and its consulates in New Zealand.   First, there was the AUT case, in which the Vice-Chancellor and his senior management rushed around madly trying to assuage the hurt feelings of the PRC, ensuring that a booking for a meeting to mark the 30th anniversary of the Tainanmen Square massacre (“incident” as the AUT senior managers descrived it) was cancelled.    They can play diversion all they want, talking of how the building wouldn’t have been open on a public holiday anyway, but everyone recognises how thin that excuse is, when we see the Vice-Chancellor of a New Zealand university writing to the consulate

“Happily, on this instance your concerns and ours coincided, and the event did not proceed at the university,”

“Happily”?   The man seems to have no decency at all when dollars might be at stake.  It reads and sounds a lot like the only value left in his university –  well, our university actually –  is the dollars.  Not truth, not freedom of expression, nothing of the sort  (those reminders occasionally of a statutory role of universities to be “critic and conscience of society” –  not something I’d look to overwhelmingly left-wing institutions for, but let that be for now), just dollars.

There has been some blowback against McCormack and his managers.  I was left wondering how different any other New Zealand university Vice-Chancellor would have been –  perhaps some would have phrased things a bit more neutrally, or even avoided writing things down (the OIA and all that), but they seem as bad as each other.   Have you heard a senior New Zealand academic figure ever criticise the PRC, including for the intensifying restrictions on the “freedoms” of academics in the PRC.  I haven’t.   None of them came out this week and distanced themselves from AUT.

But what was really striking was how feeble the political response was. Only David Seymour seemed to care enough to speak.  Not a single National Party MP was heard to comment.  And the Minister of Education was reduced to mouthing a few cliched points and then spluttering about how important the relationship with the PRC was.    We didn’t see the China Council –  who often tells us how important New Zealand values are to them (but never tell us which ones) –  saying that this sort of conduct –  from the Consulate, but particularly from the university –  stepped over the mark, or suggesting that –  in the face of the PRC refusal to acknowledge what went on in 1989, and to offer any contrition – in a free society we should encourage efforts to remember and draw attention to what Beijing did.    “Friends” and “partners” in Beijing seem more important to all of them: “friends” was what National called the CCP/PRC in their international affairs document just a few months ago, “partners” seems to be what successive governments call these tyrants (just last month the current government signed up to a defence cooperation agreement with them).

That episode was bad.  But the real low point of the week was the open effort by the PRC embassy/consulate to laud those students who sought to disrupt a peaceful protest at the University of Auckland –  a foreign embassy cheering on lawlessness in New Zealand.   As the Herald reported the initial events

The university launched a formal investigation after three Chinese men were filmed clashing on campus with protesters who were against a controversial extradition bill.
A woman was pushed to the ground by one of the men, and the police are now seeking the identities of those involved in the incident.

The PRC consulate statement is here.

The Consulate General expresses its appreciation to the students for their spontaneous patriotism, and opposes any form of secessionism. We strongly condemn those engaged in activities of demonizing the images of China and HKSAR government, inciting anti-China sentiment and confrontation between mainland and Hong Kong students, through distorting the factual situation in Hong Kong under the pretext of so-called freedom of expression.

As far as I can tell, of our entire Parliament and our entire “establishment” more generally, again only David Seymour was moved to comment.   About a flagrant intervention by a foreign embassy into the internal affairs of New Zealanders, encouraging and celebrating lawlessness.     Even for the China Council, or the National Party, or the budding National Party candidate currently running Air New Zealand, perhaps this might have been a step too far.  Or what about the group of university vice-chancellors collectively?  The best proof that you actually have limits –  values, self-respect etc –  is when you demonstrate it, by calling out an egregious breach of acceptable standards.  This was surely one of those, to anyone of any decency.   Does Don McKinnon –  chair of the China Council –  really regard this as acceptable conduct?  And if not –  and surely he doesn’t really –  why won’t he say so?   China Council Executive Director Stephen Jacobi seems to be a decent chap personally –  occasionally, he even gets let off the leash and has made the odd mildly critical comment on his personal Twitter account.  He objected strongly a couple of weeks ago when I suggested that the China Council functioned to provide cover for the CCP, writing to (cc’ed to one of his Advisory Board members) in a Twitter exchange

“Say what you like but associating the NZ China Council with the CPC is really rather silly.”

Wouldn’t this episode have been an ideal opportunity for him and the China Council to have demonstrated that there are limits, that there is such a thing as unacceptable activities by the PRC Embassy in New Zealand (who they mostly champion and celebrate).  But not a word.  I guess Beijing prefers it that way.

And, which is really the point, probably Wellington too.  I imagine that there was a collective intake of breath at MFAT when they saw the Consulate statement; an “oh not”, a “they really shouldn’t have said that”.    But what does that amount to. even if so?  Precisely nothing.   There has been not a word from the Prime Minister (and leader of the Labour Party), not a word from the Foreign Minister (and leader of New Zealand First), not a word from the Greens (for whom I once had a sneaking regard on some of these sorts of issues), not a word from a single government minister or backbencher.  None. Not a word.

One of my readers –  from the tone, someone who knows of what he speaks – left a comment here

Promoting violence and disorder in the receiving State is a transgression that would normally result in any diplomat’s expulsion as persona non grata. But the New Zealand government obviously has no self-respect so these people can get away with whatever they choose to do.

There haven’t been expulsions, but there haven’t even been public statements.  Not a word. I guess it is always possible that someone from MFAT had a word with the consulate, but when the PRC Embassy is openly cheering on lawlessness in New Zealand, there needs to be an open, public, response and rebuke.  At least if our government, our establishment, stand for anything other than deals and dollars.  And if they want us to believe they take these things at all seriously.

In a very similar situation last week in Australia, Marise Payne Australia’s Foreign Minister put out a pretty forceful statement making it clear that such behaviour from foreign diplomats in Australia was not acceptable.  It was still milder than it should have been –  no naming specific names, no calling in of the Ambassador –  but it was a great deal better than the shameful supine silence of our Prime Minister, Foreign Minister (and Leader of the Opposition).   It looks a lot as though, when it comes to the PRC, all our purported leaders care about is party donations and the sales prospects of a few export businesses (public –  universities –  and private).  And our backbench MPs –  just keeping their seats I supposed (both main party presidents have been cheerleaders for the PRC regime) – not a single one, on either side, broke ranks.  Values, decency, morality just didn’t seem to come into it. Neither it appears does any sense of prudence –  if we don’t draw the line somewhere, the PRC is likely to simply keep on pushing.  I don’t suppose they see themselves as pursuing Beijing’s interests, but in substance that is exactly what they are doing.

(These three –  Ardern, Peters, Bridges –  were also all notable for their silence, apparent utter indifference, to the attempts to intimidate Anne-Marie Brady, and have given no leadership to the meandering foreign interference select committee inquiry.)

It is sickening.   No doubt each individual compromise and choice to stay silent doesn’t amount to very much, but they add up to something shameful: “leaders” who have simply abandoned any sense of the things New Zealand once represented and stood for, seemingly just to keep the next dollar flowing and keep a quiet life.

Are there rare, and puzzling, exceptions?  There are, and the New Zealand government’s recent choice to join 21 other countries in signing a letter of protest at what the PRC is up to in Xinjiang, is one of those.   It was, of course, better that they signed than not but it is almost as if the New Zealand government was embarrassed to have done so, perhaps “coerced” into doing so from other free and democratic countries.   Little or nothing has been heard from the government on the letter, nothing (in support) from the Opposition.  There is no sign they represent any decent values at all.

In an exchange earlier this week, someone suggested that the tide was turning.  “Look how much progress has been made since 2017” I was told.  I wasn’t persuaded.  2017 was when the background of Jian Yang, the National Party MP who had been a Communist Party member and part of the PRC military intelligence system, and who was never ever heard to say a critical word about the PRC (not even about Tiananmen Square), was revealed to the public. It was when Anne-Marie Brady’s Magic Weapons paper was published.   There was a bit of debate, some controversy –  including when Jian Yang acknowledged that he has actively misrepresented his past, on Beijing’s instruction, when applying for citizenship/residency.

But where are we now, almost two years on?    Jian Yang still sits in Parliament, in the National Party caucus –  in fact, he got a promotion this week and now (almost incredibly, but this is New Zealand) chairs a parliamentary select committee.  No one else in politics makes a fuss, there are no media calls for him to be de-selected.   In the intervening period, he and Phil Goff got together to get a royal honour awarded to another person with close CCP ties, whom National had been soliciting for donations.  No electoral laws have changed.    Phil Goff is still free to fund his campaign with anonymous bids for the works of Xi Jinping.   The government is signing defence agreements with the (increasingly aggressive) PRC, and the Prime Minister rushed off to Beijing to placate the PRC.  And now, when the PRC consulate grossly oversteps and attempts to directly interfere in free expression (“so-called”) in New Zealand no one in authority says or does anything.

Optimists tell me there is a groundswell of discontent among the public.  Perhaps.  But people don’t much like high house prices, and nothing serious gets done about that either.    Selective elite interests, and a comtemptible fear of a distant foreign power, seem to drive our political “‘leaders”, who seem now to inhabit a values-free zone when it comes to attitudes to one of the worst regimes (that matter much) on the planet today.   Their predecessors – National and Labour, who resisted Nazism and Soviet Communism –  would be ashamed of them. We should too.  On this issue in particular they have become  contemptible.

PRC may never match other advanced countries

There was an article in the Wall St Journal last week, by their economics writer Grep Ip, that attracted a reasonable amount of attention.    Ip made the argument, that really should be uncontentious, that on current policies and institutions, the People’s Republic of China is unlikely ever to catch up –  in productivity or per capita income terms –  with the advanced countries, whether in Europe, east Asia, or North America.     The (worth reading) article is behind a paywall, but here is his key chart.

Ip 1

Despite having shot themselves in the foot so badly in the 1950s and 1960s –  such that there were absolutely huge convergence possibilities open to them by the late 1970s – the economic catch-up and convergence of the PRC has been distinctly underwhelming.     And since the economic and political model now being adopted is again increasingly Party/state dominated, the prospects for anything like the sort of productivity growth required to match the advanced economies appear slim.   Absence of the rule of law and of an efficient market-led allocation of resources –  with market disciplines working effectively to correct the inevitable bad calls firms will make –  will do that to your country.    The sheer size of the PRC also makes continued export-led growth harder to sustain, even if the PRC were playing by some genuine approach of free and open trade.

As the article notes, charts like the one above draw on official data, and there are real doubts about whether the official data are accurately representing average PRC incomes (for example, this paper, to which Ip makes reference, suggesting as much as a 25 per cent overstatement).   Credit booms also not infrequently see GDP per capita and productivity measures during the boom rather higher than actually proves to be sustainable.

Ip’s article is consistent with a line I’ve run in several posts over the last few years, noting –  as I put it most recently –  that by all reasonable standards the PRC remains an economic failure.  My most recent post along those lines was late last year.   Here is some of that post:

….the People’s Republic of China (and more specifically, the Chinese Communist Party, that our leaders are so keen to cosy up to) has overseen a really poor economic performance.  It is, more or less, what one might have expected knowing that the rule of law would be absent, markets wouldn’t be allowed to function effectively, state subsidies (of all sorts) would be rampant, and so on.  It could have been worse, of course –  there was the utter chaos, misery, and (for a time) mass starvation from the late 1950s to the mid 1970s.  The handful of other remaining Communist-ruled countries are worse.   But even having stopped doing so much active destruction, the PRC results are unimpressive.  Any other conclusion surely invites that American line about the soft bigotry of low expectations.

Of course, it isn’t the line the PRC would have one believe.  And it suits too many politicians in the West to talk up China as a stunning economic success story.  But it isn’t.  Development economists, left and right, will talk up the hundreds of millions of people who’ve moved above the poverty line.  And that is great, except that (a) it was the CCP that did its utmost (perhaps unintentionally) to put them back below the poverty line in the first place, and (b) getting above the poverty line is a pretty feeble standard against which to judge the economic performance of a country that for centuries matched or exceeded the best material living standards anywhere.

Angus Maddison’s great collection of historical GDP per capita estimates is a typical starting point for such comparisons.    He reports estimates for some countries every few hundred years from year 1 AD, and then more frequent (increasingly annual) estimates for more countries in more recent centuries.  In 1 AD the estimates he reports had Italy with the highest material living standards, followed by Greece.  China was about the level –  or a bit ahead –  of most other places in Europe.   In 1000 AD, China was top of the rankings –  not by much, but it was number 1.  That shouldn’t be any great surprise to anyone who recalls the various Chinese inventions ahead of the discoveries of such things (printing presses, paper money, even very big ships) in the West.   By 1500, China was a bit behind Italy and Belgium, but not much different to most of the rest of western Europe (all well ahead of what is now the United States).

Scholars spill a lot of ink debating why China went into such severe relative decline…..    Whatever the precise mix of explanatory factors that slippage happened.   In 1850, Maddison’s estimates have Chinese GDP per capita at about a quarter of that in the UK and the Netherlands, and less than 40 per cent of his “Western European 12 countries” average.  By 1900, estimated per capita GDP was only about 15 per cent of that in the highest income countries.

But perhaps as importantly, in 1900 China’s GDP per capita is estimated to have been about half that in Japan, and just a bit behind that in Taiwan (by then a Japanese possession).   As late as 1870, China had been not far from the GDP per capita in a range of Asian countries/territories for which Maddison now has estimates –  about on par with Korea, Taiwan, and Thailand, and a bit behind Japan, Hong Kong and Singapore.

And this is what they’d been further reduced to by 1976, the year Mao died.  I’m using the Conference Board’s PPP estimates, and have shown a mix of countries –  mostly east Asian and European, but with a few other interesting cases (eg Israel –  brand new in 1948) thrown in.

china 1

Such utter self-destruction and failure.  It wasn’t done by outsiders.  It wasn’t as if the PRC had faced uniquely bad external threats.  It was like economic suttee, with the depraved indifference of mass starvation thrown into the mix.

And how does the picture look today, with the Conference Board’s 2017 estimates.

china 2

The PRC has rocketed past the Philippines and Sri Lanka, and still trails the rest of this pack rather badly.   And this isn’t Tanzania or Rwanda, but a country that was once –  for centuries –  among the highest living standards anywhere in the world.  A country in a region where South Korea, Japan, Taiwan, and Singapore now manage advanced country living standards –  one of those a country that struggles to get international recognition and under constant threat from the PRC.

From the Maddison estimates, in 1980 the Soviet Union –  a region never at the forefront of material living standards –  had GDP per capita about the same ratio to that in the western European countries that China has today.  In fact, about where China was –  in relative terms –  in 1850 (see above).  It is a simply dismal economic failure in a country –  controlled by a Party –  that would have so much potential were its people ever to be free, to ever be properly governed with the rule of law rather than the rule of Xi.

For the same countries, here are the real GDP per hour worked estimates.

china 3

It really is an astonishingly poor performance.  Or at least it would be unless you’d been told in advance that Japan, Singapore, Taiwan, and South Korea would establish market economies with the rule of law, sound governance etc etc (and none of it perfect) and that the PRC would remain a land where the (Communist) Party actively rules.  Then, the outcomes are probably much as one might expect –  China lags very badly behind, to the disadvantage of its people, even if to the enrichment (power, money) of its rulers.

On the IMF’s full list of countries, the PRC now ranks 79th (out of 187) in the GDP per capita (PPP) stakes.  Average real GDP per capita is a touch behind that in Iraq (yes, I was surprised) and the Dominican Republic, and a little ahead of Brazil and Macedonia.  Perhaps China’s growth rates are faster than those places, at least if one (a) believes the official data for the Xi period, and (b) discounts the massive distortions and misallocations associated with one of the largest credit booms in history.      But there is no sign of Chinese per capita incomes catching those of the leading countries any decade soon (if things unwind nastily, the gaps would even widen a bit for some years).

Taiwan, Korea, Japan, and Singapore are genuine economic success stories –  catch-up and convergence more or less as the textbooks suggested was possible.  Cause for celebration in fact.   The PRC?  Anything but.  Being big doesn’t change that –  even if it gives geopolitical clout to a lagging middle income country –  it just means more people are failed by their rulers (and by those in countries such as ours who give the rulers aid and comfort, pander to them, or simply cower in a corner).

New material again.

As regular readers know, I am a trenchant critic of the failure of successive New Zealand governments to lift our own average productivity performance.  Decade after decade we slip further behind first the leading advanced country group and then, increasingly, most advanced countries.  But bad as our performance has been, on the Conference Board estimates –  which may overstate things quite materially for the PRC (see above) –  average labour productivity in the PRC is about 36 per cent of that in New Zealand (and about 20 per cent of the United States and other leading advanced economies).  In fact, average labour productivity is barely half –  on official figures –  that in Russia.

One other way of looking at these things is to look at where the PRC is now and see how far back one has to go to find when other advanced economies had the same level of productivity.   Compound growth can make quite a difference quite quickly, also a pointer to the economic possibilities for the people of China, were the CCP ever to abandon power and a proper market-led, law-governed, country were to emerge.

For example, on official numbers, the average level of labour productivity in the PRC is now (2018) US$15.3 per hour (converted at PPP exchange rate).    That is probably about where New Zealand –  productivity growth laggard among advanced countries –  was in the early 1950s.    The range of goods and services produced or consumed is, of course, very different from New Zealand in, say, 1952 –  despite its low productivity, PRC consumers still have access to the goods generated at the technological frontiers.

Here is summary table for some of today’s advanced economies, drawn from the Conference Board numbers, with two columns, one using official PRC numbers and one allowing for the possibility, per Ip’s article, that the PRC numbers might be materially overstated.

Ip 2

There is a certain consistency of message: the PRC –  a country heir to a civilisation that was for a long time the most technology-advanced in the world – is perhaps 70 or more years behind: achieving levels of econommywide productivity now that frontier countries were achieving around the time of World War Two.  None of the east Asian countries were doing particularly well at the start of the 20th century, but the PRC is also now 40 or 50 years behind the leading east Asian economies (in South Korea’s case – productivity lower than New Zealand –  “only” 25 years or so).   The PRC is where embattled Taiwan is estimated to have been in 1981.  That isn’t dirt poor, but it isn’t very good either.

But that is what PRC economic failure looks like.     Perhaps they’ll catch-up, but nothing in modern economic history suggests that a statist model like the PRC could make that sort of leap.  Just possibly, in another 20 years the PRC might catch up to where some of the laggard advanced countries are today –  “rich” in some absolute sense –  but by then of course the frontiers will have most likely have moved much further on.

Police: cosying up to tyrants, ignoring NZ law

I’ve already written about the slow and painful efforts to get Police to reveal details of the visiting professorship they had allowed one of their senior officers to take up at the PRC People’s Public Security University (the university of the Ministry of Public Security).

The day after the belated Police response finally arrived, a reader sent me a link to another example of the New Zealand Police cosying up to the regime in Beijing.  Here was the whole of my initial post:

A reader sent me the link, and this is what Google Translate generates:

Guangzhou Municipal Public Security Bureau and New Zealand Oakland Police Department signed a friendly cooperation arrangement
Source: Guangzhou Municipal People’s Government Foreign Affairs Office published:2019-05-05 17:51

guang 1.png

guang 3.png

To celebrate the 30th anniversary of the conclusion of the international friendship city relationship between Guangzhou and Auckland, and to strengthen the police cooperation between the two cities, Yang Jianghua, deputy mayor of Guangzhou and director of the Municipal Public Security Bureau, and the assistant police chief of the Auckland City Police Department of New Zealand on April 29 Lena Hassan ( Naila Hassan ) signed a “friendship and cooperation with the Guangzhou Public Security Bureau Auckland, New Zealand Police to arrange the book” in the Guangzhou Municipal Public Security Bureau. It is reported that this is the first time that the Guangzhou police and foreign police have signed a cooperation intention, which indicates that the law enforcement agencies of the two places will formally cooperate in police exchanges and police training.

“Police exchanges” with the Guangzhou branch of the Ministry of Public Security………..  Surely this cannot mean that MPS officers will be let loose with law enforcement powers in New Zealand?  Surely…..

I looked on the Auckland police website, I looked at the Minister of Police’s website, and I looked at the main Police news releases page, and there was nothing about this deal.

I wonder if Police, or their Minister, were ever planning on telling New Zealand citizens and voters about their deal with the PRC domestic repression apparatus?

Yesterday, I mentioned the Gestapo, but one doesn’t need to invoke (quite valid) Nazi comparisons with the People’s Republic of China.   Would Police – or elected governments – have thought such friendship and exchange deals were appropriate with the domestic security forces of the Soviet Union, or Pinochet’s Chile, with Galtieri’s Argentina, with apartheid South Africa, or……or…..or……

It just should not be.  And it clearly isn’t the case that this is just normal stuff (“everyone does it”) –  it is the PRC side that stresses that this is the first such arrangement for Guangzhou.

I’m not fond of the phrase “social licence”, but if it must be used this is an example of how government agencies –  allegedly working for our interests –  risk forfeiting theirs.

I will be lodging an OIA requesting details of this agreement.

And so I did, on 8 May.   I asked Police for

1. Text (in English and – if it exists – Chinese) of the recent agreement signed between the Guangzhou bureau of public security and the Auckland police district.  

Copies of

2. Any advice re the agreement to the Minister (and/or his office)

3. Any consultation with other government agencies on it.

4. Any internal position papers evaluating the possibility of this agreement, including any risks, and pros and cons.

And I had an acknowledgement of my request the next day.  So far, so proper.

I heard nothing more for a couple of weeks and then I had this from Police in Auckland.

Good Morning  

We have received your request for information

Before we can process this request we require some form of photo ID.  The best is a photo of your driver’s licence and a photo of you holding your licence.

Now, I’ve been using the Official Information Act for years and had never had such a request.  In fact, Police has responsed to my earlier OIA just a few days previously (very slowly but) without asking for photo ID.  Apparently, agencies are allowed to check that someone is entitled to make a request, but Police by then had my address, my phone number, and I’m in the telephone book (and readily Google-able).

Anyway, I went back to them and asked them for the statutory basis for their request, noting that Police had responded to earlier requests without photo ID.  I heard nothing more.

A few days later (27 May), I had a letter from a Senior Sergeant in Auckland, extending my request by a couple of weeks (beyond the statutory 20 working days), to 18 June.  He claimed they needed the additional time because of the “consultation we need to do on your request”.  That extension was probably lawful (albeit only because it looks as though it had taken almost 20 (calendar) days for anyone Police to really look at the substance of the request).

And then on 20 June, I had another letter for Senior Sergeant Housley (who is the Auckland District Police OIA co-ordinator), this time extending the request to 18 July, citing the need for “further consultation”.      That argument was already wearing thin, but what really bothered me was that it is against the law to extend OIA requests if the extension is made after the statutory 20 working days has passed.  The Ombudsman has been quite explicitly clear on that.

Nothing in the OIA prevents multiple extensions being made, providing any extensions are made within the original 20 working day time period after receiving the request. For example, if an agency notifies the requester of a one week extension, and then later realises that a two week extension is actually necessary, a second extension may be notified as long as the original 20 working day time period has not yet passed.

In this case, not only had the 20 working days passed when the second extension was made but so had the deadline on the first extension.  I went back to Senior Sergeant Housley and pointed out that his extension was unlawful, but (unsurprisingly) I got no response.

This morning, I finally had a letter from Senior Sergeant Housley substantively responding to my request, politely thanking me for my “patience”.   And what little they released –  and, in fact, what little they held, gives the lie to the claim that “consultations” and “further consultations” were necessary.   All they released was the text of the agreement (see below), the substance of which the PRC side had been boasting of two months ago, and all they withheld was advice from MFAT on the wording of the agreement (which can’t have been very long, and which I never expected them to release –  standard OIA exceptions: my interest had been mostly in seeing who, if anyone, had been consulted.   I have now lodged a complaint with the Ombudsman about (a) the unlawful second extension, and (b) the dubious claims about “consultation” and (especially) “further consultation”.  But this is the Police…….in a well-functioning system, you’d hope a Police force would fall over itself to act lawfully, spirit and letter.  Then again, I guess this is modern New Zealand, where complying with the law seems like an optional extra for too many public agencies.

What of the substance?  Here is the agreement itself (Chinese and English), and Mr Housley’s letter.

Letter of Friendship Between Auckland Police and Guangzhou

Letter Mr Reddell July 2019

There are a few things of note in the (short) agreement itself (and any Chinese-speaking readers might like to check that the Chinese version says the same as the English version, both of which are signed).

First, it is pretty clear that the initiative for this must have come from the PRC side.   The first version of the agreement is in Chinese, and the English version is clearly a not-particularly-colloquial version/translation (“Based on joint benefits and laws in both countries, the two participants accept to exchange…” is clearly not something written by a native English speaker).

It is pretty easy to see what is in it for the PRC.  They have whole webs of organisations and agreeements designed to tie people, institutions, and countries more closely to their odious regime, lending a (hitherto) good name to one that should be held in very low esteem.  And New Zealand has clearly been a soft touch, and so (recall the initial release) the Auckland Police will have made a good place to start for a first such agreeement.

But what on earth is in it for New Zealanders?   Police officers hot-footed it to Guangzhou –  presumably at taxpayers’ expense –  to do the kowtow and sign up to an agreement that dignifies the repressive law enforcements mechanisms of the PRC as somehow akin to a Police force in a (hitherto) free, open and democratic society.  To what end, other than the typically craven approach of the New Zealand “establishment” –  more deals, more party donations, improved electoral prospects for Phil Goff?

Second, the substance, such as it is

guangzhou

It is a simple question really that Police make no attempt to answer: what benefits will the New Zealand Police –  supposedly responsible, via ministers, to the New Zealand public gain from their cooperation and exchanges with Guangzhou, a force that acts to enforce the will of the CCP (and where presumably no officer can serve if they are suspected at all of sympathies with –  say –  Christianity, Islam, Falun Gong, let alone the rule of law and democracy).  This force operates just over the border from Hong Kong, where civil liberties have already been jeopardised, aided and abetted by the Police.  Won’t all the senior officials the Auckland Police delegation were pandering to likely be CCP members?

And what of the letter I got from Police?

Among the things I found interesting is that there was no advice at all of this agreement to the offices of the Minister of Police or the Minister of Foreign Affairs.  I suppose most likely Police simply anticipated the preferences of our politicians –  after all, last week Ron Mark was signing up to a defence agreement with the PRC (quite extraordinary: we sign a defence agreement with a country that openly talks of seizing a free and democratic country by force).

Perhaps more worrying –  but perhaps not surprising, given the widespread Wellington view of Police competence and capability –  is that I was told there was no position paper or similar reviewing pros and cons, risks and opportunities etc that an agreement with the odious PRC forces might entail.   So what happened?  Did Guangzhou Police simply take someone in Auckland to lunch and sweet talk them into flying over to sign up?  It can’t quite have been that bad surely, but this simply isn’t proper or prudent policymaking.

But then they made up a rationale on the fly.  Recall that none of this was documented before the agreement was signed, it was simply in a letter to me dated today.

There is no formal ‘position paper’ in existence evaluating the possibility or the ‘pros and cons’ of the Letter. However the Police position is that 2019 will mark the 30th anniversary of the sister city relationship between Guangzhou and Auckland – Auckland’s longest standing and most successful sub-national partnership in China.

This relationship has been significantly strengthened as a result of the Tripartite Economic Alliance that was signed in 2014 between Auckland, Guangzhou and Los Angeles. The relationship between the cities goes back to the time of the gold rush in New Zealand, when many Chinese came across to New Zealand with a significant number finally settling in Auckland. Latest statistics indicating that up to one in three greater Aucklanders are likely to identify as Asian by 2038. Close transport connections (twice daily direct flights between the cities), the immense trade and significant crime connections make the relationship between Guangzhou and Auckland crucial to both cities. Other areas Police would benefit from this relationship include, training, narcotics and economic crime investigations.

In summary this is an extension to the sister city relationship. With the proposed growth in the Asian population in Tamaki Makaurau over the next two decades this letter of friendship will enhance the relationship and benefit both Guangzhou Public Security Bureau and Tamaki Makaurau Police as it will present opportunities for each of us to learn from our colleagues.

Much of which is simply weird.   We have a national Police force, not (unlike, say, the UK system) a city-based one.  What is the national Police force doing signing up agreeements with odious foreign forces to support the sister-city partnership signed up by some elected local body politicians?   Recall, that the current Auckland mayor substantially funded his last campaign with large anonymous “donations” including from an auction of works of Xi Jinping.  Goff was one of those who nominated the CCP-aligned Yikun Zhang for a royal honour, for what amounted in effect to services to Beijing.   This agreement has the feel of something that the Mayor’s office will have liked.  Perhaps it will help with this year’s fundraising?

And what about all that puffery about the Gold Rush?  We had German immigrants back to the 19th century and it didn’t make the first Labour government any keener on dealing with the Gestapo.   Perhaps the Senior Sergeant and his bosses didn’t notice that whatever the “Asian” share of the population 20 years hence, “Asia” is not the same as the PRC, not even all immigrant ethnic Chinese come from the PRC, and many who did come want to be free of the clutches and mindset of the PRC.  The PRC –  not China, but the PRC/CCP –  is a threat more than an opportunity, at least to anyone with a modicum of integrity and morality.

And, once again, what does the Auckland wing of the New Zealand Police think they are going to learn about policing from their friends in Guangzhou?  Whatever it is, seems unlikely to be in the best interests of New Zealanders.

There is a level at which it is tempting to just ignore these things.  Individually, I don’t suppose the agreement means very much.   Bad as Police are in many respects, they aren’t quite yet the Guangzhou bureau of public security, and this agreement is isolation won’t change that much.  But it all speaks of a mindset in which our establishment agencies and individuals seem to have lost any real sense of right and wrong, of fundamental decency, and recognising odious regimes when they see them.   Yes, there need to be basic, formally correct, relations with the PRC, as with a bunch of other dreadful regimes, but we simply shouldn’t be signing friendship agreements, declaring ourselves “strategic partners”, of offering to help make their dreadful regime even more effective in what it seeks to do.  Do our leaders –  politicians and Police – really live by any values other than deals, donations, and the bonhomie (and self-delusion) that goes with cosying up to such a regime?  Not on the evidence of agreements like this.

Oh, and the Official Information Act really does apply to Police to.  Our Police –  unlike China’s – are supposed to be subject to the law, not subject to the Party.

 

The PRC, trade, foreign investment etc

Parliament’s Justice Committee today has the second (and final?) public hearing of submissions on their foreign interference inquiry.  The first such session was described to me by someone who watched it all as “just hopeless”, and accounts I’ve read don’t suggest any reason to doubt that take.  If there were signs of seriousness about the process, they seemed to be about trying to play down, or pretend there was nothing to, concerns around the PRC.   The acting chair had introduced the hearing by suggesting she would prefer not to hear names.     Her party, earlier this week, launched a foreign affairs discussion document in which they talked of their “friends in Beijing”.  What hope for a serious investigation.

Reports this morning suggest the Committee is just about to have another acting chair, with previous acting chair Maggie Barry deciding to leave the committee, and substantive chair Raymond Huo (who initially opposed any public submissions, claiming government departments could say all there was to be said) having belatedly recused himself, as someone about whom concerns had been raised, notably in Anne-Marie Brady’s paper.  In another sign of the unseriousness of the exercise, a senior National MP on the Justice Committee told the committee two weeks ago, when Brady appeared, that he hadn’t even read the paper.  I might not have expected all MPs to have done so –  although all should –  but a senior MP, actually sitting on the committee, part of National’s international affairs team…..

It is reported that National MP Chris Bishop is to be the new acting chair.   As I happened I was engaged with Bishop briefly on this issue on Twitter yesterday, when he politely took exception to my suggestion that the inquiry, especially around the PRC, was really a faux inquiry.   His claim was that

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and went on to ask the basis for my concern.   240 characters really isn’t the length for such discussions, so I simply pointed him to my submission to the inquiry, and in addition to some of the points above noted the Jian Yang situation.  Perhaps he was in earnest.  Perhaps his acting chairmanship will really mark some sort of turning point in the inquiry.  It would be great if it did, but it is hard to have any optimism given how deeply entrenched, especially in the two main parties, the wish to pretend there are no problems, and to just get on treating the PRC as a normal country (“our friends”) has become, from Jacinda Ardern and Simon Bridges down.

There was another example of the establishment approach in this area in the Herald yesterday, in a column by lobbyist and former trade negotiator Charles Finny, offering to “make sense of the US-China dispute”.  Par for the course for the Herald, general readers would not have any idea that Finny serves on the Advisory Board of the (largely taxpayer-funded) New Zealand China Council, set up to champion closer ties with the PRC (and never known to have said anything critical of the regime), and he is also chair of Education NZ, the government body charged with promoting export education, much of it to the PRC.   On a good day, Finny appears to be alive to some of the risks around the PRC –  he did after all go on national TV and suggest that he was always careful what he said around Jian Yang and Raymond Huo given their apparent close ties to the PRC embassy – and I suspect he is mostly a true-believer in the mantra of the “rules-based order” and of the ever-increasing web of preferential trade agreements New Zealand is party to.

But his “making sense of the US-China dispute” column didn’t make sense of it at all, because it totally failed to place the rising tensions in a wider strategic or political context.  It was, on his telling, all the fault of the Americans (“the Trump Administration’s ‘America First’ mentality), and not at all about choices made by the PRC.  Later in the article, Finny does actually note first that some of the approaches that bother him began under Obama (judges for the WTO), and that there isn’t necessarily much difference between the approach being adopted by Trump and that by Democratic Party contenders, which you would think might matter.  But instead all we get is a worry that New Zealand could see

enormous pressure on New Zealand to stop buying Chinese technology or to co-operate with Chinese universities or research entities,

(Shouldn’t any decent media outlet have thought at that point that Finny should have to disclose his Education NZ and China Council involvements?)

Finny’s approach seems to be that no matter the character of the regime, we should simply keeping on doing more trade, buying more technology, allowing more investment.  There seems to be no sense at all of anything around security risks –  be it Huawei, Hikvision or whoever –  no sense that, however the New Zealand government labelled it in a treaty, the PRC is no market-economy, but one with an ever-increasing role for a state with totalitarian aspirations and abilities.   Simply no recognition of the way the PRC has sought to inject its pernicious influence –  and don’t pretend it is just another state – into the affairs of all sorts of other countries, including our own, including our own ethnic Chinese New Zealand citizens.   Now, you might think Trump is going about tackling these challenges in a poor way – or perhaps won’t even follow through –  but that is a quite different matter from whether there is a real issue that needs addressing.   Finny –  and the New Zealand political establishment –  would, it appears, prefer to pretend otherwise.  And don’t pretend –  as some try to –  that this is just about another big country getting richer and stronger.   There would be nothing like the level of concern there now is across the US political spectrum if China were opening up, reducing the power of the state, reducing the power of the Party, stopping the threats to Taiwan, stopping corroding freedom in Hong Kong, demolishing artificial islands in the South China Sea, not engaging in state-sponsored intellectual property theft, not imprisoning a million Uighurs, not attempting to exert control over diasporas and foreign Chinese-language media, and so on.    Those are the sorts of things that should be concerning our MPs and ministers, but not one will utter a word.      (And by contrast I listened to an interview yesterday with Pete Buttigieg, one of the fairly left-wing Democratic contenders.  I can’t imagine he agrees with Donald Trump on almost anything, and yet on China and the risk and threats he was fluent and serious.  I was impressed.)

As it happened, a reader this morning posted a link to a column from the New York Times by the (often rather breathlessly enthusiastic) champion of globalisation Tom Friedman on the US/China issue.  I don’t suppose he is generally much of a Trump fan either, and yet

A U.S. businessman friend of mine who works in China remarked to me recently that Donald Trump is not the American president America deserves, but he sure is the American president China deserves.

and, for example,

But when Huawei is competing on the next generation of 5G telecom with Qualcomm, AT&T and Verizon — and 5G will become the new backbone of digital commerce, communication, health care, transportation and education — values matter, differences in values matters, a modicum of trust matters and the rule of law matters. This is especially true when 5G technologies and standards, once embedded in a country, become very hard to displace.

And then add one more thing: The gap in values and trust between us and China is widening, not narrowing. For decades, America and Europe tolerated a certain amount of cheating from China on trade, because they assumed that as China became more prosperous — thanks to trade and capitalist reforms — it would also become more open politically. That was happening until about a decade ago.

But, as he goes on to note, it simply isn’t now.  And New Zealand politicians seem to refuse to confront the implications of that, accentuating local issues that were already building (as one small but prominent example, Jian Yang was already in country –  told by Beijing to lie about his past –  and in Parliament before Xi Jinping took the top job).

In somewhat the same vein the government has a consultation open at present (submissions close tomorrow) on possible changes to the overseas investment regime.  I took the opportunity to make a short submission for two reasons:

  • first, I generally favour greater openness to foreign investment, but
  • second, the discussion document dealt (rather superficially) with national security issues and how the rules might best handle those.

These days, New Zealand does not get much foreign direct investment –  and especially not much in the way of greenfields new developments.  I don’t think the screening etc regime is the main reason –  mostly, I suspect, we don’t have that much foreign investment because (a) there are few opportunities here, and (b) for the same sorts of reasons business investment generally has been weak for decades (high cost of capital, high real exchange rate, high taxes on business profits –  in that case, especially for foreign investors).  But I’d generally favour a more liberal environment, for almost all industries and for investors of almost all countries.

It is also worth recognising that most of any benefit (to productivity in New Zealand for example) from foreign investment will come from investment by firms based in rich and advanced countries.  Of course, there might be rare exceptions –  a firm based in Zambia, Laos or El Salvador –  but they will be exceptionally rare (the best ideas, technologies, management systems etc) will be in the rich countries –  part of why they got, and stay, rich.  So I’d favour a pretty-much open slather approach to foreign investment –  existing assets or new –  for investors based in rich countries (the OECD membership might be a decent starting point, and one could add in places like Singapore and Taiwan.

For most of the poorer or smaller countries, I really don’t care much what the rules are.  Probabilistically, there is almost nothing at stake (at least in economic terms) in maintaining restrictions on Zambia, Laos, El Salvador (or 100 others) if that is what the political process demands.  But, equally, there isn’t much risk or downside to opening up to them either, especially if one is focused on the benefit of New Zealanders being (generally) able to sell to the highest bidder.

There are various odious regimes in the world.  Most them don’t matter much to New Zealand at all (thinking places like Equatorial Guinea).  But the PRC does and in my view we should –  while the regime remains as it is – be treating investment from there quite differently, for various reasons.    One is a straightforward economic one.  Almost any large PRC firm is either an SOE or has a significant element of state/Party control to it.  We spent years here trying to reduce the hand of the state in direct business operations in New Zealand.  State entities typically don’t run businesses well, don’t allocate investment efficiently, and so on.  There is no more likelihood (to put it mildly) that PRC state-controlled companies will do so than the New Zealand government ones will –  and at least the New Zealand government ones are ultimately answerable to New Zealanders.  Such investment is likely to be a net negative for New Zealand even if the price paid to the initial New Zealand vendor is higher than that vendor could have got from another –  private –  purchaser, whether from New Zealand or another country.

But the deeper reason is that the PRC is a big and powerful totalitarian state, that has repeatedly displayed aggressive intent, which has values antithetical to those of most New Zealanders.   Individual PRC buyers may well be perfectly decent well-intentioned people –  as plenty of 1930s Germans were too –  but a totalitarian state has, and repeatedly demonstrated, its leverage over its own people, by fair means and (too often) foul.  We would simply be ill-advised to allow PRC-associated interests to have significant investments in many sectors in New Zealand.  One could think of media or telecom companies, or tech firms.    The PRC banks operating here should be a matter of concern, especially if they get materially larger than they are now.   But the concern should range wider.  For example, the greater the control PRC interests have of elements of the dairy industry, the more difficult New Zealand might find it to be handle the sort of economic coercion the PRC has attempted to engage in re various countries in recent years.

And, of course, to circle back to my earlier point, it is not as if the PRC is one of the world’s advanced economies.  Productivity levels languish far behind even New Zealand’s modest levels, and everyone recognises the dependence the regime has had on industrial espionage.  Deep pockets aside –  with a mix of market and non-market motives –  how much genuine benefit to New Zealanders is there likely to be from PRC foreign investment over time?

It is possible that this sort of restrictive regime could come at some economic cost, in terms of lost productivity opportunities for New Zealand. My sense is that it would probably be quite a small cost, but we can’t be sure.  Perhaps more importantly, many precautions have a cost –  whether it be a national defence force, Police, anti-virus software, or a lock on your front door.  The PRC is a threat to New Zealand and countries like us, and we need to be willing to spend some resources (perhaps sacrifice some short-term opportunities) to establish some resilience to those threats.

But, of course, our elected “leaders” and business establishment figures have no interest in any of this.  For them, it seems, the character of the regime matters not a jot, it demonstrated track record at home, abroad, and in New Zealand matter not a jot.  There are deals to be done, donations to be collected, and  –  if there are any risks –  well that will be someone else’s problem another day.  And in the process they’ve allowed our political system to become corrupted, indifferent to the character of the regime, indifferent to the values of New Zealanders.  But their “friends in Beijing” are no doubt happy.