College students waiting at a job fair in Tokyo.
Photo by Ko Masaki; Bloomberg Markets
According to the 2012 World Bank World Development Indicator, the college enrollment rate in Japan and South Korea is at an all-time high: 61% of high school graduates entering college in Japan and a remarkable 98% high school graduates entering college in South Korea. Yet increasing educational attainment has not been able to ease the unemployment problems among the recent graduates in both countries. On the other hand, only 31.2% of college graduates in Japan and 35% in South Korea have found difficulty securing a full-time job upon finishing their education in 2011. This gap between the high number of college graduates and the low number of full-time jobs, however, does not simply mirror the lack of job opportunities. Interestingly, this gap is driven by risk-averse graduates who voluntarily choose to stay unemployed in hopes of securing a stable job in the long run. However, the Japanese and Korean governments could address this mismatch by supporting their SMEs in recruiting university graduates.
In Japan, increasing voluntary unemployment of college graduates can be attributed largely to the country’s unique corporate structure and culture—the practice of lifetime employment system (shushinkoyou)—that guarantees job security and stability. However, this lifetime job security is made possible mostly in large corporations or in the government, and not in 4.69 million small and medium sized enterprises (SMEs) in Japan that account for 70% of all employment. Due to smaller size, SMEs are perceived as less capable of providing benefits and stability, especially in the times of economic recession, than the large business associations (Keiretsu) such as Mitsubishi, Toyota, and Mitsui that have dominated the Japanese economy since the postwar period. Therefore, recent graduates rather wait for an opportunity to join large conglomerates in the future than work for SMEs.
Japanese hiring system that favors recruiting fresh graduates has also contributed in solidifying the lost generation of jobless youth. Even when the demand for labor increases or the economic growth resumes, employers prefer to hire fresh graduates over the older graduates. The unfortunate graduates who have missed the opportunity now make up a generation called “freeters,”a term that combines the English word “free” and the German “arbeiter,” the part-timed temporary workers or anyone who hops between short-term jobs. However, the penalties that these “freeters” face in the Japanese society such as low pay have only further aggravated the uncertainty of job prospects.
This is not too different in Korea. Working at large conglomerates (Chaebol) or public office has also been equated with job security and stability in Korea. As the number of college graduates increase, it has become increasingly difficult to secure a job at top corporations such as Samsung, LG, and Hyundai. Even for the best-performing students from the elite universities, there are just not enough Chaebols to satisfy the overflowing fresh graduates. Moreover, these Chaebols, instead of creating more jobs at home, expand abroad; their overseas production jumped to 16.7 percent of their total output in 2010 from 6.7 percent in 2005. However, the unemployed in South Korea choose slightly different alternatives than the generation of Japanese “freeters” who resort to part-time work or job-hopping. Although nearly 3 million SMEs exist in South Korea that accounts for nearly 90 percent of its employment, Korean graduates actually exacerbate the unemployment crisis by preparing for the civil or professional exams or studying abroad in the hopes of joining a large corporation.
Conversely, the dominant presence of large and established firms in Japanese and South Korean job market raises a question on the role of the SMEs that actually constitute the majority of employment in both countries. Although the latest G20 report positively assesses the culture for start-ups and entrepreneurships in Japan and South Korea, a 2013 survey by the Global Entrepreneurship Monitor speaks otherwise. According to the survey, both countries have one of the highest levels of fear of business failure among the public with 49.3 % in Japan and 42.2% in South Korea. In both countries, skeptical graduates overlook the growth potential of the SMEs or startups by favoring stable employment opportunities at large corporations, especially during the times of economic downturns.
In response to the reluctance of the university graduates to join SMEs or start their own businesses, the governments of Japan and Korea have both taken a number of positive steps. In order to realize the economic vision of “creative economy” through entrepreneurship this year, South Korea’s Small and Medium Business Administration (SBMA) under the Ministry of Trade, Industry and Energy has announced plans to initiate programs to give financial and R&D support to startups. Similarly, Japanese government has Small and Medium Enterprise Agency (SMEA) under the Ministry of Economy, Trade, and Industry that provides resources to empower SMEs and entrepreneurship. For instance, the government has had initiatives such as capital gains tax deductions and elimination of capital requirements for limited liability companies to create SME-friendly business environment.
However, both Japan and Korea still have room for improvement in encouraging SME employment or entrepreneurship. According to the 2012 IMF working paper, Japanese start-ups predominantly rely on self-finance; in 2009, Japan ranked second to last in venture capital investment as a share of GDP among OECD countries. Korea also ranked among the lowest in the G20 for availability of venture capital funding to entrepreneurs in 2013. On the other hand, the existing programs that connect unemployed youth to the existing SMEs are often designed specifically for the vocational and high-school graduates in Korea and “freeters” in Japan which have done no more than reinforcing the negative perception that the SMEs are not attractive to college graduates.
Unlike the past, college degree no longer serves a guaranteed path to upward social mobility in Japan and South Korea; those who are educated are as likely to be unemployed than those who are not. In order to reduce unemployment of this educated workforce, more active government participation in restoring public confidence in the value of SMEs and entrepreneurship seems necessary. If not, Japanese and Korean college graduates with their eyes on the lifetime employment at top-tier firms should not be criticized for their risk-averse behavior. Without real alternatives, many of today’s graduates are still unemployed.
In 2011, the Republic of the Union of Myanmar initiated political, social and economic reforms after 51 years of military rule. As a result of these reforms—most notably the democratic elections of 2012 that brought Aung San Suu Kyi back into formal politics—Myanmar, or Burma to many, saw an unprecedented growth in international tourist arrivals and receipts—from US$165 million in 2008 to US$534m in 2012. As a result of this global interest and endowed with natural beauty, ancient Buddhist sites and a friendly and welcoming population, Myanmar is turning into the new tourist frontier. Recognizing and capitalizing on the country’s unique situation, the government of Myanmar unveiled the Tourism Master Plan (2013-2020) this June in order to create additional economic growth while attempting to safeguard Burmese culture and the environment. Thus, the Myanmar Tourism Master Plan attempts to create a more conducive environment for mass tourism and ensure that the mistakes of other tourist destinations do not occur in Myanmar; however, despite its commendable intentions, the success of the plan depends on civil society action to hold leaders accountable.
According to the Master Plan—which is funded by both the Asian Development Bank (ADB) and the Norwegian Government—the government intends to pursue six broad initiatives in order to boost tourism arrivals and receipts by 2020. These initiatives are tailored directly to the realities experienced by tourists. For example, the country’s infrastructure, although sufficient, is not geared towards maximizing tourism experience. In order to get to the main tourist sites, such as Bagan, Mandalay or Inle Lake, from Yangon—the main port of entry—there are four options: bus, train, airplane or car. The busses are the most economical but take almost 18 hours to get up to Bagan—unless you are there for more than a week, the round-trip alone takes about two days. Trains usually are unreliable due to poor track maintenance (they are the same tracks from colonial days). Airplanes are often fully booked due to limited aircraft, and cars can only be rented with a local driver. Addressing these infrastructure concerns, as well as accommodation shortages and visa impediments, are some of the main pillars of the Master Plan.
Another issue that emerges from this debate is environmental sustainability and social standards. The Master Plan’s third initiative—Strengthen Safeguards and Procedures for Destination Planning and Management—is the most important initiative of the six as it outlines ways to ensure sustainability and uphold ethics and values. Being the new tourism frontier, Myanmar will have to learn from the mistakes of previous tourism destinations around the world such as Bali, Indonesia, Thailand and others. Hopefully, the country will recognize the mistakes made by uncontrolled development in Bali, where the Balinese have been in a constant battle with the tourism industry over water, power, food, land prices and taxes, pollution and environmental degradation (see “Holidays in Hell: Bali’s Ongoing Woes”). Moreover, it is important for the government and civil society groups to crack down on child sex trafficking and prevent the country from turning into a ‘sex tourism’ destination, a label that some countries in Southeast Asia continue to battle with to this day. Both the government and civil society have a role to play in preventing these mistakes from happening.
In order to uphold these social standards and ensure sustainability, the government and civil society must take action. Regulation in the past has come in the form of the, Tourism Law, which requires any tourist-related business to obtain a license to operate. This licensing scheme has become a double-edged sword; regulation of the industry has prevented overdevelopment, while at the same time, lining the pockets of those with connections to government (see “Visiting Myanmar: It’s Complicated”); on the other hand, an unregulated industry could lead to a repeat of tourism-related social and environmental degradation experienced in other countries. For many years prior to the political reforms in 2011, the party of Aung San Suu Kyi, the National League for Democracy, urged foreigners to stay away from Burma since the majority of money spent would feed the junta (see “Suu Kyi urges Britons to boycott Burma”). Even though the Master Plan indicates that the Tourism Law will be reevaluated and certain licensing processes streamlined, this revenue stream will most likely continue to be exploited by corrupt officials (Transparency International ranked Myanmar 172 out of 176 on the Corruption Perceptions Index in 2012). Thus, the time is ripe for civil society to become involved in the tourist industry and hold its leaders accountable. The newly launched NGO, Tourism Transparency, is one initiative that fills this void as it attempts to promote an “open and accountable tourism industry in Myanmar/Burma.”
In the end, only time will tell as to whether or not tourism in Myanmar will benefit the public economically but also preserve certain aspects of culture and the environment. With a lack of transparency and accountability, tourism will continue to benefit the government and local elites. Although a fledgling democracy, Myanmar has had a rich history of civil society action, and it will not be surprising if protests surface as a result of either uncontrolled overdevelopment or massive government revenue that does not benefit the people. As the new tourist frontier, Myanmar will surely be a battleground of foreign businesses, the government, and civil society for many years to come.
Christopher travelled to Myanmar in June 2013 right after the Tourism Master Plan was unveiled.
Southeast Asian states are stepping up their prosecution of cybercrime and illicit online activities. A September UNCTAD report showed that 8 out of 10 ASEAN countries have cybercrime legislation exceeding international standards, and on September 19th, ASEAN declared the creation of a new cybercrime working group. ASEAN nations are also trumpeting enforcement of these laws, as evidenced by the highly publicized arrest of 35 cybercriminals in the Philippines last month.
This makes a lot of sense. Today, Southeast Asian economies, especially those without substantive industrial sectors, are increasingly trying to drive economic growth through research and development. Singapore, for example, explicitly encourages biotech firms to relocate within its borders, citing “world class intellectual property protection” and it’s growth as a “regional research and development hub.” In addition to such domestic efforts, many regional economies are pursuing trans-national agreements on Intellectual Property Law, most notably those to be contained in the upcoming Trans-Pacific Partnership (TPP). The hope, presumably, is that protecting research-based companies will draw yet more research and development spending to the country, fueling a sustainable, development driven growth strategy.
Perhaps cracking down on cyber crime is a logical extension of these initiatives: countries need to increase their ability to find and prosecute cyber criminals to show their resolve in protecting the trade secrets of their research driven industries. R&D driven businesses would be hesitant to relocate to a country with high rates of cybercrime, or little cybercrime enforcement, because it would make it easy for them to have their intellectual property illegally taken, regardless of the Intellectual Property law of the country. ASEAN, at least, is clearly aware of this: the most recent ASEAN roundtable – a forum for developing business strategy, focused primarily on intellectual property and cybercrime prosecution.
Thus, recent efforts to crack down on cybercrime in Southeast Asia seem just as likely to be industrial policy as rule of law. Regardless of the rate of cybercrime, it’s becoming increasingly important for ASEAN economies to look tough on cyber crime to spur high-tech and research based investment in the region.
A truck hauls waste out of the Oyu Tolgoi mining site. Mining projects are contributing to rapid economic growth on the Mongolian Steppes.
Photo from energydigital.com
As a landlocked country with less than 4 million people, Mongolia doesn’t seem a likely candidate to be APEC’s first new member since 1998. Have rapid growth and a rising China made Mongolian accession more than a pipe dream?
Most recent World Bank data puts Mongolia’s growth rate at a blistering 17.5% , driven in large part by massive joint mining ventures between the Mongolian government and private firms. Notably, the Oyu Tolgoi mining project, is estimated to be the largest undeveloped gold/copper reserve in the world and is expected to account for 30% of the country’s GDP by the time of its completion. Mongolia holds a 34% share of the project, with controlling interest held by Canadian mining company Turquise Hill, part of the multinational mining giant Rio Tinto. If Mongolia can avoid the corruption, over-speculation, and environmental degradation that often come with resource based development, and strategically invest its profits, these projects put Mongolia on track to be a major regional economy and resource provider within the decade.
Moreover, there seems to be regional desire to draw Mongolia out from under China’s economic thumb. China consumes 90% of Mongolia’s exports, raising national security concerns inside Mongolia and market envy from other regional powers, such as South Korea and Japan. Diversifying Mongolian trade patterns is clearly an economic and security interest of such countries, and would likely support Mongolian accession to APEC should they see it as a means to this end.
This is more than just speculation. In September, Indonesian President Susilo Bambang Yudhoyono visited Mongolia to discuss trade ties on his way to the Vladivostok APEC summit, and expressed general support for Mongolian entrance into APEC. Japan, which has supported a Mongolian APEC bid since the nineties, is already working to balance China through routes such as TPP under Prime Minister Abe’s hawkish hand; on March 31st he met his Mongolian counterpart Norov Altankhuyag in a bilateral summit focused on increasing trade and diplomatic ties. While these overtures alone are hardly enough to secure a Mongolian bid (see for example India, which failed to become an APEC member despite vigorous support from Australia and the United States) they might signal a growing momentum towards expanding the forum.
APEC had a moratorium on accepting new members until 2010, and with the recession coming to a close, it’s reasonable to believe member economies will be looking to broaden the scope of the co-operation. Mongolian accession to APEC still seems like a long shot, but economic and political indicators definitely support the idea more than they have in the past. The Steppes are stepping up, and Mongolia could yet become APEC’s first landlocked nation.
Speaking at this month’s annual IMF meetings held in Tokyo, Japan, Lagarde revitalized gender equality discourse in hopes of pulling Japan out of its economic slump. It should come as no surprise that Lagarde, the female managing director of the Fund, appreciates the role of women in political and economic development.
At the meeting, Masaaki Shirakawa, governor for the Bank of Japan, emphasized the importance of increasing women’s participation in the labor force, and Lagarde capitalized on the moment and urged Japan to create a more conducive environment for female workers. She suggested that with better childcare assistance and a more positive perception of women’s workplace capabilities, women could be a large boon to the country’s economy. A Goldman Sachs report published in 2010 indeed supports this claim, maintaining that higher female participation rates would raise GDP levels by almost 15%.
The discussion of reinvigorating a significant portion of the population comes at a crucial time for the nation. Japan continues to suffer from a simultaneously aging and decreasing population. The proportion of the elderly—and thus people out of the workforce—continues to rise, consequently producing higher welfare demands that put a large strain on the government’s checkbook. At the same time, women’s departure from the workplaces exacerbates the situation. More women withdraw from the workplace out of occupational dissatisfaction as they continue to lose higher career positions to men, and inadequate childcare support compels women to return full-time to the home post-childbirth.
So what are Japan’s viable options? As Lagarde and many others have proposed, the government can enhance childcare assistance so that women are encouraged to enter and remain in the labor force. Yet considering the Democratic Party of Japan’s track record since winning the elections in 2009, improvements in childcare welfare policies seem unlikely within the current financial environment. Regarding workplace discrimination, it may be difficult to alter cultural gender perceptions, but the government could choose to implement gender quotas or better job placement programs. Japan might further consider granting paternity leave instead, shifting a portion of childcare responsibilities away from the mothers to the fathers. The extent to which these policies might enhance female worker participation and overall economic productivity—or even draw criticisms—remains to be seen. Other countries in the region such as South Korea and Thailand that face similar population characteristics and gender inequalities could very well look to Japan for how to address the issue and what policy avenues to take. As the conversation on boosting the global economy continues, women indeed have the power to exit their marginalized roles and become the principle force in national recovery.
OECD: Japan among other Asian nations face a greater gender inequality problem in the labor market than most.
Unlike most summers in Beijing, which are usually arid and scorching hot, the summer of 2012 was in one word – wet. Storm after storm, the rain would sometimes get so strong that I saw thigh-deep waters more reminiscent of an ocean than a city street outside my window. In July 2012, the largest flood in more than 60 years swept Beijing, flooding streets and homes, trapping people in their cars, and killing around 70 people (unofficial figures estimated to be much higher). More than the natural disaster, Beijing residents were outraged at the government’s inadequate response to the flood. They asked how could such an atrocity happen in China’s capital? Despite the 4 trillion-yuan infrastructure stimulus following the 2008 financial crisis, there weren’t enough drains that could handle the flood, too much litter clogged the existing drains, and leftover debris from construction sites left the water muddy and dangerous. While Shanghai also received heavy rainfall, the city did not experience devastating floods because its infrastructure problems are not as severe as Beijing and the majority of China.
Infrastructure isn’t the only problem. In September, a Foxconn manufacturing facility in Taiyuan, the capital of the Shanxi province, was shutdown following a chaotic riot that erupted between workers and security guards. One of the biggest electronics manufacturers in the world for high tech companies such as Apple and Dell, Foxconn has recently been criticized for poor working hours and wages. In a New York Times article concerning the September shutdown of the facility, a Foxconn employee was quoted saying, “At first it was a conflict between the security guards and the workers, but I think the real reason is they were frustrated with life.” Labor protests like those at the Foxconn manufacturing facilities are just one symptom of the Chinese people’s dissatisfaction.
Earlier this year, Professor Richard A. Easterlin, a leading authority on subjective well-being, a.k.a. happiness, released a report titled “China’s life satisfaction, 1990-2010.” The study showed that contrary to conventional wisdom that suggests that happiness coincides economic growth and improvement in living conditions, this is not the case in China. Post-1979, China witnessed the reform of socialist programs such as state-owned enterprises. According to the study, after the dismantling of the iron rice bowl, people began to lose their jobs and their social safety net, and became less happy relative to when the iron rice bowl existed. And even as GDP per capita increased for all socioeconomic classes, happiness did not correlate. Instead, when people, in particular those in the lower socioeconomic classes, saw the growing inequality between the rich and the poor, their life satisfaction decreased.
Happiness has historically been an integral component to Chinese society. In Confucian theory, the idea of the benevolent leader entails a ruler’s responsibility to ensure harmony through the maintenance of balance in society. Happiness can be seen as a necessary condition, if not a metric for societal harmony. The success of China and the Chinese Communist Party (CCP) greatly hinges upon the happiness of its people. And leaders realize this. A goal that is often cited in party rhetoric is to achieve a “harmonious society.” But whether this is an actual or nominal goal has yet to be demonstrated.
I would argue that the problem is not entirely one of infrastructure, corruption, or inequality – at least not explicitly. The real problem is a lack of trust– trust that you can buy Chinese goods without fear of illness or death, that when it rains, the drains will be able to rid the streets of water, that when an earthquake occurs, the buildings will remain intact, that your officials will adhere to a certain code of ethics, that with hard work, you can succeed. The people must have faith that the CCP has the common people’s best interests at heart. Only then will the CCP have the hearts and happiness of the people and the harmonious society they purport to desire.
In the end, no one is denying that the CCP has achieved remarkable success in economic growth in the past 30 years. People’s livelihood has undoubtedly been bolstered by China’s huge strides in economic development. However, now the issue is more what the CCP could do. The CCP could make strides towards greater safety, health, and labor standards. They could aim for quality rather than quantity when it comes to modernization. That way, perhaps incidents like the massive flood in Beijing or the protests at Foxconn can be prevented. And especially with the new leadership transition in November, the CCP has great potential to not only remedy the systemic problems in China, but also build the nation on a more solid foundation and pave a road to prosperity.
Early this week, Japan’s majority party, the Democratic Party of Japan (DPJ), replaced several top ministerial positions in preparation for an election that is expected late this year or early next spring. Prime Minister Yoshihiko Noda appointed ten new ministers to cabinet positions, leaving only eight ministers in returning to positions they held before October 1st. As the third such cabinet change in Noda’s year-long tenure as prime minister, the move has hardly caught anyone off guard. Rather, this shuffle seems a predictable, desperate attempt to shore up party support.
Although the Cabinet had almost sixty percent support following its inauguration last year, throughout December it’s popularity had dwindled to almost twenty percent. This drop in approval (and thus electability) comes at a time when the opposition LDP has announced political old-timer Abe as head of party and is soaring in the polls. Awash in bad news, Noda must have decided another shuffle of his cabinet was the answer to his electability woes.
And perhaps he was right. Although several of the new ministers are relatively unknown to the public (many Japanese even confused the new Finance Minister with a recently retired baseball star of the same family name), several charismatic and popular leaders were put in higher, more visible cabinet posts. For example, Jun Azumi (the previous Finance Minister known for his quick tongue and voter support) will now take a role as top deputy secretary general of the DPJ.
That said, it is unlikely this shuffle will have any real effect on the upcoming election. Chosen more for perceived popularity than real job credentials, many of Noda’s new cabinet picks are already drawing criticism from news sources and opposition. Meanwhile, a Tuesday poll by Japanese news source Kyodo found that the new cabinet’s popularity had edged up only slightly with the move, settling up three points over the past month to about twenty-nine percent on Tuesday. This is still below the thirty percent popularity line generally thought prerequisite for success in Japanese elections, and with the DPJ hesitant to call elections, the Japanese people would have plenty of time to recover from the honeymoon of yet another leadership change. Japan has found its cabinet shuffled, but its electorate unstirred.
By Adam Motiwala, BASC Research Assistant
In a recent blog post, fellow research assistant Jake Lerner discussed some lessons that could be gleaned from the failed North Korean missile test. However, I think it is important to be hesitant when extracting such extravagant claims from a single dud missile:
1. That the regime did not collapse after the failed launch is not a sign of stability. No one reasonably expected the collapse of the North Korean regime after a single failed missile test. Just because the younger Kim still appears as the figurehead of the crumbling country, it is nonsensical to conclude that a post-Kim Jong Il power struggle is not currently underway. Instead, talk of political positioning between “hawks” and “doves” continues unabated and that the missile test happened at all might have been the result of Kim Jong Un being overruled by some unknown overlords. Furthermore, the regime might have only come clean to its people about the mishap because of a newfound fear of being unable to control the flow of information into the country, a scary prospect for the hermit kingdom. Frankly, it is far too early to speak of North Korean stability.
2. The suspension of U.S food aid is nothing new and frankly not that important. It is nothing new for the Americans to deny North Korea food aid after excessive belligerence. This should not come as a surprise to onlookers; it is not a unique outcome to North Korean actions. More importantly, it should be remembered that the North Korean elite do not necessarily care much about food aid. The regime has survived a decade of severe food shortages and mass starvation, and the North Korean elite have a history of spinning food aid cancellation as an act of Western imperial oppression. In addition, given the rumors that the North may have just manufactured its food shortage by hoarding food for the centennial, it would not come as a surprise if the North Korean top brass sought the suspension of food aid in an attempt to look strong.
3. To say North Korea is not a nuclear threat to the West misses the point. It is difficult to think of a way in which a North Korean nuke could actually change the rules of the game. The strategic calculus on the part of the Kim regime has and would remain static: occasional belligerence can make way for hard bargaining, but a nuclear attack on any country would mean instant obliteration. The claim that the North is “far from being a direct nuclear threat to the West” is a nonissue and is hardly worth noting.
By Patricia Sun, BASC Research Assistant
On February 6, 2012, Wang Lijun, vice-mayor and head of the Public Security Bureau (PSB) of Chongqing, and a hero in Chonging gang trials, traveled to the U.S. consulate in Chengdu to seek political asylum and offload Bo Xilai’s misconducts in Chongqing, but “left of his own volition” a day later. Since the explosive event, Chongqing became the center of focus. Soon after, on March 15, the CPC Central Committee made the announcement of dismissing Bo Xilai from his post as Chongqing party chief and related municipal positions. Then, on April 10, Bo Xilai was suspended from the party’s Central Committee and its Politburo pending investigation for “serious disciplinary violations.” Meanwhile, Bo’s wife, Gu Kailai was formally investigated as a suspect of the murder of English businessman Neil Heywood, who had economic connections with the Bo family. The series of events hint on direct confrontations between neo-Maoists/leftists and rightists as well as a heated campaign to protect the legal system. On April 13, the People’s Daily published a commentary on its front page with title “自觉遵守党纪国法” (“Voluntarily Obey the Principles of the Party and Laws of the State”), emphasizing that “no matter what position one holds, Party members shall never place themselves over Party discipline and the law.” On April 18, the Xinhua Agency published an article named “Criminal Case Shall Not be Interpreted as Political Struggle,” signaling the CCP’s determination “to safeguard the socialist rule of law, to investigate and handle every discipline violation and never tolerate corruption.” The responses of official media used Bo Xilai’s case as an exercise of the principle of “ruling the state by law” and as a public anti-corruption campaign. Such special use of the law has its origins in Bo Xilai’s conduct during the Chongqing gang trials and the highly suspicious lawsuits that followed, including Li Zhuang’s case.
In the Chongqing gang trials (重庆打黑除恶专项行动), the municipal government of Chongqing turned the trials into a mass movement by encouraging and rewarding citizens for exposing the crimes. To maximize the effectiveness of the campaign, the municipal government provided special envelopes for reporting letters to every household and allowed ordinary citizens to meet face to face with high-level officials of the PSB to disclose the crimes. Hundreds of special investigation groups that included police, lawyers and prosecutors were organized. These groups worked like an intelligence agency, in secrecy and with extreme efficiency. Arrested suspects were thrown into jail almost immediately and under secret codes rather than real names . As a result of using secret codes, neither family members nor lawyers could find the suspects who were arrested because of their association with gangsters. Even though the Chongqing gang trials proved remarkably effective in cracking down on the web of gangsters and corrupt officials such as former head of the Bureau of Justice Wen Qiang, the mass trials nevertheless gain the infamous name of violating judicial procedures. Secret detention, mass investigation and rewards for exposure of crimes closely resemble similar practices during the Cultural Revolution. From this perspective, the Chongqing gang trials were not simple campaigns against organized crime and corruption led and dominated by judiciary agencies and the police, they were in practice a mass movement that significantly affected the lives of all citizens in Chongqing.
The trials’ violation of judicial procedures became even apparent in the follow-up trials, as the case of Li Zhuang shows. Li Zhuang, defense lawyer for Gong Gangmo (a major gangster), was arrested and accused of “coaching his client to make false claims of torture.” Dramatic changes happened in the second instance as Li completely admitted his crimes even though he fiercely appealed them in the first instance. As a result, Li was sentenced to 18 months in prison and barred for life from practicing law. In fact, Li made an unsuccessful attempt to tell the media the story behind his sudden change of attitude in an interview before the second instance, during which he showed a letter of confession and hid his secret meaning in the letter, which says he was forced to admit the crimes in exchange for probation and would appeal once he got released. Li Zhuang’s case provoked a heated debate; while people were perplexed for his sudden change of attitudes, many accused Chongqing government’s intervention of judicial system and asked for just judicial procedure. Although the Chongqing government intended to use Li Zhuang’s case to improve their infamous name for violating judicial procedure, the result of Li Zhuang’s case ultimately confirmed the government officials’ intervention and abuse of power.
Throughout the entire Chongqing gang trials and follow-up lawsuits, violation of justice and over-use of administrative power became so prevalence that even though the action cracked down on a web of crimes, it triggered the development of a new one. Since the web of gangsters and officials could only exist because of the ineffectiveness of the legal system, cracking down at the expense of justice only resolved superficial problems associated with specific people but not the roots of gangsters’ issues. Moreover, by turning the trials into a mass movement, the action brought up the potential dangers of chaos and deviation from the path of economic development, as seen in the “唱红” (sing red songs) movement. In the 唱红 movement, the municipal government organized Chongqing’s residents to sing songs that were popular in the revolutionary era and that praised the leadership of CCP, so-called red songs. This movement has parallels in the Cultural Revolution, when people sang songs and perform operas (样板戏) to praise the CCP and Mao Zedong.
Bo Xilai’s dismissal is important in a sense that before him, officials of his level such as Chen Liangyu and Chen Xitiong were dismissed or accused mainly because of economic corruption, rather than abuse of power and violation of state’s laws and the Party’s principles. Apart from the political struggle behind the scene, CPC brought down Bo to signal its primary concern with economic development and to prevent growth of municipal power. Moreover, as seen in Premier Wen Jiabao’s comments on Bo Xilai’s downfall, Bo’s actions make a strong analogy with practices in Culture Revolution, in which the entire legal system was in effect paralyzed. By criticizing his actions, the central government has hinted at its intention for future political reform towards rightist side and built an image of itself as the defender of “rule by law.”
By A. M. Newhall, BASC Research Assistant
On March 16th, President Barack Obama nominated Jim Yong Kim to replace the graying Robert Zoellick as President of the World Bank. Although The Wall Street Journal hailed the selection of a candidate lacking experience in either finance or diplomacy as a refreshingly daring choice, other states in the international system did not share this enthusiasm. Many viewed Kim’s nomination as the perpetuation of U.S. domination of the global financial system. Following Kim’s nomination, representatives of the BRICS — Brazil, Russia, India, China, and South Africa — met in New Delhi to discuss the creation of a non-Western version of a “World Bank,” one more equitable to emerging economies.
Analysts unfamiliar with poker viewed such statements as a serious attempt to create a rival economic financial system. Indeed, even Robert Zoellick addressed the hypothetical scenario by gamely suggesting a partnership between the World Bank and the proposed BRICS-run institution. However, more perceptive analysts realized this was an attempt to bluff the World Bank into considering a less conventional candidate and, more importantly, gain some policy concessions. Indeed, as journalist Richard Blackden of The Telegraph observed, “the fight for the top job at the bank starred a dog that barked loudly but did not, in the end, bite.” The much-touted plan to create a rival institution to the World Bank had become nothing more than hot air amid the parlor tables of power by March 28th. Soon, most European governments such as the United Kingdom and France had endorsed Kim. On April 13th, Russia, ever crafty in international power politics, betrayed its BRICS comrades and threw its support behind the U.S. nominee. On April 16th, the World Bank confirmed Kim as its next leader.
The selection of Kim, whose Harvard pedigree and presidency of Dartmouth College makes him the consummate American choice, was decried as narrow-minded in a world in which global power increasingly shifts away from the United States and the World Bank is dogged by accusations of irrelevancy in the modern global economy. According to William Easterly of New York University’s Development Research Institute, “The World Bank doesn’t have any obvious role in the current world environment.” Indeed, with China offering FTAs with few strings attached and pouring billions of dollars as “free gifts” to impressionable regions such as the Caribbean, one must wonder if the World Bank is still relevant except as a symbol of waning U.S. power in an increasingly multipolar world. To his credit, Kim understands these issues and has pledged to guide the World Bank in a new direction, one more in harmony with the changing international order. If Kim honors his pledge, the Bank might take its cue from the International Monetary Fund and appoint an important Chinese official to a key post.