Sunday, August 30, 2009

The earth is dying

Monday, August 24, 2009

American Health care

If you think that a decent health care system is socialist, then try explaining to me why your arguments do not also apply to firemen:

Harold's Left: The Socialism of Firemen
Harold's Left:There is a new group on Facebook that is meant to poke fun at the hypocrisy of the conservative argument that a public option for health care is socialism. The group is called 1 Million Strong Against our SOCIALIST Fire Dep

Tuesday, August 11, 2009

China shows its other, angry face

China shows its other, angry face

* Peter Hartcher
* August 11, 2009

illustration Simon Letch.

China has taken off the mask of friendship. In the past few months, its central government has decided to show Australia another face of China. It's a harsher vision of a possible future with the rising superpower of our region.

If there were any lingering doubt that we had entered a new phase, it was dispelled by the feverish claims published on the website of China's National Administration for the Protection of State Secrets.

In alleging Rio Tinto was involved in a six-year spying operation against China's steelworks, it accused the resources company of "winning over and buying off, prising out intelligence .. and gaining things by deceit''.

Six years, by the way, is the time in which iron ore prices have been rising. The previous two decades, when prices were falling, was just the free market, apparently. Only a conspiracy could cause prices to rise.

The most outlandish part of the story was the assertion that Rio's activities led China to pay $123 billion more for iron ore than it would have otherwise, a sum far larger than the total value of Rio sales to China in those years. "That means China gave the employer of those economic spies more than $123 billion for free, which is about 10 per cent of Australia's GDP," the piece argued.

When this was reported widely in the international media yesterday, the article, a long diatribe in Mandarin, was removed from the website. The reason is obvious. This material has nothing to do with criminal jurisprudence. It is a venomous, nationalistic rant.

It exposes the motivation, or at the very least the prejudices, of the National Administration for the Protection of State Secrets, the authority conducting the prosecution of Stern Hu and his three Rio colleagues who have now been held in China for four weeks without charge. This is now, undeniably, a political case.

We already know what it's like to live in the new China growth zone. That was all the exuberant news about resource prices. Now Beijing is instructing us in what it might feel like to live in the China political zone as well.

Together with the other evidence - Beijing's hamfisted efforts to ban a film about its Uighur minority at the Melbourne Film Festival, its angry campaign to block a visit to Australia by the exiled Uighur leader Rebiya Kadeer, its chilliness in rebuffing the Rudd Government over the Stern Hu case - this is a clear sign that the Chinese regime has consciously decided to take a tougher line with Australia.

Why? First, Australia displeased Beijing. The principal reason for Chinese interest in Australia is its resources. When the big state-owned firm Chinalco wanted to increase its share in the world-class minerals assets of Rio in a $25 billion deal, Beijing was unhappy at the political wariness with which it was greeted in Canberra.

It would have been the biggest overseas acquisition that communist China had ever made.

The Australian Government did not block the deal. Indeed, it said repeatedly Chinese investment was welcome. But Canberra did put conditions on smaller takeovers of other resource assets by Chinese state-owned companies. This entrenched a principle, and it boded ill for the Chinalco deal.

The Opposition's Peter Costello was outspoken in expressing reservations about the Chinalco bid. Rio, reading the political climate, abandoned the deal.

China's leaders seem to have decided to make this rebuff an opportunity to teach a lesson to Rio, to Australia, and anyone else watching. This is the second dimension to China's angry new attitude.

It's an old Chinese folk saying - "kill the chicken to scare the monkey." In other words, you punish the weaker enemy to frighten the stronger. With a new president in the White House and a heightened mood of protectionism in the US Congress, is Beijing using Australia as the chicken to scare the American monkey?

A China specialist at Canterbury University in New Zealand, Anne-Marie Brady, says: "I think there is clearly a new approach to dealing with Australia - it could be sending a message to the US or to other countries in general."

The US has noticed. The State Department official responsible for Asia policy, Kurt Campbell, told the Herald recently: "I know China is more complicated now in Australian politics. In many respects, Australia is mimicking the US in that the image of China stirs great hopes and some anxieties. And that's exactly the way it is in the US."

This is new. Until now it had all been about the hopes, with few anxieties. Brady explains that, after 1989, China put the US in a category of one. With most of the rest of the world, Beijing followed the principle of "looking for things in common and letting disputed points lie". This was precisely its formula for Australia and the Howard government reciprocated.

But with America, Beijing took a harder line according to the principle of "looking for commonalities and facing up to differences". What has changed this year is that Beijing has moved Australia into the same category. "I think that's what China is doing to Australia now," Brady says.

This is a powerful wake-up call for Australia. The China we must live with is not the China we thought we were dealing with.

Peter Hartcher is the Herald's international editor.

from here.

Monday, August 10, 2009

Doing business in dictatorships

Beware the wounded Chinese bureaucrat
MICHAEL PASCOE, Sydney Morning Herald
August 10, 2009 - 1:41PM

The danger in dealing with a pig-ignorant bureaucrat in an authoritarian regime is that the moment their stupidity and ineptitude is exposed, they will use all their power to blame someone else. So it seems with the China Iron and Steel Association's secretary general, Shan Shanghua, and Rio Tinto.

If it wasn't for the fact that four men are facing years in a Chinese jail because of it, the latest development in the Rio Tinto/Stern Hu case would be simply laughable - either that or Rio has been capable of greater magic than anything Harry Potter has imagined.

Maybe the China Iron and Steel Association doesn't realise Ms Rowling's books are fiction - how else could China allege Rio has overcharged by $123 billion for iron ore shipments over the past six years when that is more than the total value of its shipments?

Such a ridiculous allegation, the stuff of a loony propaganda machine, is a sign of desperation. And Shan Shanghua is understandably desperate.

Shan first came to popular attention as the goose who triumphantly hissed back in February that the proposed Chinalco bailout of Rio would ''help China break the duopoly in Australian iron ore supply over the long term''.

Dumb, Shan, plain dumb - unless you're secretly a double-agent, working for the anti-Chinalco forces. No matter how much you might have hoped it, or even if you planned it, to speak such a thought was sheer stupidity. Take a bow, Shan Shanghua, for doing as much as anyone could in sinking the Chinalco deal.

Costly mistakes

But that was just a warm-up. Shan moved on to more costly mistakes as he exerted CISA control over China's steel mills in their price negotiations with Rio.

It was Shan himself who scotched suggestions that key mills had agreed to the same new benchmark pricing as the Japanese and Korean mills.

And thus it is Shan himself who is responsible for China presently paying about 20 per cent more than it needed to for iron ore. Over time, that would add up to billions Shan - nice work.

Again, you'd have to think Shan is either grossly incompetent or a double agent.

But it's no fun being exposed as either in a totalitarian regime, even if you are a favoured son of the Party - that can change. It's even worse than the NSW Labor Party.

Hence the urgent need to blame someone else - blame Rio.

Et tu, BHP?

The weekend's escalation of a commercial dispute into the realms of fantasy and xenophobia is dangerous stuff. By strong implication, it takes this particular fight well beyond Rio to BHP Billiton and, to a lesser extent, Brazilian rival Vale.

It may have been Rio's particular misfortune to be leading the iron ore price negotiations this year. It could so easily have been BHP instead.

There's a clear warning that CISA has ''the Australian duopoly'' in its sights, not just the running dog capitalists at Rio. Note that China is now claiming that stolen goods accounted for 10 per cent of Australia's GDP - ah, the old convict streak coming out in us.

BHP reports its annual results on Wednesday. Its usual fine commodities outlook section might well be carefully worded this time round.

In particular, it might pay to be very careful in the wording of any discussion about the Pilbara joint venture with Rio. This is an issue of great concern in China that seems to have been brushed aside by the miners understandably bedazzled by the cost savings.

China's threats to sool its equivalent of the ACCC onto the joint venture should not be ignored - there's plenty of room in Chinese detention centres for more recalcitrant employs of foreign devils.

And CISA does have a point - Rio, BHP and Vale happily function as a cosy oligopoly in the annual price negotiations, as they've had to when the Japanese, Korean and now Chinese mills are similarly marshalled into a single negotiating voice.

Shan Shanghua's inability to handle that reality, his apparent lack of comprehension of the demand/supply balance, has created a desperate bureaucrat well out of his depth - a dangerous individual indeed. Maybe he should have asked Rio for a little market intelligence before running off at the mouth.

There are plenty of very smart, very well educated and ethical Chinese bureaucrats who are doing an amazing job in steering the Middle Kingdom back towards the centre of the universe. The Party runs a business school for them modelled on the best Western MBA courses.

Unfortunately there can be a great deal of internal politics in the way of the intelligent bureaucrats taking control of an issue from the hopelessly ignorant. And bigger immediate problem again is that the latest over-the-top rhetoric and publicity make finding a solution much harder - the stupid value face much more than the wise.

Michael Pascoe is a BusinessDay contributing editor.

From here.