The dance of dualities in the Chinese Social Credit

Unlike the conflicting nature of dual forces in western philosophy, traditional Chinese philosophy manifests this duality in the form of complementary and balancing forces exemplified in the Yin-Yang.

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leadership

Nishant Dilip Sharma, Research Intern, Institute of Chinese Studies, Delhi

Dualities have always held a prominent place in traditional Chinese philosophy. Unlike the conflicting nature of dual forces in western philosophy, traditional Chinese philosophy manifests this duality in the form of complementary and balancing forces exemplified in the Yin-Yang. The way in which the Chinese government has gone about experimenting and implementing the infamous Social Credit System in China is another duality at play.

What is being seen as the emergence of an Orwellian “Big Brother” age in China, is being carried out in several cities through a number of pilot projects running on a dual ‘carrots & sticks’ model. Just like any other ‘reward-punishment’ scheme, this programme offers certain incentives (carrots) to people complying with the expectations of the governing body and at the same time, has punitive sanctions (sticks) in place for non-compliance. Interestingly, the quality of the carrots and the size of the sticks has not been uniform across all pilots.

This arises from the fact that the implementation of pilot programmes is being undertaken in a two-pronged approach. At one end are the Government run mandatory SCS programmes that are operational in more than 43 Chinese cities. At the other end, there are the corporate-run Social credit systems. Unlike the Government SCS programmes (GSCS), the corporate ones (CSCS) are not mandatory. The CSC pilots do offer virtual and monetary rewards to their customers, however the real intent is to eventually become incorporated with the government’s plans. This way the corporate in question remains in the forefront when SCS is rolled out in a more comprehensive measure. Speaking of the sticks, punishments are harsher in GSCS than under CSCS. The carrots and sticks in the GSCS are in the form of ‘red-lists’ and ‘black-lists’ respectively. While one’s name in the ‘red-list’ would mean a special honor and privileged/subsidized access to public services, a name in the ‘black-list’ would mean lesser privileges or denial of certain privileges. This could mean low internet speed, ban from traveling, denial of bank loans, public naming and shaming, etc. In short, one’s social credit scores could have a great impact on his/her routine life and social reputation.

In a country which bears the tag of the most populous nation on Earth, such measurement of reputation scores for each individual is no small undertaking. This is accomplished through the creation of a systematic surveillance state where big data and artificial intelligence play a major role. Each camera captures the movement of every face and small offenses like jaywalking or walking your dog without a leash could result in an immediate fine from the government. Thus, surveillance in the eastern industrialized towns is associated more with governance and has helped bring down law enforcement costs and many governance issues.

In contrast, state surveillance in Xinjiang and Tibet is employed to address security concerns. Surveillance cameras here snoop into the personal lives of the inhabitants to stamp out any cultural expression. Any sign of resistance opens up the gates of re-education camps, the insides of which many have seen but few have come out to tell the story. Here state security is a priority while separatism is viewed as evil and surveillance becomes a tool. This dual nature of surveillance, that of governance in the eastern region and that of security in the western region, is another duality present in the Chinese system. This duality, however, begs to question the coherence of what China plans to achieve with a full-scale rollout of the SCS model in the entire Mainland China, which could be up and running as early as 2021.

These dual objectives, dual implementation models, dual outcome conditioning, raise multiple questions: Will China be successful at creating a reputation state amidst the incongruities that exist in China? The answer seems to be hooked to a second question: Will China be willing to respect the socio-geographic disparity present between the historically separatist western regions and the presently thriving eastern industrial hubs?

One way of doing so would be to prevent any punitive sanctions and credit reductions on the grounds of cultural suppression. A conundrum in the eastern region could be credit rating reductions caused due to systemic failures, human errors, or corrupt bureaucracy. As remediation mechanisms, legislations are being put in place to prevent such reputation harms. Shanghai’s local credit legislation passed in 2017 on the “right to be forgotten” provides a much-needed right to credit restoration and a reasonable requirement on administrative agencies’ query over citizens’ social credit information.

Such remediation mechanisms are also extended to cover data protection and norms for safe collection, processing and storage of personal data. These measures are limited to eastern cities like Hubei, Shanghai, and Hangzhou. The lack of such legal remedies in the GSCS pilots being run in the western region calls for a systemic shift in the way the pilots are being conducted. More polarized developments in the way the pilots are conducted could likely leave the western inhabitants estranged and brew discontent if the policy is applied without systemic planning and West-specific trials. Perhaps it’s time for the policymakers to take a hint from their traditional philosophies and create more balancing dualities than conflicting ones.

Agricultural Industry amidst the 2018 US-China Trade War

This article discusses the current scenario of the two markets, with a particular focus on soybeans and associated businesses.

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Agricultural Industry amidst the 2018 US-China Trade War

VIDUSHI R SINGH, Research Intern, Institute of Chinese Studies

The US-China trade war of 2018 began with tariffs being imposed on core sectors, such as industry inputs (steel, aluminium tariffs by the US) and agriculture (grain and seed tariffs by China). These attacks on primary industries have led to huge outcries on both sides, with several calls for the hurrying up of ongoing trade negotiations so that the political agendas of the leaders do not hurt the ordinary people.

This article discusses the current scenario of the two markets, with a particular focus on soybeans and associated businesses. Both countries have faced losses and market instability as a result of tariffs being put on agricultural commodities this manoeuvre, but while neither of the countries have ‘won’ in this particular sector, China seems to have incurred a lesser loss than the US.

US Agricultural Industry

The first round of the trade war saw China putting a 25 per cent retaliatory tariff on several US goods. One of the most critical commodities in the Chinese list was soybean – produced in regions that were majority supporters of Trump in 2016. The cleverly targeted tariffs have wreaked havoc on the US soybean market, with prices falling by over 13.4 per cent (based on the author’s calculations and data from United States Department of Agriculture) since May 2018. The fall in prices has further been caused by an approximate 78.6 per cent fall in demand from Chinese importers as of April 2019, based on a year on year comparison. The trade negotiations between President Trump and President Xi have included promises by the Chinese government regarding buying of over 5 million tonnes of soybean from the US, but no deadline has been set. It is possible that the unreliability of the US as a supplier of essential commodities to China has encouraged the Chinese populace to look for substitutes elsewhere, and US farmers are unlikely to have the same access to the Chinese market as they once enjoyed. As of now, there has been an almost complete crowding out of US soybean from the Chinese market, due to its inability to compete with local and Brazilian substitutes on prices. If the Chinese tariffs stay in place, the USDA projections have concluded that US soybean exports will not be able to reach pre-trade war levels even by 2024.

Another factor creating problems for the US agriculture industry is the increased costs of farm equipment and machinery. The tariffs on steel and aluminium imposed by Trump have led to a rise in the production costs of farm machinery. This, combined with the low expectations farmers have for the coming planting seasons, has resulted in a situation where farmer bankruptcies are on the rise, and US agricultural trade surplus has hit an unprecedented low, the lowest it has been since 2007. The plantation of soybean has fallen by 5 per cent in the last one year and is anticipated to reduce further, as farmers move away from soybean to other, more profitable crops. While the US Department of Agriculture has promised aid to farmers adding up to USD 12 billion, they have also asserted that this will only be a one-time assistance to help farmers regain control of farm operations.

Chinese Agricultural Industry

As for the Chinese side of the agriculture industry, the scenario seems to be mixed, as opposed to the blatantly negative situation that the US agricultural industry is facing.

The Central Committee of the Communist Party of China and the State Council unveiled its Number 1 Agricultural Document on 19 February 2019. The document focused on agricultural and rural issues and outlined policy goals for 2019 and 2020. Its focus on the “profound changes in the external environment” and ways to mitigate the same highlights China’s wariness with regards to the rising tensions in the trade war. This announcement falls in line with China’s 2015 mission to achieve absolute food security by balancing production and environmental concerns. While the agricultural reforms and the shift to the household responsibility system have helped increase productivity of land, China’s reliability on foreign markets for soybean has become a cause of concern, bringing down the agricultural trade balance, which would otherwise have been positive.

The government has, however, acted commendably fast in the past year to shift all soybean imports from the US to Brazil, which has allowed Chinese consumers some protection from the increased prices of US soybean. This has been followed by government encouragement of increased domestic production of soybean and other feed grains. However, the lower profitability of cultivation of soybean over rice or wheat has created a new need for subsidy and minimum procurement schemes.

Another factor cushioning Chinese soybean market has been the outbreak of African swine fever in various parts of the country since August 2018. The hog population in China has fallen by an estimated 13 per cent, and this has created a consequential fall in demand for feed grains and seeds. Since swine feed in China is 20 per cent composed of soybeans, this fall in demand has allowed for market prices to stabilize at a lower level than previously anticipated.

These steps have also been accompanied by reduced quality restrictions on imports and increased incentivisation for agricultural investment, as announced in the latest Number 1 document. So while there has been an undeniable fall in supply and increased uncertainty in the market, the government’s response has been able to prevent the need for total abstention from the consumption of soybean and several other vital parts of people’s diets as well as livestock feed.

Conclusion

The attempts by the two countries to regain equilibrium in their respective agricultural markets have provided some comfort to the consumers and producers of the tariffed products. The Chinese government, however, seems to have leveraged its position better to create changes very quickly to shield its populace from the worst impacts of the trade war. The US government, on the other hand, has only implemented superficial steps to manage the impact of the trade war in its borders, instead choosing to leave the outcome to market forces.

Irrespective of these safeguarding attempts by the governments, the agricultural markets in both countries are doing worse than previous financial years. Falling demands and accumulating stocks have created an imbalance in the global market. In the absence of intervention, this may result in an economic crash, as US farmers find themselves unable to repay loans and Chinese livestock producers fall short of sufficiently nutritious feed. Relaxing quality controls and giving out aids are sure to help in the short run; however, given the inconsistencies in the market, long-term solutions are necessary.

 

China’s Global Influence in the Film Industry

Preethi Amaresh, Former Research Officer, Chennai Centre for China Studies (C3S)

China’s rise is the economic story of the 21st Century and the entertainment industry is no exception. Cinema was introduced in 1896 in China.[i] The film industry is viewed as part of China’s modernization process and with the global influence wielded by the country’s economy, the rise of “cultural industries” in China is seen as the next step on a path from a developing nation to a world power.

Before the 1949 revolution, China had a vibrant film industry. There were studios in Shanghai – the city was known as the Hollywood of China – which made comedies, romances and melodramas on an almost weekly basis, which were very popular with domestic audiences. But during the Cultural Revolution, the ruling Communist Party of China under Mao Zedong came close to destroying Chinese cinema. Soon after the Cultural Revolution the film industry again flourished as a medium of popular entertainment. [ii]

With China’s liberalization in the late 1970s and its opening up to foreign markets, commercial considerations made its impact in the post-1980s filmmaking. Fifth-generation Chinese filmmakers who had graduated from the Beijing film academy   sought to popularize Chinese cinema abroad. Continue reading “China’s Global Influence in the Film Industry”

A Case for the Useless and Things Unsaid

Cidarth Sajith, Research Intern, ICS

The 2012 documentary ‘The Act of Killing’, in which the perpetrators of the 1965 anti-communist purge of Indonesia, re-enact and dramatize their killings is not only held by many as an audacious documentary that oversteps into the obscene due to the very gleefulness with which the protagonists oblige, but also draws consternation over the impunity and reverence with which they are held. Nevertheless, it earned an Oscar nomination and subsequently managed to reignite the debates over Indonesia’s denial and reluctant embrace of its past. But, what makes the documentary truly fascinating and relevant is how it captures the unravelling psychosis of its protagonists, their fractured realities and most importantly, what art and theatre portend for societies reeling under trauma and supressed memories. Continue reading “A Case for the Useless and Things Unsaid”

Health and Wellbeing in the Context of the 19th Congress of the CPC

Madhurima Nundy, PhD, Associate Fellow, Institute of Chinese Studies

The political report delivered by Xi Jinping at the 19th Congress of the CPC is open to analysis and many interpretations. Indeed, it is a lengthy and comprehensive report where Xi attempts to cover all aspects of development in the last five years and challenges that face China today, apart from his take on socialism entering a new era. Health and wellbeing of the population is an integral component of human development which gets articulated in various sections.

It is accepted universally, that the determinants of health and wellbeing are not restricted to access to health services alone but includes social, economic, environmental and cultural factors that influence the health of the population. As a prelude to his speech, Xi gave an overview of the overall socio-economic development and that 60 million people have been lifted above poverty. Continue reading “Health and Wellbeing in the Context of the 19th Congress of the CPC”

Tibet, the 19th Party Congress and China’s United Front Work

Tshering Chonzom, PhD, Associate  Fellow, Institute of Chinese Studies

What does a powerful Xi Jinping as General Secretary of the Communist Party of China mean for the People’s Republic of China’s (PRC) various minority nationalities, especially the Tibetans? The nature and extent of authority accorded to the United Front Works Department (UFWD) that handles nationality, religious and overseas Chinese affairs, during Xi’s second term is an important starting point for analysis.

The UFWD organized a press conference on 21 October 2017 on the sidelines of the 19th Party Congress, in which its leadership saw the organization as an important player in Xi’s new formulation of ‘new era’. For instance, the various conferences held under its aegis in the past five years – such as the Second Central Xinjiang Work Conference (May 2014), Central Nationalities Work Conference (September 2014), 6th Tibet Work Forum (August 2015), National Religious Work Conference (April 2016) – are retroactively characterised as work convened ‘under the guidance of the new era of socialism with Chinese characteristics’. Indeed, at the national religious work conference that was held from 22-23 April 2016, Xi called upon the UFWD to take the lead in coordinating responsibilities with various organisations. In his report to the 19th Party Congress, he likens United Front work to a ‘magic weapon’ that will ‘ensure the success of the party’. Continue reading “Tibet, the 19th Party Congress and China’s United Front Work”

India’s Uncertain Demographic Dividend

Jayan Jose Thomas, PhD, Associate Professor of Economics, Indian Institute of Technology Delhi and Member, Planning Board, State Government of Kerala

A version of this article was originally published in Chinese as ‘印度不确定的人口红利’ [Yindu bu queding de renkou hongli], Diyi Caijing, 10 July 2017. This is part of a series by Indian scholars in China’s top business affairs news portal facilitated by the ICS. The English version follows below the Chinese text.

普遍的观点认为,印度将受益于所谓的“人口红利”。据世界银行估计,2010年至2030年间,印度15岁至59岁人口将增加至2亿多人。与此同时,包括中国在内的世界大部分发达地区的适龄劳动人口预计将会下降。也就是说,未来几年,印度会为全球劳动力供给的大幅增长贡献力量。

然而,实现人口红利对印度来说并不容易。首先,获得诺贝尔经济学奖的阿马蒂亚·森(Amartya Sen)指出,在卫生和教育领域,印度面临严峻挑战。2010年,印度的婴儿死亡率是每千名47例,而在中国,这个比例已减少到每千名13例。

对印度政策制定者来说的另一个重大挑战,是为新进入劳动力市场的印度人创造就业机会。事实上,大部分年轻劳动力的增长将来自印度最贫穷的地区,主要包括北方邦和比哈尔邦在内的北部和东部地区。 Continue reading “India’s Uncertain Demographic Dividend”