Platt Perspective on Business and Technology

Donald Trump, Xi Jinping, and the contrasts of leadership in the 21st century 20: some thoughts concerning how Xi and Trump approach and seek to create lasting legacies to themselves 8

Posted in book recommendations, macroeconomics, social networking and business by Timothy Platt on September 16, 2019

This is my 20th installment in a progression of comparative postings about Donald Trump’s and Xi Jinping’s approaches to leadership, as they have both turned to authoritarianism and its tools in their efforts to succeed there. And it is my 8th installment in that, to specifically address their legacy-building visions, ambitions and actions.

I have primarily addressed Xi Jinping’s narrative in this since Part 4, building from a preparatory start to that, that I offered towards the end of Part 3. And my primary focus in all of this has been on Xi’s China Dream: his Zhōngguó Mèng (中国梦), as it has served as an historically grounded, and historically justified foundation for all that he seeks to do.

And then Hong Kong erupted into protest again, in response to actions taken by Xi Jinping himself and by his hand-picked administrative leadership in that city, and with the most egregiously visible of that carried out and pushed forward by Carrie Lam: Hong Kong’s most senior administrator – who Xi himself explicitly had put into office there. So I changed directions in what I offer here, to focus on that immediate here-and-now, actual-legacy-realized news story and its history and context. Xi’s dreams and ambitions are one thing, representing his long-term and overall intentions; Hong Kong and its unfolding events are another as they represent his legacy that he is actually building it. (See my now six postings in the series: Xi Jinping and His China, and Their Conflicted Relationship with Hong Kong, as can be found at Macroeconomics and Business 2, as postings 343 and following.)

I have three specific follow-up postings to that Hong Kong-related series in mind, as of this writing, and may very well add more to that list as ongoing events continue to unfold there. I will simply say here in that regard that Xi’s brinksmanship approach to dealing with Hong Kong is both fueling a questioning of his judgment and his leadership in Beijing now, and fueling ambitions towards full independence in Hong Kong itself. But I will turn to that in future postings, and not today.

My goal for this posting is to turn back to Xi’s Zhōngguó Mèng and to the partly historically real, partly stereotypically fantasy foundation that it is built upon. Think of this as my turning back to more fully consider Xi’s and China’s here-and-now, and both in terms of that Dream itself as it has become Xi’s road map, and in terms of how he seeks to follow it.

Xi’s Dream is built upon two pillars: one positive insofar as it affirms what a China that is effectively led can achieve, and the other negative and grounded in the historical set-backs and humiliations that a great Chinese leader could undo and remediate from, while restoring his nation to its rightful, golden age path. I briefly outlined that positive image, golden age side of this Dream, as a perceived past glory to be restored, in Part 16 of this series. And I began writing of China’s fall from that golden age in Part 17, Part 18, and Part 19.

It is no accident that I have devoted more time and effort into presenting that darker side to Xi’s vision and narrative here, as it is clear that he has focused more on righting perceived wrongs, than he has on the details of that golden age too. And I continue that side of this narrative here, and with a goal of moving it forward along its timeline, from the 1830’s to at least the birth of Communist China and the system that Xi himself leads, and the system that he is at least as constrained by too.

I have already at least briefly raised and discussed the challenges that foreign powers and their commerce and profits oriented manifestations, created for China during this troubling period. More predatory behavior on the part of business-oriented enterprises such as the British East India Company, and more entirely private enterprises such as Jardine, Matheson & Company, and Lancelot Dent and Company, fundamentally shaped British foreign policy and how it was executed throughout Asia, and for generations, and with the British military intervening as needed to support that. And in China, this first-commercial and then military intervention and domination led to the Opium Wars and to the unequal treaties, as they came to be known, that ended them, and with first Hong Kong and then neighboring Kowloon being ceded to Great Britain as foreign owned colonies.

The historic emperors of China lived and ruled under a Mandate of Heaven, and according to a fundamental requirement that they maintain stability throughout their lands and for all of their peoples. The golden age of the Qing Dynasty ended and that mandate unraveled.

Provincial governments no longer turned to or fully supported the Emperor or their court in Beijing and the Forbidden City that was to be found at the heart of that larger urban center. Local governments no longer turned to or fully supported their provincial leadership as had always been both required and expected of them. The Qing Dynasty had a numerically small, lean and agile bureaucracy that developed a tradition of working collaboratively with their provincial governmental counterparts to create and maintain stability and order. And it was those provincial level officials who directly worked with and managed local government officials in a similar manner. But all of this began to unravel, and from foreign sourced pressures and from environmental challenges as already touched upon here, and by challenges to the food supply, and unrest began to grow.

I could write here of war lords and others who set up local and sometimes not so local enclaves within China where the Emperor and his officials had no voice or influence. China became rife with them. And I could write of larger and more individually notable outright rebellions as they arose and played out and particularly during the later Qing Dynasty as it spiraled into decline and failure. This list of rebellions in China at least briefly notes nine of them, and that is in fact an incomplete list, only touching upon more notable possible entries. All of these upheavals, all of this unrest had long-term, debilitating impact and all contributed to the death of both the Qing Dynasty and of dynastic rule per se in China. But perhaps arbitrarily, I cite three of these catastrophes by name here:

• The White Lotus Rebellion of 1796-1804 as a direct attack upon the Qing Dynasty and its legitimacy,
• A messianic uprising that came to be known as the Taiping Rebellion of 1850-1864 that was led by Hong Xiuquan: a self-proclaimed younger brother of Christianity’s Jesus Christ, come to Earth just like his older brother, and
• The Boxer Rebellion of 1899-1901, which was among other things an anti-Christian, anti-foreign influence uprising.

For a fuller and more detailed discussion of Hong Xiuquan and his uprising, see:

• Spence, J.D. (1996) God’s Chinese Son: the Taiping Heavenly Kingdom of Hong Xiuquan. WW Norton and Co.

The end result of all of this chaos, as arising from within China and as imposed from the outside was the abdication of China’s last imperial ruler, its last dynastic emperor: Pu Yi, or Henry as he was also called. And dynastic empire gave way to the Republic of China of 1912-1949, with its chaos, including Japan’s invasion and conquest of much of what is now China, with the Second Sino-Japanese War of 1937-1945. And I end this so briefly sketched historical timeline by citing Mao Zedong and his ultimately successful war against the Republic as he established his People’s Republic of China to replace it and all that had gone before, at least in mainland China itself. And then Mao’s version of chaos began.

Xi Jinping has built his Dream: his Zhōngguó Mèng out of this, as he seeks to return his nation and his peoples to the partly real, partly imaginary glory days of China’s golden age past, and with a goal of completing the dreams and ambitions of his country’s past great leaders and to their fullest possible extent. And Xi’s adversaries of today, are cast into the molds of adversaries past, from the years and decades of humiliation that he seeks to redress. And the adversities that these modern day versions of China’s past repressors create, mirror the adversities of that same image of China’s past too.

• Who is United States president Donald Trump in this? He is a wicked reincarnation of China’s foreign tormentors of those troubled and troubling years, that China’s Communism has sought to block and that Xi sees himself as finally completely ending as a source of threat. And Trump’s trade wars against China and the tariffs that drive them are simply a next generation iteration of what past foreign tormentors have inflicted upon China, as they attempted to subjugate that nation as a vassal state.
• And the “agreement”: the treaty that finally returned Hong Kong and Kowloon back to China from British colonial rule, is at least according to this imagining, a next-generation repetition of and continuation of the affronting humiliations that an early generation British government imposed on China, and certainly as far as those lands are concerned, with their Transfer of Sovereignty over Hong Kong.

And this brings me both to the uprisings taking place in Hong Kong as I write this, and Xi’s response to Donald Trump and other foreign aggressors. And this is where Xi’s efforts to control his people and his country, enter this narrative as his Dream plays out both within the borders of his nation and beyond them too. I am going to continue this narrative with a 21st installment to this series, and with a goal of pursuing that complex of issues. And I will also continue my Hong Kong-related series as briefly outlined for moving forward, towards the start of this posting.

In anticipation of that, I add here that I will at least briefly discuss the house that Mao built and that Xi now seeks to rule over: the Communist Party of China and the government that that Party leads and controls, and at least something of the history that this: Mao’s legacy has created. That history constitutes Xi’s fundamental grounding reality as a leader, and it would be impossible to meaningfully discuss his Dream or his legacy building efforts without taking that narrative into account too.

Meanwhile, you can find my Trump-related postings at Social Networking and Business 2 and its Page 3 continuation. And you can find my China writings as appear in this blog at Macroeconomics and Business and its Page 2 continuation, at Ubiquitous Computing and Communications – everywhere all the time, and at Social Networking and Business 2 and its Page 3 continuation.

Xi Jinping and his China, and their conflicted relationship with Hong Kong – an unfolding Part 2 event: 6

Posted in macroeconomics by Timothy Platt on September 5, 2019

This is the sixth posting that I have offered here since June 19, 2019, to address significant and still expanding conflicts taking place in Hong Kong, arising as a response to actions taken by China’s government and by their hand-picked executive leadership in Hong Kong, that would fundamentally limit the legal rights of citizens there (see Macroeconomics and Business 2, postings 343 and following for Parts 1-5 of this.)

I refer to this set of postings as a “Part 2 event” in the working title that I have applied to them, because they represent a continuation of an already ongoing story that I first began writing about here in 2014 with two back-to-back installments concerning Hong Kong’s then still actively unfolding Yellow Umbrella Movement (雨傘運動) (see that first installment and this continuation to it as offered then.)

I have focused through all what are now-seven prior postings there, essentially entirely on Hong Kong and on Xi Jinping and the People’s Republic of China, and on how Xi and his Communist Party and government have sought to control that city and its peoples. And as a part of that narrative, and with Hong Kong’s current unrest in mind, I have offered two open letters in this blog, explicitly written to Xi himself but equally directed towards others in China who I have reason to believe do follow these postings. See Part 4 of this more recent series of postings and its Part 5 continuation. But my goal here is somewhat different. My goal here is to step back from that unfolding news story with its immediate, geographically here-and-now in Hong Kong and Beijing focus, to consider all of this in terms of Xi’s and his China’s policies and practices in general as they seek to control as much of everything and everyone in their nation as they physically and psychologically can, and all of the time and everywhere there.

I have at least briefly and selectively sought to position the Hong Kong and the Beijing of today in this, in terms of their history and in terms of Xi’s China Dream: his Zhōngguó Mèng (中国梦) and his own personal legacy building aspirations. I switch directions from that here, to consider how current decisions and actions coming out of Beijing, directed towards Hong Kong, align with or deviate from what they do and how, elsewhere in their country when all do not simply fit in and conform to the Chinese Communist Party-defined ideal for public thought, speech and action.

Hong Kong is one of China’s special administrative regions. And that in principle means that it and its peoples would be afforded a louder and more meaningful local voice in how that city would be run, administratively. And that status would also at least in principle mean that China’s Beijing-based national government would offer Hong Kong a measure of special autonomy: a measure of private sector independence from government and Party control that might not apply more generally across China as a whole.

And Hong Kong was returned to China as Great Britain ended its colonial rule there, under terms of the Transfer of Sovereignty over Hong Kong treaty, or the Handover of Hong Kong as it is often called. And this agreement, signed off upon and agreed to by China’s government, effectively mandates that the Beijing government adhere to the one country, two systems policy that is at least officially in place there, and at least until the 50th anniversary of when that treaty first went into effect: until 2047. And given all of this, and particularly given the value that Hong Kong holds for China as a connecting gateway to the world as a whole, and to global business and the global economy, Hong Kong might be expected to be afforded a greater level of independence and autonomy than essentially any other part of China as a nation.

• Diversity and even just a possibility of dissent coming from China’s citizens: dissent from the official Party and government line in China by anyone there, frightens their Communist Party and government leadership, and more so than any outside-sourced threats possibly could. Even just a possibility of disagreement and of dissent that might be acted upon, is viewed as an existential threat and to all of China and their Party and government system.

So ultimately, Xi and his colleagues in power in China, cannot simply step aside and even for a specifically time-limited duration with a set and agreed-to end point facing them when their 1997 treaty with Britain will expire.

• What is China’s Communist Party and government doing elsewhere in their nation to quell diversity and compel Communist Party line-defined Good,
• As enforced by its more-local police forces, its paramilitary forces such as its People’s Armed Police, and even by its People’s Liberation Army if needed?
• What are China’s Party and government doing to compel compliance to their will as a pattern for all to follow?
• Alternatively and addressing the same exact issues, what does the Party and government of the People’s Republic fear, and how strongly do they fear it?

Let’s look beyond the confines of Hong Kong, in China’s sphere of national control to put at least something of what I have been writing about here, into a perhaps wider-framed perspective. And to be more specific there, let’s consider one of China’s decidedly non-Han peoples: Uyghurs (ئۇيغۇر in Arabic script, and 维吾尔 or 維吾爾 in Chinese). Let’s consider the Uyghurs of China’s Xinjiang Uyghur Autonomous Region. But at least as importantly let’s consider the concentrations of Uyghurs who live elsewhere in China, and particularly the large numbers of members of this Chinese minority group who live in north-central Hunan, far to the east of Xinjiang. There is even a significant Uyghur community that lives in Beijing and historically, at least some of that ethnicity have lived there at least since the days of the Tang Dynasty (618-907 CE).

The Uyghurs are a historically, traditionally nomadic peoples who at one time lived primarily around the oases of the the Taklamakan Desert (the Tarim Basin) and largely in what is now the more northern half of Xinjiang Province: now the Xinjiang Uyghur Autonomous Region. They are Turkic in origin and they started as a people to follow Islam in the 10th century. They had become predominantly Muslim by the 16th century. And some 80% of them still live in the Tarim Basin, though significant numbers of them live elsewhere in China too, and at least small Uyghur communities can be found in a dozen and more other countries as well.

Uyghurs are recognized as comprising one of China’s 55 officially recognized ethnic minorities – but they are only so recognized if they live in the Xinjiang Uyghur Autonomous Region itself, and they are not considered an indigenous group even there – and regardless of the fact that they have lived there and in areas that have been part of China going back to before the dawn of dynastic China and the days of the first emperor: Qin Shi Huang (秦始皇). This distinction: this lack of and limitation of official status in China significantly, officially limits the rights of all Uyghurs and regardless of where they live in that nation. Uyghurs are Muslims and they seek to worship their god and observe the teachings and ways of their religion as they and their ancestors always have, going back to the days they first began to follow that faith. This puts them on a direct collision course with the Chinese government’s mandate that all in China faithfully adhere to the teachings and ways of their Communist Party. And China’s government has acted accordingly in its ongoing programs for controlling and dominating the Uyghur peoples.

What does that mean? What has official China done to carry out and enforce this control? I would at least partly respond to that question by offering some recent news and related links to help answer those questions, and to validate that I am not simply offering my own personal opinion here on this:

China’s Prisons Swell After Deluge of Arrests Engulfs Muslims,
World Bank to Investigate if China Loan Funded Muslim Detention Camps and
China’s Orwellian War on Religion.

The third of those links points to an Op-Ed piece that notes how China’s government has not simply singled out the Uyghurs or their religion here. They vigorously pursue any possible source of dissent: any possible source of belief or opinion that they see as competing with those of their Party and government. And religious beliefs and institutions that they cannot directly control, at least within their national boundaries, are among their primary targets there.

The People’s Republic of China officially recognizes only five specific religions in their country, as being legitimate and as being legal to observe there: Buddhism, Catholicism, Daoism, Islam, and Protestantism. And they are generally tolerant of traditional Chinese beliefs and their practice, if they are more privately expressed. But officially, any religious beliefs or practices that fall outside of the official five, are formally prohibited and subject to harsh legal action. Islam is one of the recognized five. So why do I write this in terms of state-versus-faith conflict? The answer to that is very simple. China’s Party and government only accept and allow specific practice of those faiths that they have decided are not a source of possible threat. It may be legal to belong to one of the permitted five, but only if you observe your faith in it the right way there. And any deviation from that is also illegal there.

Catholicism is one of the officially recognized five too, but China’s Party and government only allow it because, for example, they have a deciding voice in who can be allowed to serve as a Catholic bishop in China. And the Vatican has agreed to go along with this in order to maintain a presence in China. See, for example, this piece from The Catholic News Agency:

The Complicated Case of China’s Catholic Bishops.

And China and its Party and government officials, officially determine who is a legitimate reincarnation of a deceased Tibetan Buddhist Lama, and not members of that religion’s own leadership. This source of conflict has already begun to play out with more minor, though still significant lower ranking lamas, as would be recognized in that form of Buddhism as their reincarnated spiritual leaders. But this Party and government control over Tibetan Buddhism will come to a head when the current 14th Dalai Lama dies, and a 15th in succession, reincarnation of him has to be chosen. Whoever decides who that can be, controls the voice and the fate of Tibetan Buddhism as a whole and from that date going forward. See:

The Coming Fight for the Dalai Lama’s Soul.

And I am only addressing the five officially allowed religions here! What of other, unrecognized and therefore entirely illegal religions? I only have to cite one source of examples there, to put a face and name to a recurring if not always well publicized story: the Falun Gong in China. And that is such a wide-spread and long-term ongoing news story that I would cite an encyclopedia reference on it: Persecution of Falun Gong.

What is the fundamental point of similarity here between China’s response to Hong Kong dissent, and their response to the risk of dissent that they face in Mainland China as so briefly touched upon here? I would argue that China’s leadership sees all of these issues and all of the actions of the people who they would confront and seek to control here, as ideological in nature, and whether that means religiously or politically motivated dissent. And ultimately, there are no real distinctions between religious and political in this type of context; Mao Zedong was China’s first true Communist Emperor and the central figure in what has become a true state religion. And once religion and politics become all but one and indivisibly so in your own house and in your own thinking, it becomes effectively impossible to separate them from each other when viewing outward too – in this case towards Hong Kong with its striving for a more Western-imagined form of democracy.

Now what is the fundamental point of difference here between China’s response to Hong Kong dissent, and their response to the risk of dissent that they face in Mainland China as so briefly touched upon here? The world’s public can readily see all that takes place in Hong Kong and real-time and free from the filters of China’s official news agencies, and free from at least direct filtering by their Golden Shield Project: the Great Firewall of China too. And the cost they would face if they were to actively suppress dissent in Hong Kong is so much higher quantitatively there, than a crackdown would be in a place such as the Xinjiang Uyghur Autonomous Region: the direct costs for a Hong Kong crackdown are so much higher, that this becomes a qualitatively different problem for them.

So Xi’s government has sought to rein in Hong Kong and dissent there by shows of force and by threats of it, and by exercises in brinksmanship as shows and threats that stay that way, tend to get bigger to keep their messages credible. And with that noted, I repeat a point that I have made in the two most recent postings to this progression of them that this updating note fits into, when touching upon the issues of brinksmanship as a means of control. Pursuing that as a strategy, or as a tactic in need of a strategy if you prefer, of necessity means a taking of progressively more significant actions, and:

• “Brinksmanship is like that; if you skirt too close to the edge of a cliff you might inadvertently fall off.”

And with that offered, I return to a point of detail that I at least suggested in my two above-cited open letters to Xi Jinping. If he seeks to be China’s new Kangxi Emperor, its new Qianlong Emperor for the 21st century, leading his nation to greatness the way that they did in the Golden Age of the Qing Dynasty that they created and led, how can he achieve any of that if he continues to gamble everything that he holds as important with “roll of the dice” brinksmanship and with an at least implicit hope that one of the least reasoning members of his forces, does not take a step that would bring real chaos? What would happen if, for example, a young, frightened, inexperienced police officer or paramilitary trooper were to open fire with an assault rifle into a crowd of protestors, and even if that meant his doing so against the orders of his officers in charge?

The greatest emperors of China’s past, who have shown the way by their historic examples of what China can achieve, lived and ruled according to the Mandate of Heaven (天命). And this mandate both guided and constrained the emperors of dynastic China, conferring legitimacy to their rule but only insofar as they could keep and maintain order and stability and for all of their peoples and lands.

• Just rulers and their governments seek to achieve this goal, and so do the unjust. The difference is that the just seek to do this to the benefit of the people who they rule over, and for their communities, while the unjust drift into that from how they seek to develop and maintain order for their own benefit and for that of their political bases and governments.

I have decided not to write this note as an open letter, but I do offer it with the rest of my at least hoped-for audience in mind, in Hong Kong and in China itself, as well as more widely. And I offer this as a response to a request that I not simply set this ongoing series of events aside as I write new postings to this blog. I have not forgotten and I still care, very much. I will not forget. And I will have more to write on this and related matters and soon.

Meanwhile, you can find this and related China and Xi Jinping-oriented material at Macroeconomics and Business and its Page 2 continuation.

Xi Jinping and his China, and their conflicted relationship with Hong Kong – an unfolding Part 2 event: 5

Posted in macroeconomics by Timothy Platt on August 23, 2019

This is the fifth posting that I have offered here since June 19, 2019, to address significant and still expanding conflicts taking place in Hong Kong, arising as a response to actions taken by China’s government and by their hand-picked executive leadership in Hong Kong, that would fundamentally limit the legal rights of citizens there (see Macroeconomics and Business 2, postings 343 and following for Parts 1-4 of this.) And I refer to this set of postings as a “Part 2” in the working title that I have applied to all of these postings because they represent a continuation of an already ongoing story that I first began writing about here in 2014 with two back-to-back installments concerning Hong Kong’s Yellow Umbrella Movement (雨傘運動) (see those Part 1 and Part 2 postings.)

That protest, I have to add here, arose because of the way Xi Jinping’s Communist Party-led government in Beijing reached out to select Carrie Lam and others specifically loyal to them and to their political party, to lead Hong Kong and regardless of how that conflicted with the terms of the treaty through which Great Britain agreed to return Hong Kong to China and ultimately to Chinese control: the: Transfer of Sovereignty over Hong Kong agreement, or the Handover of Hong Kong as it is commonly called, as went into effect in 1997.

I also add here that those 2014 protests were not the first to have taken place there since 1997, when Hong Kong officially became a special administrative region within the People’s Republic of China and with that status to remain in place until at least until 2047. That was not the first time for China to violate the spirit if not the explicit letter of this agreement and the one country, two systems policy that the Beijing government agreed to adhere to, at least until 2047. And 2014 did not mark the first time that the people of Hong Kong publically protested such incursions on the local autonomy that they were promised in that treaty. Protests to China’s ongoing efforts to erode away and limit that autonomy go back at least as far as 2003, though those earlier efforts to retain local control did not gain the global recognition that has been achieved there since 2014. And that global visibility will not go away, and certainly outside of China and for the world at large, and regardless of how actively Xi’s government and their social media and related efforts seek to control the message there.

I offered Part 1 and Part 2 of this 2019 progression of postings on Hong Kong’s current unrest, with a goal of outlining the basic issues and challenges faced. Then I turned in Part 3 to at least begin to discuss how this fits into the ongoing narrative that I have been referred to in this blog, as Xi Jinping’s legacy building efforts, as he seeks to fulfill his China Dream: his Zhōngguó Mèng (中国梦). And I offered Part 4 of this, in large part as an open letter to Xi Jinping, or at least to the people in China who have access to otherwise blocked online content, who I have specific reason to know read from this blog anyway. And at the end of that posting, I referred to Hong Kong as Xi’s kryptonite, citing that term from Western fiction and with more relevant accuracy than it is usually cited for.

I wrote there of my concerns regarding an ongoing succession of mistakes and miscalculations that have very visibly been made, that could lead to a disastrously impactful conflict that no one would want: that no one would intentionally plan for or start. Brinksmanship is like that; if you skirt too close to the edge of a cliff you might inadvertently fall off.

And the conflicts and confrontations continue and with no end in sight, and with a continuing ratcheting up of both the tensions and the demands made and on both sides of this. I wrote in earlier installments to this now-five part narrative, or now-seven part if you include my 2014 postings, about how elements of the People’s Liberation Army’s 74th Army Group have been carrying out antiterrorist exercises approximately one hour away from Hong Kong by commercial flight. And I have noted how Hong Kong police, acting out of uniform, have systematically and repeatedly attacked protestors just to disappear into the crowds and with no official response allowed to find out who had done this. And on the other side I have written at least in passing of how protestors, acting out against Carrie Lam’s and the Beijing government’s actions and proposed actions, have gone from peaceful protest to defacing government buildings and to directly confronting China and their claim to sovereignty over Hong Kong. This has even included at least some protestors raising the United Nations flag and yes – the British Union Jack too, as a direct repudiation of any claims that Xi’s government might make there.

And the first initially low-key arrivals of officers from China’s People’s Armed Police: a paramilitary force that has and is trained to use military weapons and that uses military transport and related support resources, began arriving at the Shenzhen Bay Sports Center and surrounding area on August 11, 2019. And they have been carrying out increasingly visible daily exercises and drills there too, just outside of Hong Kong itself.

What could trigger their being called into Hong Kong? What could trigger an escalation in response beyond that, to include in troops from the 74th or even just from other paramilitary, officially police force units? And how would the protests taking place and the protestors carrying them out respond to that? No one knows and no one in their right mind would want to find out. And with that noted, I turn back to a basic pattern for writing about this unfolding news story, that I first attempted here in my Part 4 installment to this posting progression, as initially went live here on August 15. I offered an open letter to Xi Jinping there, and I offer a second such open letter to him again now, as the one person in China who might be in a position to reach out and reduce the tensions and the risks there. And that one person really is Xi Jinping himself, now.

I offer what follows here as a continuation of that first open letter, and with Xi’s China Dream itself in mind, and both for how he envisions China and its future and for how he envisions himself and his role in that – and his legacy as he seeks to create it out of all of this too.

Dear Chairman Xi,

I recently wrote an open letter to you and to those who you lead in China, concerning a developing crisis that you and all of China, Hong Kong and the world are now facing. And I wrote to you of this because you are in a stronger position to either help resolve this peacefully, or lead it into disaster than anyone else right now, as the leader of both China’s Communist Party and government.

You lead and seek to lead China, according to a vision in which your country can take a position of global leadership. And you base this vision, this dream, your Zhōngguó Mèng on two historical narratives: one positive and the other negative. You base it on visions of what China could become again, as based on what it has been in its golden age during the height of the Qing Dynasty and particularly as that was led by its two greatest leaders: the Kangxi Emperor and the Qianlong Emperor. And you base it upon the century and more of humiliation that China endured as the Qing Dynasty began to fail and in the years and decades that followed. You base it on the lessons learned and never to be repeated of foreign domination from one direction and internal strife and challenge from the other.

I focused in my first open letter on the positive side of this, and on what you can lead the China of your time towards, if you can go beyond the straitjacket of simply trying to redress the negatives and the wrongs historically done, of the time of humiliation that was in fact already developing by the time of the First Opium War and the treaty that ended it. And to be more specific here, I focused there on a need for agility and flexibility in decision and action, and on how that made so much of a difference for the Kangxi and Qianlong Emperors. I turn here to a second point that was fundamentally important to their leadership and that has held crucial importance in China throughout most all of your country’s long history: stability and the imperative of achieving and maintaining it.

I will be blunt. You seek to restore China to a path that the greatest leaders of your nation’s past created – that the greatest of the emperors of that past were able to create and maintain, at least during their reigns. You seek to become, in effect a Kangxi or Qianlong Emperor for China’s 21st century. But with the power that you seek, goes an at-least equally daunting responsibility, and one that predates Communism by centuries and one that will most likely endure well after Communism is gone too. The emperors of China’s past, its greatest included, were all thought of as the Sons of Heaven. And they ruled under the aegis and the pressures of responsibility of the Mandate of Heaven (天命). Emperors reigned in power and authority as the Sons of Heaven and dynasties endured, according to how effectively they could create and maintain peaceful stability in their lands and among their people. And they failed and fell when they no longer could. What is happening in Hong Kong now and what are you doing to address that, that goes beyond you’re reacting out of continued anger at past wrongs done? The currently in-force Handover of Hong Kong agreement is quite clearly included among those wrongs according to your thinking. What are you doing to make this Return as you and your government prefer to call that, peaceful and stable and supportive of the people of Hong Kong, and ultimately for China as a whole too?

You seek to be a modern day Kangxi or Qianlong? Then you must assume the mantle of responsibility that they lived by and held to: that same Mandate of Heaven, by whatever name that you would prefer to call it.

You cannot blame Hong Kong’s ongoing waves of unrest on the British, or on the United States and its government or on any other foreign power and succeed with that story, and certainly not long-term. First of all it is not true, and regardless of how avid your state controlled news agencies are in creating and repeating that story. But secondly and more importantly and certainly for China and certainly if you seek to realize your Dream, that narrative cannot be sustained when all of this chaos ultimately arises as response to decisions that you and your government make, and that people like Carrie Lam make as your hand-picked “Hong Kong leaders” there. Simply pointing elsewhere to accuse others of responsibility and leaving it at that, will only serve to further increase the chaos already taking place. Misdirection cannot and will not address let alone resolve any of the real root causes there.

Mao Zedong fundamentally reshaped China. But at the risk of oversimplifying a very complex period of history, the chaos that he created in the process of doing so, and not just from his Cultural Revolution and Great Leap Forward, went a long way towards China’s isolation from much of the world and its lack of anything like positive influence there as a result. The world saw and the world reacted to that. Do you want to see the China of your day so isolated again? You have your China Dream, your Zhōngguó Mèng, and you have your legacy creating ambitions. Do you want the crisis that Hong Kong has been slipping into become the core pillar of your dream as actually realized, and of your legacy as it would actually be fulfilled? I write you of this because ultimately you are the only one who can decide.

Sincerely, Timothy Platt, Ph.D.

I am now certain to offer a sixth posting in this succession of them as events continue to proceed, and both in Hong Kong and in China. Meanwhile, you can find this and related China and Xi Jinping-oriented material at Macroeconomics and Business and its Page 2 continuation.

Xi Jinping and his China, and their conflicted relationship with Hong Kong – an unfolding Part 2 event: 4

Posted in macroeconomics by Timothy Platt on August 15, 2019

This is my fourth posting, all coming out since June 19, 2019, to address the significant and still expanding conflicts taking place in Hong Kong, arising as a response to actions taken by China’s mainland government in Beijing and by Xi Jinping’s decisions and actions there (see Part 1, Part 2 and Part 3.) And this is my sixth such posting if you include the two 2014 entries that I initially offered here, in response to the events that have come to be known as Hon Kong’s Yellow Umbrella Movement (雨傘運動) (see those Part 1 and an Part 2 postings for further related background material and perspective.

I began writing my more recent above-cited postings here, as addressing a Part 2 continuation of what happened in 2014 and of what led up to that so public a confrontation. But in a real sense, more recent events can perhaps best be seen as a direct continuation of 2014 and its challenges. It is just that more recent actions taken, and both by senior members of Hong Kong’s government who were installed in office there by the Communist Party of China, and by Xi and his government itself, have stoked fresh flames from what were still burning embers of discontent.

I said at the end of my most recent installment to all of this that I would come back to this set of issues “in the coming weeks.” But the pace and the consequence-creating impact of recent events have prompted me to write and post that early. And I do so with a great many possible starts to this updating note in mind, that I could choose to from.

I recently found myself comparing these events to a classic Greek tragedy, and there are at least potentially some important points that the two hold in common. I explain that here as an at least intended cautionary if hopeful note as I know that at least some people in China have been reading what I have been offering here. A classic Greek comedy is a theatrical work in which problems and challenges arise, but in ways that allow for a more positive resolution. Everyone does not die in some way in the end. That does not mean humor; it does not necessarily have to include witty lines or comedic acting that would provoke laughter from the audience. It means that good prevails and that people survive and move on. A classic Greek tragedy on the other hand, is marred by what becomes doom realized, and with that as an increasingly inevitable outcome.

• If Xi Jinping and his government and the forces and voices at his command stay their current course in their effort to control and subjugate the peoples of Hong Kong, and if the protesting people of Hong Kong stay their course in demanding their rights and freedoms in the face of that, Xi is in danger of forcing a name change there, where this type of event becomes known as a classic Chinese tragedy.

A second possible start to this note is that I might offer it as what amounts to an open letter to Xi Jinping and his more senior advisors, and I particularly focus on Xi himself here because ultimately it is going to be up to him to make the decisions and take the actions that will determine if this ends as a tragedy or not. Xi, perhaps above all else, seeks to be the supreme leader in China and a true world leader as a consequence of that. Consider this responsibility as part of the cost that is automatically going to be included in any such ambitions and certainly as effort is made to realize them. The How and What of any resolution to the unrest and even chaos in Hong Kong today, are up to Chairman Xi, as is any possible If.

I displayed my own brand of hubris in Part 3 to this, by offering a concerned third party’s perspective on what might be done to at least lesson the tensions in Hong Kong, and in the halls of power in Beijing too over this, which I repeat here in at least abbreviated form at the risk of boring my readers:

• Xi and his Communist Party and government see a fundamental need to have people in political and governmental power in Hong Kong, who support them and who believe in what they seek to do. But when Xi and members of his Party and government overtly put their own hand-picked puppets into senior positions of authority in Hong Kong and its government, they poison those would-be leaders for their ever being accepted as legitimate there.
• And they poison the prospects that they themselves would ever be accepted in Hong Kong as in any way honoring the terms of the treaty that China signed with Britain, turning Hong Kong back to China, with the terms of autonomy that that treaty specified.
• So this is where Xi in particular has to look to and reconsider his true goals and priorities and certainly long-term. Does his China Dream, his Zhōngguó Mèng (中国梦) revolve around a Carrie Lam staying in toxically dysfunctional power in what should be one of China’s most valuable assets: the port city of Hong Kong? According to the terms of that Treaty, Hong Kong is set to fully return to China’s and Beijing’s control in 2047: in just a few short years when measured against the centuries that Chinese history is measured in, and that Xi himself cites as the foundation of his China Dream.

This is the backdrop and stage setting to that at least potentially classical tragedy in the making: this conflict of needs and of vision that we are witnessing unfolding in the news and every single day now. And with that noted, I actually turn to Chairman Xi, or at least to his fellow countrymen and women who read my postings, to offer that open letter. And I begin it with the fundamentals: with what I hope at least to be a fair and balanced, if selective consideration of Xi’s China Dream itself, and what it means.

Dear Chairman Xi,

I write this to you as leader of the single most important and powerful organized body and power base in your nation, overwhelming any possible challenge that could conceivably come to it from your nation’s government on its own, its military with its system of military and political officers and with those political officers really in command there, and its still embryonic private sector. I write to you here and now as the supreme leader of your nation’s Communist Party. And I write to you as the creator and bearer of your China Dream: a distillation of all of your development plans for China and of all of your more personal legacy creating ambitions as well.

You seek to restore China to the greatness that you see in its past from before the humiliations of the First Opium War and all that led up to it, making that tragedy inevitable. And you seek to redress the wrongs done and the grievances suffered coming out of the unequal treaties, with the first of them, ending the First Opium War a particularly painful part of that story, and certainly now. It was, after all, the Treaty of Nanking that ended that war, as a total defeat for China and not just militarily. It was after all that treaty that tore Hong Kong from China, making it a British colony and a more effective gateway into your country as British and other foreign forces did as they wished and throughout China. Extraterritoriality and the immunity that British, and soon other foreign nationals held, from having to honor and obey Chinese law and even in the heart of your nation, was only a small part of that. And I stress that and your loss of Hong Kong here because it is Hong Kong that I write this for, and your hopes and dreams for China as a whole.

You look back to earlier days of greatness, and most certainly to the golden age of the Qing Dynasty, before it began to fail and at least in part from the onslaught of foreign challenge. You look back to the days of the Kangxi Emperor and his grandson the Qianlong Emperor, and the 138 year span of time in which their rule led to stability and strength. And you look to the chaos and humiliations that followed, and with a goal of reversing them to restore what you see as China’s true place in the world. But at the risk of displeasing, I would offer you some thoughts as to how the Kangxi Emperor and the Qianlong Emperor actually achieved the stability and prosperity that their leadership led to, and with the expanded reach and influence that the China of their days achieved.

What was their greatest strength that they were able to bring to bear there? There are, of course, many possible answers to that, but the one that I cannot help but think of here was in how they knew when and how to be rigidly insistent and when and how to be flexible and even on what would seemingly be set and established principles and practices that would not allow for that. And the key area that comes to mind for me there, is not more internal to the country. It is not in how their numerically lean bureaucracy worked flexibly with provincial officials and through them with more local officials and to the ultimate benefit of all and to China as a whole. It is in how those emperors and the people who reported to them and who carried out their orders, managed the intricacies of the tribute system, that bound what were seen in China as their vassal states to their rule. And this system both defined and shaped all of the international trade that led to China emerging as a globally significant power during the Qing Dynasty’s golden age. And then failures in that system ultimately led to the downfall of the Qing Dynasty and the emergence of the century and more of humiliations that you seek to redress through the realization of your China Dream.

Officially and as a matter of established process and practice, any foreigners from any nation who sought to enter into business and trade in China outside of the tribute system and its protocols and restrictions, were deemed to be pirates and smugglers, and pirates and smugglers tended to be dealt with quite harshly if caught. But openly if unofficially, entirely separate alternatives to the traditional tribute system, as had officially held sway for centuries, were allowed and even unofficially supported – when they offered greater long-term value to China and their Emperor’s Court. I cite by way of example, the fact that Japan absolutely refused to enter into China’s tribute system and certainly not as a lesser supplicant nation and throughout the Tokugowa Shogonate (徳川幕府). But even with that, Japan served as a major trade conduit and one of real value to China, in its dealings with the West during this period, with a tremendous ongoing flow of trade that ultimately went in and out of China, going through the Japanese city of Nagasaki. Japan-enabled trade and the flow of new knowledge from the outside world that came with that, significantly contributed to the China of the Qing Dynasty, and to that China becoming and remaining the power that it was during this golden age. And it was the breaking of this system and partly with the advent of the unequal treaties, partly from internal challenges in China and partly – and even significantly from China’s failure to learn and internalize new scientific and technical advances that were developed in the United States and Europe in the 19th century, that led to the chaos that followed.

But I am not writing this with a goal of sharing a history lesson, and certainly not to someone who I would expect knows more of China’s history than I ever will. I offer this brief note thinking to today and to the days to come. I mentioned the distant land of Japan as an example of how China’s revered and expected tribute system could be set aside, or creatively adapted as called for in meeting specific needs and circumstances. But a seeming myriad of such exceptions, large and small, were allowed to play out in China’s own port cities too, and in fact wherever China and Foreign might meet, and at least beneficially for all and with stable good coming from that.

You revere the golden age of China and seek to restore it? It was not built on brittle, fragile intrangence. In fact, rigid and unconsidered intrangence and seemingly wherever possible was one of the hallmarks of the late and failing Qing Dynasty, as it found itself hemmed in and thwarted by forces it could neither change nor adapt to, as it successively fell from failure into failure. Look at how what had been a mutually supportive system of governance in China, collapsed and from internal rebellion and from the proliferation of disconnects between the Forbidden City and its leadership, and China’s provinces and more local governmental leaders.

Look to Hong Kong now and what do you see? Look to Hong Kong in light of the lessons of history, but not just the history of the humiliation of the First Opium War and of Britain’s seizure of that city as tribute in the Treaty of Nanking, that a Chinese Emperor and all of China were forced to swallow. Look to Hong Kong with 1997 and with 2047 in mind and ask yourself if a brittle, intransigent approach to righting perceived wrongs NOW, is the type of path that the leaders of China’s golden age would have turned to and as their only possible course of action. If you seek to be China’s leader into a new golden age, what path should you take here, to address and reduce the tension and the risk of an outright break there, with calls for Hong Kong independence that could not be withdrawn so easily?

I just learned today as of this writing (August 15, 2019) that at least some of the people protesting in the streets in Hong Kong are now carrying United Nations flags and British flags too: the Union Jack. By now everyone with any interest or concern as to what is happening in Hong Kong today, knows at least something as to how both sides – protesting citizens, and police and related agents of the state, have come to resort to progressively more violent and confrontational means to promote their causes. If you are China’s leader, where are you in all of this? Are you prepared to sit back and rigidly allow this to become that classic tragedy, or are you willing to lead, and away from that? This really is up to you now and history will judge you on the basis of how you rise to or fail to rise to this challenge.

Sincerely, Timothy Platt, Ph.D.

I am certain to offer a fifth posting in this succession of them as events continue to proceed, and both in Hong Kong and in China. Meanwhile, you can find this and related China and Xi Jinping-oriented material at Macroeconomics and Business and its Page 2 continuation.

Innovation, disruptive innovation and market volatility 48: innovative business development and the tools that drive it 18

Posted in business and convergent technologies, macroeconomics by Timothy Platt on August 13, 2019

This is my 48th posting to a series on the economics of innovation, and on how change and innovation can be defined and analyzed in economic and related risk management terms (see Macroeconomics and Business and its Page 2 continuation, postings 173 and loosely following for its Parts 1-47.)

I have been discussing two-organization based, innovation discovery and development scenarios here since Part 43 when I began outlining and analyzing:

• University research labs and the university-as-business systems that they function in, as original sources of new innovation,
• And invention acquiring, for-profit businesses that would buy access to these new and emerging opportunities for development and sale

as organizations of these two types come to work together through technology transfer agreements. And my goal here is to expand that line of discussion to include a wider range of participating organizations. I raised a possibility for that in Part 47, when I made note of how larger companies can and do at least occasionally divest themselves of patents that they hold, but that do not supportively fit into their current or planned business model and its needs. IBM is known for having sold off tens of thousands of patents in that way as they have, as a business, redefined themselves to remain competitively effective in the face of overriding change and its challenges. (See, for example IBM Has Sold Over 15,000 Patents Since 1991; Google is its biggest customer, where this news piece only addresses part of a still larger and longer-term patent divestiture story for this business.)

For purposes of this line of discussion and this posting in it, it does not matter as much what types of businesses are involved in these transactions. It only matters that one of them holds effective control if not direct outright ownership of at least one trade secret, patent protected or otherwise access-limited innovation that another would want to be able to benefit from, and that second organization is both willing and able enough to secure control of this for itself to make a transaction for managing that transfer, a viable option. Under these circumstances, the precise business models and business plans of the enterprises involved, do not particularly matter except insofar as that type of information would add insight into the nature and details of whatever those businesses could negotiate an agreement upon in this specific context. And that means relevant information concerning these businesses that fall into four fairly specific question-defined categories, that are all fundamentally grounded in a same set of operational and strategic concerns:

• What value would the initially owning business gain, or retain if it were simply to maintain tightly controlled, access limited hold over the innovation or innovations in question here?
• What value could it develop and secure from divesting at least contractually specified control over the use or ownership of this innovative potential?
• And from the acquiring business’ perspective, what costs, or loss of positive value creating potential would it face, if it did not gain access to this innovation and on terms that would meet its needs?
• And what positive value would it gain if it did gain access to this, and with sufficient ownership control and exclusivity of use so as to meet its needs?

I posit this entirely in cost and benefits terms, and in terms of risk and benefits where the more disruptively novel the innovations under consideration are in this, the less firm data will be available to calculate a priori, what the actual costs and benefits would be, as efforts are made to answer the above four questions. That places this type of analysis at least significantly in a risk management arena.

Timeframes enter this narrative here, as even the most dramatically new and novel innovation as initially conceived, is going to have a time limited shelf life. And this can be expected to hold true with particular force if an innovation in question offers dramatic new sources, forms or levels of value that would not have been possible before it. As soon as word of its existence gets out, efforts will be made to bypass any ownership or licensure-based access restrictions to what it can do, with duplication of initial discovery and innovation pursued by others and either by directly copying it with knock-offs or through efforts to create similar if analogous product offerings that would capture similar forms and levels of new value, or both. And with this, I cite my above-noted IBM example again. On the whole, the thousands of patents that that company has sold off, have still held value for at least select business-to-business markets and sectors, and for specific types of potentially acquiring businesses. But it is likely that many of them were worth less on an open market of this sort when finally sold off, than they were initially worth. And some of them have undoubtedly fit into a “cut your losses” pattern where it had in fact cost more to initially develop them and secure patent protection over them, than could be fully recouped from their ultimate sale.

I am going to continue this discussion in a next series installment where I will add in the complexities of scale, and for both the divesting, or licensing business and for the acquiring one. And I will also discuss the issues of direct and indirect competition, and how carefully planned and executed transfer transactions here, can in fact create or enhance business-to-business collaboration opportunities too, where that may or may not create monopoly law risks in the process.

Meanwhile, you can find this and related postings at Macroeconomics and Business and its Page 2 continuation. And also see Ubiquitous Computing and Communications – everywhere all the time 3 and that directory’s Page 1 and Page 2.

Xi Jinping and his China, and their conflicted relationship with Hong Kong – an unfolding Part 2 event: 3

Posted in macroeconomics by Timothy Platt on August 12, 2019

This is my third posting offered as part of an in- the-news analysis of current events in Hong Kong, as they revolve around the deep seated sources of conflict that exist between that former British colony, and China’s Beijing government (see Part 1 and Part 2.) And this sequence of postings is itself, a continuation of a pair of related postings that I initially offered in 2014 as part of another series, that reported on and analyzed a series of events that I would refer to here as the Part 1 that I name these postings in terms of: Hong Kong’s Yellow Umbrella Movement (雨傘運動) and its protests over China’s Beijing government and their Communist Party, interfering in and suborning local Hong Kong elections in order to put their hand-picked candidates in office there: Hong Kong’s current most senior executive branch government official included: Carrie Lam. And now there are protests in the streets and beyond as well, as Xi Jinping’s Beijing government, and Carrie Lam and her government have sought to fundamentally suborn the rights of Hong Kong citizens to fair and impartial trials if they are brought up on criminal charges in Hong Kong itself.

I wrote my earlier, 2014 postings: An Inserted News Update re Hong Kong and an immediate continuation of that, with a real sense of trepidation, thinking back to the events leading up to the 1989 Tiananmen Square protests and the crackdown and massacre that ended that ordinary citizen-based reform movement attempt. Would Xi Jinping follow the same type of violently repressive course that his predecessor in power, Deng Xiaoping did in Tiananmen Square? Deng and the people who he had to work with and accommodate in shared power, looked back to the days of Mao Zedong and to his use of repressive power as a means of societal control. And they thought that if they acted according to that pattern, as was used in initially building the system and the power base that they relied upon, they would achieve similar results. But the China of Mao’s days was cut off and isolated and it was possible to carry out massive repressions, and certainly in more isolated areas of their country and no one would see, from the outside. No one, they thought would care.

Then Deng began to open up China to the world, reaching out to potential friend and foe alike in order to reshape his own and China’s images, and the conversation that took place around both. Xi has if anything, tremendously expanded that opening up and way beyond what his predecessors since Deng could achieve. And that has helped him to advance his China Dream: his personal legacy building dream and ambitions. But that opening up has also ripped away any possible veil that a Mao might have tied hiding his more repressive measures behind: a veil that was already gone by the time of the Tiananmen Square massacre, and that could not conceivably offer any cover now in 2019 and certainly in a globally visible international port city such as Hong Kong.

So I wrote my recent Parts 1 and 2 postings on the turmoil in Hong Kong, with a greater sense of confidence that reason and a search for calm would prevail, than I felt when writing my above-cited 2014 postings, and certainly as cooler heads did prevail then. But more recent events that have developed since I wrote and posted them have given me pause for thought and cause for concern again. I am not so sure that reason can prevail this time, at least long-term, and even if Xi’s government did try to bring the Yellow Umbrella Movement protests of a few years ago to a peaceful end, avoiding direct conflict and the prospects of escalating violence that neither Xi nor anyone else could simply turn off, once started.

• I am not concerned about the possibility that Xi or others in his government would set out to in some way intentionally create a larger scale and globally visible Tiananmen Square massacre, Part 2. I see that as beyond the realm of possibility and certainly where intention could shape actual realized events.
• I am not even particularly concerned that Xi and his government would display the possibility of more intentionally planned out use of military or other large-scale force as a visible Plan B, and certainly when that force capability is still an hour and more from Hong Kong by airlift, and even if elements of his People’s Liberation Army have been carrying out large scale antiterrorism exercises and visibly so as briefly discussed in Part 2 here. There, a display of force can remain just that: a display and without any follow-through beyond that.
• But I do, however, feel real concern that Xi’s and particularly Carrie Lam’s brinksmanship efforts to suppress what have become larger and more widespread protests, and with no end in sight to them, might lead to escalating violence with police and even local-to-Hong Kong, Chinese military garrison involvement that they cannot simply rein in and stop once started – until that is, they have that massacre Part 2 event to deal with.
• I am concerned about the possibility of Xi and his military and his government, and Lam and her puppet government and her available forces, taking steps that carry ever-increasing risks that they cannot contain, with that too likely leading to escalations that they would in retrospect find worse than those arising from the Tiananmen Square massacre itself. Brinksmanship as policy and practice creates too great a risk of accident and of unintended action and reaction, and with what in this type of context would be explosive results.

I add here that the 74th Army Group that is providing the troops and support systems for carrying out those antiterrorism exercises, has a storied history that prominently includes their having active fought in what in the United States, is called the Korean War. When Chinese forces entered North Korea in that conflict, to prevent the military annihilation of Kim il Sung’s forces, most of the Chinese forces that the American and South Korean military faced were drawn from the 74th. And elements of the 74th have actively invaded the northern reaches of Vietnam, most recently in the years after American forces were withdrawn from the area as an end to the United States, Vietnam War, doing so as part of a show of force to demonstrate China’s authority in the region, and in order to “correct” what the Beijing government saw as “border irregularities”. But while units from a wide range of army groups were involved in the events that we know of as the Tiananmen Square massacre, that did not include any direct involvement or participation of elements of the 74th. That, along with their willingness to fight if so ordered, that is so central to the 74th’s history and tradition, was undoubtedly a significant factor in the selection process when deciding which People’s Liberation Army units would do this. But simply deploying and involving military units that are free of any taint of Tiananmen Square involvement themselves, cannot do much to change either the levels of risk that these exercises create as an obvious threat message, or the marketing message that deploying them in particular, might hold for the world at large.

I stated above that the current unrest in Hong Kong is continuing without any let-up and in fact at a seemingly ever-increasing level of intensity. And that in fact is true, with protests impacting on transportation and communications systems and in fact on essentially all of their basic infrastructure systems – and certainly where this would visibly impact upon a deeply involved globally spanning international community that is grounded in trade through Hong Kong. For some recent news references in support of that contention, see:

Chinese Official Warns Hong Kong Protesters Against ‘Color Revolution’,
Protesters Plan to Swarm Hong Kong’s Airport, a Symbol of Efficiency,
Hong Kong Protesters Descend on Airport, With Plans to Stay for Days,
Hong Kong Protesters Defy Beijing Warnings, as Police Fire Tear Gas and
Hong Kong Protesters’ New Target: A News Station Seen as China’s Friend.

Officially China has sought to redirect any possible blame for this conflict happening, away from itself and away from the decisions and actions of their hand-picked executive official in place in Hong Kong: Carrie Lam. And in keeping with their current trade war tensions with the United States, as initiated by the president of the United States, Donald Trump, this has included their making accusations of Hong Kong’s unrest, arising as a consequence of US meddling. See, for example:

China’s Theory for Hong Kong Protests: Secret American Meddling.

But ultimately this conflict all arises from two sources, both of which are or at least were under the control of China’s Communist Party, their national government and Xi Jinping himself:

• Their insistence of managing and even overtly taking control of Hong Kong’s local elections, when they first installed Carrie Lam in office there, leading up to and causing the Yellow Umbrella Movement,
• And their insistence on continuing to support her and even when that means their supporting decisions and actions that can only cause harm to the current leadership of China: Xi Jinping himself, and his hopes for fulfilling his self-perceived destiny as a great leader.

I have not worked with a national government as a consultant for a while now, and I have never served in that capacity in any dealings with China and their government or Hong Kong, which I intentionally label here as being separate, still. (Just ask Hong Kong’s current protestors if you are uncertain as to why I would make that distinction.) But that point of detail acknowledged, if I were to take on a work assignment of that type now and in China, and if I were asked for my advice as to how to actually end this current and ongoing predicament, I would most likely at least start that by suggesting that:

• While Xi and his government want to see people elected or appointed to positions of power in Hong Kong, who would look and act favorably towards China as a whole and its Party and government, the price for that is too high if it means Beijing having to overtly install a local Hong Kong leader. Such an act can only serve to poison any possibility of that leader ever being accepted as anything other than a puppet, owned by and controlled by Beijing.
• So whatever her expected positive value or virtues as seen from Xi’s perspective, Carrie Lam started out in her current office as a liability and as a toxic one. And the fact that her election essentially immediately led to the Yellow Umbrella Movement and the fact that the tension and unrest that erupted then has never really gone away since then, and the fact that it has erupted again and with even greater force now – and specifically as a consequence of her continued actions, should be telling the decision makers in Beijing something.
• Xi Jinping has his China Dream, and it is solidly grounded in an at least partly fantasized vision of China’s golden age of power and influence, and of respect as achieved in the days of the Great Qing when that dynasty and its China reached a zenith of authority and position and both regionally and even globally. But if he can only see his legacy building vision in terms of recreating this Qing dynasty dream, and if he cannot avoid getting caught up in the snare of its here-and-now unrealistic details, what can and will come of his own China Dream as a whole?
• At the risk of being presumptuous, I would cite by way of advice here, a passage from one of China’s historically most revered documents: the Tao Te Ching, to the effect that a little fish, overly handled soon spoils. Hong Kong is no little fish, but it is small in comparison to the sweep of Xi’s ambitions, and of his dream. And if his manhandling of this continues, the stink that comes from that spoiling will spread out globally, and with consequences to match.
• This is a time when Xi and his government should step back, disavowing a disaster of their creation, with positive measures replacing them in support of Hong Kong’s rights under the terms of the treaty that returned this vital port to China in the first place. And as a first step there, Xi and his government should disavow themselves from Carrie Lam, offering her in private a way out and even if that means offering her a less visible or impactful paid position in Beijing or some other mainland city. And they should open up the process of replacing her as a presumably Hong Kong leader, with a more open, involving and transparent process – and even if that would mean their facing a replacement who would at the very least start out more confrontational towards them than they would like.
• The treaty that China signed with Great Britain as part of the handover of Hong Kong to their ultimate control, is set to continue in force until 2047. Xi and yes, his successors in power have time and reason to take a long-game approach here and to look and think and plan much further forward than they seem to be doing now, for the self-defeating short-sightedness they seem to be showing now.

Do I expect any of this to happen? No, not now and certainly given the way events continue to unfold and both in Hong Kong and as coming from mainland China as well.

I expect to add a fourth installment to this progression of them in the coming weeks as Hong Kong has become Xi Jinping’s kryptonite, to cite a reference from Western fiction. Meanwhile, you can find this and related Xi-oriented material at Macroeconomics and Business and its Page 2 continuation.

Donald Trump, Xi Jinping, and the contrasts of leadership in the 21st century 19: some thoughts concerning how Xi and Trump approach and seek to create lasting legacies to themselves 7

Posted in macroeconomics, social networking and business by Timothy Platt on August 5, 2019

This is my 19th installment in a progression of comparative postings about Donald Trump’s and Xi Jinping’s approaches to leadership per se. And it is my 13th installment in that on Trump and his rise to power in the United States, and on Xi and his in China, as they have both turned to authoritarian approaches and tools in their efforts to succeed there.

I have been focusing on Xi and his still actively developing narrative for this since Part 16 of this series, with a goal of offering an historically grounded framework for thinking about and understanding his goals and ambitions as a legacy builder. And that has meant my at least briefly and selectively outlining two sources of overriding influence: one positive and the other negative, that Xi and in fact all in China’s leadership face, and whether or not they would all explicitly pursue them as role models for future planning and action:

• The mythos and realities of China’s Qing Dynasty during its Golden Age, as a source of visionary legacy defining possibilities (as briefly discussed in Part 16, and
• What has followed that period in China’s history, leading up to the reign of Mao Zedong as China’s first de facto communist god emperor, and with particular emphasis on the humiliations that China has endured at foreign hands, starting with the events of the First Opium War (第一次鴉片戰爭) of 1839-1842 (with this line of discussion starting in Part 17 and Part 18 and continuing here.)

And to be explicitly clear here, I am not simply offering my own outsider’s-view or analysis of what might be motivating Xi Jinping in this, and even driving and shaping his plans and ambitions. I am in fact outlining something of the history and context of what Xi himself has openly, publically proclaimed to be his source of driving inspiration as China’s supreme leader, and certainly when he proclaims his China Dream: his Zhōngguó Mèng (中国梦) as his policy shaping vision.

Xi focuses in his Dream, on righting the wrongs and removing the unjust and unwarranted shackles of foreign domination that he still sees China as being burdened with, that had their origins as far back as the First Opium War as it was imposed upon his country by the British, and the Treaty of Nanking that formally ended it, and entirely to the benefit of that and other colonially ambitious foreign powers. And I hold up the Qing dynasty and certainly in its years of greatness as an exemplar, if an idealized one of what an unshackled China could and can achieve and certainly as Xi sees things.

I focused in Part 17 on the declining years of the Qing Dynasty and on its increasingly isolating and fragmenting weaknesses, that both insiders from within China’s state bureaucracy and foreign powers could and did exploit. Then I used Part 18, as a perhaps-digression from this largely-historically framed narrative here, to more fully discuss and clarify what “us” and “them”: “true” Chinese and foreigner (guizi in Mandarin Chinese; gweilo in Cantonese slang – 鬼子, and words like them), even mean in this overall context. My goal for this posting is to continue the historical narrative that I offered in Part 17, from an awareness of the line of discussion offered in Part 18, and to at least begin to explicitly discuss Xi’s China Dream as he shares it with China and the world. And in anticipation of what is to come here, I will at least initially focus on trade as a compelling source of interaction and influence and both within China itself and with the outside world. And while Xi himself begins his Dream narrative, for the most part with the events of that First Opium War and its aftermath, I will begin my narrative here with an at least acknowledgement of earlier foreign trade and interaction.

I could in fact delve a lot farther back then the days of Marco Polo (1254-1324), and the writing of his eye opening book: Livre des Merveilles du Monde (Book of the Marvels of the World) , as first written and offered to the West, circa 1300. He and his travel accounts opened the eyes of the merchants and of the public in general in Europe, to the wonders of China and the orient. But even there, Marco Polo was not in fact the first to have built at least transient trade connections between East and West.

For purposes of this discussion, I begin pursuing this narrative in 1514 with the arrival of the earliest Portuguese traders to visit China and with their initial commercial ventures there (see China–Portugal Relations. Portuguese traders and I have to add, Dutch traders who followed them were not primarily bent on building empires. They sought out trade and business opportunities that they could develop and profit from, and without their having to make more than whatever more minimal effort was needed in order to develop stable and reliable trade systems. If that meant their negotiating access to and use of a particular trade port where they could build a local base of operations in a country that they would do business with, that was acceptable. But they did not seek to dominate or control, and either new lands and peoples or the governments that held sway over them. For a relevant more-general Dutch trade reference see this piece concerning their Dutch East India Company ( the Vereenigde Oostindische Compagnie, or VOC), and for a more market and trade-specific example see Early 17th Century Chinese Trade Ceramics for the Dutch Market: Distribution, Types and Consumption.

This, it is important to note did not mean that this early trade was free of all conflict, as the Ming Dynasty rulers and their government functionaries who these Western traders and merchants had to deal with, were reluctant at best to the prospect of having to deal with such foreigners, and even when they did agree to follow China’s tributary system rules. See, for example Sino–Dutch conflicts. What this means, was that the conflicts that did arise were context-specific and that they were kept within bounds, and of a type that imperialist ambitions would not have supported.

To add one more relevant source of references here, that later experience should be compared to, I would cite the Qing Dynasty’s experience with their neighbor to the north, Russia, and how those two governments came to sign, and adhere to the Treaty of Nerchinsk of 1689. This was the first Westphalian treaty that any Chinese government signed and it was in fact more of a treaty between equals than later treaties signed with the British would prove to be. So, for example, under the terms of this treaty, Russia agreed to both stop their incursions into adjacent Chinese territory and to pull back from such lands as already taken, in exchange for trade rights and opportunities through a system of designated open Chinese cities.

Not all European nations to follow, were as interested in trade alone, and as free of empire building ambitions. The British were not the only such power to break from the above noted pattern, but they were perhaps the most influential of them and certainly for setting the stage for reimaginings such as Xi’s China Dream. It was, after all, the British who forced the Opium Wars on China.

• Opium was China’s scourge. And opium addiction and its consequences were seen as a demeaning problem, with widespread use of this drug in communities that spanned the nation, fueled from opium grown and processed in China itself and primarily in its Szechwan and Yunnan Provinces.
• The national government of China, under Qing rule finally sought to stop this, by enacting new law in 1729 that went so far as to impose a death sentence on those caught and convicted of participation in this business.
• Then British traders arrived and began forcing their way into China, bringing a by then already weakened succession of Qing emperors to allow them to carry out their business through more and more Chinese treaty port cities. But China’s citizens were not buying enough of their European-sourced goods. So they looked for an alternative form of marketable products that they could secure inexpensively and reliably and that a Chinese market could be brought to want to buy and with big profitable markups.
• Indian opium, with the majority of that coming from the Bengal region, proved to be the best and certainly the most profitable solution to that problem that they could arrive at. India was not formally designated as a British Crown Colony until 1858 with the formal beginning of the Raj. But the entire subcontinent was already effectively under British control and its foreign trade was just as firmly under the control of Britain’s large merchant empires such as Jardine, Matheson & Company, and Lancelot Dent and Company. They were the largest importers of Indian opium into China, and their trade in this commodity was viewed as a humiliating, and a devastating form of challenge to Chinese sovereignty and to the Chinese people as a society.
• China sought to thwart and even stop this trade. These merchants brought in their government’s military, and China was resoundingly defeated in what turned out to just be the First Opium War of 1839-1842.
• And that ended with China being forced to enter into what became known as the first unequal treaty (不平等條約), of a series of them that were imposed on the Qing Dynasty and on China. This event, and humiliations included in it such as a requirement that China cede Hong Kong over to British control, is widely seen as constituting a formal, historically framed start to the challenges that Xi, among others still seek to redress. See my two recent posts regarding Hong Kong’s current unrest, and the conflict that continues to take place between the Beijing government of China and the local Hong Kong government that was forced upon China in 1997, as a condition in yet another treaty between those nations: Xi Jinping and His China, and Their Conflicted Relationship with Hong Kong 1 and its Part 2 continuation.

Trade and foreign relations that China entered into during the Qing era’s golden age are looked back upon in today’s China, in idealized form and as validation of how China has been, can be and should be honored and as a leading power and authority, and even globally. The events that I write of here in this posting and this treaty that came out of them, and foreign relations that China has entered into subsequent to that with its succession of subsequent uneven treaties, are seen as a demeaning counterpoint to that, to be overcome and vindicated. And that pattern has, in the eyes of China’s current leadership, continued through a succession of challenges as arising both from within and from the outside the country. And it is only really being redressed now through their current leadership and policies.

I am going to continue this narrative by briefly considering a succession of debilitating rebellions that China went through, citing the Us versus Them discussion of this series’ Part 18, where for example, the then-ruling Qing emperors themselves, came to be vilified as foreigners and as unworthy from being so, and as not being truly Chinese at all. Then after that I will at least briefly outline some of the events and developments that followed the formal end of the Qing Dynasty in 1912, up to the founding of Mao Zedong’s Communist China in 1949. And I will round out this historical narrative by at least briefly and selectively discussing how Xi Jinping developed his China Dream and his vision of leadership out of Mao’s dreams and ambitions and out of his policies and his practices.

Meanwhile, you can find my Trump-related postings at Social Networking and Business 2 and its Page 3 continuation. And you can find my China writings as appear in this blog at Macroeconomics and Business and its Page 2 continuation, at Ubiquitous Computing and Communications – everywhere all the time, and at Social Networking and Business 2 and its Page 3 continuation.

Xi Jinping and his China, and their conflicted relationship with Hong Kong – an unfolding Part 2 event: 2

Posted in macroeconomics by Timothy Platt on July 24, 2019

I have been writing in recent months about how Xi Jinping, and also Donald Trump, approach leadership and about how they view their place in history. And I have written in that context, at least briefly and selectively about how they both in their own ways, seek to create lasting legacies to their rule. See Donald Trump, Xi Jinping, and the Contrasts of Leadership in the 21st Century as can be found at Social Networking and Business 2, as postings 299 and loosely following, for its Parts 1-18 (as of this writing.)

And as a core element of that narrative, I have been discussing Xi’s China Dream: his Zhōngguó Mèng (中国梦), of the China that he is convinced that he can bring into being through his leadership. And I have focused up to here on that and on the dual historical narratives that drive it. Then I in effect interrupted that ongoing line of discussion on June 19 of this year to offer a set of thoughts concerning one of the most compelling sources of influence and challenge that Xi faces as he seeks to fulfill that dream: Hong Kong and its unrest in the face of his efforts to lead and to control there. See that Part 1 posting that this brief note serves as a continuation and update to.

I wrote in that Part 1 piece of Hong Kong’s current unrest, and about the mass protests that have in fact grown to become significantly larger in scale and in levels of public involvement than were found, even at their peak during the Yellow Umbrella Movement (雨傘運動) that roiled the Hong Kong Special Administrative Region beginning in 2014, and that have continued at least at low levels from then on. That earlier protest movement was sparked by widely perceived interference from Beijing in local Hong Kong elections where that was seen as a direct challenge to Hong Kong’s largely antonymous self-rule as called for at least until 2047, in the treaty that China’s Beijing government signed with Great Britain when that country agreed to turn this once-colony back to Chinese control. This newer protest is grounded in anger and fear of the Beijing government’s interference in Hong Kong’s legal system and in the right of its citizens to fair trials in courts of law that do not simply enforce China’s Communist Party decisions. There, it is telling that something over 99% of all mainland Chinese court trials end in a conviction!

And this new round of major protests on the part of large portions of Hong Kong’s overall population has not ended, or even slowed down, even as the Beijing government and their politically selected Hong Kong chief executive, Carrie Lam have backed down and withdrawn their proclaimed right to extradite legal defendants to courts and venues of their choosing.

I stated towards the end of the above-cited Part 1 to this note that I would delve into some of the history of this, as earlier events have driven and shaped what is happening in Hong Kong and in Beijing too now, and certainly as Xi and his government understand and respond to these recent and current protests. I will in fact discuss more of that history and in at least some more detail as I continue posting to my above-cited Contrasts of Leadership series. Here, I simply note that historically Great Britain, acting in support of some of its largest and more powerfully placed merchant powers (and Jardine, Matheson & Company, and their arch rival Lancelot Dent and Company in particular), forced China and its government to allow these foreigners to import and sell opium and in large quantities in China. And the British government and these British trading companies did this despite the fact that the Qing Dynasty and its legal system had absolutely outlawed the opium trade there in 1729, due to its devastating impact on all who used it and on their communities, and with a death penalty mandated for selling, using or even just possessing the substance.

Britain went to war with China in order to defend and support this opium trade, and the right of its merchants to import opium into China from India for profitable sale there. And importantly for purposes of this discussion, the First Opium War that was fought in this way, and that was won by the British, was ended by the Treaty of Nanking of 1842. And one of the key provisions of that treaty as forced upon a militarily defeated Qing emperor and his government, was that Great Britain would gain complete control over the harbor and adjacent lands of Hong Kong, and to use and to rule over as they saw fit. And that meant their developing that vast deep water harbor into one of Asia’s great trading ports. But it also meant Britain ruling Hong Kong as if British land and according to Britain’s legal system and according to their rules of governance in place, as followed in Britain itself.

Great Britain and China signed a treaty in 1997 that would turn Hong Kong back over to Chinese rule. But the terms of that treaty required that China allow a level and type of autonomy for what then became that Special Administrative Region, that would not be allowed anywhere else in China. And according to this treaty they had to allow this special un-Chinese and even anti-Chinese status in Hong Kong for another 50 years. And that must be how Xi Jinping and his Communist Party of China leadership see this treaty and its constraining requirements.

Xi and his government have repeatedly and persistently tried to push the limits of what they can do in Hong Kong in more directly taking control of this so valuable a resource and now – not in 2047, but without directly violating their 1997 treaty with Britain. Hong Kong residents and I have to add every business that does business there, foreign-based multinationals definitely included, see that with great trepidation and concern. And the people of Hong Kong have been acting on that concern through active large scale protests. And the lack of trust that the Beijing government has created there is sure to keep all of this going.

And that brings me to today and to events that have just taken place and that are in fact still unfolding, as Xi’s China: his Party and government respond to the challenge and the affront of Hong Kong Chinese citizens openly speaking out against him and his leadership, and against the system that he leads and that he seeks to build in China as a whole as a fulfillment of his Dream.

Elements of China’s 74th Army Group that include army, navy and air force elements, with direct participation of personnel from the Hong Kong police force’s antiterrorism unit and the PLA Hong Kong garrison have recently commenced and been conducting antiterrorism exercises in Guangdong province, and particularly near the city of Zhanjiang. And they have carried out their latest such exercise there, at least in part as a response to how protestors in Hong Kong have now defaced the Chinese government’s official emblem, as displayed in front of their central government’s liaison office with the Hong Kong government, by throwing raw eggs at it. (Zhanjiang is 408 kilometers, or 254 miles from Hong Kong so commercial flight time between their main airports is just over one hour. But China’s People’s Liberation Army also has large military facilities that are much closer without being in Hong Kong itself, including but not limited to ther San Wai Barracks, their Shek Kong Airfield, and facilities such as石崗軍營 and 新蒲崗行動基地 that do not appear to have such standard, recognized English language names. And they of course, also base their Central Barracks and their Chinese People’s Liberation Army Forces Hong Kong facilities right in Hong Kong itself, where it would be possible to pre-position assets in the event that China’s leadership were to see need to do more than simply carry out warning and preparation exercises.)

With that admittedly much larger scale possibility in mind, I also note that Hong Kong-based police force personnel from their antiterrorism unit carried out a large scale interdepartmental exercise (code named Powersky) in March of this year in Hong Kong itself, as a show of force warning to the protestors then in the streets to restrain themselves or face consequences. The new exercises that I cite here as taking place in Guangdong have added large-scale direct People’s Liberation Army participation to that. And I add this closing cautionary note as to what might at least be under consideration, by noting the power struggles that took place between the then PLA leadership and Deng Xiaoping: the then supposedly supreme leader of China, when a decision was made to move tanks into Tiananmen Square. (Do I see another Tiananmen Square massacre coming? No, I am more hopeful that cooler heads will prevail and that China’s leadership will continue to play a waiting game until 2047 before going beyond the types of treating stretching infringements that they have already been trying. But right now, I seriously doubt that anyone really knows what might happen next and particularly if the Beijing government tries moving on Hong Kong again, and too soon and too crassly. Brinksmanship does, after all create risk.)

I am going to continue this narrative, most probably with a next installment of my Contrasts of Leadership series. Meanwhile, you can find this and related Xi-oriented material at Macroeconomics and Business and its Page 2 continuation.

An addendum note regarding plausible deniability:
I initially write this posting as a single quickly drafted whole, on July 22, 2019 and with plans for it to initially go live on this blog on the 24th. Then I saw a news piece today, on the 23rd that I thought I should at least mention here too, and certainly in the context of my discussion of actions taken by the Beijing government and at their behest, to control or even curtain public Hong Kong based protests. The news piece itself is:

Mob Attack at Hong Kong Train Station Heightens Seething Tensions in City.

This news piece reports of violent attacks with sticks and metal bars that were made in an organized manner by people who at least appeared to be systematically targeting street protestors. I wrote in this posting of protestors throwing eggs at the liaison office that China’s Beijing government runs in Hong Kong, and that has escalated to ink throwing and graffiti, to highlight a still-higher ratcheting up of the tensions that Hong Kong and its citizens, and China as a whole and its government face here. But potentially deadly violence as carried out by what are most likely organized and directed mobs, can only make this worse and for all involved – while providing plausible deniability for whomever is behind that and certainly as these attackers remain anonymous.

I wrote in this news analysis piece: in this posting, of Xi and his government taking a waiting game as an alternative to using direct force (and force that could only have come from their initiatives.) Think of this as a middle ground option for the impatient, and particularly if longer-term consequences are set aside from consideration, in favor of short-term expediency and meeting its needs.

Xi Jinping and his China, and their conflicted relationship with Hong Kong – an unfolding Part 2 event: 1

Posted in macroeconomics by Timothy Platt on June 19, 2019

I have recently been offering a progression of postings on Donald Trump and on Xi Jinping, where I have been analyzing, and comparing and contrasting their approaches to leadership. And as part of that larger effort, I have been writing about how and something of why they have both turned to authoritarian approaches to both define their leadership goals and to realize them. My more recent postings in that still ongoing narrative, have focused on legacy building, first as president Trump seeks to pursue that historically defining goal, and then as Xi Jinping has. And my most recent installment to that, as can be found at:

Some Thoughts Concerning How Xi and Trump Approach and Seek to Create Lasting Legacies to Themselves 6,

was a third consecutive posting there, to discuss historical forces and events that have come to shape Xi’s approach to this, and with a goal of shedding light on both his understanding of effective leadership per se, and on how he sees his role as a leader in today’s China.

My initial intention was to continue that posting progression as a next step offering concerning Xi and his China, with that continuing that ongoing historical timeline based narrative of issues and understandings that appear to have shaped Xi and his drive to succeed. And I will write and offer that posting here in this blog soon. But I have been following a succession of recent events in Hong Kong that would prompt me to interrupt that narrative, for its timely relevance and both in understanding modern China and where that nation seeks to go, and Xi and how he seeks to lead it there.

I have identified this posting in its title, as “… an unfolding Part 2 event.” And I begin its narrative by explaining that wording, as a starting point for putting what is to follow in it into an at least recent historical perspective. And I do so by noting that the Part 1 event that can be seen as prelude to the current events that I would write of here, was the Yellow Umbrella Movement (雨傘運動) of Hong Kong protestors that came to a head and erupted across the Hong Kong Special Administrative Region in 2014, and that was most actively carried out from roughly September 28 through December 15 of that year.

Angry if passively resisting peaceful crowds, and in large numbers, shut down key areas of Hong Kong and its government services, among other areas of activity, in protest over widely perceived interference from Beijing in what should be local Hong Kong elections. And this, in many respects was the first real testing challenge that Xi Jinping faced as General Secretary of the Communist Party of China and as leader of their overall government.

I wrote two postings as current events updates to a series that I was developing at the time: China and Its Transition Imperatives, that dealt with this then-still very actively unfolding news story: Part 12.5: an inserted news update re Hong Kong and Part 12.6: a continuation of that. And my reason for adding those extemporaneous additions to that series, and for adding them in as such, was simple. I saw a direct and immediate challenge to the government of China in Beijing, and to the Communist Party of China, and to Xi Jinping and his leadership emerging, and as a globally visible spectacle. And I found myself viewing and thinking about this, in light of the 1989 Tiananmen Square protests and the crackdown and massacre that ended that ordinary citizen based reform movement attempt. I felt real concern that Xi’s China might react to and suppress this attempted reform movement through military action too, just as the China of Deng Xiaoping did in Tiananmen Square.

Xi Jinping, however, found more peaceful, if equally effective ways to curtain and then shut down that call for reform, leaving smaller numbers of protestors to carry on the struggle with their yellow umbrellas for months and even years to come, after the main protests of 2014 ended. And then a decision was made to change Hong Kong’s legal system to allow the Beijing government and its courts to impose extradition of people who would otherwise face legal trial in Hong Kong and under Hong Kong law with its legal protections, to other venues including Beijing itself and Taiwan, and at the complete discretion of the Beijing government and its courts. And this in fact came about as a generally applicable decision and action, that was intended at least for immediate use, to allow extradition of a specific individual who was accused of committing murder, to a Taiwan court – not to mainland China and not to a Beijing court at all!

For purposes of this discussion, it does not matter if that intended change had its origins in Beijing, or in Hong Kong and its government and particularly as Carrie Lam, the Chief Executive of Hong Kong since 2017, is widely known to have been hand-picked for that job by the government of the People’s Republic of China in Beijing and by the Communist Party there, and as an abrogation of local authority and control as called for in the treaty under which Great Britain returned Hong Kong to China.

What is currently happening in Hong Kong, that would rise to a level of impact and of possible action, so as to make this a Part 2 continuation of the Part 1 Yellow Umbrella Movement? I would begin addressing that question, by repeating a detail that I offered earlier in this posting in passing, here noting its current immediate significance. The Tiananmen Square Massacre: an event that is considered so toxic in the People’s Republic of China that it is all but illegal to even publically acknowledge that it happened, took place in 1989. And the current protests taking place in Hong Kong are taking place as its 30th anniversary fast approaches and at a time when that cautionary note event is back in the news again, and globally so. The people of Hong Kong certainly know at least in outline what happened then. And recent revelations as to what actually happened then and with new details emerging for that, have brought all of this into very sharp current interest focus.

You can find a brief sampling of current, as of this writing, references to this now-emerging side to that 1989 story at:

New Documents Show Power Games Behind China’s Tiananmen Crackdown,
Photos of the Tiananmen Square Protests Through the Lens of a Student Witness and
He Stayed at Tiananmen to the End. Now He Wonders What It Meant.

And you can find also-recent accounts of how this event has been all but officially obliterated from memory in mainland China, even as it is known, discussed and thought about in Hong Kong at:

Witnessing China’s 1989 Protests, 1,000 Miles From Tiananmen Square (in Hong Kong) and
Tiananmen Anniversary Draws Silence in Beijing but Emotion in Hong Kong.

And for a lessons learned news piece, as to how China’s People’s Liberation Army: the force that moved on Tiananmen Square, creating that massacre, views what they did and what came of it, see:

30 Years After Tiananmen, a Chinese Military Insider Warns: Never Forget.

And I would round out this first half to this posting by offering a brief selection of in the news links concerning this Part 2 protest movement itself:

Fearing China’s Rule, Hong Kong Residents Resist Extradition Plan,
Hong Kong March: Vast Protest of Extradition Bill Shows Fear of Eroding Freedoms,
Hong Kong Leader, Carrie Lam, Says She Won’t Back Down on Extradition Bill,
Why Are People Protesting in Hong Kong?,
Hong Kong Residents Block Roads to Protest Extradition Bill,
The Hong Kong Protests Are About More Than an Extradition Law, and
Hong Kong’s Leader, Yielding to Protests, Suspends Extradition Bill,
China Backs Hong Kong’s Leader Despite Huge Protests and
Hong Kong Protesters Return to the Streets, Rejecting Leader’s Apology.

I will have more to say on this, and particularly on its impact on Xi Jinping and his rule in China in an upcoming installment to my series on Xi and Donald Trump as they approach and seek to create lasting legacies to themselves, as cited towards the start of this posting. But for now, at least I conclude this half of this posting’s narrative here, simply adding that:

• Little if anything of what I have offered here should come across as being startling new to anyone who follows the news at all, and certainly outside of the People’s Republic of China itself where this unfolding story is being officially censored from view by their Golden Shield Project: their Great Firewall of China
• But at the same time, it is impossible to fully understand the bind that China’s leadership sees itself in from all of this, and certainly since the Yellow Umbrella Movement and definitely today, without knowing and understanding something of the background history of all of this, and certainly for China as it has held and then lost and then regained hegemony over Hong Kong as part of its national territory.

I am going to delve into some of that history in a follow-up posting to this one, where I will selectively discuss trade-motivated foreign intervention in China, and particularly as that led up to the First Opium War there. And in the course of that, I will discuss how China was forced to cede ownership of Hong Kong to Great Britain as a point of humiliation imposed on the Qing emperor, under the terms of the Treaty of Nanking of 1842 that ended that conflict. And I will equally selectively discuss the treaty and its terms, that China had to agree to when Great Britain finally returned Hong Kong to Chinese rule in 1997. I will simply add here in anticipation of what is to follow in this, that the history that I will briefly outline there, holds a great deal of meaning for Xi Jinping and his China’s leadership, and certainly when considered for how it fits into and supports the two sided historical narrative mythos that by all appearance drives much of Xi’s understanding of where China is, where it can go and how it should achieve those goals (as addressed in my above-cited Xi and Trump postings.)

Meanwhile, you can find this and related Xi-oriented material at Macroeconomics and Business and its Page 2 continuation.

Innovation, disruptive innovation and market volatility 47: innovative business development and the tools that drive it 17

Posted in business and convergent technologies, macroeconomics by Timothy Platt on June 5, 2019

This is my 47th posting to a series on the economics of innovation, and on how change and innovation can be defined and analyzed in economic and related risk management terms (see Macroeconomics and Business and its Page 2 continuation, postings 173 and loosely following for its Parts 1-46.)

I have been discussing innovation discovery, and the realization of value from it through applied development through most of this series, and as one of the primary topics considered here. And I have sought to take that line of discussion at least somewhat out of the abstract since Part 43, through an at least selective discussion and analysis of a specific case in point example of how this can and does take place:

• The development of a new synthetic polymer-based outdoor paint type as an innovation example, as developed by one organization (a research lab at a university), that would be purchased or licensed by a second organization for profitable development: a large paint manufacturer.

I focused for the most part on the innovation acquiring business that is participating in this, from Part 43 through Part 45, and turned to more specifically consider the innovation creating organization and its functioning in Part 46. And at the end of that installment and with this and subsequent entries to this series in mind, I said that I would continue from there by:

• Completing at least for purposes of this series, my discussion of this university research lab and outside for-profit manufacturer scenario.
• And I added that I will then step back to at least briefly consider this basic two organization model in more general terms, where for example, the innovating organization there might in fact be another for profit business too – including one that is larger than the acquiring business and that is in effect unloading patents that do not fit into their own needs planning.
• I will also specifically raise and challenge an assumption that I just built into Part 46 and its narrative, regarding the value of scale in the innovation acquiring business in their being able to successfully compete in this type of innovation as product market.

And I begin addressing this topics list with the first of those bullet points and with my real world, but nevertheless very specialized university research lab-based example. And I do so by noting a point of detail in what I have offered here up to now, that anyone who has worked in a university-based research lab has probably noted, and whether that has meant their working there as a graduate student or post-doc or as a lead investigator faculty member. Up to here, I have discussed both the innovation acquiring, and the innovation providing organizations in these technology transfer transactions as if they were both simple monolithic entities. Nothing could be further from the truth, and the often competing dynamics that play out within these organizations are crucially important as a matter of practice, to everything that I would write of here.

I begin this next phase of this discussion with the university side to that, and with the question of how grant money that was competitively won from governmental and other funding sources is actually allocated. For a basic reference on this, see Understanding Cost Allocation and Indirect Cost Rates.

Research scientists who run laboratories at universities as faculty members there, write and submit grant proposals as to what they would do if funded. And they support their grant funding requests for this, by outlining the history of the research project that they would carry out, and both to illustrate how their work would fit into ongoing research and discovery efforts in their field as a whole and to prove the importance of the specific research problems that they seek funding to work on, as they fit into that larger context. As part of that, they argue the importance of what they seek to find or validate, and they seek to justify their doing this work in particular and their receiving funding support for it, based on their already extant research efforts and the already published record of their prior and ongoing there-relevant research as can be found in peer reviewed journals.

They do the work needed to successfully argue the case for their receiving new grant funding for this research and they carry out the voluminous and time consuming work needed to document that in grant applications. And they are generally the ones who have to find the funds needed to actually apply for this too (e.g. with filing fees where they apply and grant application related office expenses.) Then the universities that they work for, demand and receive a percentage off of the top of the overall funds actually received from this, that would go towards what are called indirect costs (and related administrative costs, etc., though many funding agencies that will pay these types of expenses under one name will not do so under another, so labels are important here.)

My above-cited reference link, points to a web page that focuses in its working example on a non-research grant- in-aid funding request, and on how monies received there would be allocated. But it does offer basic definitions of some of the key terms involved, which tend to be similar regardless of what such outside-sourced grant funding would be applied to, and certainly where payment to the institution as a whole is permitted under the range of labels offered.

And with that noted as to nomenclatural detail, the question of how funds received would be allocated can set up some interesting situations, as for example where a university that a productive research lab is a part of, might in general require a larger percentage of the overall funds received for meeting its indirect costs, than the funding agency offering those monies would allow. For a university sourced reference to this and to put those funding requirements in a numerically scaled perspective, see Indirect Costs Explanation as can be found as of this writing on the website of the Northern Michigan University. Their approach and their particular fee scale here are in fact representative of what is found in most research supportive colleges and universities and certainly in the United States. And they, to be specific but still fairly representative here, apply an indirect cost rate of 36.5% as their basic standard.

The Bill and Melinda Gates Foundation, to cite a grant funding source that objects to that level of indirect costs expenditures, limits permitted indirect cost rates to 10% – a difference that can be hard to reconcile and certainly as a matter of anything like “rounding off.” And that leads to an interesting challenge. No university would willingly turn away outside grant money and certainly from a prestigious source. But if they agree to accept such funds under terms that significantly undercut their usual indirect costs funding guidelines, do they run the risk of facing challenge from other funding sources that might have accepted their rates in the past but that no longer see them as acceptable? Exceptions there and particularly when they are large-discrepancy exceptions, can challenge the legitimacy of higher indirect cost rates in place and in the eyes of other potential funding agencies too.

• Funding agencies support research and have strong incentives to see as many pennies on the dollar of what they send out, actually directly going towards the funding of that research. Excessive and perceived excessive loss of granted funds for more general institutional support, very specifically challenge that.

Universities that have and use the type of innovation development office that I wrote of in Part 46 for managing the sale or licensing of innovation developed on-campus to outside businesses and other organizations, generally fund them from monies gained from research grants in aid received, as payment made to them in support of allowed indirect expenses. And this makes sense as they are university-wide research lab and research program-supportive facilities. But indirect expenses also cover utilities and janitorial services and even what amounts to rent of the lab space used – among other expenses.

To round out this example here, I add that one of the most important parts of any grant application is its budget documentation in which it spells out as precisely as possible what monies received will be expended upon. This includes equipment and supplies and related expenses that would directly go towards fulfilling a grant application’s goals but it also includes salaries for postdoctoral fellows who might work at that lab and it usually includes at least part of the salary of the lead investigator faculty member who runs the lab too, as well as the salaries of any technicians employed there. And I freely admit that I wrote the above with at least something of a bias towards the research lab side of this dynamic, and at least in part because I also find the one third or more cut taken by the universities involved for its use, to be excessive. And this sentiment is reinforced by the simple fact that very little of the monies coming into such a university as a result of innovation sales or licensing agreements actually goes back to the specific labs that came up with those innovations in the first place, and certainly as earmarked shares of funds so received.

• Bottom line: even this brief and admittedly very simplified accounting of the funding dynamics of this example, as take place within a research supportive university and between that institution and its research labs and its lead investigators, should be enough indicate that these are not simple monolithic institutions and that they are not free of any internal conflict over funding and its allocation.

Innovation acquiring businesses are at least as complex and certainly as different stakeholders and stakeholder groups view the cost-benefits dynamics of these agreements differently. And that just begins with the questions and issues of what lines on their overall budget would pay for this innovation acquisition and in competition with what other funding needs that would be supported there, and what budget lines (and functional areas of that business) would receive the income benefits of any positive returns on these investments that are received.

• Neither of these institutions can realistically be considered to be simple monoliths in nature, or be thought of as if everyone involved in these agreements and possible agreements where always going to be in complete and automatic agreement as to their terms.
• And these complex dynamics as take place at least behind the scenes for both sides to any such technology transfer negotiations, shape the terms of the agreements discussed and entered into, and help determine who even gets to see those negotiating tables in the first place.

I am going to continue this discussion, as outlined towards the top of this posting by considering a wider range of organizational types and business models here, and for both the innovation source and the innovation acquisition sides to these transfer agreements. And as part of that, I will at least begin to discuss the third to-address bullet pointed topic that I listed there, and organizational scale as it enters into this complex of issues. Meanwhile, you can find this and related postings at Macroeconomics and Business and its Page 2 continuation. And also see Ubiquitous Computing and Communications – everywhere all the time 3 and that directory’s Page 1 and Page 2.

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