For decades, the Chinese government’s position on the South China Sea has been based on a dashed line drawn on a map in 1946 by Republic of China officials. Originally it was 11 dashes, delimiting the extent of territory, ocean and seabed claimed to be under Chinese sovereignty. In the 1950s, the People’s Republic embraced the same dashed line, but Mao deleted two of the dashes near northern Vietnam to give his communist brothers in Hanoi a break. That made nine. And so it has been, until this week when the Center came up with a new map with TEN dashes, including one to the east of Taiwan. Immediate protests followed from a number of countries, including Malaysia, the Philippines and India. Why do it now? Why, yet again, act at variance to the Dengist strategy of going low-key, keeping powder dry etc? One wonders about the timing and tactics.
One factor in getting everyone to agree to such a delimitation in the wider sense is the state of big brother’s domestic affairs. And the economy continues to be clearly in not good shape. Consumer spending numbers for July indicated a modest boost, but it’s still clear that Chinese people are mostly being very cautious with their money. The property market continues to wilt. Evergrande made steps this week to get its house in order, but Country Garden’s situation became more dire. Mortgage rates are being pulled down to make apartment buying more attractive, and Chongqing announced that unmarried mothers can now apply for all the child benefits due to married couples with kids. But convincing people to buy property and have kids is all about confidence in the future. And that is the core problem facing the system. Cynicism, passivity, a sense that the golden era of opportunity has passed, that the system has become unpredictable, that jobs and economic growth and housing prices and prospects for the future are not heading in the right direction—the overall mood seems to have shifted. Which brings us to a quote we spotted from American economist Adam Posen, talking about the state of China’s economy: “The condition is systemic, and the only reliable cure—credibly assuring ordinary Chinese people and companies that there are limits on the government’s intrusion into economic life—cannot be delivered.” Hmmm.
All the best for a scintillating weekend.