In my post “China Establishing While USA Losing World Leadership” yesterday, I point out that President Obama’s plan to bring back manufacturing and jobs and increase export will cause America to lose world leadership. It in fact helps China to grab world leadership from America because China is gaining popularity now in getting richer and helping other countries to become rich by providing investment and job opportunities and expanding its market for imports. However, faced with serious unemployment, America has no alternative.

America remains world leader in military strength, but it is helping China to catch up as it makes China step up its military build-up by announcement of its intention to be involved in South China Sea disputes. China will, therefore, substantially increase its military spending while America is reducing its military budget. Chinese military budget appears to be much smaller than America’s, but China can assign military research and development projects to its state-owned enterprises (SOEs) without government funding as such projects may also be useful for civil purposes. Even if they are solely for military purpose, China can fund the projects by reducing the profit that state-owned enterprises have to deliver to the government. That will certainly not be reflected in its military budget.

In 2011, Chinese SOEs’ profit totals US$357 billion, of which 10% to 15%, i.e. US$35.7 to US$53.5 billion shall be delivered to the government, quite a substantial amount compared with China’s military budget of US$77.95 billion.

Moreover, Chinese government may also order state-owned enterprises to provide it with military hardware at a very low price without any profit, which enables China to get more hardware with much less spending than America.

For example, a 071 landing platform dock (LPD) costs China only US$300 million while an America San Antonio-class LPD of similar size and functions costs more than US$1.2 billion.

There are widespread malpractices of counterfeiting, and pirating of American software similar to rampant corruption difficult to eliminate due to involvement of local vested interest. Foreign, especially American pressure has helped Chinese central government and quite a few enterprises that produce quality goods realize the importance of developing China’ own brands, patents and software and make them popular not only in China but also the world over. Over the past two years, China has conducted lots of raids to put an end to such malpractices in order to facilitate first of all development of China’s own intellectual property.

America movies and music spread American values of democracy, human rights, etc. The Chinese government certainly wants to reduce their influence as much as possible, but they are popular and difficult to be censured unless the government has well justified reason. America, however, is helping China reduce their influence by pressuring China to put an end to pirating and thus make them less affordable.

Ambitious to be world leader, China is making much investment to spread its TV and radio broadcasting and setting up Confucius Institutes the world over. The Chinese Communist Party regards its movies and music as propaganda for its values and is willing to promote them at great costs. China has encouraged its skillful film makers to produce films such as “Hero” and “The Flowers of War” that not only serve its propaganda purpose but also earn foreign exchange.

“Hero” especially praises one of China’s two worst tyrants for his achievement of unification of China to justify the Chinese Communist Party (CCP)’s praise of Mao Zedong’s similar achievement and the legitimacy of its rule. Due to the film’s artistic success, people outside China paid to be brainwashed.

Last October, CCP Central Committee held its sixth session to adopt a decision to boost China’s soft power and maintain cultural security following China’s ongoing economic boom. It called on Chinese people to carry out the strategy of opening up international cultural market and continuously enhance the influence of Chinese culture in the world. China wants not only economic and military but also cultural leadership.

Moreover, America helps China by pressuring it to turn Renminbi into a freely convertible currency, but does not see the threat to US dollar’s position as an international currency. China is making efforts to turn Renminbi into the currency for settlement in its trade with some Asian and African countries. If China succeeds in establishing a greater Asian community, like Euro, Renminbi, if freely convertible, may become the major currency for the community.


Due to China’s strategic shift, it is narrowing rich-poor gap, improving its people’s living standards and expanding its domestic markets and needs natural resources and cheap labor. Its huge foreign exchange reserve and its people’s huge savings need to be invested elsewhere. Africa and quite a few ASEAN countries have rich natural resources and need Chinese investment and market to provide job opportunities for their cheap labor.

There are now over 2,000 enterprises with US$40 billion Chinese investment in Africa and China became Africa’s biggest trading partner in 2009 and its trade with Africa rose more than 20% in 2010. For better relations, Chinese government spent US$200 million to build the headquarters of the African Union. Its No. 4 leader Jia Qinglin attended African Union’s recent summit and promised to provide African Union with US$95 million funds over the next three years.

China cannot establish and maintain its leadership in Africa if its relations with Africa are not mutually beneficial. There have already been complaints about trade imbalance. In order to enable both parties to be winners, China’s deputy commerce minister Gao Hucheng said that China would increase its investments in African manufacturing and transfer technology and management skills to “change from made-in-China to made-in-Africa”.

Similarly, in Southeast Asia, Chinese is one of the leading trading partners and investors in quite a few countries and its labor-intensive industry is moving to Cambodia and other countries with cheap labor. If China adopts a policy similar to what it plans to adopt in Africa, China’s leadership in Southeast Asia is ensured.

Even the EU wants Chinese funds now.

In short, China is establishing its leadership in the world by providing funds, job opportunities and a growing huge market while making money from the investment and obtaining cheap goods for its people.

What about America?

In his recent State of the Union address, President Obama gives priority to bringing manufacturing and jobs back to America. He perhaps means bringing jobs back from China, but China is moving enterprises that require cheap labor to African and South East Asia. By bringing back jobs, America will reduce the job opportunities created by China in developing countries.

Moreover, while China is providing its expanding huge market for developing countries, President Obama plans to make “it easier for American businesses to sell products all over the world.” He said he would “go anywhere in the world to open new markets for America products.” Certainly, demand for the products of those countries will decrease.

President Obama’s policies are certainly good for America, but who in the world will follow his leadership to have their job opportunities and domestic and export market shares reduced?

Chan Kai Yee is the author of “Tiananmen’s Tremendous Achievements: The Silent Peaceful Coup D’état In China…”.


When Deng Xiaoping came to power, he wanted to establish a system of collective leadership in the Chinese Communist Party (the CCP) so that there will be no repetition of Mao’s autocracy that had brought disasters to China.

Their reform and opening-up were fiercely attacked by conservatives, who were the powerful majority in the Party then and who regarded public ownership and planned economy as vital indispensable elements of Marxist socialism. The conservatives tried every means in finding faults with reformists and succeeded in removing Hu Yaobang from CCP’s top leading post on the excuse of his failure to fight against bourgeois liberalization.

To counter the opposition, Zhao Ziyang invented the new concept of the “initial stage of socialism” based on the Marxist series of social development from feudalism to capitalism and finally to socialism and communism. Zhao held that as China skipped capitalism in its transition from feudalism to socialism, its economy was too backward and could not merely pursue socialism but had to be supplemented by the development of capitalism. That concept implies that public ownership and planned economy will be resumed when China has passed that initial stage.

However, conservatives did not buy it. According to Zhao Ziyang’s memoirs, before the Tiananmen Massacre in 1989, there was a campaign to overthrow Zhao. Conservatives’ opposition to Zhao’s reform was so vehement that Deng Xiaoping even planned to retire so as to force other elders to retire in order to prevent them from interfering with Zhao’s reform.

Before Zhao was removed due to his opposition to Tiananmen massacre, Deng only succeeded in making powerful conservative elders agree that Zhao was to serve two terms till 1997. Deng had not found any one capable of succeeding Zhao then and he might well be dead by 1997 as he would be 93 years old. Deng’s and Zhao’s only hope before the massacre lied in obtaining convincing achievement by the reform by 1997. That was why from the very beginning, Deng told all those who opposed the reform not to debate whether the reform was socialist or capitalist in nature but wait for its results.

However, due to the difficulties in price reform and transformation of the money-losing state-owned enterprises and the obstacles to the reform created by opponents to the reform, they did not seem to be able to obtain convincing achievements even if Zhao had not been removed (state-owned enterprises was not successfully transformed until early 2000s). .

When Zhao had been removed, conservatism prevailed and Deng was desperate. He had to find a way to ensure that his reform will be carried on. Drawing lessons from the Chiang Kai-shek Dynasty, Mao’s absolute monarchy and Deng’s failure to establish collective leadership, Deng realized that since the elimination of the imperial dynasty by the 1911 Revolution, China had remained an absolute monarchy. The Chiang Kai-shek regime remained an absolute monarchy with hereditary succession. The CCP regime differed only in having no hereditary succession. Mao was the absolute monarch but was not succeeded by his son. Deng called the absolute monarch of CCP regime the core of CCP’s collective leadership. When Mao was the core, Mao was able to conduct his Cultural Revolution with only a minority support of the Lin Biao and Zhou Enlai factions. When Deng himself was the core, he was able to carry on his reform in spite of the opposition of a majority of Party cadres and members.

Deng decided that in order to carry on the reform, he should find a reformist successor who should become the core with the power of an absolute monarch like Mao and himself. His successor would then be able to carry on the reform in spite of strong opposition. He had the wisdom to choose Jiang Zemin, a true reformist, as his successor but told Jiang that Jiang’s priority was not to carry on the reform but to gain the position as the core like Mao and himself so as to overcome the opposition to the reform in the future.

Assisted by the Shanghai faction, Jiang, exploited the universal fear in the Party caused by Tiananmen protests to successfully establish his position as the core and carried out a coup to substitute intellectuals’ dominance of the Party and state for that of workers and peasants. He invented the first of his Three Presents by applying the basic Marxist principle that relations of production should meet the requirements of the development of advanced productive force. The economic stagnation in China and other communist countries has proved that public ownership and planned economy do not meet the requirements of the development of advanced productive force. However, the development of private sector in China has proved that capitalism meets the requirements. Jiang has thus not only justified his pursuit of capitalism adjusted by Keynesian macroeconomic control, but also denied the necessity to return to public ownership and planned economy.

By the first Represent, Jiang has thoroughly defeated economic conservatism and achieved economic liberation in China.

Jiang’s Three Represents and Deng Xiaoping Theory are the new Marxism based on Marxist materialist philosophy and Marxist basic principles.

Chan Kai Yee is the author of “Tiananmen’s Tremendous Achievements: The Silent Peaceful Coup D’état In China…”.


On January 15 a young Chinese Mainland girl ate noodle and littered the carriage on Hong Kong’s East Railway. A Hong Kong passenger told the girl to stop eating as according to the rules, eating was forbidden on the railway, but the girl’s mother did not tell the girl to stop eating and a quarrel occurred. A bystander also from the Mainland joined the quarrel, speaking quite excitedly against the Hong Kong man. The Hong Kong man supported by other Hong Kong passengers, indignantly pushed the emergency button and complained to the driver.

The driver had to stop the train, come to explain to the Mainlanders the rules and admonish them to comply to the rules, but did not fine the Mainlander in accordance with the rules. Lots of passengers suffered some delay in their travel due to the incident.

A heated debate broke out on the Internet over the incident. Hongkongers criticized Mainlanders for habitual failure to follow the rules as they often see violation of rules when they travel in Mainland China; while Mainlanders complained that they had often been discriminated and maltreated in Hong Kong.

Littering, spitting, disobeying traffic and other rules, failure to queue and other uncivilized or rude behaviors are indeed quite common among Chinese tourists abroad and make people outside China wonder why people from a county with five thousand years of civilization lack sense of common decency.

That is first of all resulted from the Cultural Revolution, when people were encouraged to rebel against all rules and good educated manners were regarded as bourgeois in nature. The better one was educated, the worse one was struggled against and discriminated against while the less one was educated, the prouder one became for that. Educated people had even to pretend to be uneducated to avoid the trouble. The practice of acting in an uncivilized manner has become in vogue since then.

However, Chinese tourists now are from the newly emerged middle class. Most of them have become rich because they have received college and even post-graduate education. Their poor manners are one of the most serious problems in China’s education system. In people’s pursuit of wealth, education on ethics, etiquette and good manners is neglected and emphasis is entirely placed on passing the examination for entering colleges. As a result the tremendous increase in college education has not brought about improvement in the manners and moral quality of Chinese people.

The latest Party Central Committee’s plenary session focused on development of culture to enhance China’s soft strength, but we still have to wait and see whether it will greatly improve educated people’s quality.

Chan Kai Yee is the author of “Tiananmen’s Tremendous Achievements: The Silent Peaceful Coup D’état In China…”.


In addition to the busy testing of its aircraft carrier, trial operation of its satellite GPS system, and launching of its third 071 landing platform dock (LPD) in September 2011, China recently launched its fourth 071 LPD during its Chinese Lunar New Year Festival according to Hong Kong’s “Mingpao” newspaper.

071 LPD is a 20,000-ton amphibious transport dock similar to the US-built San Antonio-class LPD. With a range of 6,000 nmi (11,000 km) and a capacity to carry 500-800 troops, 15-20 armored vehicles and 6 helicopters, it will be quite useful if China has to solve South China Sea disputes by force.

In July 2010, China reacted angrily at statements concerning South China Sea disputes by US Secretary of State Hillary Rodham Clinton during an Asean security gathering. It began to quicken the development of its navy. Since it decided to counter military threat with military strength, it responded to President Obama’s high-profile announcement of America’s return to Asia last year with a Xinhua comment entitled “Constructive US role in Asia-Pacific welcome” and reiteration of its statement that China’s peaceful rise constitutes no threat at all to America.

“Sun Tzu” begins its teachings by saying: “The art of war is an art of deception. Hence, one shall make his enemy believe that he is unable to fight when he is able to and that he has no desire to fight when he is going to.” Having followed the teachings in “Sun Tzu” for over 2,000 years, China believes that America’s activities in providing arms to and holding joint military drills with China’s border dispute opponents are aimed at containing China and that America’s statements to the contrary are but deception.

China launched its first 071 LPD in December 2006 and its second 071 LPD 4 years later in November 2010, but it launched the third 10 months later and the fourth five months after the third. Why was the haste, especially the haste in launching one during the Chinese Lunar New Year Festival? Because China is conducting an arms race with America in earnest. It now wants to catch up with and surpass America in military strength as soon as possible because it believes that America wants to bully it.

There is something quite similar between the China now and the Germany after World War I. German people suffered greatly when German economy collapsed due to the heavy indemnity imposed on it after it lost World War I. Chinese people suffered greatly when Britain forced it to accept import of opium after China was defeated by Britain. The misery lasted for over a century afterwards as China was bullied by various foreign powers and finally invaded by Japan for eight years. Hitler became popular as German people wanted revenge, but Chinese people do not want revenge. They want to put an end to its century-long history of being bullied by foreign powers.

Does America want to bully China? Certainly not. America is uncertain whether China’s rise will be a threat to its security and interest and world peace or beneficial to the world. It switched its strategic priority to China merely for the purpose that it can adopt preemptive action in case China turns out to be a threat. However, this shows America’s dire lack of understanding of China.

First, America is ignorant of Chinese people’s sensitiveness to bully by any foreign power. Its deviation from its traditional attitude of avoiding being involved in border disputes between other countries gives Chinese people the impression that it is playing off China’s neighbors against China in order to profit from the border disputes. Chinese people have begun to regard America as their enemy.

Second, it lacks basic knowledge about Chinese history, which is a history of dynasties. Usually, a major dynasty remained prosperous for about one century after its establishment. The CCP (Chinese Communist Party) Dynasty has been established for only three decades since Hua Guofeng, the successor of Mao Dynasty, was dethroned; therefore, there will be at least several more decades of prosperity in the future for China. People kept predicting hard landing of Chinese economy, but it has never occurred because Chinese leader and his talented assistants with moral integrity are too wise and clever to allow it to occur.

People believe that it is safe to predict China’s tremendous growth cannot last for more that 30 years because Japan’s rapid growth lasted for only 30 years in the past. However the figure 30 has no magic force for China as China is an entirely different country.

My greatest worry is that a despot like Mao may be selected as a successor to the core of the collective leadership (paramount leader) in China’s current system of succession. When such a despot comes to power, he may exploit the enmity among Chinese people to confront America when China has grown stronger than America. Such confrontation may have disastrous consequence to China and the world but in China’s political system, no one can stop the despot.

Perhaps, America is ignorant about Sun Tzu’s art of deception and believes that China really welcomes America’s return to Asia to interfere in the border disputes. Perhaps, it does not believe that China will grow stronger than it. Perhaps, it is not aware of the enmity it has roused among Chinese people. Otherwise, it would not have declared its plan to reduce its military budget and give up its goal of being able to successfully fight two major regional wars when China is making every effort to surpass it in military strength.

In my article “China’s Greater Asia Co-Prosperity Sphere”, I mentioned China’s plan to establish an Asian community similar to the EU. I believe that the prospects of being benefited from China’s huge market will help China solve border disputes peacefully. If China adopts a win-win policy in dealing with potential members of the community, Asia may become the most prosperous region in the world.

With America’s economic power, before China has established its status as the centre of Asia, America may begin to establish an Asian-Pacific community consisting of all the potential members of the Asian community and other Pacific countries and regions. As China will also be benefited by the community, it may take an active part and become America’s mutually beneficial partner. Why does America not choose this alternative? Perhaps, due to America’s long experience of Cold War, it has got used to solving problems by force or military superiority.

Chan Kai Yee is the author of “Tiananmen’s Tremendous Achievements: The Silent Peaceful Coup D’état In China…”


There is an established practice in China now that retired leaders keep a low profile and refrain from making any comment on the work of their successors. However, at the beginning of a Peking Opera show for Shanghai officials mostly at bureau-chief level on January 18, former premier Zhu Rongji broke his silence and gave a 9-minute impromptu speech.

Zhu began his speech with a joke, telling the audience to be patient as the show would last only three hours, not much longer than the official speeches they have been used to attend. Well-known for the efficiency in his work, Zhu attacked with humor officials’ lack of efficiency in giving excessive long speeches.

What provided much food for thought was that he recalled his work in Shanghai under the leadership of President Jiang Zemin and what he once said then: “We will have a satisfactory clean government in Shanghai and Shanghai will be able to achieve successes however great if only we watch closely our 506 bureau-level officials and give play to their talents.”

When Zhu retired in 2003, he firmly promised that he would not comment on government work. He expressed his dissatisfaction related to housing, automobile industry, urban communications, education, etc., during his visit to Tsinghua University for its centennial celebration in late April, 2011, but he did not mention Jiang Zemin and told his audience not to disclose what he said to outsiders.

Why did he break his silence now?

At the age of 88, Deng Xiaoping could not but break his silence in his famous Southern Tour in 1992 because conservatives were putting an end to his reform. What was the serious problem in China now that makes Zhu, 84, break his promise to remain silent? In spite of Zhu’s instruction to keep his speech in Tsinghua University secret and the CCP Central Disciplinary Commission’s notice immediately after Zhu’s speech that forbade such speech, sources revealed that Zhu was indignant that local governments robbed land from peasants to increase their income though they get 80% of the tax income of the nation. They have such excessive financial needs due to rampant corruption.

In my book “Tiananmen’s Tremendous Achievements: The Silent Peaceful Coup D’état in China…” I point out that China’s current political system is the CCP (Chinese Communist Party) Dynasty with a core who has the absolute power as the emperor of the dynasty whether the core is in office or retired. To prove that, I cited Deng Xiaoping’s Southern Tour to prove that the core though retired had the absolute power to rescue the reform when conservatives prevailed.

Will Deng’s successor Jiang Zemin continue to be the core ten years after his retirement or be replaced by Hu Jintao who will retire this year? To remain the core, Jiang’s Shanghai faction has to have a majority in the new politburo standing committee, while Hu needs a majority in it for his Youth League faction if he is to replace Jiang and become the new core.

This issue is usually resolved through behind-the-scene bargaining when preparations are being made for the coming CCP congress, but the words of a retired heavy weight in the Party and government will certainly have some decisive repercussion especially when he points out real serious issue in his speech.

That was why in spite of CCP Central Disciplinary Commission’s ban, Shanghai Party head Yu Zhengsheng, a politburo member, gave Zhu forum to air his views.


In my recent article “A Dynasty on the Verge of Collapse”, I point out that North Korea’s Kim Dynasty “has to feed its people and improve their living standards especially when its neighbors South Korea and China have become rich and mass protests for democracy are spreading to quite a few countries.” Otherwise it will soon collapse.

Just as I have predicted, Commercial Radio Hong Kong reported on January 23, 2012 that in a recent cabinet meeting, North Korea decided that this year it would concentrate its efforts on developing agriculture and light industry in order to improve people’s living standards. Kim Jong-il’s decade-long policy of focusing on developing military strength is discarded.

North Korea’s agriculture has been in great trouble since the collapse of the Soviet Union in 1991. According to Chinese sources, North Korea has been trying hard to obtain aids from the capitalist world especially America and may become America’s dependency. Its nuclear blackmail is a shrewd trick to begin dialogue with America, but it has failed to turn America into its mentor perhaps due to incompatible political differences.

According to Chinese sources, for a long time, North Korea regarded China as much inferior to America in spite of China’s success in achieving tremendous economic growth. However, Kim Jong-il gradually saw China’s potential and decided a few years ago to begin to open up to China but did not really change his course of focusing on weapon development.

Now, in order to make its major change of course a success, North Korea has to draw in Chinese capital and technology and rely on China as its major market of export. As a result, China will succeed in setting a North Korean model for the establishment of a greater Asia co-prosperity sphere. Much more Sino-North Korean joint ventures controlled by Chinese parties will be established to exploit North Korea’s cheep labor and forest and mineral resources and North Korea will become rich along with China. This will attract China’s neighbors to do the same.

China has already signed a free trade treaty with 10 ASEAN countries, which South Korea and Japan are anxious to join and India is much interested in participating. The large number of rich overseas Chinese in ASEAN countries will certainly help China in its efforts to set up such a sphere, but the most attractive factor is China’s growing market of 1.3 billion consumers. In addition, China has been satisfactorily developing its relations with Central Asian countries and trying hard to resolve border dispute with India.

If China adopts a win-win policy in dealing with North Korea and extends this policy to other countries in the sphere, China will become the center of an economic community greater than the EU.

Chan Kai Yee is the author of “Tiananmen’s Tremendous Achievements: The Silent Peaceful Coup D’état In China…”