Made in China 2025

With a larger war about to kick off in the Middle East and news-making talks taking place on the Korean peninsula, it is easy to ignore the brewing trade war between the United States and China.

In yesterday's national edition of The New York Times Keith Bradsher had two stories -- "China Is Set to Take a Hard Line on Trump’s Trade Demands" and, with Ana Swanson, "White House Considers Restricting Chinese Researchers Over Espionage Fears" -- which document how damaging that trade war likely will be.

The United States is dead set against China's "Made in China 2025" industrial policy to attain top-tier status in AI, robotics and chip manufacture:

Beijing is frustrated with Mr. Trump’s threats to impose tariffs on $150 billion in Chinese goods and dismayed by suggestions in the West that China has a weak bargaining position. Chinese officials think the country’s one-party political system and President Xi Jinping’s enduring grip on power — particularly after the repeal of presidential term limits in March — mean that China can outlast the United States and Mr. Trump in any trade quarrel.

The Chinese government believes Mr. Trump’s background as a businessman means that at some point he will agree to a deal. Seminar participants also reaffirmed previous Chinese trade policy offers to further open the country’s financial and automotive sectors, though not in ways that would impact China’s industrial modernization program, called Made in China 2025. They also suggested that China would be willing to tighten its intellectual property rules so as to foster innovation within China as well as protect foreign technologies from counterfeiting and other illegal copying.

China is insisting that the parameters of any negotiations be limited, and that the tariff threat be removed before a final deal can be struck.

Chinese officials have reached out to Treasury Secretary Steven Mnuchin, who has reacted positively to China’s overtures in the auto and financial sectors. Mr. Mnuchin, a former Goldman Sachs executive who will be on the Trump administration’s team in Beijing later this week, has sought to calm investors worried that the rhetoric between Washington and Beijing could break out into a full-blown trade war.

China’s position is that the bilateral trade imbalance arises from differences in savings rates. Households in China save roughly two-fifths of their income. Americans, on average, save almost nothing. So money from China tends to flow to the United States, buying factories, technology companies, real estate and more, and Americans in turn spend much of that money to buy goods from China. Many economists in the United States, including some at the Treasury, share that view.

By contrast, many trade lawyers, lawmakers on both sides of the aisle and Mr. Trump contend that the trade deficit stems to a large extent from unfair practices, including cheap loans by state-controlled banks to exporters.

China is ready to discuss shrinking the $375 billion annual trade deficit. But it wants to do so by buying more high-tech American goods. Washington has long blocked such deals because of concerns that they may have military value. China is also willing to buy more oil, natural gas, coal and other goods from the United States, and to help finance the extra pipelines and other infrastructure that would be needed to move them to China.

A senior Chinese government official said that Beijing is unwilling to negotiate with the United States on any curbs on Made in China 2025, which includes large-scale government assistance to favored industries in advanced-technology manufacturing. China perceives the American demands as an attempt to stop China’s economic development and technological progress, the senior Chinese official said.

Germany and other countries also have industrial policies, and the United States has not objected to them, he added. American and European officials have argued that those policies elsewhere are much narrower and less ambitious.

Other advisers and officials said that the United States had misunderstood the Made in China 2025 industrial policy. They expressed hope that it might be possible to resolve differences by explaining the program better and making very small tweaks to it — a stance that still may not appease the Trump administration.

The Chinese government is not simply throwing money, land and other resources to favored industries like robotics, artificial intelligence, semiconductors and aircraft manufacturing, they said. China is engaged instead, they contended, in a carefully thought-out program that measures potential profits for each dollar of investment. So China’s program bears some resemblance, they said, to private sector investment programs in the West.

U.S. complaints about Made in China 2025 prove that industrial policy works. The U.S. has an industrial policy too. It's the warfare state. Full-spectrum military dominance of the globe. If the Chinese achieve preeminence in AI, aviation and the manufacturing of semiconductors this might eventually threaten U.S. global hegemony.

With all these various wars looming, and with a commander in chief who favors a confrontational negotiating position, citizens of the U.S. are going to have to feel pain. They will not be able to suffer for very long because they -- we -- are weak.

No Hand-wringing Necessary: Clearly Trump Will Not Win

Since Memorial Day the frontpage of The New York Times has been a miserable place for Donald Trump.

Monday "Can Donald Trump Win? These Battleground Regions Will Decide" laid out the daunting electoral map for Trump in a general election against Hillary Clinton. Basically, the best Trump can do is capture North Carolina and Ohio. He is going to lose Florida and Virginia. And that should be it for any hopes he has of occupying the White House. Heading out West, the election turns into a rout. Hillary might even win Arizona.

Tuesday dawned with an enjoyable puncturing of Trump's acumen as a real estate tycoon. In "Donald Trump Soured on a Deal, and Hong Kong Partners Became Litigants," Farah Stockman and Keith Bradsher deconstruct a Trump boast that “I beat China all the time. I own a big chunk of the Bank of America building at 1290 Avenue of the Americas that I got from China in a war. Very valuable.”

It turns out that The Donald wooed a couple Hong Kong billionaires to bail him out when, in the 1990s, he could not make the payments on a 77-acre property known as Riverside South near Manhattan's Lincoln Center.

Trump went into partnership with the Chinese developers, Henry Cheng Kar-shun and Vincent Lo, but the relationship turned litigious a decade later when Trump tried to scuttle the sale of the property. Trump alleged that he was not consulted and could have got a higher price. He lost the suit. So the Chinese plan to use the proceeds from the sale of Riverside South to purchase Bank of America buildings in New York and San Francisco went forward with Trump as a passive investor. The properties have appreciated greatly. That's Trump's business savvy for you. He didn't win. He actually lost. But he ended up benefiting, through no fault of his own, anyway.

Wednesday's "Former Trump University Workers Call the School a ‘Lie’ and a ‘Scheme’ in Testimony," by Michael Barbaro and Steve Eder, is the most damaging frontpager of the week so far. In a response to a request from the Washington Post, the judge in a federal lawsuit against the for-profit Trump University ordered last Friday that court records be unsealed, which happened on Tuesday.

The court records show Trump University to be a shabby outfit stocked with high-pressure salesmen seeking to fleece the rubes who harbored fantasies of getting rich quick while rubbing elbows with the TV star of "The Apprentice." Basically a prequel of Trump's presidential campaign.

Today's anti-Trump frontpage offering is more conventional but nonetheless nauseatingly illuminating about how Hillary plans to best Trump now that Jerry Brown has effectively ended any hope that Bernie Sanders has of pulling off an upset on Tuesday. Amy Chozick's "Hillary Clinton to Portray Donald Trump’s Foreign Policy Positions as Dangerous" is an oddly lengthy preview (almost like we were being prepped for a state of the union address) of a speech Hillary is to deliver in San Diego today warning soccer moms (though I think now they are being called "megachurch moms") that electing Donald Trump will blow up the world.

What is revelatory about Chozick's piece is that it confirms that Hillary plans to swing to the right in order to beat Trump:

Mrs. Clinton will deliver the address on her final campaign swing before California holds its Democratic primary on Tuesday, when she is widely expected to reach the threshold of delegates needed to secure her party’s nomination. But in choosing to raise concerns about Mr. Trump’s foreign policy stances, she will be speaking to swing voters in general election battleground states who have doubts about a Trump presidency.

While Mrs. Clinton must be cautious not to alienate liberal Democrats who oppose some of her hawkish foreign policy stances, her campaign says national security could be the catalyst that drives independents and wavering Republicans to support her this fall.

Roughly 21 percent of independent voters and 32 percent of Republican voters said the most important issue this election was terrorism and national security, compared with 16 percent of Democrats, according to a Suffolk University/USA Today poll conducted last month. At the same time, 61 percent of registered voters said a Trump presidency would make America’s image in the world worse, according to the latest New York Times-CBS News poll.

“There are many Republicans concerned about this,” R. Nicholas Burns, an American ambassador to NATO during the George W. Bush administration who also served on Bill Clinton’s National Security Council, said of Mr. Trump. “They find his policy positions beyond the pale, and they’re also turned off by his vulgarity.”

To that end, the Clinton campaign and its outside advisers have embarked on an effort to reach out to prominent moderate Republicans who could endorse Mrs. Clinton, largely making the case for foreign policy sure-footedness.

Those calls have included to an aide of the 2012 Republican nominee, Mitt Romney, and to Nicholas F. Brady, who served as secretary of the Treasury under Mr. Reagan and the elder Mr. Bush, with plans to reach out to James A. Baker III, a White House chief of staff to President Ronald Reagan and secretary of state under President George Bush.

Very bad news for all those Bernie supporters looking for a reason to vote Hillary in November.

Obama Guts Dodd-Frank + Umbrella Movement Epitaph + Grocery Store Torture Report Discussion

When we look back on the Obama years, I fear, they will be seen as a dividing line. On one side of the line will be the quaint notion that people actually have a say in how we live our lives; on the other, the dystopia of our lives as actually lived in a brutal society held together by lies ruled by the super-rich and their police-state enforcers.

Last night the House of Representatives narrowly passed a budget bill (Ashley Parker and Robert Pear, "House Narrowly Passes Bill to Avoid Shutdown; $1.1 Trillion in Spending") that guts a main provision of Dodd-Frank, the key piece of legislation designed to prevent another Great Recession. House minority leader Nancy Pelosi, no one's idea of a Leftist firebrand, broke with the Obama, who was lobbying for the bill, and asked her caucus to reject it. The budget ending up clearing the House with 162 Republicans and 57 Democrats voting yes.

Jonathan Weisman explains in "Furor Over Move to Aid Big Banks in Funding Bill" what it is that the House just did:

WASHINGTON — In a 1,600-page, $1.1 trillion spending bill, a provision to roll back an obscure financial regulation became a focal point of uproar as Congress struggled to keep the government funded. 

The “push-out” regulation — a measure to ensure that banks trade their riskiest financial instruments without the protection of the Federal Deposit Insurance Corporation or the Federal Reserve’s backup — was controversial from the start. Hundreds of billions of taxpayer dollars were shoveled into Wall Street banks after instruments like credit default swaps became worthless in the financial crisis, but even some crucial Democrats were unsure if Congress went too far when it voted to include push-out in the landmark Dodd-Frank law to regulate Wall Street in 2010. 

But with regulators pressing to put rules into effect to carry out the law, a provision in the enormous spending bill to remove the push-out regulation drew bipartisan outrage. Representative Nancy Pelosi of California, the House minority leader, said she was “heartbroken” by the “taint” visited upon the spending bill, which would finance virtually all of the government through September.

***

The fierce Democratic opposition over the Dodd-Frank rollback provision created the odd spectacle of President Obama and Vice President Joseph R. Biden Jr. calling Democrats to muster support for the spending bill over the opposition of Ms. Pelosi. 

“I love the American political system, I really do, but the ability to sneak in substantive policy measures and make it take it or leave it, I think it’s appalling,” said Simon Johnson of the Massachusetts Institute of Technology’s Sloan School of Management and a former chief economist at the International Monetary Fund, who is a prominent critic of the nation’s big banks. 

The push-out legislation assumed outsize importance, not only because of what it does but because the biggest Wall Street companies have fought it since it was proposed. 

The language in the spending bill was inserted by Representative Kevin Yoder, Republican of Kansas, but he did not write it. Citigroup did. In 2013, the bank and its allies were able to corral a bipartisan vote to pass the rollback out of the House Financial Services Committee. In an analysis by The New York Times of Citigroup emails, more than 70 lines of the committee’s 85-line rollback bill came from Citigroup’s recommendations.

The banking industry strongly supports the rollback measure. James C. Ballentine, an executive vice president at the American Bankers Association, said financial instruments like credit deferred swaps are used to mitigate risk, not bolster it. To force their trading into units unprotected by federal taxpayers would be onerous, he argues. 

“The push-out requirement to move some swaps into separate affiliates makes one-stop shopping impossible for businesses ranging from family farms to energy companies that want to hedge against commodity price changes,” Mr. Ballentine said. 

Tony Fratto, a former official in the Bush Treasury and White House, called the opposition “a lot of hyperbole” around “an incremental common-sense regulatory improvement.” 

Mr. Johnson said the evocation of family farms and mom-and-pop banks was specious. The four largest banks conduct more than 93 percent of all derivatives trading in the United States. The repeal push is for them, he said. 

Such banks can still deal in derivatives and credit-deferred swaps in units uninsured by the federal government, but they could charge clients a considerably higher premium if they could keep that federal backstop. 

“In 2008, we learned the economic consequences of conducting derivatives trading in taxpayer-insured banks,” said Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corporation, calling the repeal Congress is contemplating “illogical.”

We're back to where we started before that 2008 election-night celebration in Grant Park when Oprah and Jesse Jackson cried for the television cameras.

Obama has been a terrific bust. His administration has returned the U.S. military to Iraq, has signaled a open-ended commitment to staying on in Afghanistan, has embarked on a New Cold War with Russia, is pivoting to Asia to confront China, and now has provided the crucial support to gut Dodd-Frank.

Most people understand that it was Wall Street's addiction to lightly-regulated derivatives that caused the financial crisis. Obama's support for a federal backstop of the big banks' derivatives business proves that nothing has changed.

So next time you run into a liberal who wants to tell you that Obama is a good and decent leader who would always do the right thing if not for those devilish Republicans in Congress remind him of Obama's support for the 2015 budget.

The epitaph of the Umbrella Movement has been written by Chris Buckley and Keith Bradsher, "Hong Kong Protesters Lose a Last Bastion, but Vow to Go On." The goal here, as in any political campaign, is to claim victory, regardless of the actual outcome, once the campaign is over. Note the tabloid-like opening:

HONG KONG — Constance So, a slightly built university student, wept as she looked for a way past the tightening ring of police officers closing in on the last of the sizable protest camps in Hong Kong. 

With friends urging her to avoid an arrest record, Ms. So, like many others, decided to give up voluntarily. There was no violence, only a few defiant final stands and many tearful goodbyes, as the nearly three-month Umbrella Movement disbanded. 

“It was like my home,” Ms. So said. “I’m leaving my friends behind. I feel like I’m betraying them.” 

For the Hong Kong authorities and their superiors in Beijing, the peaceful end to the protest is likely to be seen as a major victory. They repeatedly rebuffed demands for a greater degree of democracy in this former British colony, and defused the longest sustained political uprising on Chinese territory in many years without a bloody crackdown.

Yet even in their defeat, the protesters, most of them college students, left with a new sense of political identity, a willingness to challenge the almighty power holders in Beijing, and a slogan from a science-fiction film that many of them repeated as they cleared out of the encampment in Hong Kong’s Admiralty district: “We’ll be back.” (A sliver of a protest camp remains in Causeway Bay, a busy shopping area.)

Buckley and Bradsher, thankfully, do include a counter-narrative, which has to do with the diminished status of  Hong Kong's tycoons:

Some in Hong Kong worry that the protests this autumn have harmed the long-term cause of achieving greater democracy. 

They fret that Beijing has permanently transferred large numbers of security and intelligence specialists to Hong Kong to keep a much closer eye on the Chinese Communist Party’s many critics. Beijing, they say, could end up even more resistant to further democratization in Hong Kong for fear that a hostile government might be elected. 

“This movement has done more damage to the pro-democracy camp than anything in the last 17 years,” said Steve Vickers, who was a senior Hong Kong police official before Britain handed over Hong Kong to China in 1997, and who said he favored the introduction of greater democracy. 

Under the British, and through the first 17 years of Chinese sovereignty here, the most powerful political force has been the leaders of the city’s biggest businesses — heavily Scottish at first, but now mostly Chinese families originally from the neighboring Guangdong Province or from Shanghai. These tycoons have long opposed increases in social spending, fearing they would lead to higher taxes on them.

But the bruising political battle with democracy activists has hurt the tycoons’ image and their clout with top city officials and the Beijing authorities, people with a detailed knowledge of Hong Kong’s policy making said. 

To Beijing’s annoyance, the tycoons were reluctant to criticize the protesters for fear that their own businesses might be boycotted. One of the most politically active business leaders, a real estate developer, James Tien, publicly broke ranks in October with the administration’s support for Mr. Leung and called for more negotiations with the protesters. 

“The tycoons are no longer a factor; their days are past,” said the person who works closely with the Beijing and Hong Kong governments.

Last night at the grocery store I asked the checker, a guy I have known for years, what he thought of the torture report. He said, "Torture? What torture report?"

I explained to him that the Senate had released its study of the Bush administration's post-9/11 use of torture and its creation of a network of overseas secret prisons to house the tortured detainees.

He said, "Well, I'm still glad I live in this country."

"Have you ever lived anywhere else?"  I asked.

"No, I haven't."

"How do you know it's not better in, say, Ireland?"

"Well, you're right. But I would like to think that it is better here."

U.S. Business Decries Chinese for Enforcement of Antitrust Law

After a blissful 21-hours away from the Internet, a return to the laptop this morning reveals a Gray Lady overtaken with stories on the Asia-Pacific Economic Cooperation (APEC) summit underway in Beijing, where a lamed Obama arrives this morning.

According to Mark Landler, "Obama Arrives in China on Trip With Complex Agenda," one of the main goals for Obama in Beijing will be to secure commitment to the Trans-Pacific Partnership (TPP) as well as a new bilateral treaty with China:

Later on Monday, Mr. Obama was to speak to business executives from that group, the Asia-Pacific Economic Cooperation forum. He will also meet leaders from 11 countries involved in trying to create the Trans-Pacific Partnership, an ambitious American-led trade pact that would be a central pillar of Mr. Obama’s “strategic pivot” to Asia.

The White House has methodically lowered expectations that a deal will be reached in Beijing. But the fact that Mr. Obama is meeting the other leaders so early in the trip — combined with recent reports of progress in talks with one of the key participants, Japan — has prompted trade analysts to speculate that there could be some kind of a surprise. 

The Trans-Pacific Partnership does not include China, so Mr. Obama’s main commercial proposal for the Chinese will be a new bilateral investment treaty between the countries. Economists said it could be the most significant opening of the Chinese market for American companies since China joined the World Trade Organization in 2001. 

American businesspeople view the treaty as an indicator of how serious Mr. Xi is about overhauling the Chinese economy, after a start that many describe as shaky. It would require the Chinese to open dozens of sensitive markets, some that remained closed to American companies, or required Chinese partners. 

“Optimism is moderating in the American business community,” said John Frisbie, the president of the U.S.-China Business Council. “The reason for that softening is policy uncertainty. What’s the reform policy direction? We’ve seen little tangible impact so far.”

A reason for the moderating optimism in the American business community is the subject of an excellent report today by Keith Bradsher, "No Longer Business as Usual in China." China is using its antimonopoly laws to go after companies, a percentage of which are foreign multinationals, for corruption and price gouging:

While China has long presented unique challenges for businesses, the regulatory and legal environment has been especially perilous in recent months, with authorities pushing companies to cut prices and punishing them with large fines. GlaxoSmithKline, Volkswagen, Chrysler, Mead Johnson, Samsung, Johnson & Johnson and other companies have been hit with multimillion-dollar fines this year, while Microsoft, Daimler and Qualcomm are under investigation. 

Then suddenly, in the last five weeks, there has been a lull in what had been a rapid pace of punishments. The pause has been all the more abrupt because Chinese officials were putting the finishing touches on what seemed likely to be their heaviest penalties yet in the continuing crackdown on monopolistic practices. The target was even identified by Chinese officials at a news conference in mid-September as Qualcomm, which invents and licenses mobile technology.

***

While national and provincial investigators appear to have pressed pause, township governments have quietly stepped up their activities, raiding the local offices of multinationals. 

The townships, which do not have the legal authority to enforce antitrust legislation, are operating under old, vaguely worded laws against price gouging as well as collusion that are still on the books even as China has modernized much of its legal code to embrace more market-oriented principles. The local investigators have been copying large amounts of memos, tax records and financial documents. The more complex documents have then been forwarded to more experienced investigators in provincial capitals.

“We have clients that are investigated by very, very rudimentary teams who have no clue what they are doing,” said an adviser to multinationals who insisted on anonymity because of the legal sensitivity of the cases. Those teams, the adviser said, nonetheless manage to accumulate large quantities of confidential corporate data, sending a shudder through the head offices of the affected multinationals.

It is wonderful to read the squeals of Western corporate chieftains and captains of industry. Where are the hosannas to the rule of law? Of operating in a corruption-free commercial market?

Bradsher's story wonderfully, if unintentionally, highlights Western hypocrisy as it lays out the lax, captive regulatory environment U.S. and European multinationals have grown accustomed to:

Whether the Chinese government is focusing disproportionately on foreign companies is the subject of considerable dispute. 

Foreign business groups calculate that half the recent national and provincial antitrust and collusion penalties have been aimed at multinationals even though they represent a very small share of the Chinese economy. But Chinese officials said in late September that if all collusion penalties assessed by local governments are included, then multinationals are only the targets a tenth of the time. 

Western companies have been taken aback by many procedural aspects of the investigations, which diverge significantly from practices in the United States and Europe. 

Chinese regulators have been pushing through antitrust cases in a few weeks, giving companies little chance to respond. In the United States, they take two years or more.

China also does not have clear rules on whether investigators need warrants to search offices or whether executives are entitled to lawyers, particularly foreign lawyers. So many companies have been raided that the European Union Chamber of Commerce in China has organized a conference for executives in Beijing on Nov. 21 titled, “Dawn Raids in China — How to avoid and answer a sudden knock at your door?” 

Antitrust authorities in China also routinely share evidence with other agencies, including tax collectors. The information, which generally cannot be shared among agencies in the United States, has opened up new avenues for potential cases. 

People’s Daily, the official newspaper of the Communist Party, devoted nearly an entire page on Oct. 13 to accusing foreign corporations of diverting large profits out of the country without paying taxes on them — a complaint sometimes levied against multinationals in the United States and Europe.

Yuan Shuhong, the deputy director of the legislative affairs office of China’s State Council, or cabinet, said at a news conference in Beijing on Thursday that China planned to enact an administrative procedures law to require that due process and other legal norms be followed during government regulatory actions. But the law may take considerable time to draft and approve, he warned.  

Some lawyers contend that the Chinese government is simply looking to create a robust regulatory framework and stamp out corruption. Chinese government agencies “are becoming more and more sophisticated, and confident in launching investigations against foreign companies,” said Michael Gu, an antimonopoly specialist at the AnJie Law Firm. 

To others, the legal cases are signs that the government’s growing nationalism — already evident in state-run media and China’s contentious relationships with neighboring countries — extends to economic policy as well. Critics contend China is going beyond the spirit, and possibly the letter, of the free-trade rules of the World Trade Organization, even though China, as the world’s largest exporter, has been the biggest beneficiary of the W.T.O. 

“China should be out there in the front trying to make W.T.O. rules stronger, not undermining them,” said Susan C. Schwab, who was the United States trade representative from 2006 to 2009. “But I don’t get the sense there is anyone in Beijing making that case, because you’ve got a very self-absorbed focus on industrial policy coming out of parts of the government.” 

China’s assertive stance has created a dilemma for the United States and other trading partners. While they are reluctant to defend companies that may have bribed officials or colluded with competitors, they are also unsettled by China’s insistence that companies cut prices for products or otherwise hamper business. The Obama administration has ended up saying little publicly even as American business leaders have fumed. 

“We have been in regular contact with U.S. companies on a range of issues that may affect the business climate in China and want to ensure foreign firms are not singled out for Anti-Monopoly Law investigations and are treated fairly by Chinese enforcers,” Matt McAlvanah, the chief spokesman for the Office of the United States Trade Representative, said in a written reply to questions. “The U.S. has had longstanding discussions with the Chinese government on antimonopoly law and we will continue this engagement.” 

Advocates of a more confrontational trade strategy have criticized the administration for not taking a more public stance. They point to various potential tools, like threatening to limit China’s access to the American market.

So there you have it. Really all you need to know. The U.S. Trade Representative is being lobbied, with requests to threaten a trade war, to punish China for cracking down on corruption in its marketplace. I'm sure American consumers would love government action to cut prices; we just know not to expect it.

Andre Vltchek had a terrific piece, "‘Pro-Democracy Protests’ in Hong Kong," this past weekend on the Counterpunch web site. Vltchek travels to Hong Kong and talks to the Umbrella Movement protesters at the various occupation sites. He finds a lot of bourgeois youth hopped up on the Western media with little understanding of their role in the U.S.-backed color revolution scheme.

What Vltchek's story also accomplishes is an appraisal of China that is not predisposed to see it as a growing evil dragon biding its time until it can gobble up the peaceful democratic West:

For years, Western propaganda has tried to convince the world that China is actually ‘not communist’, not even socialist. A highly successful communist nation would be the worst nightmare to the Empire; it would torpedo Western dogma about the ideological victory over non-capitalist and non-imperialist forms of government. 

So far, the propaganda has been extremely successful. If people were asked in Berlin, London or Paris, many would make ludicrous statements that ‘China is more capitalist than many openly capitalist countries.’

By provoking China, directly and through its client states like Japan, Philippines and South Korea, the West hopes that the big dragon will eventually lose its patience, will snap, and consequently gain a reputation as a highly aggressive creature. That could, in turn, ‘justify’ another arms race, perhaps even a direct conflict with China.

The more socialist China becomes, the more the West panics. And China is becoming increasingly socialist: by maintaining the central planning system, by holding in state hands its key industries, by commanding the private sector what to produce, or by declaring that if the people would not be given free medical care and free education, the country would lose its right to call itself communist. The more public parks are built, the more high-speed trains and urban subway lines, as well as theaters and cultural centers, the more terrified the West becomes.

Now the revanchist students in Hong Kong admit that China (PRC) actually is a communist nation, but from their lips comes something extremely negative. And they declare openly how much they hate communism.

It all goes really well in the West, because China, together with Russia, Venezuela and Iran, are on the top ‘hit list’.

Protests in Hong Kong surely came in at an extremely opportune time, for the Empire.

Although China is acting with tremendous restraint (much greater than the US, France or UK have shown towards their own protesters), it has become a target of yet another smear campaign in the Western mass media outlets.

Hong Kong Chief Executive Speaks for Leaders Worldwide: You Can't Have Open Elections Because Then Poor People Will Have Power

Yesterday government officials in Hong Kong debated leaders of the Umbrella Movement on television, something that would never happen in the United States, and something which did not happen during the Occupy Wall Street protests of autumn 2011. Then protesters were dismissed as infantile Utopians who were unreasonable for not articulating a list of demands that could be conveniently translated into the political/legislative process. At the same time, Obama and the Democrats appropriated the main Occupy argument about income inequality, which carried them to an impressive victory over Romney and the GOP in 2012.

Reuters has a handy story about the TV debate, "Hong Kong students put their case to government, but no breakthrough":

Communist Party rulers in Beijing in August offered Hong Kong people the chance to vote for their own leader in 2017, but said only two to three candidates could run after getting majority backing from a 1,200-person nominating committee, which is widely expected to be stacked with Beijing loyalists. 

The protesters decry this as "fake" Chinese-style democracy and say they won't leave the streets unless Beijing allows open nominations. 

"We hope the Hong Kong government doesn't become an obstacle on the democratic road for Hong Kong people," [student leader Alex] Chow added. "But that it will help us dismantle these road blocks and to lead Hong Kong people to bring about true democratic reform." 

[Chief Secretary Carrie] Lam reiterated the government's position that open nominations were not possible under Hong Kong law. 

"The students' voices and demands have been clearly heard by the special administrative region government, Hong Kong society and the central government," said Lam, seated on one side of a U-shaped table with four colleagues facing an equal number student leaders wearing black t-shirts. 

"But no matter how high the ideals, they must be strived for through legal, appropriate and rational means." 

The unprecedented open debate on democracy, that put protesters on an equal footing with Hong Kong officials who have branded their acts illegal, reflected a shift in the government's approach to engage rather than shun a movement that has lasted beyond most people's expectations.

Chief Secretary Lam was careful to note that no other nominating process exists in the Basic Law other than by nominating committee. The students of the Umbrella Movement want to abolish the constituent groups that are represented in the Hong Kong legislature and make up the nominating committee. As Michael Forsythe and Alan Wong report in "On TV, Hong Kong Openly Debates Democracy":

The students and other protesters want a more open nomination process as well as the abolition of so-called functional constituencies, which are industry, professional and social groups that are represented in Hong Kong’s legislature and in the committee that currently picks the chief executive. 

The government has rejected or ignored all of the students’ demands, except for their request to talk.

Hong Kong’s chief executive, Leung Chun-ying, made clear on Monday that the government would only listen to what the students had to say and explain to them how Hong Kong’s political process works. The territory has a great deal of autonomy from Beijing, and its people enjoy a broad range of civil liberties that mainland Chinese lack, including freedom of speech and assembly.

If the Umbrella Movement, seeking a more popularly democratic way to elect the chief executive of Hong Kong, dismisses the pre-selection of two or three candidates by a rigged nominating committee as a "fake," then the democracy of "the greatest nation on Earth," a.k.a., the United States is also a "fake," which it of course is.

Speaking for all plutocrats worldwide Hong Kong's top official Leung Chun-ying laid it shockingly bare the other day (which surprisingly received little comment, really no comment that I saw): that a government cannot have truly popular, wide-open nominations because then the poor will have a majority voice and they might vote themselves a welfare state. The amazing story by Keith Bradsher and Chris Buckley,"Hong Kong Leader Reaffirms Unbending Stance on Elections," appeared yesterday:

HONG KONG — The Beijing-appointed leader of Hong Kong, Leung Chun-ying, said Monday evening that it was unacceptable to allow his successors to be chosen in open elections, in part because doing so would risk giving poorer residents a dominant voice in politics. 

Mr. Leung made the statement during a broad-ranging defense of his administration’s handling of pro-democracy protests that have disrupted the city for more than three weeks. 

In an interview with a small group of journalists from American and European news media organizations, his first with foreign media since the city erupted in demonstrations, he acknowledged that many of the protesters are angry over the lack of social mobility and affordable housing in the city. But he argued that containing populist pressures was an important reason for resisting the protesters’ demands for fully open elections. 

Instead, he backed Beijing’s position that all candidates to succeed him as chief executive, the top post in the city, must be screened by a “broadly representative” nominating committee appointed by Beijing. That screening, he said, would insulate candidates from popular pressure to create a welfare state, and would allow the city government to follow more business-friendly policies to address economic inequality instead. Leung Chun-ying, the chief executive of Hong Kong, supports Beijing’s lead role in screening the region’s future leaders.  

Mr. Leung’s blunt remarks reflect a widely held view among the Hong Kong elite [and elite world over] that the general public cannot be trusted to govern the city well. His statements appeared likely to draw fresh criticism from the democratic opposition, and to inflame the street struggle over Hong Kong’s political future.

***

Mr. Leung said that if “you look at the meaning of the words ‘broadly representative,’ it’s not numeric representation.” 

“You have to take care of all the sectors in Hong Kong as much as you can,” he said, “and if it’s entirely a numbers game and numeric representation, then obviously you would be talking to half of the people in Hong Kong who earn less than $1,800 a month.” 

“Then you would end up with that kind of politics and policies,” he continued.

The philosophy C.Y. is espousing is of course the American way of thinking, so American it is enshrined in the U.S. Constitution. The Founding Fathers were as paranoid -- if not more so -- with popular democracy as they were with monarchy or oligarchy.

So for the Gray Lady to continue to favorably spotlight the young protesters of the Umbrella Movement who are trying to implement a form of democracy that the owners and editors of the paper clearly do not support, which is to say a broadly egalitarian system, one has to note the glaring display of bad faith. This then lends weight to the notion that U.S. mainstream advocacy of the Umbrella Revolution -- something that would never be tolerated in the homeland; look at Ferguson: protesters were not allowed to stand still let alone sit down -- is part of a Color Revolution scheme "Pivot to Asia."

After what happened in Kiev last February, no wonder Beijing is paranoid.

Umbrella Revolution Folding Up After Only a Week

I should be clear. I am not opposed to the pro-democracy protests in Hong Kong.

What I am opposed to is the official narrative of the protests as told in the Western mainstream media. That narrative goes something like this: a peaceful, industrious, capitalist people struggles to free itself from the tentacles of a totalitarian Communist China by embracing the kind of democratic reform we enjoy in the egalitarian, modern West.

It is a crock of shit, a lie, part of the larger narrative of official enemies. There are bad actors on the global stage, according to the Gray Lady, and these number Iran, China, Russia, Venezuela, Cuba, as well as others. The official enemies found in the mainstream media almost always align with those that the U.S. State Department considers antagonists.

Take today's paper for instance. the number of major stories devoted to Occupy Hong Kong equal that of the West African Ebola outbreak. All this week there have been saturation levels of coverage of the pro-democracy protests; Occupy Wall Street never garnered anywhere near the attention.

So what are we to make of this? The obvious, I would think: We are dealing with an official enemy here, the People's Republic of China; so no expense will be spared. In the case of Occupy Wall Street (OWS), the enemy in question was the be-all and end-all of the U.S., "capitalism in one country" state itself, a nominally democratic massively plutocratic neoliberalism.

As the Hong Kong Occupy protests begin to splinter today, it is interested to note the differences and similarities with Occupy Wall Street. Of significant differences, I think there are two. First, Occupy Wall Street was very careful never to articulate specific political demands, as have the two main student groups and Occupy Central With Love and Peace have in Hong Kong. In Hong Kong the two demands are that chief executive Leung Chun-ying resign and that going forward his successor can be elected by popular vote without first being approved by a nominating committee selected by Beijing. OWS was a Utopian movement, a grand gesture rejecting pretty much the entire cultural project of the West -- its consumerism, its pay-to-play representative democracy, its pauper's wage slavery careerism. There have been indications that this sensibility is also at work in Hong Kong. Good.

Second, the street occupations in Hong Kong are more akin to what went on in Bangkok in the run up to the military coup there than Occupy Wall Street and its various epigones across the United States. OWS was very careful to choose parks, usually located downtown and relatively small, for its occupations. Marches would proceed from those spaces. But mass sit-ins at several locations of the type that protesters in Hong Kong are undertaking were never a feature of Occupy Wall Street -- for the simple reason that, without a doubt, the police would crack down quickly and harshly and be applauded in the prestige press for doing so.

The main similarity between OWS and Hong Kong is the commitment to leaderlessness and consensus in decision making and a lateral rather than hierarchical social structure. This is creating the obligatory splintering and chaos, as Austin Ramzy and Keith Bradsher describe in "Hong Kong Leader Refuses to Resign, but Deputy to Meet With Protesters":

“We don’t have a leader,” said Irene Ng, an English major at Hong Kong Baptist University. “This is trying to be a democracy, but then you try to reach a decision and you can’t. Nobody can decide. The ultimate problem is it might split us apart.” 

The protesters interviewed gave no indication that a retreat was imminent. But many wondered how long they could sustain the turnout necessary to block crucial roads in the city and just what would constitute an acceptable victory. 

Tim Lam, an engineer who said he had joined the sit-ins every day since Sunday, said he expected the occupation to last another week at most. “That’s about how long the protesters’ passion can last,” he said. “After one, two weeks of occupation, protesters would start to think about how it affects the economy, the everyday lives of people.” 

Further escalation by the protesters could alienate members of the public resentful of a demonstration that affects their daily lives. But without more aggressive steps, the protests could fade. “If we take rash actions, we may lose people’s sympathy,” said Niko Cheng, a recent college graduate and protester in Mong Kok, a densely populated area of Hong Kong on the Kowloon Peninsula. “But if this drags on — it’s already turning into a carnival, with people dancing, singing and all that — people may forget what they’re here for.” 

Prominent voices in the pro-democracy campaign have indicated that there is no consensus on what, short of an unlikely reversal of the central government’s position, would lead to an end of the protests.

Umbrella Revolution Through the Prism of Occupy Wall Street

It started in Tunisia in December 2010 when a food vendor set himself on fire to protest his treatment by a local government official. Mass protests over joblessness, inflation, corruption -- the whole hopeless condition we have become familiar with over the last 20 years -- followed, leading to president Zine El Abidine Ben Ali fleeing to Saudi Arabia in January 2011.

That same month protesters occupied Tahrir Square in Cairo. By February president Hosni Mubarak had stepped down, handing power to the Council of the Armed Forces.

There was a feeling of jubilation. Old, rotten systems could be swept away by people power. That was the feeling the Arab Spring inspired.

In September 2011 the Occupy Wall Street movement began in Lower Manhattan in emulation of the Tahrir Square protests. “America needs its own Tahrir.” Copycat Occupy encampments shot up all over the United States and Europe. We were all giddy with hope.

Once Zuccotti Park -- the central protest site of Occupy Wall Street -- was cleared early one morning in November by NYPD, the party was over. Other Occupy encampments would linger on, but without the central, symbolic site of resistance in Wall Street, the movement shuffled off the stage.

I was a supporter of Occupy Wall Street; I supported financially and participated modestly in the activities of the Occupy Seattle.

My assessment is that weather is an issue for peaceful sit-ins/occupations of the type that Hong Kong is embarking on with its Umbrella Revolution. (Thank goodness it has been named something other than another color.) Rain, constant rain in the fall here in the Pacific Northwest, turned the Occupy Seattle encampment, once it had been moved from downtown's Westlake Park up to Seattle Central Community College, into a fetid frigid filthy swamp populated by what seemed to be mostly junkies and homeless youth. It went from being a tightly run, clean, compact encampment with a busy field kitchen serving nutritious hot meals to a post-apocalyptic slum.

The gist of Keith Bradsher's article this morning, "Hong Kong Government’s Strategy on Protesters: Wait Them Out," is that the decision makers, following Sunday's orgy of  tear gas and pepper spray, have gotten a handle on things:

The wait-them-out strategy appears to have the support of the city’s influential tycoons, many of whom are out of town during this holiday week in any case. The tycoons derive the bulk of their income from leasing out their many commercial, office and residential properties, and their tenants have to keep paying Hong Kong’s famously high rents even as protesters restrict access to many businesses.

The hope of the Hong Kong government, and of Beijing, is that this economic pressure will turn owners of small businesses and other members of the middle class against the demonstrators. Local officials hope that the public will come to see the protesters as people who inconvenience others, not as icons of democracy, as the students occupying Tiananmen Square in Beijing became in 1989 before China’s brutal crackdown.

“This is a Cultural Revolution revival, this is not Tiananmen — they think they are doing the right thing, so they can infringe on other people’s interests and therefore make the government kowtow to them,” said the person heavily involved in the government’s decision-making. 

The government adviser said officials were actively trying to avoid a Tiananmen-style crackdown. “We cannot repeat the mistake of 25 years ago,” the adviser said.

The rainy season in Hong Kong is in the spring. Autumn is supposed to be pleasant. The cool winter months can be spent easily outdoors with the proper amount of layering. So the Umbrella Revolution could be lengthy. Bradsher hints at a possible concession that the PRC is willing to make:

The central authorities in Beijing have allowed Hong Kong officials to manage the political crisis here as long as they do not promise fundamental changes in how the next chief executive is chosen in 2017. The Hong Kong government has been mulling, with Beijing’s support, a small compromise that might allow democracy supporters to say later that they had achieved something. 

Beijing has mandated that while all adults will be allowed to vote in 2017, only names approved by a nomination committee will be allowed on the ballot. The nomination committee is to be drawn in equal shares from four sectors of society; one of these, for example, is the “industrial, commercial and financial sector,” which tends to be dominated by pro-Beijing tycoons. 

The Hong Kong government is willing to broaden the number of people who participate in each sector’s selection of delegates, said the person heavily involved in local decision-making. But while a few pro-democracy politicians have been willing to discuss such a change, there has been no such interest from protesters. They mainly want the general public to be allowed to nominate candidates, an idea that officials have firmly ruled out.

The primary difference between Occupy Wall Street and Occupy Central with Love and Peace is that OWS rejected the whole neoliberal system where the 99% are ruled by their 1% overlords who controll the predatory casino capitalist economy and the democratically elected representatives. The Umbrella Revolution doesn't want to change the neoliberal system; it just wants to change Hong Kong's Basic Law to allow for direct elections of freely nominated (meaning not pre-selected by Beijing) candidates for chief executive. In other words, the goal of the Umbrella Revolution is no revolution at all.

The Kiev Junta Did It + Israel Invades Gaza

Before moving to the downing of the Malaysia Airlines jet over Grabovo, Ukraine, a few words on Israel's invasion of Gaza, which began yesterday. Jodi Rudoren has the story, "1 Israeli, 20 Palestinians Killed in Gaza Ground Offensive." I mistakenly believed that Israel's talk of a ground assault was a feint while another ceasefire was worked out in Cairo with Palestinian Authority leader Mahmoud Abbas. Well, they pulled the plug on those talks:

President Mahmoud Abbas of the Palestinian Authority, whose meetings in Cairo on Wednesday and Thursday failed to produce a cease-fire agreement, told reporters there that the ground operation would “lead to more bloodshed and complicate efforts to end the aggression,” according to WAFA, the official Palestinian news agency. Mr. Abbas was scheduled to travel to Turkey and perhaps Qatar on Friday to continue cease-fire discussions.

Where the conflict goes now is anybody's guess. Israel's stated purpose is to close the tunnels that Hamas uses to smuggle its rockets, which I suppose has the advantage of Netanyahu being able to declare victory whenever he wants. Who is to say how many tunnels actually exist? They don't appear on Google Maps. So Israel will rack up a large body count and administer as much destruction as possible. The wild card is what happens in Israel and the West Bank. Israel's Western allies will certainly shield her from any official condemnation. But what of the Palestinian population in the West Bank and Israel? Will a third intifada develop? So far Israel is coming out on top because the conflict remains what appears to be the latest iteration of Operation Cast Lead.

Now to the war in Novorossiya and who is responsible for blowing the Boeing 777 commercial jetliner, carrying 298 passengers, out of the sky. Ukraine has posted audio of an intercepted phone conversation from a militia leader named Igor Belzer where he claims to have shot down a plane. This is being covered by the Gray Lady, but it is being treated with kid gloves. No one is embracing it; that is how low the credibility of the junta is even by news organs that have supported Kiev's legitimacy from the outset.

Sabrina Tavernise and Keith Bradsher, two topnotch reporters, have the lede story this morning on the Malaysia Airlines jet, "Russia Denies Role in Downing of Airliner." They puncture the junta's claim that a ragtag militia under the command of a Belzer could launch a fancy missile system capable of bringing down a commercial passenger jet traveling at 33,000 feet

Peter Marosszeky, a longtime aircraft engineer and former senior executive at Qantas, PanAm and American Airlines who advised Boeing on the development of the 777 aircraft, said in a telephone interview that the 777-200 had an extremely long range and would have enough fuel to divert around a dangerous area during a 12-hour flight if the pilots chose to do so. But he said that airlines have typically not worried until now about surface-to-air missiles reaching planes at cruising altitude, because only a very large missile with a lot of fuel could ascend such a distance. 

Mr. Marosszeky expressed skepticism that militiamen could readily fire such a large missile without training as well as cooperation from whoever owned or manufactured the missile. “You’ve got to have special codes and so forth to operate these things,” he said.

Tavernise was on the scene in Grabovo and talked to Novorossiya fighters there. They said point blank that their side had nothing to do with it. It rings true:

As a cloudy dawn came, the full horror of the field was on display. Small white pieces of cloth dotted the grassy farmland, marking the spots of bodies. 

Four rebels in fatigues were wandering through the ruins, looking through people’s belongings and riffling through guidebooks and bags. 

When asked who was responsible for the crash, they looked incredulous and said that it had of course been the Ukrainian military. 

“This wasn’t ours,” said a rebel who identified himself only as Alexei, standing looking at an overhead bin in the grass with a rifle over his shoulder. “Why would we do this? We’re not animals.”

Tavernise's interviews from around the crash site revealed that the flash of the missile originated from Snizhne (the city that was on the news earlier this week when Ukraine accused Russian military aircraft of blasting apart a four-story apartment building and killing 11 civilians):

The crash remained the subject of intense debate in the small Ukrainian town of Grabovo, as residents tried to come to grips with what had unfolded in the fields where they work, just yards from their homes. 

Two villagers said quietly that they had seen the flash of a rocket in the sky around the time the plane went down. Victor, who said he was too afraid to give his last name, said that he had been in his garden at the time and that he had seen “the light coming from a rocket.” 

He said it had come from the direction of Snizhne, a city where the Ukrainian military has been bombing rebel positions frequently for more than a week. “It was a rocket, I’m sure of it,” he said.

The smoking gun here is not the bogus Belzer intercept but the activities in and around Snizhne. Let's go back to that story by David Herszenhorn that appeared yesterday, "Ukraine Says Russian Plane Shot Down Its Fighter Jet":

Ukraine and Russia have traded several accusations of cross-border hostilities in recent days. The Russian Foreign Ministry, for instance, warned of potentially “irreversible consequences” after a man was killed in the Russian city of Donetsk, which shares the same name as the regional capital in eastern Ukraine where rebel forces have been regrouping in recent days. The Russians said the man was killed by a mortar shell fired from the Ukrainian side of the border. 

Ukraine, in turn, has accused Russia of firing a rocket that destroyed an Antonov-26 military transport plane on Monday, and Ukraine also accused Russian military planes of carrying out an airstrike that destroyed a residential building and killed 11 people in the town of Snizhne on Tuesday morning.

The junta's southeast offensive had been routed; its military was behaving in an increasingly erratic fashion -- shelling Russia, blowing apart buildings and then blaming Russia, seeing Russian fighter jets blotting out the sun. This is a description of power coming unhinged. Downing a passenger jet is just what you would expect.

Islamic State, the Secret Weapon in Obama's Asia Pivot

Secretary of State John Kerry was in Beijing yesterday meeting with Chinese officials. Many topics were discussed, foremost of which from the U.S. perspective was the promulgation of some sort of national code of conduct in maritime disputes in the South China Sea and East China Sea. The august Jane Perlez, spouse of Ray Bonner, has the story, "Kerry Presses China to Abide by Maritime Laws to Ease Tensions":

BEIJING — In a closed-door session at a high-level gathering of Chinese and American officials here on Wednesday, Secretary of State John Kerry urged China to follow maritime law in nearby seas to reduce regional tensions, a senior American official said. 

Mr. Kerry called on China to support the creation of a legally binding code of conduct that other Asian nations are considering to enforce rules of navigation and inhibit unilateral actions in the South China and East China Seas, said the official, who briefed reporters on the condition of anonymity under standard protocol. 

The secretary met with Yang Jiechi, a state councilor who deals with foreign policy, on the first day of the Strategic and Economic Dialogue, an annual gathering of senior officials from both countries where differences on issues including national security, the economy, climate change and human rights are aired.

“The secretary emphasized this is not a situation in which countries should or can be permitted simply to act unilaterally to advance their territorial claims or interests,” said the official, alluding to China’s dispatch of a huge oil rig to disputed waters off the coast of Vietnam in May and the virtual takeover in 2012 of a reef, the Scarborough Shoal, that is claimed by the Philippines.

Mr. Kerry also said efforts to create a “new status quo” at the expense of regional harmony were “unacceptable,” the official said. 

Maneuvers by China to assert claims over islands and waters in the South China Sea, and to slow the efforts of a regional group, the Association of Southeast Asian Nations, to complete a code of conduct that would govern maritime rules have become a major point of friction between Washington and Beijing. The South China Sea is one of the world’s busiest trading routes.

The best thing I've read that allows one to get a handle on what Obama's "pivot to Asia" is all about is a story by Ed Wong and Jonathan Ansfield from last month, "To Bolster Its Claims, China Plants Islands in Disputed Waters." A lot is made of the commercial aspects of the Asia pivot, that the U.S. is reasserting it guardianship of the China Sea to reassure its allies that they won't be blocked by the Chinese behemoth from reaping any bonanza to be had from oil and natural gas reserves in the region's waters. But what is really going on is a U.S. effort to keep the Chinese Dragon penned within the first island chain. If the Chinese are successful at asserting a strategic presence in the Spratlys or the Paracels, this can be used to project power to the second island chain. This would be a game-changer since the second island chain essentially encompasses the principal islands of Japan, something that the United States will not abide.

And when the United States needs to solve a geopolitical problem these days, who does it turn to? Yes, you guessed it -- Islamic State, formerly the group known as ISIS. It was easy to miss Keith Bradsher's story yesterday, "Recent Tanker Hijackings Add to Problems in the South China Sea," about a spate of pirate activity off the coast of Malaysia reminiscent of what has been well publicized in the waters of Somalia:

The hijackings raise geopolitical issues. Seven have taken place close to Malaysia and one close to the Anambas Islands of Indonesia. But two of the hijackings close to Malaysia occurred in waters near James Shoal, a disputed, submerged reef near the north coast of Malaysian Borneo. 

Malaysia has had commercial activities there for many years, and it is a center of the country’s extensive offshore oil and gas industry. Oil and gas revenues cover nearly half of the Malaysian government’s budget. 

But China has been increasingly assertive over the past several years in claiming that James Shoal lies inside its so-called nine-dash line, a huge expanse of the South China Sea that Beijing has been claiming with increasing boldness, particularly this year. A small flotilla of Chinese naval vessels went to James Shoal in January, and Chinese officers held an oath-swearing ceremony there to pledge that they would defend China’s sovereignty. 

Malaysia glossed over the matter, saying that the Chinese vessels had stayed in international waters during their activities. Malaysia has tried to maintain a nearly neutral stance toward China within the Association of Southeast Asian Nations, but it could find the balancing act more difficult next year, when it assumes the rotating chairmanship of the association. 

The hijackings also come at a time of considerable nervousness about jihadist recruiting efforts in Malaysia, which is heavily Sunni Muslim. The Malaysian authorities have detained more than a dozen people in the past month, reportedly including a Malaysian naval officer, in an investigation into recruiting and other support activities on behalf of the Islamic State in Iraq and Syria, the militant group that has seized control of a large part of northwestern Iraq.

The International Maritime Bureau, which is part of the International Chamber of Commerce and works closely with the United Nations on shipping issues, has been quietly tracking the hijacking problem and plans to issue a detailed report next week calling for further international attention to the problem, Mr. Choong said. The Malaysian Maritime Enforcement Agency has said that it is trying to solve the crimes and increase security at sea. 

Cmdr. William J. Marks, a spokesman for the United States Navy’s Seventh Fleet, said the fleet had not received a request for antipiracy help in more than two years, but generally worked closely with countries in the region, including conducting a joint exercise last year with Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand. 

In a typical year, one tanker is hijacked in the South China Sea or the adjacent Strait of Malacca, or none at all. Freighters and pleasure boats are sometimes stopped and their crews and passengers robbed and, on rare occasions, kidnapped. From $1 million to $2 million worth of fuel has been stolen from each of six tankers that have lost part or all of their cargos in the South China Sea since mid-April. 

Pirates briefly seized two other tankers but did not try to steal their cargos after discovering that they were carrying chemicals that were not readily salable. One of the tankers was carrying methanol, used in making paints and plastics, and the other was carrying bitumen, a thick fuel used for firing boilers.

Malaysia goes from one-to-no incidents of piracy to eight at the same time that Islamic State is busy recruiting. This is how it works nowadays. Islamic State is the point of the spear for the United States not only in Syria and Iraq but also potentially the South China Sea. It is something to watch.

China's Surge in College Graduates

A lengthy, important story today by Keith Bradsher, a pillar of the New York Times for decades, shines the light on China's huge investment in the mass production of college graduates. I have yet to read the entire piece, but I think the three graphs included in the story sum it up. One shows China's share of worldwide college enrollment climbing while the United States's drops; another one shows the number of Chinese college graduates rocketing off the charts while far below the U.S. nearly flatlines; and the third and final one is a bar chart that shows the enormous year-after-year increase in Chinese educational spending.

Western global dominance since the nineteenth century, one could argue, has been synonymous with its superior university system -- the highest manifestation of its culture. If China is successful and hits its target of educating 195 million college graduates by 2020 -- almost two-thirds of the entire U.S. population -- then a shift will be underway akin, speaking metaphorically, to a geomagnetic reversal. (And it is not out of bounds to link such reversals to mass extinctions.)

This is the second long, important story Bradsher has written in the last month. At the end of December he chronicled the change occurring in China's world-leading powerhouse electronics factories.