Xi who must be obeyed (with apologies to The Economist)

The title of this post is directly stolen from The Economist which ran a cover story by this name a year or so ago. They themselves were punning the quote from here.

The much awaited China's People Congress ended today with the expected climax - the unveiling of the new Politburo Standing Committee ; the men who will run China for the next five years. More of this in just a little while. This ended a week of speechifying and staged events.

First, the two things that stood out during the days preceding the event today.  Xi Jinping opened the Congress with a speech lasting an incredible three and a half hours, reaching new heights of torture and boredom. It was a hugely self confident China strutting about as a world power, with Xi vigorously patting his own back. He outlined some of the directions for the next five years which were typically broad motherhoods, but gave some clues on where they are heading.

The most important outcome was the enshrining of "Xi Jinping Thought" in the Communist Party's Constitution. This is a peculiarly Chinese obsession. Their infatuation with obscure theories and doctrines knows no boundaries. "Mao Zedong Thought" was supposed to be the guiding doctrine of the Party - never mind that it is rubbish, the Party has long ditched many of that nonsense, etc etc. Then Deng Xiaoping "Practice" was enshrined into the Constitution after his death. At the end of their terms Jiang Zemin and Hu Jintao's "theories" were also included, but their names were not mentioned (such semantics are very important in China with those two acknowledging that they are a step behind the two taller and earlier leaders). Xi hasn't bothered with any such finesse. Halfway into his term he has enshrined his name and "Thought" - the implication being he is Mao's equivalent and even above Deng. A dangerous move almost Trumpesque is self aggrandisation. His "Thought" is mostly bland with lots of garbage , but who cares. These are political moves cloaked in ideology.

And then today, came the line of seven men who walked in, and that was how the world got to know about the new Standing Committee. Readers of this blog may recall that this blogger made a prediction in this post a month or so ago. I got one thing wrong - that Li Keqiang the Premier would be dropped and that Wang Qishan, Xi's right hand man would stay on beyond retirement age and would become the Premier. That didn't happen. The powerful Wang retired and Li has stayed on as the Premier. I predicted a 5 man Standing Committee reduced from 7 (that didn't happen) but also named the potential seven man Committee if it stayed at that number. I got that dead right, including the order of seniority - after Xi and Li came Li Zhanshu, Wang Yang, Wang Huning, Zhao Leji & Hang Zheng. I got real lucky !

Here is my take on the implications of what happened over the last week

- Xi is all powerful. That we knew of course.
- Xi has decided to not break all traditions and to preserve some of the norms and continuity. Hence the  retirement of Wang Qishan and the continuance of Li Keqiang.
- No successor to Xi has been named, as expected. This leaves Xi's options open. He can stay on as a power centre either formally or informally after his term ends in 5 years.
- The two possible successors Hu Chunhua and Chen Min'er are on trial. They have to earn the right to succeed over the next 5 years. But even after, they will probably have to be subservient to Xi.
- The Party is going to tighten the hold on China even more. Forget any liberalism, tolerance and such other "esoteric" concepts.
- China will be aggressive in world politics. The world simply has to learnt to adjust to that. America will be the county most affected. It will be on the losing end more often than not.
- Zhao Leji will be the new Wang Qishan. He will continue the anti corruption drive and Xi's political opponents will continue to be targeted.
- China is entering into dangerous territory of authoritarianism.  Chinese history shows  how much the entire country loses when such autocratic tyrants take charge - recent examples of Ci Xi and Mao are enough to illustrate this danger. There is every risk of Xi going the same way - generating sycophants, staying on too long, getting drunk on power and doing stupid things.
- The Deng Xiaoping era is finally over (that it lasted 25 years after his death is amazing by itself). Most of the safeguards he tried to institutionalize are slipping. The wisdom of Deng is being frittered away. In many ways, he is the loser from what has happened. China will learn to its cost, the implications of ignoring its wisest man in recent history.

Life returns back to normal in China. This blogger will not blog about Chinese politics for the foreseeable future. A parting thought however - watch out for Hu Chunhua, Chen Min'er, Zhao Leji, and of course, above all, Xi.

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Wooing HQ2 ? Yuk !

If you are an American, here's a a nice issue to distract you from your fixation about you know who and direct your attention to a different issue you can get all worked up about.

Witness each city falling over each other and doing the most stupid of things to land HQ2. Tucson Arizona, where one of the readers of this blog lives ,  uprooted a 21ft cactus and tried to deliver it to HQ1. The mayor of Kansas City actually bought one thousand items from the company in HQ1 and wrote a review of each one of them. Mayors of cities are looking silly in videos that they have made asking Alexa where HQ2 is going to come up and Alexa answering of course, the city they are mayors of. Shall I go on ?

If you are wondering what all this hullaballoo is  about, this is all to do with attracting Amazon's second head office. Amazon is based in Seattle (this is HQ1). They want to create a HQ2 somewhere else. And why are cities willing to stand in a line and kiss Bezos' ass (cue the nod to the awful American version of the Queen's English !). Because he is promising to invest $5 bn and create 50,000 jobs. How did they come to this magic figure of investment ? Because he says the average salary of the jobs created would be $100,000. 

The antics of Tucson and Kansas City are harmless on their own. HQ2 won't come there anyway. The real danger is the big cities offering tax breaks to Amazon. Without a doubt this will happen.

This is a terrible idea. Cities and states that do sweetheart deals to tempt businesses into moving are doing an appalling act of profligacy.  This is worse than a bribe.  Think about it - this is a perfect way of taking money from the poor (remember indirect taxes are not progressive and a fair amount of the state revenues in the US come from indirect taxes) and giving it to somebody who does not deserve or need the money. One city does this , and the next city will do the same for another company.  And before you say Bingo, everybody has been given a dole.

The right way to attract companies is to do the boring things - create infrastructure, make a talent pool available by vigorous education and training, attract outsiders by making it a great place to come and live, have a favourable business atmosphere in the form of ease of doing business and reasonable tax rates.  That is when companies will come and stay on. That's why New York in Finance and the West Coast Cities in technology are what they are.  Not because they gave tax breaks.

If you are an American, you should vigorously protest against your city doing a sweetheart deal with Amazon.  

For Indians, who can look at all this with an amused smile; we have of course been long guilty of doing such deals with companies. But I want you to get agitated in a different angle. The capital of the IT industry in the country did all the right things 30 years back - great place to live in, pleasant weather, abundance of talent, a cosmopolitan place for people to come, etc etc. It did not give a tax break. And yet every IT company worth it's salt came.

And then this city let it all go to seed and become the appalling wreck of a city that it is today.  This is the best way to drive every company out. No member of the Homo Sapiens species will ever come to this place again. Instead the entire population has mutated into Pithecanthropus Erectus, which being extinct, is delighted to be able to come back into existence even if condemned to living in a hellhole ! How does this blogger know of such a mutation ? Because he has mutated himself !

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