Yu Zhou

More than 10 days later, there is little consensus of UN climate change conference at Copenhagen beyond the fact the conference was badly organized and chaotic.  We have heard conflicting perceptions and interpretations, which is not unusual.  Yet a picture has emerged in the Western media that the Chinese delegation bullied and managed to sabotage the conference for a global treaty.  In particular, an article from the Guardian newspaper by Mark Lynas offers the most direct first person account on this line of the story.  The article has been picked up around the world in English media (NPR, Times Magazine, to name a few).  It not only serves as the standard narrative of Chinese delegation behavior, but is also seen as indication of a worrying style of arrogance and self-centeredness of China as a new superpower.   Yet, what is troubling is that this account refers to absolutely nothing from China’s own explanation beyond offering its own assertions of China’s intentions, in addition to other developing countries.   On Dec. 25, Xinhua released its own account about the experiences of the Chinese delegation (English translation). Comparing the two, the conflicts are rather revealing.  Without adopting the conclusion or sentiment of either account, this post relies on details offered in both.

I do not doubt the accuracy or authenticity of Mark Lynas’ story.  But what bothers me is the part left out of his article and the logics of in his conclusion.  I would quote Lynas’ article liberally.

The article made the opening claim on China’s Copenhagen strategy: “China’s strategy was simple: block the open negotiations for two weeks, and then ensure that the closed-door deal made it look as if the west had failed the world’s poor once again.”

By way of evidence, it offers that “Sudan behaves at the talks as a puppet of China; one of a number of countries that relieves the Chinese delegation of having to fight its battles in open sessions. It was a perfect stitch-up. China gutted the deal behind the scenes, and then left its proxies to savage it in public.”

These Chinese “proxies” refer to Sudan, Bolivia, Cuba, and Venezuela.  It is not a secret that these countries have anti-Western attitudes and have never hesitated to voice their opinions at any UN forums they had access to.   Why would Lynas’ presume that that if one country voices its anti-western sentiment, it automatically acts as China’s proxy and works for China’s strategies. Does he agree with the Bush doctrine that “you are either with us or against us.”  It is disheartening to see environmentalists adopt such a line of reasoning.

Then, Lynas offers his personal eyewitness account.

“Here’s what actually went on late last Friday night, as heads of state from two dozen countries met behind closed doors. Obama was at the table for several hours, sitting between Gordon Brown and the Ethiopian prime minister, Meles Zenawi. The Danish prime minister chaired, and on his right sat Ban Ki-moon, secretary-general of the UN. Probably only about 50 or 60 people, including the heads of state, were in the room. I was attached to one of the delegations, whose head of state was also present for most of the time.

What I saw was profoundly shocking. The Chinese premier, Wen Jiabao, did not deign to attend the meetings personally, instead sending a second-tier official in the country’s foreign ministry to sit opposite Obama himself. The diplomatic snub was obvious and brutal, as was the practical implication: several times during the session, the world’s most powerful heads of state were forced to wait around as the Chinese delegate went off to make telephone calls to his “superiors”.”

First of all, Lynas did not tell us what this group of heads of the state was. In what capacity were they negotiating a close-door global deal? Who selected the countries to be at the table? What criteria were used?  According to the Western press, there were two meetings that Premier Wen allegedly skipped.  It is not clear at which one Lynas was present.  If there were a total of 50-60 people, it could not be more than 20-30 countries present.  The Xinhua account said that Chinese Premier Wen was astonished to hear about this (or an earlier) meeting from another foreign leader without being informed from the conference organizers.  One can understand the desperation of the conference organizers to some smaller assemblies to work out a deal.  But given how high a stake such a treaty would be to any country, ad hoc arrangements without consultation with would-be participants would be a disaster. Wen’s objection to have a small group of countries to negotiate a close door global deal was not that surprising, given China was not involved in the selecting process.  In fact, Copenhagen conference had been plagued by various versions of draft negotiated in exclusive circles from the very beginning.  Chinese reactions to these meetings did not seem to be groundless.  In the end, Chinese decided to send a second-tier official.

One may argue that the final Copenhagen accord also emerged from a selected group of countries between USA and China, India, South Africa and Brazil.  But there are major differences.  The final accord was not a legally binding treaty, and with the exception of Obama who was interested to reach a global accord, the rest of the heads of state went to the meeting to coordinate their stands as a group, rather than drafting a deal for the world.  In contrast, according to Lynas, the meeting he was present was intend to reach a global deal.

“I am certain that had the Chinese not been in the room, we would have left Copenhagen with a deal that had environmentalists popping champagne corks popping in every corner of the world.”

Lynas further describes the behavior of Chinese representative at the meeting

“To those who would blame Obama and rich countries in general, know this: it was China’s representative who insisted that industrialized country targets, previously agreed as an 80% cut by 2050, be taken out of the deal. “Why can’t we even mention our own targets?” demanded a furious Angela Merkel. Australia’s prime minister, Kevin Rudd, was annoyed enough to bang his microphone. Brazil’s representative too pointed out the illogicality of China’s position. Why should rich countries not announce even this unilateral cut? The Chinese delegate said no, and I watched, aghast, as Merkel threw up her hands in despair and conceded the point. Now we know why – because China bet, correctly, that Obama would get the blame for the Copenhagen accord’s lack of ambition.”

Here Chinese delegate came across as truly rude and unreasonable.  But wait, is he saying that EU countries need China’s approval for a unilateral target?  Do we miss anything here? Lynas explains that China blocks this target so that China could shift blame to Obama?  But everyone had already known before the Copenhagen conference that Obama’s hands were tied by the difficulty of the US Senate to pass major promises on the climate bill.   How could an act by China blocking a deal shift more blame to Obama?  Wouldn’t it simply shift blame to China?  Lynas’ logic makes no sense. 

Lynas offer further explanation or speculation, and habitually without consulting any Chinese long standing positions.

“All this raises the question: what is China’s game? Why did China, in the words of a UK-based analyst who also spent hours in heads of state meetings, ‘not only reject targets for itself, but also refuse to allow any other country to take on binding targets?’ The analyst, who has attended climate conferences for more than 15 years, concludes that China wants to weaken the climate regulation regime now ‘in order to avoid the risk that it might be called on to be more ambitious in a few years’ time’.”

There is no doubt that China and other developing countries do not want to submit to a binding target on their total emission.  Yet what is truly strange is that the article grants China the ultimate power to stop any country from issuing its own target reduction.  What right does China have to stop the UK or any other EU country from unilaterally cutting 50% of its own emissions?  This is especially weird since China made its own unilateral target and announced that it won’t link the target with any other country.  Are these so called unilateral cuts from the EU in fact linked with some conditions that Lynas did not tell us? The Chinese representative in Lynas’ article appeared only capable of saying no, and no explanations were offered.

Even if the Chinese representative said anything, it is unclear that Lynas would hear them.  Here is what Lynas said about Indians.

“The Indians, in particular, have become past masters at co-opting the language of equity (”equal rights to the atmosphere”) in the service of planetary suicide – and leftish campaigners and commentators are hoist with their own petard.”

For Lynas, India’s concern for equality has no legitimacy.  He also seems to suggest no one but the West cares for the planetary suicide:  “Obama needed a strong deal perhaps more than anyone. The US had confirmed the offer of $100bn to developing countries for adaptation, put serious cuts on the table for the first time (17% below 2005 levels by 2020), and was obviously prepared to up its offer.”  Lynas probably was among the very few participants in Copenhagen who were convinced about the all-out effort to stop the climate change by the USA.

These are just some of the holes in this article. Yet as it is making its rounds on the internet, it invents and fortifies an unreasonable, rude, uncaring and hegemonic China in contrast to a self-less and vigilant West working for the global welfare.  

Xinhua’s account of Copenhagen depicts Wen as the hero in the conference.  Yet, it is not clear that Wen was committed to some global of deal either.  But there are some interesting details missing from the western reporting.  Beyond the fact that Wen was not informed by the conference organizer about the meeting with selected heads of the state, we also learn that Wen went to a scheduled UN speaking forum only to find that no one was there until an hour and a half later, underlining the chaotic nature of the conference.  The Western press speculated that Wen was furious at Obama since Obama implicitly criticized China in his opening speech, which prompted Wen to skip two meetings of the heads of states.  Yet Wen held a private meeting with Obama right after Obama’s speech for which all sides reported good results.  In the dramatic scene where Obama crashed into the meeting Wen held with the India, South Africa and Brazil heads of state, American press reported only that Obama busted into the meeting, but Xinhua reported Obama asked Wen who was chairing the meeting whether he could come in or waited for the scheduled individual meeting with Wen.  Wen invited him to join the group.  This suggests that Wen had the option to meet with Obama individually but chose not to exercise it, undermining a sense of a major confrontation between US and China.  Lynas also claims that China cared nothing about the fate of small island nations, but we learned from Xinhua that Wen met with the representatives from island nations for over two hours to listen to their concerns, something Obama did not do.  What emerged from these details was quite a different China from the one portrayed in Lynas article, even one could not fully trust Xinhua’s account.

Conflicting interpretations of such a chaotic conference is unavoidable, in addition to different positions held by people from different ends.  But what is dangerous is the tendency to make grand statements while completely ignore the other side of argument, in other words, delegitimizing any other positions by totally ignoring their own explanations.  If the West and China want to deal with each other with any measure of success, the good place to start is at least trying to listen to other side of the story before jumping to conclusions. 

Yu ZHOU is a Professor of Geography at Vassar College. She is the author of “Inside story of China’s high-tech industry: Making Silicon Valley in Beijing.”

China has launched its Nasdaq-style board (ChiNext) on Oct. 30 with first batch of 28 companies at Shenzhen Stock Exchange.  There has been considerable enthusiasm for this new board in China, but there is also a concern that these shares may be overpriced.    The first day proved to be highly successful with most share price doubling.

While the launch is widely noted by the media, few commentators have paid much attention to the potential of this board to be a game changer in China. If successful, it also has the long term prospect to transform the global map of capital, technology and innovation.

The idea of a Chinese Nasdaq was conceived over ten years ago at the height of dot.com rush.  China realized then that it needs a similar capital mechanism to support innovative companies.  The original plan was to launch it in 2004. It would be known as the Chuang’ye’ban (Start-up Board), stressing its role in innovative startups.  When I researched in Beijing’s Zhongguancun—“Silicon Valley” of China during the early 2000s, there were many enthusiastic tech-entrepreneurs dreaming of IPO in this market.  The bust of the tech bubble in Wall Street, and the poor performance and erratic speculation in China’s main stock market poured icy water over this idea.  The plan was suspended.  In the mean time, China’s high-tech startups struggled and those could not raise money overseas vanished. 

Since 2003, venture capital (VC) investment in China picked up speed, fueled by the international VCs looking for next growing market.  China had its own venture capital funds since the late 1990s.  Yet their share of the market shrank just as the global interests on Chinese startups rose.  In the middle of 2000s, I found that international VCs were active looking for new projects in Beijing, but domestic VCs were practically absent. “We contacted them, but nothing much came from them.” commented a manager in a business incubator in Zhongguancun.  Entrepreneurs and experts attributed the ineptness of domestic VCs to their incompetence and lack of expertise in technology industry.  They were all true.  But there was another bigger problem:  there was no domestic exit option for VC funds.  China’s main stock market is oriented to state-owned companies. The threshold is too high for most small and non-state-owned companies.  Without a fully functioning domestic capital exit, the circulation of investment could not be completed.   Foreign-originated VC funds ended up dominated over 80% of China’s VC market.   

 This is certainly not because China lacks capital. 

The odd thing is that China has one of the world deepest pools of capital looking for profitable outlets.  It also has a large pool of able entrepreneurs with good ideas and a proven record, but have no access to this capital.  Chinese banking system discriminates against small and non-state firms, and China’s stock market shuns them.  The international VCs have been the only ones courting them.  They brought China’s most visible startups, Baidu, Shenda and Sun-tech, to IPO in Nasdaq.  But to get international venture finance, Chinese firms must meet the standards of Nasdaq.   To fully appreciate how strange it is, imagine the start-up of eBay or Google could only receive venture investment from outside the US, and issue IPOs in a foreign stock market, even though their services might not work outside the US.  To the credits of the international VCs, they have helped to create a start-up culture in China.  But it is obvious how limited this channel has been for the vast majority of small Chinese startups.   

The launch of this new board (ChiNExt) could change that.  For the first time, China will have an institutionalized framework to channel its domestic capital to its entrepreneurial ventures.  The exit will also serve as a standard for VCs to guide new startups.  Already, in anticipation of ChiNext, the number of domestic VCs surged.  The Asia Times reported that in Shenzhen alone, 35 new VC firms were set up in 2007.  In the second quarter of 2009, the investment of domestic VC increased over 70% compared to the previous year.  For the first time since the VC industry emerged in China, projects invested by domestic VCs exceeded those by foreign VCs. 

Is this excitement over-rated? Possibly!  Unlike in the early 2000s, most potential participants of ChiNext today keep low key and avoid high expectations.  Plenty things can go wrong in the new board.  Similar exchange in Hong Kong has not done well. The ChiNext might also repeat the same or worse speculative cycles in China’s main board.  Yet, the fusion between one of the world deepest capital sources and its largest reservoir of future entrepreneurs could not be overstated.  Chinese small high-tech firms have been battling endlessly with China’s financial system. The ChiNext provides an exciting alternative and a possible future direction. 

What does this mean? International VCs should expect more competition from domestic VCs, but they may also see an increase of potential projects as more people become entrepreneurs.  Chinese firms may choose domestic listing over foreign listing if their main businesses are within China, increasing competition for Nasdaq.  If ChiNext works as it is supposed to, it could unleash a world of new ideas and innovation from China’s long under-served companies.  

By Yu Zhou (周宇), professor of geography, at Vassar College, Poughkeepsie, NY.  Yu Zhou is the author of Inside Story of China’s high-tech industry: Making Silicon Valley in Beijing (2008).

I am new on blog. So forgive me if what I said does not make sense.

I was in Beijing during the Olympics and I found that it was rather  interesting how controversies played out in different ways in the Chinese and western contexts. Take the famous case of fake singing of that little girl in the Olympic opening ceremony.  Many Chinese were upset. After all, the sight and song were so perfect.  People felt betrayed when the perfection proved to be an illusion.

Most reporting and commenting in the western press suggested that the highest level of Chinese government (someone in the polibureau) objected the apparence of the real 7 year old singer, so the pretty girl is standing in her place. But if you read the NY Time’s story  which includes the direct translation of the transcript of the Music director, Chen Qigang, this is not the case at all. Chen said that in a meeting including polibureau members, they heard the recording of the pretty 9 years old and decided that the singer has to change.  So in fact, what the leader objected was the singing of the pretty girl, not the look of the 7 years old.  They did not even see the 7 years old according to the report!  Frankly I find this intervention of singing perfectly reasonable since this is a very familiar song for most Chines. If one sings it out of key, you can imagine the discomfort of many people. 

But what Chen did not tell us is who made the decision to use the song of 7 year old and the performance of 9 year old.  Here the guesses differ in China and in the west.  In the west, the fake is universially blamed on the Chinese government–they even determine whether one child is cute or not, how aweful! But there is almost no evidence to support this version.  In China,  people found the most logical person to blame is the director Zhang Yimou. After all, he is the movie director and he is credited for discovering several China’s prettest female performers.  A pretty face, to him, is paramount.  Besides, he already disqualified a 10 year old for looking “too old.” So between the demand of changing of the singer and the demand of a perfect cute performer, Chen did what he had to do.    

But if it is Zhang Yimou made the decision which in all likelihood he did, it won’t be a story. After all, such practices are routine in Hollywood.  The only way to spin this into a sensational story is to substitute Zhang Yimou with the Chinese government. That was exactly most western media did.

Seven years ago in the spring of 2001, I was on sabbatical in Beijing. For a few weeks, I found the city visibly anxious for an inspection of International Olympic Committee to check Beijing as a potential host for the 2008 Summer Olympics. The street was cleaned and linked up with flowers. Residents were instructed to be friendly, at least for a few days. The local school my 7 year old attended held an event to celebrate Olympics and invited parents. It was then my son pleaded: “Mom, can we come back to Beijing in 2008?” “Most definitely,” I answered. It was a promise I made for my son and a promise Beijing made to the world.
I had grown up Beijing and only left it in my 20s. Outsiders associate Beijing with monuments such as Tiananmen Square, Greatwall, and the Forbidden City. I know the city as a place for family and friends with distinct neighborhoods and vibrant universities. Beijing not only has China’s most intellectuals, its ordinary citizens are also famous for being the most outspoken and humorous. Living in a city serving as national capital for some 800 years, Beijingers have a keen sense of ownership of history and politics. They took pride in talking about international affairs as if it happen next door and ancient history as if it was yesterday. In a way, there is no better Chinese city to host the Olympics since the city’s residents are never shy from the spot light of monumental history. Yet for all of its rich heritage, Beijing is also known for not paying much attention to its appearance. The city is dusty, polluted and chaotic, with too many cars and full of ugly buildings hastily built in the 80s and 90s to house its huge population with little aesthetic consideration.
But that was in 2001. Since then, the extreme make over of Beijing happened at a breath- taking pace. Everyday, old neighborhoods and farm field disappeared, replaced by highways, parks, glittering high rises and the huge stadiums. The city literally changed its color as the old cracking buses and taxi are replaced by shining new fleet and dreary buildings got exterior paint. And then, Pang! It is all done! Three new subways lines, a futuristic airport, and a new train station with the world fastest train all opened for business in the summer of 2008. Olympic is here. I stepped into a Beijing hardly recognizable even from a year ago.
I quickly learned that Olympics meant two things to locals—security checks and colossal inconvenience. Starting from late July, there was a sharp increase of security personnel on the streets. Policy motorcycles zoomed through streets, and helicopters were in the air. None of these was familiar to the residents. In fact, the only recent memory of this level of security was in 1989, immediately after the Tiananmen Square crack down on June 4th. Those were the darkest days in Beijing. Fear and hostility permeated the streets. Residents, shocked by the bloodshed, cursed and attacked the soldiers. Nothing like that was felt this time. The police were mostly polite and professional. The residents, trading rumors of potential terrorism, were largely curious and a bit nervous. Their biggest complaint, however, was the traffic. Many streets or lanes were closed. Half of the city cars were removed from the streets since driver could only drive on odd or even days depending on their plate. Beijing’s newly expanded subway/bus system bulged at the seam to move the city of 17 millions around. Only the youthful volunteers everywhere with their unfailing energy and smile seemed to brighten up the city.
If you ask the residents their honest opinion before the Olympics, they would tell you they want it be over so they could get on with their lives. But as soon as the game started with the spectacular opening, that sentiment evaporated as people were instantly awed and captivated by the human drama unfolded before their eyes. I took kids to Bird’s nest, Water cube, and a few smaller stadiums scattered around the city. The magic were in the air, fans from all over the world mixed. Brazilians danced, Americans paraded, Europeans shouted, Koreans chanted with synchronized moves, and they were sometimes joined or overwhelmed by thunderous Chinese cheers. I didn’t have tickets to Michael Phelps or Usain Bolt in his final, but got to cheer with others for two Iraq rowers who finished last, and a Taiwanese badminton player bravely saved her ball against a hopelessly superior Chinese player. Here the foreign athletes and fans are no longer creatures from different planets, but people with too human delight and anguish. Chinese fans used to show little interest to sports without Chinese participation. But I saw Bird’s Nest filled to its capacity for track/field preliminaries with few Chinese qualified. The fans also used to humiliate those Chinese athletes failed their expectations, this time they supported them even when their star hurdler Liu Xiang dropped out of the race. Only a few years ago, many Chinese viewed overseas Chinese coaches for other national teams as traitors. Today, audience cheered for US Women’s Volleyball team led by a Chinese coach all the way to the silver metal even when it defeated the Chinese national team.
People often make a big fuss about the Olympics legacy. The truth is that the two week game will not change China’s political system, nor will it change western reactions to it. But here in Beijing, what I saw were not just the spectacular games, but also the growth of a population who are learning to receive the world with confidence, openness and tolerance.