jueves, 28 de septiembre de 2017
miércoles, 27 de septiembre de 2017
VENEZUELA: UN COLAPSO SIN PRECEDENTES
El 16 de julio se celebró un plebiscito en Venezuela, organizado apresuradamente por la Asamblea Nacional, en la cual la oposición tiene mayoría. Su objetivo era rechazar el llamado del presidente Nicolás Maduro a formar una Asamblea Nacional Constituyente. En este evento, más de 720.000 venezolanos votaron en el exterior. En la elección presidencial de 2013, solamente lo hicieron 62.311.
Cuatro días antes del referendo, 2.117 postulantes rindieron el examen para obtener su licencia médica en Chile. De estos, casi 800 eran venezolanos. Y el sábado 22 de julio, se reabrió la frontera con Colombia. En un solo día, 35.000 venezolanos cruzaron el estrecho puente entre los dos países para adquirir alimentos y medicamentos.
Es evidente que los venezolanos quieren escapar, y no es difícil entender por qué. En todo el mundo los medios de comunicación han estado informando acerca de Venezuela, documentando situaciones verdaderamente terribles, con imágenes de hambre, desesperación e ira. La cubierta de la revista The Economist del 29 de julio lo resume así: “Venezuela en caos”.
Pero, ¿se trata simplemente de otra aguda recesión cualquiera o de algo más grave?
El indicador que más se usa para comparar recesiones es el PIB. De acuerdo al Fondo Monetario Internacional, en 2017 el PIB de Venezuela se encuentra el 35% por debajo de los niveles de 2013, o en un 40% en términos per cápita. Esta contracción es significativamente más aguda que la de la Gran Depresión de 1929-1933 en Estados Unidos, cuando se calcula que su PIB per cápita cayó el 28%. Es levemente más alta que el declive de Rusia (1990-1994), Cuba (1989-1993) y Albania (1989-1993), pero menor que la sufrida en ese mismo período en otros antiguos estados soviéticos, como Georgia, Tayikistán, Azerbaiyán, Armenia y Ucrania, o en países devastados por guerras como Liberia (1993), Libia (2011), Ruanda (1994), Irán (1981) y, más recientemente, el Sudán del Sur.
Dicho de otro modo, la catástrofe económica de Venezuela eclipsa cualquier otra de la historia de Estados Unidos, Europa Occidental, o el resto de América Latina. No obstante, las cifras mencionadas subestiman en extremo la magnitud del colapso, según lo revela una investigación que hemos venido realizando con Miguel Ángel Santos, Ricardo Villasmil, Douglas Barrios, Frank Muci y José Ramón Morales en el Center for International Development de la Universidad de Harvard.
Claramente, una disminución del 40% en el PIB per cápita es un hecho muy poco frecuente. Pero en Venezuela hay varios factores que hacen que la situación sea aún peor. Para empezar, si bien la contracción del PIB venezolano (en precios constantes) entre 2013 y 2017 incluye una reducción del 17% en la producción de petróleo, excluye la caída del 55% en el precio del crudo durante ese mismo periodo. Entre 2012 y 2016, las exportaciones de petróleo se desplomaron US$2.200 per cápita, de los cuales US$1.500 obedecieron al declive del precio del crudo.
Estas cifras son exorbitantes dado que el ingreso per cápita en Venezuela en 2017 es menos de US$4.000. Es decir, si bien el PIB per cápita cayó el 40%, el declive del ingreso nacional, incluyendo el efecto precio, es del 51%
Típicamente, los países mitigan estas caídas de precios de exportación ahorrando dinero en tiempos de vacas gordas, para luego utilizar esos ahorros o pedirlos prestados en tiempos de vacas flacas, de modo que el declive de las importaciones no sea tan grande como el del las exportaciones. Pero Venezuela no pudo hacer esto debido a que había aprovechado el auge del petróleo para sextuplicar su deuda externa. El despilfarro en la época de las vacas gordas dejó pocos activos que se pudieran liquidar en el periodo de las vacas flacas, y los mercados no estuvieron dispuestos a otorgar créditos a un prestatario con tal exceso de deuda.
Tenían razón: en la actualidad Venezuela es el país más endeudado del mundo.
No hay otra nación con una deuda pública externa tan alta como proporción de su PIB o de sus exportaciones, o que enfrente un servicio de la deuda más alto como proporción de sus exportaciones.
Sin embargo, de modo similar a Rumania bajo Nicolae Ceauşescu en la década de1980, el gobierno decidió recortar las importaciones para poder permanecer al día en el servicio de su deuda externa, lo que repetidamente sorprendió un mercado que esperaba una reestructuración. Como consecuencia, las importaciones de bienes y servicios per cápita cayeron en un 75% en términos reales entre 2012 y 2016, con un declive aún mayor en 2017.
Este colapso es comparable solamente con los ocurridos en Mongolia (1988-1992) y en Nigeria (1982-1986), y mayor que todos los otros colapsos de las importaciones ocurridos en cuatro años en el mundo desde 1960. De hecho, las cifras venezolanas no muestran mitigación alguna: el declive de las importaciones fue casi igual al de las exportaciones.
Más aún, debido a que esta disminución de las importaciones que impuso el gobierno creó una escasez de materias primas y de insumos intermedios, el colapso de la agricultura y de la manufactura fue todavía peor que el del PIB total, con lo que los bienes de consumo de producción local cayeron en casi US$1.000 per cápita en los últimos 4 años.
Otras estadísticas confirman el funesto panorama. Entre 2012 y 2016, los ingresos fiscales no petroleros se desplomaron un 70% en términos reales. Y, durante el mismo periodo, la aceleración de la inflación hizo que los pasivos monetarios del sistema bancario cayeran un 79% medidos a precios constantes. Medido en dólares al tipo de cambio del mercado negro, el declive fue del 92%, de US$41 mil millones a solo US$3.300 millones.
Dado esto, inevitablemente el nivel de vida también ha colapsado. El sueldo mínimo –el que en Venezuela también es el ingreso del trabajador medio debido al alto número de personas que lo recibe– bajó el 75% (en precios constantes) entre mayo de 2012 y mayo de 2017. Medida en dólares del mercado negro, la reducción fue del 88%, de US$295 a solo US$36 al mes.
Medido en términos de la caloría más barata disponible, el sueldo mínimo cayó de 52.854 calorías diarias a solo 7.005 durante el mismo periodo, una disminución del 86,7% e insuficiente para alimentar a una familia de cinco personas, suponiendo que todo el ingreso se destine a comprar la caloría más barata. Con su sueldo mínimo, los venezolanos pueden adquirir menos de un quinto de los alimentos que los colombianos, tradicionalmente más pobres, pueden comprar con el suyo.
La pobreza aumentó del 48% en 2014 al 82% en 2016, según un estudio realizado por las tres universidades venezolanas de mayor prestigio. En este mismo estudio se descubrió que el 74% de los venezolanos había bajado un promedio de 8,6 kilos de peso de manera involuntaria. El Observatorio Venezolano de la Salud informa que en 2016 la mortalidad de los pacientes internados se multiplicó por diez, y que la muerte de recién nacidos en hospitales se multiplicó por cien. No obstante, el gobierno de Nicolás Maduro repetidamente ha rechazado ofertas de asistencia humanitaria.
El abierto ataque del gobierno de Maduro contra la libertad y la democracia está atrayendo merecidamente una mayor atención internacional. La Organización de Estados Americanos y la Unión Europea han emitido informes muy duros, y Estados Unidos hace poco anunció nuevas sanciones.
Pero los problemas de Venezuela no son solo de índole política. Abordar la extraordinaria catástrofe que ha causado el gobierno también va a requerir el apoyo concertado de la comunidad internacional.
domingo, 17 de septiembre de 2017
A Show Trial in Moscow
As the sensational trial of former Minister of Economic Development Alexei Ulyukaev continued this week in Moscow’s Zamoskvoretsky District Court, it seemed more and more like a replay of the infamous show trials of the Stalin period—the charges bogus, the outcome predetermined. Ulyukaev is the first Kremlin minister to be charged with a crime while in office since Lavrenty Beria was arrested in 1953. He is accused of taking a $2 million bribe from Igor Sechin, the CEO of the Rosneft oil company, in exchange for facilitating Rosneft’s purchase of controlling shares in the state oil company Bashneft. Ulyukaev was detained by the Federal Security Service (FSB) on November 14 last year after he walked out of Rosneft’s Moscow headquarters with the cash, and has been under house arrest since.
Ulyukaev appears to be a pawn in a larger political game. In the words of veteran Russian political analyst Anton Orekh: “He was nothing more than a worm on a hook; he was not the real target.” Orekh says that Sechin, widely viewed as the most powerful of Putin’s subordinates and the de-facto leader of the hardline “siloviki” faction in the Kremlin, was using Ulyukaev to attack the so-called “liberals” in the government, represented by Prime Minister Dmitry Medvedev and his group of economic reformers. But the case has another purpose as well. In true Stalinist fashion, President Putin, who would have given his approval for Ulyukaev’s arrest and trial, is sending a message to all members of his entourage: Watch out, you could be next. While Ulyukaev’s case points to a conflict over power and resources within Putin’s elite, it is also a manifestation of a broader crackdown by Putin—a crackdown that includes the recent shocking arrest of famed theater and film director Kirill Serebrennikov on fraud charges and the arrest last summer of Kirov governor Nikita Belykh, whose trial is now taking place in Moscow as well. With presidential elections looming in the spring of 2018, and the Russian economy still fragile, Putin may be feeling vulnerable and be concerned both about popular discontent and the loyalty of his elite. Now, more than ever, he needs to show that he is in charge.
Ulyukaev, who faces up to fifteen years behind bars if convicted, looked visibly wan and older than his sixty-one years when he appeared in court on the first day of his trial, August 16; he told journalists that he lost more than thirty pounds since his arrest. But he was defiant, claiming that he was innocent and had been “set up” by Sechin and Oleg Feoktistov, the FSB general in charge of Rosneft security at the time: “Sechin called me [to Rosneft headquarters] on the pretext of discussing important matters and proposed we meet. That’s when the bag [of cash] was given to me.” Ulyukaev says he did not know the bag contained money, but Russian prosecutors have a different story. In their version, when Ulyukaev and Sechin were both at a BRICS summit in Goa, India in mid-October 2016, Ulyukaev complained that, while everyone got payoffs for doing deals on the Kremlin’s behalf, he was working around the clock on the Bashneft transaction and getting nothing in return. Sechin, taking Ulyukaev’s statement as a request for a bribe, reported it to the FSB, which then laid a trap for him.
The problem with the prosecution’s narrative is that the Bashneft purchase was completed in early October, before the summit in Goa happened. Furthermore, it strains credulity that Ulyukaev, with his long years of experience in the government, would have allowed himself to be duped into taking a bribe so blatantly—especially since, by all accounts, the deal was not contingent on his approval in the first place. How could Ulyukaev exhort a bribe from Sechin for something Sechin, who manages to win out in all Kremlin internecine struggles, would get anyway? In the words of one government official: “If Alexei Ulyukaev had been accused of running over an old lady while driving a Gelandewagen at high speed through Moscow late at night, even that would look more probable.”
In addition to lack of motive, the prosecution’s case thus far seems flimsy on evidence, although in the Russian system of justice evidence often does not matter much. On Tuesday, the third day of the trial, the prosecutor read from a transcript of a taped conversation that took place between Sechin, who was wearing a wire, and Ulyukaev just before the latter was arrested as he and his driver were leaving Rosneft headquarters in a BMW. There was no discussion of money or a bribe, and it was not at all clear from the conversation that Ulyukaev knew that there was $2 million stashed inside a briefcase Sechin gave him that also contained a bottle of expensive wine. Sechin, who reportedly has a habit of giving gifts to business associates, presented Ulyukaev with a basket containing sausages as well. (Sechin is an avid hunter and often has the Rosneft chef make sausage from the wild game he catches.) According to Ulyukaev’s driver, who was questioned in court today, Sechin was with Ulyukaev when he put the parcels in the trunk, thus making sure that his plan came off.
Ulyukaev’s fall from grace was preceded by a highly successful career as an economist and central banker. (He also has published three volumes of poetry.) As he pursued a doctorate in economics, Ulyukaev became associated in the late 1980s with Yegor Gaidar and other prominent economic reformers during the years of perestroika, and eventually served as deputy head of the Gaidar Institute for Economic Policy.
From 2000 to 2004, he was first deputy minister of finance under Alexei Kudrin, and then moved to the Central Bank of Russia, where he served as first deputy chairman from 2004 to 2013, overseeing assets management and making his name as a frequent speaker on financial and economic affairs. Ulyukaev was the favored candidate to become governor of the Central Bank when Sergei Ignatiev retired in 2013, but in the end Putin gave the job to Ulyukaev’s colleague Elvira Nabiullina, and Ulyukaev became minister of economic development in the cabinet of Prime Minister Dmitry Medvedev.
Ulyukaev’s influence in the financial world grew after he became chairman of the supervisory board of VTB Bank in mid-2015, and the next year was appointed to the board of Gazprom. But his reputation started to be tainted with scandal. The state-controlled VTB Bank, which was placed on the Western sanctions list in 2014, had become notorious for its illicit financial practices and its lack of transparency, problems that Ulyukaev apparently made no effort to address. The anti-corruption blogger and now presidential candidate Alexei Navalny once said: “VTB is a group of money-laundering thieves endlessly devouring money allocated as ‘financial assistance.’” (Coincidentally, it was VTB Bank that President Trump’s lawyer Michael Cohen was supposedly lining up to finance the planned Trump Tower in Moscow.)
In 2015, Ulyukaev was featured ignominiously in the Panama Papers, which disclosed his secret offshore family company, operating in the British Virgin Islands from 2004 to 2009. It is illegal for Russian government officials to own companies abroad, so Ulyukaev got around the problem by listing family members as directors: Ulyukaev’s twenty-one-year-old son Dmitry was initially listed as director of the company, followed by Ulyukaev’s second wife, Yulia. Navalny later revealed another offshore company, listed in Cyprus in the name of Ulyukaev’s father, who is in his eighties. All this was technically legal, but certainly looked bad. As for Ulyukaev’s reported income, according to documents unearthed by Navalny it was around a million dollars in 2015. At that time Ulyukaev owned twelve parcels of land, a residential house, an apartment, and a dacha, while his wife owned five parcels of land, two houses, and two apartments. This was a substantial holding for a Russian civil servant and his spouse.
It should come as no surprise that Ulyukaev took advantage of his privileged Kremlin position to enrich himself and his family. As the Russian journalist Evgenia Albats said to me this week: “Of course Ulyukaev is corrupt, who isn’t in the government? That is the rule of the game in Russia, otherwise you are lacking weight on the bureaucratic market.” Indeed, Ulyukaev’s accuser, Sechin, is a notorious crook. In September 2016, Navalny’s Anti-Corruption Fund documented the rewards Igor Sechin has earned as the chairman of Rosneft, including a $150 million yacht and a mansion in the exclusive Rublevka suburb of Moscow that, together with its land, is valued at close to $60 million.
According to Navalny, Sechin is a “witless, mediocre manager” who got his powerful position as Rosneft CEO because he was for several years Putin’s secretary and “carried his briefcases.” Rosneft’s acquisition of Bashneft, which led to Ulyukaev’s arrest, may in fact be an example of Sechin’s poor management skills. Supposedly the private company Lukoil, Russia’s second largest oil producer, had been engaging in joint ventures with Bashneft for several years and wanted to acquire the controlling shares in Bashneft.
Two senior ministers in Medvedev’s cabinet, Igor Shuvalov and Arkady Dvorkovich, were reportedly lobbying on behalf of Lukoil and had opposed the Rosneft purchase, as did Ulyukaev before he was persuaded otherwise late in the summer of 2016. They argued, with justification, that Rosneft is not a private company because more than two thirds of its stock is owned by Rosneftgas, which is state-owned, so the purchase would just be assets shifting from one state corporation to another. In their view, the transaction undermined Russia’s privatization efforts. Sechin, who is not a fan of privatization, won out, but the deal has not been beneficial for Rosneft, which was already in debt and had to sell 19.5 percent of its assets to cover the purchase of Bashneft stock for $5.3 billion—higher than the market price.
Although at this point the case against Ulyukaev boils down to his word against Sechin’s, it is not clear that either Sechin or FSB General Feoktistov, who facilitated the covert operation against Ulyukaev, will appear at the trial as witnesses. Feoktistov, who has gained notoriety as the investigator in several high-profile corruption cases, including that of Nikita Belykh, was seconded from the FSB to Rosneft by Sechin in August 2016, presumably to work on the Ulyukaev case. He reportedly fell out of favor for going too far in investigating members of the elite after he returned to the FSB, and was sent into retirement.
As for Sechin, who just yesterday repeated to journalists his claim that Ulyukaev took a bribe from him, he has good reason to avoid facing the former minister in court. The transcript of his conversation with Ulyukaev on the fateful evening of the arrest reveals treachery on his part that rivals that of Shakespeare’s worst villains. Using the familiar “you” (ty) with Ulyukaev and addressing him by his diminutive, “Losha,” Sechin fusses over him and feigns concern that Ulyukaev is not wearing a jacket and will get cold. (He knows, of course, that Ulyukaev will be spending the night in a dank prison cell.) He talks cryptically about “completing a task,” presumably to imply that he is referring to a bribe, but without arousing Ulyukaev’s suspicions.
The basket of sausage was an added touch, and its irony has not been lost on Ulyukaev. He blurted out to journalists in court yesterday: “Beware of Danaans [Greeks] bringing gifts of sausages.” This might be amusing if it were not for the chilling parallel between Sechin’s actions and those of Stalin and his henchmen. Alexei Navalny, himself a victim of false corruption charges, has said that the prosecution of Ulyukaev is part of Putin’s plan to create a “nightmare” for the Kremlin elite: “The elite hates Putin and is scared of him. He is afraid that the elite will betray him, so he is doing what all authoritarian leaders—from Stalin to the chief of an African tribe—do: periodically repress some unsuspecting person, so that the others will grumble less and actively fight each other.”
Perhaps Ulyukaev will avoid prison and receive only probation or a suspended sentence. Whatever happens, he can at least be thankful that he is still alive. Eleven years ago this month, Ulyukaev’s colleague, Central Bank First Deputy Chairman Andrei Kozlov, an advocate of reforms that were resented by the banking community, was brutally gunned down on a Moscow street.
September 8, 2017, 4:10 pm
September 14, 2017
What the West Gets Wrong About China's Economy
By Yukon Huang
Few countries command as much attention as China. That is not surprising. Its remarkable economic rise is shaking the world’s geopolitical balance even as it raises questions about the universality of market-led capitalism and democratic norms. In turn, China has become a lightning rod for all manner of anxiety. The White House has blamed China for the United States’ huge trade deficits, for example, even though there is no direct causal relationship between such deficits and China’s surpluses. In fact, there are several things about China that U.S. analysts get wrong.
It isn’t hard to understand why. For the general public, there are difficulties in drawing appropriate conclusions about a country that is so big and regionally diverse in the distribution of its natural resources and commercial activities. And sentiments are almost always clouded by differences in ideology, values, and culture.
For scholars, meanwhile, conflicting views stem from the lack of an agreed framework for analyzing China’s economy. Decades ago, in the heyday of the Soviet Union, universities taught courses on centrally planned or “transitional” economies as an academic discipline. With the demise of the former Soviet Union, this body of analysis faded away. Today, China is studied as a developing economy, yet it is not one. The close links between its financial, fiscal, trade, and social welfare systems make it a different animal entirely.
Given the lack of an appropriate framework for analyzing China, predictions of its future have varied wildly. Among the many popular beliefs are that China’s high debt levels will inevitably lead to financial crisis (yet its debt as a share of GDP places it around the middle of major economies); that corruption has negative consequences for China’s growth (yet deepening corruption has facilitated rather than impeded growth); that it is impossible for U.S. firms to compete with China because its wages are so low (yet China’s wages have increased fivefold since the mid-1990s); and that American companies invest a lot in China, which is a drain on jobs in the United States (yet less than two percent of America’s foreign investment over the past decade actually went to China).
If the analysis is off, then it is likely that Western policy responses are as well.
JASON LEE / REUTERSRush hour in Beijing, November 2016.
WHY CHINA’S DEBT IS DIFFERENT
For many years, annual Pew and Gallup polls have reported that most Americans see China as the leading global economic power. Europeans, for the most part, share this view. Those in the rest of the world, however, correctly identify the United States as the world’s top economic power. Perception is important; politicians are greatly influenced by where they sit and the sentiments of their constituents.
Why is there such a dichotomy between the views of developed and developing countries? The answer comes from the preoccupation of the United States and Europe with their huge trade deficits with China as a sign of economic weakness. Overall, the rest of the world generates trade surpluses with China, and many countries realize that economic power comes more from the strength of a nation’s economic institutions and the depth of its human capital than from trade alone.
For the more ideologically inclined, China’s economic ascendancy threatens the tenets of Western political liberalism—grounded in free markets, democracy, and the sanctity of human rights. These concerns often surface as a debate about the roles of the state versus the market, or the priority to be accorded to individual liberties versus collective action. The relative positions of the United States and China have become caricatures, although they may have more in common than many realize in terms of the problems that need to be addressed.
In the West, the debate about the market versus the state took on more urgency after the 2007-08 financial crisis, when major Western economies stumbled badly as China continued steadily apace. Critics of the Chinese model found China to blame for the West’s woes. They warned of its unbalanced growth (as measured by its extremely low share of personal consumption relative to the size of its economy and high outward investment), which would make it harder for the United States and Europe to recover. In the long run, the imbalance would even harm China itself. Thus, under U.S. President Barack Obama and now President Donald Trump, Washington has been urging Beijing to boost consumption if China wants to achieve high-income status—to escape the so-called middle-income trap.
Although “balanced” sounds good and “unbalanced” bad, those perceptions are misguided. Unbalanced growth is an inevitable but unintended consequence of a largely successful long-term development process. A decline in consumption as a share of GDP and a commensurate increase in investment actually comes from the movement of migrant workers from labor-intensive rural activities to more capital-intensive industrial jobs in cities. In the process, the share of consumption to GDP automatically declines even though consumption per person or household increases. In labor-surplus countries like China, farmers consume most of what they produce; thus, the share of consumption relative to agriculture output is high. When the farmer moves to an urban-based industrial job, such as assembling computers, he is paid a wage that is several multiples of what he was previously earning in agriculture; thus, his personal consumption increases considerably. But labor costs (and thus personal consumption) as a share of the value of an industrial product is relatively small compared with the costs of the components and the factory. Thus, the steady transfer of labor from agriculture to industry leads to a decline in the share of consumption to GDP but an increase in consumption per worker. Unbalanced growth has thus led to a rise in household living standards and China becoming a major manufacturing and trading power—much as it once did for Japan and South Korea and, a century before that, in the United States.
Beyond so-called unbalanced growth, world financial markets have also been fixated on China’s surging debt-to-GDP ratio and a property bubble. Experts such as the former IMF chief economist Kenneth Rogoff and agencies such as the Bank for International Settlements (BIS) and Moody’s have warned that all economies that have incurred comparable increases in debt have experienced a financial crisis and that there is no reason why China should be any different.
Yet China is, in fact, different—not because it is immune to financial pressures, but because of the structure of its economic system. The more optimistic observers point out that most of China’s debt is public rather than private, sourced domestically rather than externally, and that household balance sheets are typically strong. But neither the optimists nor the pessimists recognize that, a decade ago, China did not have a significant private property market. Once that market was created, credit surged into establishing market-based values for land—whose value was previously hidden in a socialist system. The fivefold increase in property prices over the past decade is the consequence.
The question now is whether current asset prices are sustainable. If they are not, a debt crisis is plausible. On that score, housing inventory has declined in recent years and affordability has improved. Many analysts have compared China’s housing prices with other major cities to get a sense of whether they are too high. But usually such comparisons are with much richer cities such as Hong Kong, Singapore, and Tokyo. Few realized that compared to India, prices in China’s megacities are actually much lower.
China’s financial situation does warrant serious attention, but it is not in crisis the way some observers suggest. Although China’s largely state-owned banking system has been too lax in its lending practices, the excessive pressure for credit expansion comes from local governments, which do not have the authority to raise revenue needed to fund the social and infrastructure services to support a rapidly growing economy. They have survived only because they have been able to borrow from state-owned banks to finance these expenditures. Thus, China’s debt problem is not so much a sign of typical banking problems but rather the consequence of a weak fiscal system.
For many China observers, worsening social tensions are the real risk to the country. Over the past several decades, income inequality has increased more rapidly in China than in any other major economy, environmental degradation has become a source of social protests, and worsening corruption is perceived as hampering growth and destabilizing the system.
Efforts to aid the poorer interior regions and to revamp social programs are beginning to moderate income disparities. The government is also starting to address environmental concerns because the rise of a more concerned middle class has made doing so a political imperative. But addressing corruption has revealed a potential conflict between political and economic objectives. Chinese President Xi Jinping sees arresting corruption as critical to preserving the legitimacy of the Communist Party, whereas economists, be they Chinese or Western, see dealing with it as essential to maintaining rapid growth. But these goals are not compatible.
Corruption is said to impede growth in developing economies because it dampens investment, both public and private. But China is different because the state controls all the major resources such as land, finance, and the right to operate commercial activities. Since privatization of those resources is not politically realistic, corruption allows for the transfer of use rights of these assets to private interests through formal or informal contractual arrangements with party and local officials. Such an arrangement encourages investment in infrastructure and industrial expansion in support of growth, with both sides sharing the gains. It is the major reason China has done so well economically even though it has lacked strong institutions and the rule of law.
Yet as China’s economy becomes more services-oriented and complex and public dissatisfaction with the inequities of rent-seeking behavior intensifies, sustaining growth may require getting the party out of its dominant role in controlling access to resources and economic opportunities.
Beyond national and international investment, international trade is another concern. Many Americans share the sentiments of Trump and his key advisers that America’s huge trade deficits are closely linked with China’s large trade surpluses. Yet the reality is that there is no direct causal relationship between the two.
As a former chairman of the Council of Economic Advisors, the Harvard professor Martin Feldstein, has written, “every student of economics knows or should know that the current account balance of each country is determined within its own borders and not by its trading partners.” Basic accounting principles tell us that the United States’ overall trade deficit is the result of a shortage in national savings relative to spending due to excessive government budget deficits and households consuming beyond their means. The countries that show up as being the source of the offsetting trade surpluses are coincidental.
How can this be explained intuitively to the non-economist? A close look at historical trends provides an answer. America’s trade deficit became significant around the late 1990s and only began to moderate around 2007. But China’s trade surpluses with the United States were not significant until 2004-05. How could China be responsible for America’s trade deficits when America’s huge deficits emerged long before China’s huge surpluses?
The confusion comes from having China as the final assembly point for parts produced by other Asian countries. In the 1990s, America’s bilateral trade deficits were concentrated among the more developed East Asian economies. The share of U.S. manufacturing imports from Asia has not changed over time, but the bulk of it shifted to China after the country became the last stop in the regional production network in the early 2000s.
Conventional wisdom also suggests that too much of America’s foreign direct investment (FDI) is going to China, resulting in job loss and declining competitiveness. Yet despite the United States and China being the world’s two largest economies, only about one or two percent of U.S. foreign direct investment has gone to China over the past decade. Going the other way, only three or four percent of China’s outward investment has been directed to America.
The existence of tax havens means that the real numbers are likely higher, but consider the EU, which is comparable to the U.S. in economic size. Over the past decade, annual flows of European FDI to and from China have been roughly two to three times those of the United States although they began at around the same levels a decade ago. The difference is that the European Union’s manufacturing strengths are more complementary to China’s needs than the United States’. The EU’s top exports to China are dominated by machinery and automobiles as well as high-end consumer goods. These products require FDI flows to support market penetration and servicing.
In comparison, the top categories of U.S. exports to China over the past decade include oilseeds and grains and recyclable waste (scrap metal and discarded paper), which do not lead to FDI. The third type is largely Boeing aerospace products, but Boeing has refrained from opening operations in China until recently, whereas its European competitor, Airbus, has had manufacturing centers in China since 2008.
Regarding outward investments, Europe is again more attractive because China and Europe are more complementary in their respective industrial structures than China and the United States. In addition, the EU is a much easier market for China to penetrate because it offers a greater choice of partners that are less preoccupied with security concerns. If one EU country restricts access to its market, a Chinese company can still enter through a different member country to gain access to the greater EU market. Although partnerships with individual U.S. states are possible, overarching federal policy is disadvantageous for Chinese investors relative to the more open environment that the EU offers.
Promoting more FDI in both directions would benefit both the United States and China. But the Trump administration may resist any agreement that would encourage American firms to invest more abroad. Moving forward on the bilateral investment treaty that has been under negotiation for years, however, should be high on the agenda even if it is not politically expedient.
VENUS WU / REUTERSWorkers at a factory in Zhuhai, China, December 2016.
NO ZERO-SUM GAME
In assessing China’s economy, the puzzle is not whether one should be positive or negative. Rather, it is coming up with a framework that leads to a better understanding of China’s reality. For now, more often than not, the China debate reflects a misreading of the role of the state in influencing economic decision-making in China. The Western concept of an economy is based on competition among firms in open and free markets. Unique to China, local governments are also part of the competitive economic environment. Beijing sets the broad parameters and policies are calibrated in ways that defy traditional thinking. Competition in China is not just the result of pressures generated by markets and firms but can also come from local government entities. Not incorporating these factors into the analysis leads to a misunderstanding of what has been happening in China.
It is good for the world if China is stable and progressing well economically. Such progress is best supported if the country’s economic and financial problems are accurately assessed and addressed. Misunderstanding the nature of its debt problem, for example, by not recognizing that it is as much a fiscal problem as a banking issue, contributes to misguided efforts. China has one of the most restrictive regimes regarding foreign investment in services. Liberalizing access would cater to the United States’ strengths as well as spur the competition and knowledge exchange needed for China to become more innovative. Thus, the debate should be less about punitive tariffs and more about negotiating a bilateral investment treaty. Moreover, rather than worrying about China’s unbalanced growth model, the focus should be on persuading China to grant its rural-to-urban migrant workers full access to the social and economic services accorded to established urban residents. Doing so is justified for reasons of equity, but it would also spur growth in personal consumption and help moderate China’s trade surpluses, thus easing global trade tensions. Finally, at the geopolitical level, economic differences between nations can and do raise concerns, but ultimately their resolution does not have to be a zero-sum game.
Los crímenes de lesa humanidad del gobierno de Nicolás Maduro
LA OPINIÓN DE
22 DE AGOSTO DE 2017 09:00 AM | ACTUALIZADO EL 22 DE AGOSTO DE 2017.
"Confieso que TRANSCRIBIR cientos de relatos de víctimas de tortura en Venezuela y su sistematización me ha puesto el “cuero duro”, pues no puedo dejarme embargar por la indignación y la rabia para escribir lo más metódico y objetivo posible los informes.
El pasado jueves 17 de agosto entregué a la Corte Penal Internacional 22 nuevas incidencias de torturas, que contienen un número aproximado de 110 víctimas directas y un número no cuantificado de víctimas silenciosas, esas que son torturadas junto a las que sí denuncian, pero que el pánico, quizás la vergüenza y la gran intimidación de sus victimarios, no le permiten hacerlo. Tengo año y medio escribiendo los gritos del horror en mi país para mi expediente en la Corte, y cuando pienso que ya nada puede alterarme, surgen testimonios que me doblan de rabia, de estupor.
Uno de ellos es el de Wuilly Arteaga, el violinista de las marchas, detenido y torturado por efectivos de la Guardia Nacional Bolivariana, quien narró cómo el día de su arresto, mientras era trasladado, le practicaban actos lascivos y violación por el ano a una muchacha que también habían detenido y habían tirado encima de él para atacarla y abusar de ella. Aunque ya he transcrito por lo menos dos casos parecidos, escucharlo de la boca de este valiente joven, sometido a torturas y herido de perdigón solo por tocar su violín en las manifestaciones, me provocó un gran escalofrío en el alma.
Me niego a acostumbrarme al silencio que viene después del breve escándalo que casos como este causan en nuestra sociedad. Me niego a que esa “muchacha” no obtenga justicia, y sus violadores no sean enjuiciados y apresados. Me niego a que cada gánster que mantiene secuestrada a Venezuela a punta de armas, persecución y represión, encarcelamiento, asesinatos, torturas, tratos crueles, desapariciones forzosas, allanamientos ilegales, pillaje, ataques a la propiedad privada de quienes manifiestan, entre otras violaciones de derechos humanos y crímenes de lesa humanidad, no sea juzgado y pague por sus crímenes.
A Carolina (nombre en reserva) la arrodillaron a mitad de la carretera un día de julio y le pusieron en fusil en la cabeza. Su ropa estaba hecha harapos, después de que varios guardias la golpearon y la trataron de violar, manoseándola violentamente en todo su cuerpo. Pensó que la mataban, mientras permanecía de rodillas llorando y el pánico le corría por las venas, y sentía el fusil en su cabeza, pero terminaron aplicándole descargas eléctricas, en la nuca, en los senos, en sus partes íntimas mientras le gritaban “guarimbera” por manifestar.
Marta (nombre en reserva) sentía que se desgarraba por dentro, mientras recibía golpes con tubos y palos en sus costillas, en su abdomen, en su espalda, en sus piernas, colgada por sus muñecas esposadas de una columna en la sede del comando de la Guardia Nacional, tocando el piso solo con las puntas de los pies, sintiendo cómo se le hacía más dificultoso respirar y todo se le ponía negro, pero aun así podía percibir el odio y la violencia con el que cada guardia le daba golpes sin piedad.
Enmanuel Barrio se negó a manosear (practicar actos lascivos) a sus compañeros detenidos, para espectáculo de los guardias nacionales que los obligaban a tocarse entre sí, luego de que los golpearan de forma salvaje. Por negarse, trataron de violarlo con un tubo. Arrodillado junto a los demás, esposado y con las manos atrás, le echaron polvo de las bombas lacrimógenas en los ojos y siguieron golpeándolo, una y otra vez…Por manifestar y pedir libertad para su país.
Carmen Ángel le pedía al guardia que no le pegara más, mientras sangraba copiosamente por la herida abierta que el oficial le había hecho en el cráneo con el casco y la culata del arma con que la golpeaba, y mientras la sangre corría por su rostro se dio cuenta de que no era uno, sino 4 o 5 los que la golpeaban y le daban puntapiés al mismo tiempo. Le dieron cachetadas, le fracturaron dedos de la mano al tratar de protegerse la cabeza, pero lo peor para Carmen fue ver el odio con el que los torturadores la llamaban "guarimbera".
El capitán Jesús Alarcón está preso en una cárcel civil hace ya más de tres meses. Antes fue torturado en “la Tumba” que tiene la División de Contrainteligencia Militar en Boleíta, Caracas, y en la cárcel militar de Ramo Verde. Recibió descargas eléctricas, asfixias con bolsas plásticas, palizas en todo el cuerpo y torturas “blancas”. Hoy está encerrado en una especie de jaula con barrotes, como las que se usan para animales en los zoológicos, sin agua ni electricidad, sin baño, solo con una letrina, por donde salen todo tipo de insectos, y lo que es peor, sin alimentos. Agua de lentejas es la dieta impuesta desde hace días para todos los presos, que han bajado entre 15 y 25 kilos de su peso corporal. Cuando los alimentan con otra cosa, la porción es miserable, a veces descompuesta, a veces con gusanos. Desde que llegó no lo sacan al sol y en la jaula no puede realizar ningún tipo de actividad física que lo ayude a mantenerse en forma. Jesús está muy débil. Y lo que es peor, solo tiene permitido ver a sus pequeñas hijas una vez al año, el Día del Padre, según le dijeron.
A Briggitte Herrera la golpearon salvajemente aquel día en la UPEL. La apuntaron con el arma en la cabeza y luego le dieron golpes con la culata, con tubos y palos, con los cascos de los funcionarios y fuertes puntapiés en todo el cuerpo. Fue objeto de actos lascivos e intentaron violarla con un tubo, y junto a las demás jóvenes, recibió cachetadas en el rostro para causarle el mayor daño posible, dejándola con fuertes hematomas, mientras la amenazaban de muerte. 29 jóvenes fueron torturados junto con Briggitte esa noche, por un número no cuantificado de funcionarios. Los muchachos fueron trasladados a dos cárceles, El Dorado y la 26 de Julio, y ahí ha continuado la tortura. Sin atención médica para las graves heridas sufridas, con muy escasa alimentación, con el paludismo y la malaria dándoles vuelta; ya hay denuncias de contagiados. Hay quienes sufrieron heridas abiertas en la cabeza que no han sido atendidas e incluso uno de ellos estuvo vomitando sangre los primeros días.
Podría pasarme días escribiéndoles los horrores que miles de venezolanos han sufrido los últimos meses y años. A mí no me queda ninguna duda sobre los crímenes de lesa humanidad que comete el régimen de Maduro. ¿Y a usted?
La narcodictadura está dispuesta a matar, encarcelar y torturar de las formas más viles y sanguinarias a los venezolanos que manifiestan en las calles y se oponen a ser sometidos al régimen que pretenden imponer. Responsablemente le digo a la comunidad internacional que los venezolanos no pueden luchar solos y con las herramientas de una democracia, como es el voto, contra un régimen que está dispuesto a matarlos, encarcelarlos, torturarlos y hasta desaparecerlos, tal como sucede actualmente con algunos detenidos. Esto sin tomar en cuenta las cifras de decesos por desnutrición, por falta de medicinas y condiciones precarias de los centros de salud, que ni alcohol tienen para desinfectar. El régimen lucha por mantenerse en el poder a costa de lo que sea. Los venezolanos luchan por vivir en libertad y democracia. No nos dejen solos."