To Hell with the Rule of Law, “My Dad is Li Gang”

Michelle Mengsu Chang, BASC Research Assistant

“Sue me if you dare, my dad is Li Gang.” Over the past month, this phrase has become ubiquitous on every Chinese website and online community.

It came from a 22-year-old man named Li Qiming, from a small city called Baoding in Hebei Province. On October 16th, Li Qiming, while drunk, drove onto the campus of Hebei University at high speed and ran over two female university students.  One of them died on the spot, and the other was badly hurt. Li Qiming did not stop the car but kept on driving toward his girlfriend’s dorm. On his way back he was forced to stop by students and security guards who had gathered around the dead girl. When he got out of the car he said only one thing: “Sue me if you dare, my dad is Li Gang.”

As it turned out, Li Gang was but a deputy police chief at a branch office of the Baoding police force, and Baoding is only a minor city in Hebei Province. Yet even with this low level of influence and connections, his son could boast impunity after taking the life of a girl and breaking the leg of another.

This is not the first time accidents like this have happened in China. Almost every month there is news in China about children of rich and powerful parents speeding down busy streets in luxury cars and killing pedestrians. But Li Qiming’s arrogance, total lack of remorse, and utter disrespect for the rule of law is unprecedented. Immediately, angry citizens took the incident to the Internet and the story spread like wildfire. Millions wrote long articles condemning the abuse of justice, while others made sarcastic comments about social ills in China. The feeling of outrage was universal.

Following the incident Li Qiming was temporarily imprisoned while awaiting trial. On October 22nd, China Central Television (CCTV) released a video showing Li Gang making an apology to the public. Li Gang wept in front of the camera, and bowed down for half a minute until the reporter stepped forward to stop him. However, the TV station did not even make an attempt to interview the deceased girl’s family. In fact, around the same time, all major news agencies were recalling their reporters who were reporting in Baoding on developments of the accident and banned further publication regarding the scandal. Critical articles and commentaries also started disappearing from the Internet. Furthermore, the attorney for the girl’s family reported that he was asked to terminate his representation in the case by the Bureau of Justice in Beijing. Meanwhile, legal experts in China revealed that Li Qiming would be sentenced to three years at most.

Today in China, people everywhere are expressing their anger at the Li Gang scandal. University students in China and abroad have been passing around petitions to be presented to the central government, demanding that the Administration take the matter seriously. Yet each of these attempts has been abruptly silenced. The right and wrong in this case is crystal clear and people’s demand is simple: that Li Qiming be severely punished, that the girl’s family be given a fair answer, and that the rule of law be upheld and respected. What an average Chinese citizen is most indignant about is not only that none of these demands have been fulfilled, but that an obscure little bureaucrat like Li Gang can trample on the sense of justice of an entire nation of people. The likelihood of people’s outrage at the scandal transforming into a major social unrest is rather small. In a few months’ time, most people will lose interest in the case, learn to live with reality, and move on to other things. But if this is indeed how the incident will come to end, a sting will remain in China’s collective consciousness.

When debates on the Li Qiming case had barely started to die down, on November 10th, a man named Zhang Lianhai in China was sentenced to two and half years in jail. Zhang Lianhai is the father of a victim during the tainted milk scandal in 2008. That year, tainted milk power produced by one of China’s most trusted companies resulted in the death of six babies while 50,000 other babies were hospitalized for serious kidney problems and 300,000 were sickened to various degrees. Each child diagnosed with kidney stones from drinking the milk was promised 2000 RMB in compensation, equivalent to $300—a  pathetic amount in China’s expensive healthcare system. Zhang Lianhai, a former journalist, represented thousands of parents to demand better healthcare packages for their sick children. He rallied legal support and wrote persuasive articles on his blog. While he won the sympathy of the Chinese population, the government still decided to seize him from his home and put him behind bars for “inciting social disorder.” Unsurprisingly, news reports on his sentence that were shared all over China’s online communities spurred an explosion of public anger.

 The impunity of Li Qiming and the incarceration of Zhang Lianhai are seemingly unrelated. But these two events, together with thousands of other controversial legal cases, are posing serious questions about the state of the Chinese society.

For years, as the West criticized China for absence of democracy, corrupt governance, and human rights violations, the Chinese government and defensive citizens have come up with many excuses. The country is too big. The people are too many. Most of the citizens are not educated enough to make informed decisions. You cannot lift 1.3 billion people out of poverty without hurting a few... But in some cases, where even the least informed of citizens can tell right from wrong, where every sensible person knows that something could be done, there is no more excuse.

Today, the legitimacy of the Chinese government depends on its ability to intoxicate its citizens with a 10% annual economic growth rate and appease them with illusions of a harmonious and affluent society. Every Li Qiming, every Zhang Lianhai that emerges is an invaluable opportunity for the government to win the trust and goodwill of its people by upholding the rule of law. Yet almost every time, the government has chosen to disappoint.

There might be a day where the Chinese economy will begin to slow down, where people’s demand for justice will have to be answered, and where another Olympics and World Expo and National Day parade will fail to distract them from the real problems in China. There will not be a Li Gang to save the Party. What will the Party do then?

For Business Interests, Republican Victory is a Mixed Bag of Tea

Robert Nelson, BASC Research Assistant

Free traders and business interests are usually ecstatic when Republicans win electoral victories, but this most recent triumph might be a change from the norm. While this new Republican majority in the House will likely prove to be just as anti-regulation and anti-taxation as previous Republican majorities there is reason to believe that in areas of international commerce this group will be far more protectionist.

Unlike previous conservative victories, this one was orchestrated by a populist Tea Party movement driven not only by an anti-government ethos, but also by a desire to return America to its glorious days as an industrial superpower. They feel like the country has taken a rapid change for the worse. And while most of blame lies with Obama and his progressive polices, some of the responsibility belongs to trade deals like NAFTA, the influx of illegal immigrants, and the profligate spending by both political parties. It is these other enemies of the Tea Party movement that might prevent Republicans from being as supportive of free trade as they normally are.

There are four areas of chief concern that might spell trouble for traditional Republican business interests: immigration policy, trade agreements, relations with China, and the debt ceiling. Tea Partiers have positions at odds with the establishment Republicans on all of these issues.

Illegal immigrants are the perennial bogeymen of the Tea Party movement. Business groups, on the other hand, tend to see them as important contributors to the American economy. This tension probably will result in a stalemate for the foreseeable future, as the Tea Party members of the Republican party will block any sort of immigration bill that creates a pathway to citizenship for illegal immigrants. A compromise on illegal immigration was not likely before the Tea Party movement took power, but with the Tea Partiers in greater number it will also be difficult to pass less contentious policies like an expansion of H-1B visas, something business lobbies directly support.

Trade agreements will also be an issue of contention for these new Republican members of Congress. While the Tea Party is nominally a free market movement, Tea Partiers are not exactly eager to outsource more jobs to Asia. The line here will probably depend on public awareness. If a trade deal like the Koreas-U.S. FTA can fly under the general public’s radar, then it will probably go through. If, on the other hand, it becomes a major issue, it will probably stall. The more complex and obscure a trade deal, the more able business interests will be able to co-opt Tea Partiers and get them to vote for it.

Relations with China are not an obscure issue and Congress has always been more apt to be tough with China than the White House. This might be one of the few areas of bipartisan agreement in the next two years. Both sides were unrelenting in accusing each other of shipping jobs to China during the election. Long before the Tea Party movement began, Democrats were considering hitting China with a tariff to punish it for its currency suppression. This will not change in the new Congress, and Tea Partiers will be just as eager to get tough with China as their Democratic predecessors.

The area of largest concern and one where hopefully cooler heads will prevail is the national debt ceiling. This spring Congress will have to vote to approve a rise in the debt ceiling. This act is much like a family paying its monthly credit card bill, and Congress has historically passed the measure with bipartisan support. This year, however, was the first time in recent history that no Republican voted to raise the debt ceiling. If Republicans continue with this policy and either fail to pass a rise in the House or filibuster a rise in the Senate, the U.S. will default on its debt and a global financial crisis could occur. This is unlikely, as the Republican leaders will probably whip up enough votes to ensure passage along with the Democrats. But if one takes the Tea Party at its word, it is a possibility.

Overall, the next few years will probably be defined by policies favorable to business or at least a neutral stalemate. But in some areas, business interests will find more resistance than they are used to from Republican members of Congress and on some issues business leaders might experience outright hostility.

Hope for U.S.-South Korea FTA

Lauren Dansey, BASC Research Assistant

The new Republican Congress is predicted to take greater steps towards developing U.S. free trade deals. But will the new Congress be able to resolve the current issues blocking the U.S.-South Korea free trade agreement (FTA)? Reuters suggests the key to overcoming the barriers to the agreement maybe found in Rob Portman, the recently elected Republican Senator from Ohio. Senator Portman served as the U.S. trade representative (USTR) under the Bush administration from 2005-2006. While Portman was at the USTR office, he began talks with South Korea about signing a U.S.-South Korea FTA.  

The New York Times reported the newest roadblock to completing the FTA is White House concerns over the impact on trade sensitive sectors such as the auto industry. Labor Unions and car companies like Ford claim an FTA with South Korea will create an imbalanced trade where American car manufactures will suffer. Ford representatives argued that “for every 52 cars Korea ships here, the U.S. can only export one there.” 

Auto and union lobbyists have so far successfully delayed ratifying the agreement, but the incoming Congress will likely complete the South Korea FTA as part of their program to liberalize trade. Even Dave Camp—a Republican representative from Michigan, home of the auto industry—is advocating completing the FTA with South Korea. The GOP-run house will particularly focus on signing agreements with countries like South Korea to capitalize on the expanding Asian market. Moreover, politicians see the FTA as opportunities to increase U.S. involvement in Asia and counter Chinese regional influence. This new congressional agenda gives Senator Portman the opportunity to exercise his experience as the former USTR and complete the talks with South Korea he began five years ago.

For "Our" China Trade Emergency...

Do-Hee Jeong, BASC Research Assistant

Many politicians made the China debate a central component of their campaign platforms for the recent midterm elections, and Ohio Democratic Senator Sherrod Brown was no exception to this trend. Brown and others assert that since normalizing trade relations with China in 2000, the US bilateral trade deficit has increased dramatically (by 170 percent to be exact) because of China’s illegal subsidies and currency manipulation (for more information on China’s currency controversy, refer to this recent blog post by Professors Vinod Aggarwal and Simon Evenett). Senator Brown criticizes proponents of this bilateral relationship who emphasize the fact that exports to China have also increased as inaccurately telling only one side of the story. In his own words, it “is like reporting just one team’s score in baseball: the Cubs scoring five runs sounds good, until you hear that the Reds tallied 12.”

However, in his recent New York Times op-ed, Senator Brown also seems to fall victim to his own criticism, because isn’t trade a two-way relationship? Rather than focusing on just China’s actions that undermine free-market competition, why not focus on the US’ failed attempts to make its own industries competitive globally? The labor cost argument stretches only so far, as the US could have found other comparative advantages. Instead of developing industries that could be more competitive, the US government continues to bail out its uncompetitive automobile industry. As the US complains about its trade deficit, the rest of the world is already moving far ahead in innovative and sustainable technological developments, as Ren Yi Hooi describes here. 

Even if the US had not normalized trade with China a decade ago, it is questionable whether or not the US would have this trade deficit today without better developing its comparative advantages. Other countries with cheap labor sources would probably have taken China’s place. Similarly, even if Section 301--which allows Washington to respond with aggressive trade measures, including tariffs if investigations find that China’s support for clean-energy exports violates international trade rules--is implemented, there are still other countries that will probably replace China and continue to prolong the US trade deficit. The US would then still be pointing the finger at others for its unemployment and deficit, rallying its people to support protectionist measures to improve the trade deficit. The senator claims that the 1980s and 90s restrictive measures against Japanese and Korean subsidies and trade barriers led to more balanced trade relationships. But ironically, the US government still places blame on Japanese car companies for the demise of the American automobile industry and still brings up the asymmetrical automobile trade with Korea as a hindrance to the KORUS FTA. If trade restrictions are so effective, why do we still have similar problems with trade deficit in sectors that have been protected?  

I am not saying that the invisible hand should have been or be the sole solution, since every economic action is complicated by political ramifications. Furthermore, I am not arguing that the Chinese have not implemented unfair trade policies. But, I wanted to draw attention to the other aspect of the bilateral trade relationship that seems to be ignored in recent politically-charged criticism against Chinese trade policies. Instead of using China as a scapegoat to its domestic problems, the US should focus more on better developing its competitive sectors not only to assuage internal tensions but to provide a long-term solution to establish its competitiveness since trade restrictions, such as the Section 301 proposal provides only a temporary solution. This dramatic shift will not be easy and without public protest, but it seems to be a necessary sacrifice in order to secure America’s competitiveness in the long-run.  Perhaps, these trade restrictions are necessary to alleviate immediate trade deficit and unemployment. But, the government should take further steps beyond this temporary solution to continue developing its successful industries to establish long-term trade competitiveness.

I agree with Senator Brown that “‘made in America’… is more than an empty slogan.” It should definitely be more than empty political rhetoric and instrument to evoke patriotism amongst the American public. However, promoting “made in America” does not necessarily mean standing up for ALL American manufactures, but rather for those that can be made competitive.  

China: The Root of all Evil?

Cindy Li, BASC Research Assistant

With nearly one out of every ten Americans jobless, election campaigns have been buzzing with mentions of record-high unemployment and the “failed” stimulus plan. But of course, merely quoting the unemployment rate is no longer enough to incite anger and frustration from voters. The American people want answers. It used to be that fingers were pointed at the greedy investment bankers with their undeserved bonuses, but this year’s elections have shifted the spotlight to China.   

As David Chen noted in a recent New York Times article, at least 29 candidates have endorsed advertisements that attack opponents for being too sympathetic to China (watch a sample of these anti-China ads here). Videos range from a high-budget ad depicting an evil Chinese professor in a futuristic classroom chuckling villainously about the collapse of the US, to simple ads with cliché images of Chairman Mao looking approvingly towards a field of wind turbines while an authoritative voice accuses a candidate of fighting for jobs in China at the expense of American workers.  As Democrat Joe Sestak’s attack of Pat Toomey demonstrates, being a former Wall Street executive isn’t why we shouldn’t vote for Toomey; rather, it’s that he moved from Wall Street to work in China.  

So does this mean candidates have already forgotten about the sub-prime mortgage crisis and the ensuing credit crunch, and instead believe that China (and of course, those China-sympathizing politicians) are to blame for America’s continued economic woes?

No, alas campaign ads do not change the biting reality of economics. Rather, they reflect voters’ biggest concerns. The American people want hope. The continued increase in unemployment in the first half of 2010, even with the $787 billion stimulus package and significant regulatory changes, raises concerns that the American economy may never be restored to its previous glory. Naturally, the politician who can provide the solution will win the heart of his or her district. And of course, pointing at an external enemy is much more popular than telling voters to accept that the effects of the financial crisis will take more than a couple of years to ripple through the economy.  Until then, political campaign ads will likely continue to rely on blaming over-paid CEOs and Chinese manufacturers for all our problems.