Hong Kong

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Will Johnson Quit or Be Forced Out, Once He Has Wrecked the Country For Brexit?

Also in Lobster 80 for Winter 2020 is a very interesting piece by Simon Matthews, whose observations about Johnson’s real motives for running for PM and supporting Brexit I discussed in my previous blog post. Matthews has a piece, ‘Time for the Pavilion (or: there are 365 Conservative MPs)’ pondering whether Johnson will either retire as PM or be forced out by angry members of his own party, once he has successfully ruined the country with a hard Brexit.

And Matthews makes some very interesting observations. Johnson’s majority looks impressive, but is actually very fragile. 50 Tory MPs, for example, voted against the imposition of the second national lockdown at the beginning of November. And many of the 80 new MPs forming the Tories’ parliamentary majority actually have very small majorities in their own constituencies. He writes

Secondly, and less remarked upon, Johnson’s majority of 80 is actually quite fragile. No fewer than 78 Conservative MPs have a majority of 5,000 or less, and of these 34 have a majority of 2,000 or less. Indeed,
all the fabled ‘red wall’ seats that Johnson gained are in this category. Any MP in this situation would be aware that it really wouldn’t take much of an electoral swing to oust them.

Also, although the background of the typical Tory MP is privately educated, with a background in the financial sector, think tanks and policy groups, and is strongly anti-EU, there are still 102 Tory MPs who support the European Union.

Finally, and a puzzling anomaly, there are still 102 Conservative MP’s who were pro-EU in 2016. Admittedly, some of these may have been so at that time because it was party policy (i.e. now party policy has changed,
their views will have changed, too); and there will be others who were ‘pro-EU’ on the basis of Cameron’s re-negotiation of 2015-2016. But, nevertheless, amongst those 102 there must be some (40? 50?) who would much rather the UK stayed as close to the EU as possible, including membership of the Single Market, Customs Union and the EEA rather than exit everything, in its entirety.

BoJob’s position is very precarious. If things get very desperate, and the Tory party does decide it wants to form a ‘government of national unity’ in a coalition with Labour and the Lib Dems, it would only take 45 Tory MPs to oust him.

The article then goes to discuss the problems Johnson faces from Brexit, and particularly the challenge it poses to the integrity of the UK, and opposition from Northern Ireland, Scotland, Wales, the EU and the Americans, and members of both chambers of parliament. He’s also got severe problems with the Covid crisis, and the havoc this and the consequent lockdown has played with the economy. The sacking of Dominic Cummings could be seen as a warning shot to Johnson from Brady and the party’s donors out in the tax havens, who feel they are being ignored by the PM. But he notes that the donors and corporate backers really don’t seem to have an idea of the massive damage that Brexit will inflict on the UK economy. It will destroy 60-65 per cent of UK manufacturing, and although stockpiling of food and other goods has been going on since 2017, these supplies can only last for so long. So that Britain will return to the food queues of the ’60s and ’70s at the borders.

He makes the point here that the majority of British ports are foreign owned. In footnote 7 he writes

The owners of the UK’s main trading ports are Associated British Ports (owned in Canada, Singapore and Kuwait), Forth Ports (Canada), Hutchison Port Holdings (Singapore), Peel Group (the Isle of Man and Saudi Arabia), PD Ports (Canada) and Peninsular and Oriental Group (complex, but seemingly Dubai, China and Hong Kong). The latter group include P&O Dover Holdings Ltd, which operates most of the ferry services out of Dover, and is owned by the Peoples Republic of China. (The other ferry services at Dover, DFDS, are owned in Denmark). The intention post-Brexit of declaring many UK ports ‘free ports’, when so many can be connected back to tax havens anyway, is striking, and one wonders to what extent the owners of these ports have lobbied for that outcome.

Matthews concludes that Boris is on such shaky grounds that he may well decide to jump before he’s pushed.

The truth is that Johnson can now be ambushed by so many different groupings for so many different reasons, that the chances of him remaining PM after he has delivered the hard Brexit his backers require
must be doubtful. And why would he anyway? He looks bored most of the time and wants money. Leaving Downing Street – and the cleaning up – to others, gives him time to spend with his many different families, time to write his memoirs for a hefty advance, the chance of a US TV show and time to kick on, as all ex-UK PMs do, with earning serious money on the US after-dinner speaking circuit. The possibility that some formula will be devised to facilitate his exit, possibly a supposed medical retirement, looks likely.

After all, he’s been sacked from every job he’s ever had. Why would he wait until he is sacked from this one?

See: Time For the Pavilion (Winter 2020) (lobster-magazine.co.uk)

I found this interesting in that it showed that there is grounds for optimism amongst the gloom. The Tories have a huge majority, but it’s fragile. Very fragile. If Starmer actually got his act together and started behaving like a leader of real opposition party, he could start cutting it down significantly. But he doesn’t, perhaps because, as a Blairite, the only policy he has is stealing the Tories’ and winning the support of their voters, and backers in big business and the Tory media. Hence his silence and his determination to persecute the socialists in the Labour party.

It also shows just how much damage the ‘No Deal’ Brexit Johnson seems determined to deliver will do to Britain. It’s going to wipe out nearly 2/3 of our manufacturing industry. This won’t matter for the Tories or Blairite Labour. Blair took the view that British manufacturing was in decline, and that it could be successfully replaced by the financial sector. This hasn’t happened. Ha-Joon Chang’s 23 Things They Don’t Tell You About Capitalism argues very clearly that the British and other economies still depend very much on the manufacturing sector. The fact that it appears comparatively small to other sectors of the economy merely means that it hasn’t grown as much as they have. It does not mean that it is irrelevant.

And it also shows once again how this chaos and poverty is being driven by a desire to protect the Tories’ backers in the financial sector, and the foreign companies owning our utilities, as well as the British rich squirreling their money away in tax havens. Shaw pointed this all out in once of his books written nearly a century ago, condemning the way the idle rich preferred to spend their money on their vapid pleasures on the continent, while the city preferred to invest in the colonies exploiting Black Africans instead of on domestic industry. He stated that while the Tories always postured as the party of British patriotism, the opposite was the truth: it was the Labour party that was genuinely patriotic, supporting British industry and the people that actually worked in it.

Shaw was right then, and he’s right now, no matter how the Tories seek to appeal to popular nationalistic sentiment through images of the Second World War and jingoistic xenophobia about asylum seekers. The Tories haven’t backed British industry since Thatcher and Major sold it all off. The only way to build Britain back up is to get rid of her legacy.

Which means getting rid of Johnson, the Tories and Starmer.

Lobster Review of Book on the Real Reasons for Trump’s Hostility to China

The conspiracy/parapolitics magazine Lobster has put up a fascinating piece by Scott Newton, ‘The USA, China and a New Cold War?’ reviewing Jude Woodward’s The US vs China: Asia’s New Cold War?, published in 2017 by Manchester University Press. Woodward’s book is an examination of how Western attitudes towards China fell from being extremely positive in the first decade of this century to the current state of tension and suspicion. The chief causes for this, according to the pronouncements of our politicos and the media, are concern over massive human rights abuses in Sinjiang, Hong Kong and elsewhere, Chinese territorial claims to islands in the South China Sea, which threaten western strategic interests and the other neighbouring countries, and the threat to national security posed by Chinese companies, particularly in telecommunications and social media. Woodward’s book turns these assumptions upside down. She recognises that there are real concerns about Chinese human rights abuses and the persecution of the Uighurs, but argues that this situation is far more complicated. And the real reason for America’s change of attitude to China is due, not to Chinese authoritarianism, but because China represents an emerging threat to America’s status as the world’s dominant superpower and their attitude towards capitalism is very different from American neoliberalism.

Relations between China and the West were initially positive and very good because the new, capitalist China had helped prop up the global economy after the financial crash of 2008. The development of the country’s infrastructure created a huge demand for raw materials, which benefited other countries around the world, including the west. The introduction of capitalism is also transforming China. It’s gone from a largely agricultural nation to an industrial and commercial superpower. In 2013 it passed America as the world’s largest trading nation. later on this century it is expected to surpass America as the world’s most prosperous nation both as a country and in terms of per capita GDP.

China’s build up of military forces in the South China Sea is seen by Woodward as a defensive posture against the Americans. They’ve assembled a large naval force in the area, which poses a threat to Chinese access to the Straits of Malacca. 80 per cent of the oil imported by China and much of its merchant shipping pass through the Straits, hence Chinese determination to defend them. Woodward believes that China believes in a multipolar world, and has neither the economic power nor the will to establish itself as the world’s ruling nation.

Nor is China pursuing its economic and commercial interests at the expense of everyone else, as has also been alleged. Woodward argues that while western capitalism views trade as a competition between two parties, in which one party must beat and impoverish the other, the Chinese instead really do see it instead as benefiting both parties.

The oppression of the Uighurs and suppression of democracy in Hong Kong by the Chinese government are real and matters of serious concern, but the West is also covertly attempting to interfere in China’s control of these regions. This is through the National Endowment for Democracy, the non-state outfit to which the American state has given the task of regime change after it was taken away from the CIA in Hong Kong, and through sponsorship and funding of various extreme nationalist and Islamist groups in Sinjiang. Newton writes

But the picture is not clear cut. The Chinese government has
complained about unhelpful ‘foreign interference’ in Hong Kong and there
is evidence to support this. Senior US politicians such as Vice-President Mike Pence have met leading members of the opposition in Hong Kong,
and civil society organizations there have received significant financial
support from the National Endowment for Democracy (NED), a CIA spinoff established in 1983 to promote what later became known as ‘regime
change’. This has, of course, always been change to one committed to a
political economy characterised by neoliberalism, in other words by free
market capitalism. In Hong Kong the NED has been financing groups
since 1994. A China Daily article from 2019 stated that the NED has been
financing groups in Hong Kong since 1994 and that the Hong Kong Human
Rights Monitor received $1.9 million between 1995 and 2013. A search
of the NED’s grants database further reveals that, between 2016 and
2019, the (US-based) Solidarity Center received more than $600,000 and
the (US-based) National Democratic Institute $825,000.

As far as Xinjiang is concerned, the real story is complex. This area is
rich in oil, gas and ‘other natural resources and profoundly important to
China’s national security’. The region borders Kazakhstan, Kyrgyzstan,
Tajikistan, Afghanistan, Pakistan and India. At times of invasion and civil
war in Chinese history it has tended to fall under foreign influence: for
much of the twentieth century until the mid-1980s the Soviet Union
played a powerful role in the province’s politics, backing separatist
groups. This role has now been taken by the USA, which is funding a set
of far-right and fundamentalist Islamic organisations such as the Victims
of Communism Memorial Foundation in a bid to promote instability in
Xinjiang and perhaps even its detachment from China itself.

The efforts of these shadowy parapolitical outfits have been
supported by another NED-financed group, the World Uyghur
Congress(WUC), which is keen to promote the creation of a separate
Turkic State out of Xinjiang. WUC is linked to the extreme Right in Turkey,
notably to the Fascist Grey Wolves organization. Finally there is the East
Turkestan Islamic Movement (ETIM) whose objective is also the
establishment of an independent state carved from Xinjiang, known as
East Turkestan. The EU, UN Security Council and indeed the US
government have all identified ETIM as a terrorist organization linked to
Al-Qaida. In addition to its activities in the Middle East, during the last
twenty years ETIM has carried out terrorist attacks in China, including in
Xinjiang. Given Xinjiang’s strategic importance to China’s security and
territorial integrity and given the nature of the externally-trained and
funded agencies at work in Xinjiang, the attitude of the Chinese State to
dissidents there cannot be called surprising, even if the taking of a
repressive line has exacerbated problems in the region. It has also
provoked increasing global disquiet and has contributed to international
tension, though it cannot be said to be the root cause of this, which stems
from changing geopolitical conditions.

Woodward also argues that current American hostility to China comes from the conviction that America really is divinely ordained to be the world’s governing nation with a particular mission to promote free market capitalism. America demands trade at the expense of privatisation, the suppression of organised labour, and the free movement of capital. The Chinese have no interest in promoting any of this. They’re solely interested in trade, not in the economic and political transformation of their partners. Newton writes

It may not seem rational for the US to pursue a confrontation here but two quotations explain the reality from Washington’s perspective. The first is the comment of former French Foreign Minister Hugo Vedrine that ‘most great American leaders have never doubted . . . that the United States was chosen by Providence as the “indispensable nation” and that it must remain dominant for the sake of humankind’. The second is a comment by Perry Anderson that the US state acts ‘not primarily as a projection of the concerns of US capital, but as a guardian of the general interest of all capitals, sacrificing – where necessary and for as long as needed – national gain for international advantage in the confidence of the ultimate pay-off’.

In other words, the US both writes and polices the rules of the game
and the rise of China represents a de facto challenge to this hegemony.
On the surface this seems a strange observation. China has engaged very
successfully and indeed supportively (shown by its reaction to the 2008-9
Crash) with global capitalism. But it does so in a qualified way, or, to
paraphrase Xi Jinping, ‘with Chinese characteristics’. Not only does the 33
Chinese economy continue to operate a large state-owned sector but its
financial system is closely regulated, with controls over the currency and
over capital movements. China does not possess the conviction that
private economic activity trumps public enterprise, that government
should be small, organised labour suppressed, trade free and
international capital flows unhindered. Its assistance for developing
nations is not accompanied by requirements that states cut spending,
privatise public industries and services and liberalise the foreign trade
sector. In short China has never, in practice, endorsed the neoliberal
norms of the ‘Washington consensus’ established during the 1980s and
there is a real prospect that, if it does become the world’s largest
economy, it will seek to re-write the rules of the game in a way that is not
compatible with free market capitalism. This is what the US fears and its
strategy is therefore directed to forcing China to accept Washington’s
leadership and ‘enter the world family of nations’ on US terms or it would
face the likelihood of pre-emptive diplomatic, economic and, if necessary,
military action to halt its rise. As Woodward points out, this approach is
designed to ensure not only protection of the interests of global capital
but to secure ‘a longer-term pay-off’ for US domestic industry and finance
‘by preventing China reaching the point of competing at US levels of productivity and technology’.

It’s very doubtful if this new policy towards China will succeed. Many of the surrounding Asian countries have embraced China as a new market for their goods, while much of the American commercial hostility comes from firms and industries threatened by Chinese competition. Newton concludes that other countries may choose not to follow America’s lead but there will be considerable pressure on Britain to do so following Brexit. He writes

There is clearly a strong push within the British establishment, coming mostly from within the Tory Party and its friends in the City and the armed
services, in favour of military deployment in support of US forces in the
Far East, even if few other nations are willing to join. This might make
sense for the complex of defence industries, banks, hedge funds and
private equity firms at the core of modern British Conservatism but it is
hard to see what benefit there is for the rest of us in the UK from
confrontation with a nation which appears to harbour no aggressive
intentions to foreign countries and seems destined to become within a
short time the world’s largest economy.

See: https://www.lobster-magazine.co.uk/free/lobster80/lob80-usa-china-cold-war.pdf

In short, the new strained relations between China and America are a result, not so much of Chinese aggression, but due to Trump’s America trying to maintain itself as the world’s dominant nation economically and militarily. In this America is determined to promote its own very predatory form of capitalism, which is challenged by the less extreme form embraced by China. And it’s a situation that may benefit the military-industrial complex and financial sector that supports to the Tories, but won’t provide it to anyone else.

Hong Kong protests and Brexit could both end up benefiting financial elites

Published by Anonymous (not verified) on Mon, 26/08/2019 - 6:07pm in

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writing, Hong Kong

[A short comment piece I wrote for The Conversation website]

Philip Roscoe, University of St Andrews

Protests in Hong Kong have captured the world’s attention in recent weeks, with demonstrators closing streets and the airport, and Chinese forces amassing near the border with a none too subtle threat of violent reprisal. The protests began in response to a new extradition law, but have spilled over into a general unease about the future of Hong Kong’s special administrative status.

This special status sets Hong Kong apart from mainland China in a number of ways. As well as enjoying various social and political freedoms, it has a free market economy and is one of the world’s biggest financial centres. Global finance has attracted a number of Chinese elites but has not benefited a large chunk of Hong Kong society.

But if Hong Kong’s protesters succeed in pushing back against the oversight of Beijing, it would serve to reinforce the benefits the elites already enjoy from Hong Kong’s economic arrangements. This parallels the situation in the UK, where financial elites could soon embrace a low-tax, low-regulation future following a no-deal Brexit driven by populist concerns about immigration and inequality.

Longstanding financial centres

Hong Kong and London share a common history and since the 1960s have flourished as offshore financial centres, acting in many ways as secrecy jurisdictions or tax havens.

Hong Kong’s financial sector was a creation of the British, who used it as a route into Chinese markets. It boomed following the opening of the Chinese economy. When, in 1997, Hong Kong returned to China, it preserved some of this offshore status as a special administrative zone. The beneficiaries this time were Chinese.

Hong Kong stores great reserves of capital in comparative secrecy, channels global investment into China – also in secrecy – and is a crucial part of China’s long-term plan to establish the Renminbi as a global reserve currency through offshore markets. The local “dim sum bond market”, issuing RMB denominated debt, has been a remarkable success, with the equivalent of more than US$100 billion of capital circulating.


Finance hub.
Shutterstock

Hong Kong has been implicated in shadier dealing. Investigative journalist Nicholas Shaxton puts it bluntly: “Hong Kong is where most of the corruption in China is accomplished.” Other scholars see Hong Kong as an amalgam of onshore and offshore finance, with a strong legal system, tax treaties, and a robust financial market.

London’s success as a global financial centre has also been driven by its status as a hub for offshore financial services, a position greatly supported by its strong connections throughout Britain’s former empire. In the 1960s and 1970s, for example, London became home for the “eurodollar” markets. These were lending markets operating in US dollars, located in London but considered to be beyond the purview of the UK’s legislation.

London-based lenders could charge higher rates than the national currency controls of the time allowed. The United States benefited as the depth and liquidity of eurodollar markets supported the dollar’s reserve currency status; international banks arrived in droves and the City, London’s financial district, thrived. Regulators on both side of the Atlantic turned a blind eye, quietly admitting the economic benefits the markets bestowed. Even the Soviets invested.

Masters of reinvention

Both London and Hong Kong are centres of perpetual reinvention. Following the financial crisis, the City’s innovations have included managing the wealth of the global super-rich and an arrangement with the Chinese government to develop the offshore trading of the RMB.

In the same way that Hong Kong’s protesters fear Chinese control, a number of Brexiters claim the EU comes with too much red tape. Interviewing financiers for research into London-based markets, I found overwhelming support for Brexit, largely driven by a distaste for increasing layers of regulation.

It is certainly the case that Europe has never been comfortable with London’s activities as a conduit for international funds. No one expects the EU to maintain the City’s “passporting rights” which allow firms based in the UK to trade freely across the EU. And the mundane but profitable business of settling euro transactions is likely to be pulled within the bloc.

But there is much more to financial markets than regulation. The City’s remarkable talent for reinvention flows from the nature of financial markets themselves.

History shows they are fluid entities constantly reshaping in response to political happenstance and technological or economic advances. Markets put down roots in the shape of dense social networks shaped by bonds of trust and expertise, and in the material infrastructures – from wires, phones and screens to upscale offices, restaurants and hotels – without which they cannot function. Advantages of status and connection become embedded. When new financial frontiers open up it’s those well-placed who benefit.

Here’s the irony. Hong Kong’s protesters seek political freedom, but whatever happens in politics, it is likely that the economic advantages of the elite will be preserved through the social and material architectures of its markets.

Brexit, meanwhile, has been driven by concerns over immigration and inequality, but the no-deal on the horizon offers something else. If the new prime minister’s rhetoric of “boosterism” and “freeports” is to be believed, the City will be entirely unencumbered by regulation, free to roam the high seas of international currency flows. Here too, only the financial elites will benefit.

Philip Roscoe, Reader in Management, University of St Andrews

This article is republished from The Conversation under a Creative Commons license. Read the original article.