Alice de Jonge on "China’s strategy in Asia: why we should pay attention to the AIIB"

My colleague Alice de Jonge, senior lecturer in law at Monash University’s Business School in Melbourne, has recently posted a marvelous and thought provoking essay, "China’s strategy in Asia: why we should pay attention to the AIIB." It appeared first in the International Affairs Blog and is reposted below.

In it Dr. de Jonge considers the new narrative of global ordering that places China as its principal driver.  That narrative sometimes analogizes China's the One Belt One Road Initiative and the "Marshall Plan" to explain OBOR's scope, purpose, mission--and ultimately its political effect in locating China as the center of the new global economic order. Running in parallel with that narrative is a similar one in which the AIIB is analogized to the World Bank. Together these two initiatives are meant to provide the foundation for the Chinese variation of a global economic order that build from and away from the global order crafted by the victorious Allies after 1945 (whose time, it is intimated, has come and gone).

Dr. de Jonge examines this but also the more important effect of Chinese global initiatives on their own terms--that is, to understand OBOR, AIIB and their complex and related pieces, one must understand them on its own terms. And that is an important task. For whether or not OBOR and AIIB will displace or supplement the current variation of globalization and its financial apparatus through IFIs like the World Bank, both will play significant roles in shaping their future (cf. here). A summary version of the essay, "China’s strategy in Asia: why we should pay attention to the AIIB," follows. It appeared first in the International Affairs Blog.

The full article ("Perspectives on the emerging role of the Asian Infrastructure Investment Bank," International Affairs, Volume 93, Issue 5, 1 September 2017, Pages 1061–1084) may be accessed  here. The abstract follows below.

The Affair of the Sonic Weapons Attack and the Counterthrust to Cuba's Tourism Sector and Economic Recovery

(Pix ©Larry Catá Backer 2017; view of Havana Harbor from Regla)

One of the great feats of globalization was its transposition of the notion of "mutually assured destruction" from the military to the economic sector. The mechanics and effects of this transposition are nicely evidenced in the continuing Affair of the Sonic Weapons (here and here). Mutually assured destruction appears now to have moved to a new stage as the ramifications of the U.S. response to the Affair of the Sonic Weapons Attack now emerges and as it begins to dawn on the Cuban state the extent of the potential effects of the issuance of a travel warning by the U.S. government to its citizens (here).

What was expected was the usual diplomatic retaliation--announced recently the intent to expel a number of Cuban diplomats in the U.S. (here). But the more long lasting effects of the Affair of the Sonic Weapons touches on its threat to a core element of fundamental Cuban economic planning.  That planning, including Ciba's2030 vision was elaborated just last year in the  Conceptualización del modelo económico y social Cubano de desarrollo socialista: Plan nacional de desarrollo económico y social hasta 2030: Propuesta de vision de la nación, ejes y sectores estratégicos in which the 7th Cuban Communist Party Congress posited that development can be better managed by rejecting the central role of markets, and substituting state planning in its place, taking an all around view of economic planning as inextricably bound up in social, political and cultural progress of a nation (discussed HERE, and  HERE).

Two critical sectors may be affected by the travel warning and the related increasing transaction costs of doing business in Cuba by U.S. interests.  The first and most vulnerable is the Cuban tourist sector.  It is true enough that the U.S. makes up a fraction of tourism.  Yet the marginal contribution to income cannot be underestimated.  More importantly it is the anticipated substantial growth in U.S. tourism (and its drag effects on tourism from other places) that the Cubans might have been counting on to build a tourist based business sector. The second is the pharma sector.  Here the difficulty will come with the anticipated new investment regulations that may substantially increase the compliance costs for joint ventures and investment in Cuba. Again, while Cuba has set its sights on Latin America and Europe as more viable base line sources of sector development, the lucrative U.S. market would have contributed in significant ways to the overall positive effect.  If both tourism and pharma are threatened, then the likelihood that Cuba will slip into recession, or remain somewhat stagnant, will grow.  This could not come at a more difficult time, as the island continues to face the problems and costs of hurricane reconstruction.

Recent reporting by Nelson Acosta and Marc Frank, "U.S. travel warning sends chill across Cuban tourism industry," Reuters News (01-Oct-2017), follows.  

New Book on Press Freedom in Cuba: René Gómez Manzano, ¿Puedo Opinar?

(© Cubierta: “Prensa libre”, Claudio Castillo)

I am happy to report the publication of a new book, René Gómez Manzano, ¿Puedo Opinar? (Primera edición: Agosto de 2017;ISBN de Publiberia: 978-84-946998-2-5 Edición: Grace Piney). 

El volumen fue editado por Grace Piney, con prólogo del académico José Azel, introducción del periodista independiente Roberto de Jesús Quiñones e imagen de portada del artista Claudio Castillo.

El libro puede adquirirse en la librería Altamira (Coral Gables, Miami). El ebook se está haciendo circular, gratuitamente, en la Isla. (here)

In his announcement of publication Mr. Gómez Manzano expressed the hope that the work be given wider circulation, especially within Cuba where that might otherwise prove difficult.The ebook will circulate free especially within Cuba.

La Habana, miércoles 27 de septiembre de 2017
Estimados amigos:
Tengo sumo gusto en remitirles, en fichero adjunto, el libro electrónico (e-book) de mi obra más reciente. Ella lleva por título “¿Puedo opinar?”, y su tirada en soporte de papel fue limitada. Por este medio les invito a darle a la obra que les envío en formato electrónico la mayor difusión posible, especialmente dentro de Cuba. Con ese objetivo, les pido que la reenvíen a todos sus contactos. Esperando que ese material resulte de su interés y agradeciendo de antemano su amable atención a estas líneas, me despido de ustedes,
Atentamente,
René Gómez Manzano

 The book consists of a collection of Mr. Gómez Manzano's essays circulated in Cuba over the last several years.  It makes for excellent reading about the state of change and continuity in Cuba. The Epilogue follows (Spanish only)

合法审慎地用好社会信用 (Legally and Prudently Use Social Credit): Initial Chinese Public Commentary on the Newly Adopted Shanghai Social Credit Regulations

In anticipation of the 19th Chinese Communist Party Congress the great stakeholders Chinese officials and academics tend to accelerate the pace of their activities either to influence or to position themselves on the right side of the policy choices and initiatives to be announces, rejected, and emphasized at the CCP Congress.  Social credit has been among the most interesting policy factors in the run up to the 19th CCP Congress.  On the one hand a broad view of social credit tends to factor it into the governance of virtually all aspects of Chinese administration.  Yet such a transformative position would tend to affect, and perhaps adversely, the position of other actors--state banks and bank regulators, and some factions of administrative power, that might instead see in social credit something more narrow and technical, perhaps something like big data management tied specifically to the economic sector and precisely to managing credit and compliance.

It is far too early to tell which among the possibilities--but not too early for elements of the Chinese state and academic commentators to stake positions.  But particularly interesting is the definition of social credit in the Shanghai Municipal regulations: "第二条  本条例所称社会信用,是指具有完全民事行为能力的自然人、法人和非法人组织（以下统称信息主体），在社会和经济活动中遵守法定义务或者履行约定义务的状态。" Roughly: "The term social credit, means a natural person, legal persons and unincorporated organizations have full civil capacity (hereinafter referred to as message body) in their compliance with legal obligations in social and economic activities or to fulfill a contractual obligation of the state." The object of social credit is thus conflated with her (or its) compliance, and social credit is thus a function of individual compliance, or, perhaps better understood, the individual is defined by her social credit, and her social credit defines the extent of her obligations and prerogatives within society. This broad language might in practice be reduced to the very specific rating of economic behaviors inherent in the euphemism "big data management." It is too early to tell.

The Shanghai Municipal Legislation remain controversial:

大致说来，参与现场研讨的学者观点可分为三类：其一，全盘否定派。有教授认为，社会信用立法条件不成熟，甚至根本不应当搞，这是在搞道德档案和黑户政策，典型的政府擅权。其二，渐进暂缓派。有学者认为，上海不应当搞地方性法规，要等全国立法出来之后再做实施性规范。其三，修订完善派。有学者原则上肯定了上海社会信用条例草案，但对具体制度提出了完善建议。(再转新文 | 罗培新：有关社会信用立法的问答) [Roughly: Generally speaking, scholars involved in the field of view can be divided into three categories: First, the overall negation. Some professors believe that social credit legislation is not mature, or even should not be engaged, it is engaged in moral files and black policy, the typical government authority. Second, the gradual suspension of school. Some scholars believe that Shanghai should not engage in local laws and regulations, to wait until the national legislation came out after the implementation of norms. Third, the revision of perfect school. Some scholars have affirmed the Shanghai Social Credit Bill in principle, but have made perfect suggestions on the specific system.]

But, of course, that is not the entire picture, even of scholarly debate.  But it does open a door to the thinking within the academic community most immediately involved.

This post includes some recent reporting, centering on recent adoption of social credit regulations in Shanghai and elsewhere and the reflections of academics on the construction of social credit systems, at least as confined within the adopted regulation.  All of the following is in the original Chinese:

《上海市社会信用条例》今起施行 (Shanghai Social Credit)

 重磅：“法治与信用”国际研讨会情况 (Report in International Symposium on Rule fo Law and Social credit)

全文 | 侬好！《上海市社会信用条例》(full text of the Shanghai Social Credit Regulaitons )

湖北省社会信用信息管理条例 (Regulations of Hubei Province on Social Credit Information Management)

Index of Social Credit Posts.

And the Other Shoe Drops--In Cuba Anger on the Street and the Ministries, Conspiracy Theories, and Defensiveness

(Pix © Larry Catá Backer 2017 (a street dog neutered by a local social organization wearing a notice to that effect and imploring passers by to refrain from beating the dog))

No sooner did I post some thoughts and the first reports about the U.S. decision to substantially reduce its personnel in Cuba, freeze visa applications and issue a travel warning (U.S.-Cuba Relations Seize Up as the Affair of the Sonic Weapon Attacks Intensifies)--than the predictable reaction erupted in Cuba.  Not that the Cuban reaction was unjustified, at least in a way.  The U.S. actions appear to implement some of the  actions that might suggest a hard freeze in relations, perhaps in this case taking the U.S.-Cuba relations back to the time of the Clinton Administration. And this despite U.S. protestations to the contrary (one does well to rely less on what is said than what is done in most situations in any case). And as has been the case since 1959 in this furiously perverse relationship between these two states, both of which define their bilateral relations by the state of their willingness to indulge their national neurosis about the other, both states bear some of the responsibility for the present state of affairs and its longer term consequences.

At best Cuba is now manifesting an inability to police and protect its own interests in its own territory--a sign of sclerosis that portends badly for the vanguard party and its long term ambitions to institutionalize its governance system (that it still worries about this after almost three quarters of a century ought to give pause). At worst Cuba again is playing death wish politics--some faction within the state apparatus (or its military apparatus) in partnership with who knows what or whom--has chosen this as the most opportune moment to destroy any remaining chance of forward movement in relations. The first renders Cuba's state apparatus pathetic; the second renders that apparatus dangerous or out of control.  Conspiracy theorists might be inclined to see in this an out of control vanguard party unable to contain the factional fighting even before the present leadership retires.  Or worse, it might suggest that Cuba has become a somewhat brazenly open territory for experimentation by those states that would otherwise not dare to act in the open with development of (likely purloined and then cleverly developed) technological innovation in next generation personal weaponry. 

The U.S. fares little better.  At best the U.S. is wisely protecting its diplomats and citizens.  In an era in which all U.S. nationals tend to be targets of convenience for any individual or group that views U.S. policies, positions, culture, etc. as an affront or threat that justifies the most atrocious conduct, risk averse decisions are not unreasonable. Yet there are weaknesses to the present choices. The U.S. is manifesting a sad and technologically backwards inability to protect its own people (and interest) within a context in which the United States had (or ragged about having in any case) the most advanced technologies and know how in the world.  That the United States is reacting to the sonic attacks the way my nearly century old father in law reacts to glitches on his laptop computer renders the United States and its vaunted security apparatus as pathetic as its Cuban partner.  On the other hand, the response evidences the sort of meanness that ought to have no place in the relations of a powerful state, if only because it invariably compromises U.S., interests.  The Americans gains nothing by punishing the very people it purports to vest its great hope for "regime change" in Cuba.  Fleeing diplomats suggests the sort of weakness a great power ought never to display.  And the pettiness--fit for a middle tier state, or a teenager dealing with high school drama--suggests weakness or disarray within the U.S. policy apparatus.  The really sad thing is that it is as likely that locals will decide that the reason for the reduction  of personnel is the reality of the flooding at the U.S. Embassy that renders the building less usable.

In any case, the next steps are clear though not certain.  At this crossroads, either both states will cooperate and overcome the present difficulties or give in to their usual patterns of thoughtless provocation. In the best case, that means Cuba does something quite difficult, it chooses to approach U.S. overreaction in a less paranoid style and expresses a willingness to be more pragmatically rational  about exposing the glitches that produced the incident.  For the U.S. this means tempering the usual reflex toward the pettiness of the clueless but privileged and indulgence in the usual reflex toward petty vindictiveness (for example the call to expel Cuban diplomats) and the characteristically American "gotcha" approach to political interaction. and reinforces its quite useful policy of focused targeting of punishment for harms to U.S. interests.   Otherwise, the pathologies that have marked these relationships for so long will continue to drive policy on both sides in what has always been the most colorful act in the Caribbean diplomatic circus.

These themes are nicely developed in U.S. cuts staff in Cuba over mysterious injuries, warns travelers, a Reuters article (Reporting by Arshad Mohammed in Washington and Sarah Marsh in Havana; Additional reporting by Doina Chiacu and Mark Hosenball in Washington, Alana Wise in New York and Marc Frank and Nelson Acosta in Havana; Writing by Yara Bayoumy; Editing by James Dalgleish and Grant McCool), portions of which follow.

U.S.-Cuba Relations Seize Up as the Affair of the Sonic Weapon Attacks Intensifies

(Pix © Larry Catá Backer 2017)

The tenuous nature of the raproachment between the United States and Cuba has been taking an unexpected turn over the course of the last several months.  What began as a curiosity--reports of U.S. and other Western diplomatic personnel suffering unexplained  physical damage (here, here and here), escalated into allegations of the use of new style weapons (here) that put the threat of the closure of the U.S. Embassy on the table (here). 

Now reports are suggesting that the state of relations have sunk even lower. It appears that the United States is now planning significant cuts in its personnel in Cuba.  More importantly for U.S. nationals, the State Department has issued a travel warning (here) ("Because our personnel's safety is at risk, and we are unable to identify the source of the attacks, we believe U.S. citizens may also be at risk and warn them not to travel to Cuba. Attacks have occurred in U.S. diplomatic residences and hotels frequented by U.S. citizens.").  This  may affect risk management decisions for travel (especially by universities and other civil society groups). Lamentably for the Cuban people, routine visa operations have also been suspended indefinitely--this is especially difficult in the wake of the recent hurricanes. Taken together, the U.S. response has targeted Cuba's income generating capabilities (the travel warning and adverse impact on tourism), individual travel by Cuban nationals (the visa suspensions), and U.S. engagement within Cuba. 

The Cubans continue both to deny involvement and to proffer no explanation.  Both governments appear interested in finding the cause.  Yet the burden remains on the Cuban state on whose territory these events occurred.  For the Cuban government this presents an important challenge.  If the Cuban state apparatus, well known for its strong control mechanisms and its ability to penetrate even the most obscure group operations is unable to find the cause, that failure will severely damage its reputation.  That is, the Cuban state will appear weaker than it purports to be and less in control of its own territory. That perceived weakness might further encourage dissident groups.  And it might also create a strong reaction that will be evidenced in more brutal responses to perceived threats to the prerogatives of the government. It is likely, then, that the Cuban state has a greater interest in finding the source of the attacks  (or offering something convincing by way of explanation) than the United States.  Any sign of weakness in the control apparatus of the Cuban State and its vanguard party may significantly affect calculations about elections (already postponed) and the transition of power from the históricos--the first generation revolutionaries. 

The excellent reporting by Doina Chiacu "U.S. cuts embassy staff in Cuba, warns citizens not to visit," Reuters (29 September 2017) follows, with thanks to Marc Frank for passing it along. 

从“各自为政”到“一股合力”，（西方）反腐领域新举措：企业合规法律制度，公诉人自由裁量权以及国家主权投资人制度 ( "From a “Two Thrust Approach” to a “Two Sword One Thrust Strategy” to Combat Criminal Corruption: Corporate Compliance, Prosecutorial Discretion, and Sovereign Investor Oversight")

(Pix © Larry Catá Backer 2017)

从“各自为政”到“一股合力”，（西方）反腐领域新举措：企业合规法律制度，公诉人自由裁量权以及国家主权投资人制度

它试图以非常规的方式重新考虑从不同司法管辖区和授权机构之间建立政策一致性（1）的可能性，以及（2）在监管治理的边缘。

具体的目的是想想在腐败的具体情况下，多边和多机构一致性的可能性。为此，我集中讨论了在腐败调查范围内检察机关制度化的方式，特别是在衡量评估标准的方式对改革公司治理（特别是理解和操作）方面产生重大诱因的合规）。

我也专注于主权投资者如何开始采取类似的做法来行使其酌处权：（1）投资企业，（2）行使其股东权力。我建议在某些州，有可能将规则制定中的两个趋势与酌情决定权结合起来，以协调管理公司合规范围和行为的监管治理。

English language version: "From a “Two Thrust Approach” to a “Two Sword One Thrust Strategy” to Combat Criminal Corruption: Corporate Compliance, Prosecutorial Discretion, and Sovereign Investor Oversight"

(CPC Central Committee and State Council On Creating a Healthy Environment for Entrepreneurship) 中共中央国务院关于营造企业家健康成长环境 弘扬优秀企业家精神更好发挥企业家作用的意见

(Pix credit here)

In the run up to the 19th Chinese Communist Party Congress, the issue of the role of the private sector, and of the relationship between the state apparatus to that sector has become a source of some discussion. . . .  and action.  Even as the state apparatus shuts financing for foreign private investment abroad  and advances notions of state capitalism through its One Belt One Road Initiative, it also appears to advance the ideals of a vibrant private sector that should serve as the driving force for risk taking, innovation and social progress.  Built around this are important issues touching on the development of the Chinese Communist Party's refinement of its leadership role in the emerging new historical era towards which China is entering. 

It is in that context that one might usefully approach a consideration of the document (released in early September but only announced on September 26, 2017-- 中共中央国务院关于营造企业家健康成长环境 弘扬优秀企业家精神更好发挥企业家作用的意见. (roughly summarized as CPC Central Committee and State Council On Creating a Healthy Environment for Entrepreneurship)).  It has a wide scope and includes material from big data management and social credit, to the relationship between the CCP and the private enterprise, along with corporate social responsibility and other matters,  I will post my reflections on this potentially important document in a later post.  For now I thought it useful to post without much int he way of analysis. 

The document follows below.

Index of Social Credit Posts.

Closing Remarks: Social Credit, Big Data Management and Governance—New Possibilities, New Realities; International Symposium on Rule of Law & Social Credit Systems;Shanghai Jiao Tong University, Shanghai, China

It was my great pleasure and honor to be tasked to provide closing remarks at what turned out to be an exciting and quite extraordinary conference held at the KoGuan Law School Shanghai Jiaotong University (上海交通大学)) 23 Sept. 2017 and organized by Shanghai Jiaotong University; East China University of Political Science and Law; Shanghai Law Academy (Research Center of Banking Law Practice); Tencent Holdings Ltd (Intellectual Property Office);and the Foundation for Law and International Affairs.September 23 at the Shanghai Jiaotong University.  In prior posts I included informaiton about the conference (HERE), and posted my own conference draft ("Measurement, Assessment and Reward: The Challenges of Building Institutionalized Social Credit and Rating Systems in China and in the West"). 

This post includes the text of my closing remarks: Closing Remarks: Social Credit, Big Data Management and Governance—New Possibilities, New Realities. A PDF version may be downloaded HERE. The full text may be accessed below or HERE. Index of Social Credit Posts.

Posting Conference Draft of "Measurement, Assessment and Reward: The Challenges of Building Institutionalized Social Credit and Rating Systems in China and in the West": Presentation for Chinese Social Credit System Conference “ 法与信用体系国际研讨会”预通知 (Shanghai Jaiotong University (上海交通大学) 23 Sept. 2017)

(PIX © Larry Catá Backer 2017)

In a prior post I included information about The Conference, Global Perspectives on Law and Social Credit, will take place at Shanghai Jiaotong University (上海交通大学)) 23 Sept. 2017. It is organized by Shanghai Jiaotong University; East China University of Political Science and Law ; Shanghai Law Academy (Research Center of Banking Law Practice); Tencent Holdings Ltd (Intellectual Property Office);and the Foundation for Law and International Affairs.

I will present my paper Measurement, Assessment and Reward: The Challenges of Building Institutionalized Social Credit and Rating Systems in China and in the West. I post here a link to the preliminary conference draft for review and comment. It can be accessed HERE. Following below is the abstract and introduction (English and 中文)

More on the conference in later posts. Index of Social Credit Posts.