The Giant Shifting Its Weight

"China has become older before it has become rich."

"[China's population has been in decline since 2018; the population crisis is] much more severe [than previously thought]."

"[China's] real demographic crisis is beyond imagination and that [means] all of China's past economic, social, defence and foreign policies were based on faulty demographic data."

Yi Puxian, demographer, expert on Chinese population trends University of Wisconsin-Madison

 

"For policies to reverse the fertility decline itself is very challenging. In recent years China has already been coming up with lots of new measures, including getting rid of the one-child policy, some kinds of subsidies at different levels. But they haven't really been working well, fertility has not reversed. I do think this decline will continue."  

"But what's really causing concerns socially is what that means in terms of the structure. Because things are changing really fast… societies may not have time to adapt,"

Shuang Chen, assistant professor, department of social policy, London School of Economics

 

"The Chinese economy is entering a critical transition phase, no longer able to rely on an abundant, cost-competitive labor force to drive industrialization and growth."

"As the supply of workers begins to shrink, productivity growth will need to pick up to sustain the economy’s heady pace of expansion."

HSBC chief Asia economist Frederic Neumann. 

 

"[We will] improve the population development strategy [and ease economic pressure on families]."

“[We will] establish a policy system to boost birth rates, and bring down the costs of pregnancy and childbirth, child rearing, and schooling."

"We will pursue a proactive national strategy in response to population aging, develop elderly care programs and services, and provide better services for elderly people who live alone."

Chinese President Xi Jinping

Children playing in the village square after school in Xiasha Village in Shenzhen, China, in November.  Credit...Qilai Shen for The New York Times

Wherever, whenever the Chinese Communist Party creates solutions to problems that confront it, Beijing somehow manages to make the problems more severe than ever imagined. Its interference through measures that tend to be draconian in nature solving nothing and complicating everything. Just as its zero-COVID measures served only to stave off the inevitable. Just as it ignored the welfare of the elderly by failing to inoculate them adequately against the SARS-CoV-2 virus. Just as it refused to import mRNA vaccines that were immeasurably more effective than Chinese vaccines.

Its policy of one-child per family, meant to slow down population growth, deprived families of the choice of the number of children they would ideally prefer to have, and in the long term began a stealth campaign against female children. Since in Chinese culture (practised elsewhere as well) male babies were preferred, abortions of female foetuses were common, and neglect of female babies including infanticide was not unknown.

Which has now given way to a paucity of females of marriageable, child-bearing age in China and an embarrassment of young Chinese men who cannot find brides. Women of marriageable age are now more educated and many refuse to be child-bearers, much like their counterparts elsewhere in the developed world where population replacement levels are on the decrease. Women prefer careers over child-rearing. There are now more elderly Chinese dying than children being born in the space of a year.

 

Over the past three years while China and the rest of the world have been coping with economic downturns resulting from the pandemic, workplaces shuttered and people became unemployed. In straitened economic times people are not inclined to grow their families. All these issues have left China with a diminishing population. Granted, with 1.4 billion people, China has been celebrated as the most populous country on Earth (many now claim India has overtaken China in population growth and numbers), with an ample and cheap labour force.

That labour force is now compromised and the growth engine of world production is stalling. China has established itself as a production colossus, the manufacturing and export hub of the world community. In the past few years manufacturing has slowed considerably thanks to COVID-19's impact, and supply lines have stalled. A situation not guaranteed to improve much any time soon. In fact, with China now facing the likelihood of an ongoing and even accelerated drop in its population base, the entire world's production and distribution capabilities will be affected.

 

China is home to several of the most populous cities on Earth (Credit: Getty Images)

 

The country whose government was set on controlling the world's commercial resources has failed its own population which lacks the resources to care for its aging population. At a time when inflation is running high through the global community there is no rescue from a situation which suddenly appears even more bleak, with the official news out of China of its shrinking population and a crisis of demographic proportions.

According to a report released by the National Bureau of Statistics, China had 850,000 fewer people at the turn of the year than the previous year. This number refers to the population of mainland China only, not inclusive of Hong Kong and Macau. Fewer babies were born in China to the tune of over a million, than the year before. China's newly-sclerotic economy due to incessant lockdowns bodes ill for the future. It was reported by the Bureau that 9.56 million births took place in 2022, while deaths numbered 10,41 million.

The situation rivals the time of the Great Leap Forward when collective farming and industrialization propelled by Mao Zedong in the 1950s resulted in a massive famine where millions of people starved to death. A decline in population had been officially recognized, but this decline is at least a decade faster and steeper than authorities anticipated. The working age population between 15 and 59 years of age totalled 875.56 million, accounting for 62 percent of the national population, according to the statistics bureau. Those aged 65 and over totalled 209.78 million , relative to 14.9 percent of the total.

China's overall population has not declined for decades. (Andy Wong/The Associated Press)

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Inshallah, Lebanon

"[Following the Beirut port explosion of August 4, 2020 is the city beginning to heal?] ...No, it's worse. Because [there has been] no justice. Nothing."

"There are so many families that have lost their children, their parents, their aunts, their uncles that are working really hard to do something about it [looking for answers]. But I don't know if we're going to get anywhere."

"Now we have to think twice about everything, everything, everything. It's very mind-boggling. But having said that, I still love Lebanon, and I still love living here."

"It could be the most beautiful country in the world. And, unfortunately, it's not today."

"We're fed up with saying to ourselves 'We need to be resilient'. No. We need to make changes. We need drastic changes."

"It's chaotic. It's difficult. It's a transition, hopefully, to better things."

"And I say this with parentheses -- Inshallah. Meaning' hopeful', in Arabic."

Barbara Abdeni Massaad, Author, photographer

rsz_leinterviste

Oriana Fallaci, the verbally pugilistic Italian journalist who earned an admirable reputation as a hard-nosed, intrepid journalist whom Grand Ayatollah Khomeini agreed could interview him soon after the Islamic Revolution in Iran, also wrote a novel based on her experiences in Lebanon during and after the civil war which she titled 'Inshallah'. At that time too, when Beirut had been half-destroyed and Iran sent its al-Quds division of the Islamic Revolutionary Guard Corps to the country to train Shi'ite Lebanese the Islamist death cult of terrorism, there was still hope for the country.  

Fallaci succumbed to the demand placed on her to wear a face-revealing burqa to interview Khomeini for the opportunity to ask him probing, accusative questions of the route he was taking Iran toward. Finally, in the face of the Ayatollah's growing irritation with the questions she posed, she declared she was tearing the 'rags' off ("I’m going to take off this stupid medieval rag right now!”). Her novel described the dismal condition of Lebanon, its Muslim sects divided, the power struggles between Lebanese Christians, Druze and Sunnis, and the inferior status of the Shi'ites.

Shi'ite Hezbollah, Iran's terrorist proxy group is pretty well in control of Lebanon now; threat, intimidation, violence, all accomplished what originally living in a state of harmonious mutual suspicion, alternating political positions in a governing-sharing agreement between Lebanon's various communities has pretty well broken under the weight of the civil war and the inability to recover from the meddling of Syria and Iran. Hezbollah recklessly stored explosive material in dilapidated storehouses in Beirut's port.

 

Deadly port explosion rocks Beirut - Splash247

The inevitable occurred when a spark led to a massive explosion destroying part of the port infrastructure, killing over 220 Beirutis, and injuring an additional 6,500 others. Two and a half years later, bereaved families are still calling for an investigation to be launched. The originally assigned judge of the Lebanese judiciary resigned amidst threats and intimidation from Hezbollah wanting to protect itself from what would be damning conclusions of its willful neglect causing death and injury.

The February 2005 bomb-assassination of former Lebanese Prime Minister Rafik Hariri's investigation was finally taken over by a UN special tribunal that found, as expected, Hezbollah agents to have planned the murder of the influential and respected Lebanese politician, their strings pulled by Iran.

Hezbollah's first atrocity took place when the newly-fledged terrorist group bombed the American UN military barracks on a UN peacekeeping mission, murdering 307 people: 241 U.S. and 58 French.

 

Over time, Hezbollah has gained in strength and influence, receiving munitions and stockpiling technologically updated missiles from Iran. It has launched attacks against Israelis and Jews internationally as Iran's terrorist proxy, and it has firmly established itself as an integrated part of the Lebanese government, while maintaining its armed forces separate and apart from the Lebanese military. It is more powerful and better armed than the Lebanese military. And under its malign influence Lebanon has faltered and become utterly dysfunctional

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Fuel shortage plunges Lebanon into darkness

Following the blast at Beirut's port, the severely troubled country's economy has been destroyed, inflation has made life impossible for its residents; people cannot withdraw their savings from Lebanon's banking system. Some desperate civilians have taken to robbing banks to the extent of their savings, badly needed to pay for surgeries for ailing family members. Food, heating oil and medical supplies are scarce and people are desperately in need.

The country, once the pride of the Middle East, its coastal 'French Riviera' and 'Swiss Alps', the playground of beautiful landscapes that drew tourists from across the Middle East and further afield is now a pathetic remnant of its former glory. The kidnappings and hostage-taking, the ransom demands and 'prisoner' exchanges, the underground incarceration of Church of England Terry Waite among others, incrementally destroyed the country. It is now on its knees, its people facing starvation.

 

People are threatened daily by economic and political threats. Some 80,000 Lebanese left their country in 2021 representing an increase of 346 percent over 2020. Political instability, economic meltdown, has led to a massive deterioration of the quality of life -- to the extent that 63 percent of Lebanese would emigrate if the opportunity arose. UNICEF reports that Lebanese children "believe emigration is their only hope".

 

According to the United Nations, 78 percent of the population lives in poverty. Lebanese Civil War survivors (1975 to 1990) claim that the crisis of today is worse than the parlous times they experienced living in dread of shelling or sniper fire. 

 

Members of Lebanon’s Hezbollah take part in Ashura commemorations in a southern Beirut suburb. Anwar Amro/AFP/Getty Images

Ethically Challenged Canadian Corporate CEOs Double-Dipping on the Taxpayer's Dime

"The orthodoxy is that executives owning shares is absolutely the proper corporate governance because it aligns the philosophy, the risk and the performance period with payouts."

"What's interesting is that when you bring dividends into play and the ability of an organization to determine dividend payouts based on a government subsidy, it does raise questions about that linkage and the optics of that linkage."

"By the time you actually own a physical share, it's considered an after-tax investment the same way it would be if you bought mutual funds [there has never been a requirement to directly disclose figures relating to dividend payouts publicly]."

Christopher Chen, managing director, Compensation Governance Partners

 

"You may be less willing to suspend dividends because you have an interest in receiving the dividends. To say [CEWS] is different money or the left hand doesn't know what the right hand is doing I don't think addresses that conflict that certain CEOs have seven digits in dividends at the same time they're accepting the government subsidy."

"What you could do is voluntarily take a haircut so your net total compensation remains the same ... and say we're not going to benefit financially during receipt of taxpayer money."

Richard Leblanc, York University professor, governance consultant

There is nothing illegal about companies claiming emergency benefits while continuing to pay dividends. But the findings raise all kinds of questions that are worth debating. Photo by Peter J. Thompson/National Post files

There may be nothing illegal, strictly speaking about wealthy corporations lining up to receive government benefits out of taxes imposed on citizens, during the economic hardships of SARS-CoV-2 causing a global pandemic, but that is only because the government in its haste to send out cheques to individuals and corporations claiming to have been deleteriously impacted by the pandemic, in a bid to soften the blow and give aid to those in need, overlooked cautionary principles in flux when greed equals need, and failed to specify certain conditions be met to qualify for the handouts.

That wealthy corporate interests have taken advantage of the situation claiming Canada Emergency Wage Subsidy benefits to enable them to meet payrolls and avoid laying off personnel, when in fact they faced questionable such emergency reactions to the COVID situation, speaks volumes of their lack of principle and perspective. Seeking to enrich themselves at the expense of the taxpayer may be a common enough human lapse in judgement but it hardly excuses them, and nor does it earn any plaudits for government either.

An investigative report by journalists at one of Canada's leading national newspapers revealed that the chief executive officers of 68 Canadian companies that proceeded to pay out dividends to their shareholders while at the same time taking possession of the special pandemic wage subsidy, saw those same executives earning an estimated $30 million in dividends personally during the quarters where their firms accepted the wage subsidy.

The investigation revealed a minimum of 68 companies receiving over $1 billion in CEWS, designed as a subsidy giving aid to companies seeing a revenue drop due to the coronavirus impact -- to enable them to cover payroll costs, and who then chose to nonetheless pay out over $5 billion in total to shareholder dividends in the past two quarters. Nothing in the CEWS program as it was designed prevents companies from paying out those dividends.

 

Toronto's financial district is seen on Friday. CBC News analyzed the financial statements of 53 public companies that disclosed receiving more than $10 million from the Canada emergency wage subsidy program. Collectively, these companies dished out nearly $2 billion to shareholders between April and September. (Evan Mitsui/CBC)

 

 

Pierre Karl Peladeau of Quebecor, known to be close to the Liberal government of Justin Trudeau, earned close to half of the group's total in shareholder dividends personally, estimated at $14 million. K.Rai Sahi, CEO of four companies on the investigated list earned $3.1 million in dividends, with his company receiving over $22 million in CEWS payments. Quebecor claimed its telecom business failed to qualify for CEWS while its media subsidiaries did. 

 

According to Christopher Chen, companies have made it a requirement that executives own shares for the past several decades, as the gold standard of good governance, but the dividend earnings of the executives now has him rethinking a practise once taken for granted. Government to date has paid out over $52 billion to 359,880 applicants through the CEWS program, extended recently to June 2021.

Millions were received by other CEOs on the list of dividend recipients.

 

York University professor Richard Leblanc stated executives owning shares has always represented a "small-c" conflict of interest for the fact that the executives and board members deciding what gets paid out in dividends may themselves be recognized as among the largest beneficiaries of those payments.  The issue of dividends is characterized by many companies as necessary, arguing their dividends represent stability for investors. Suspending paying out dividends, they argue, would break the cycle of trust and might lead to a stock price downturn.

As Frank Li from the Ivey Business School explains, an executive's compensation should be linked to the firm's performance but when funds like CEWS become introduced into a company, injected into revenue and net income figures they tend to exaggerate performance metrics. This leads to higher compensation while facilitating payouts like dividends, in other words 'compensating' CEOs at taxpayers' expense. It is "luck or taxpayer money" that has resulted in executives collecting dividend income, not that they succeeded in leading their companies to good financial outcomes.

"If you perform badly, then you are fired, but in this case, they performed badly, they received [CEWS] and executives still enjoy high pay and high compensation."

"That's not an efficient corporate governance mechanism."

Frank Li, finance professor, Ivey Business School, Western University

 

"This is all part of China's education as a rising power. It has taken a flawed model that appeared to work at home, building large infrastructure projects, and hubristically tried to apply that abroad."

"Historically, most infrastructure booms have gone bust. Whether China can avert that fate may depend on its ability to renegotiate loans with countries now in urgent need of debt relief."

"If China is unable or unwilling to provide sufficient relief to its borrowers, it could find itself at the centre of a debt crisis in developing markets."

Jonathan Hillman, author, The Emperor's New Road

"In domestic Chinese media, the frequency of the topic occurring has come down a lot in the last few years, partly to downplay China's overseas expansion ambitions."

"I expect this retrenchment to continue."

Chen Zhiwu, professor of finance, Hong Kong University

"Volatile Sino-U.S. relations and more restrictive access to overseas markets for Chinese companies have prompted a fundamental rethink of growth drivers by Beijing's top economic planners."

"Naturally, if stste-owned enterprises decide to switch back to the domestic market in order to follow the leadership's wishes, the budgeted financial resources for overseas investments will reduce accordingly."

Yu Jie, senior research fellow on China, Chatham House think tank, United Kingdom

 

"This has to be the time for a rethink. It's been such a priority for Xi Jinping, he's invested so much in it that he's not going to just turn the lights off."

"But they need to seriously implement their own debt sustainability analysis and their own social and environmental impact tools."

Kevin Gallagher, director, Boston University Global Development Policy Center

Workers take down a Belt and Road Forum panel outside the venue of the forum in Beijing. BAKER/AFP via Getty Images

When China initially embarked on its ambitious Belt & Road project, it had plans to link itself to a new 'Silk Road', an enterprise that was meant ultimately to expedite Chinese trade and transport and shipping globally, the trade colossus thinking ahead to the future -- its future -- as the world's major producer and seller of goods. Its plan to finance major infrastructure projects was sold to countries in Africa and the Middle East and Europe convincingly assuring them that this would modernize their countries for the future in new highways and bridges and other forms of infrastructure.

That many of these countries had no basic infrastructure of the type Beijing was describing, or insufficient or outdated ones was because they lacked the financial wherewithal to build them. Beijing obviously reasoned and explained to any governments that were skeptical that the Belt & Road initiative would benefit all concerned; give immediate employment to their nationals in building the projects, and extend employment through operational ties that would ultimately result, enriching both China and the countries it was investing in, so they could pay back the huge loans.

Some economists raised concerns that this would result in massive indebtedness, that some of those countries would never be capable of extracting themselves from. And this was all well before anyone might have thought ahead to a massive economic blow that would strike globally with the introduction from China to the world at large of a global viral pandemic devastating world economies. Long before the Belt & Road initiative rang a bell of opportunity to Beijing it was busy investing in other countries' natural resources.

Security personnel stand guard near a "Golden Bridge on Silk Road" decoration for the Belt and Road Forum outside the China National Convention Center in Beijing earlier this year. (Jason Lee/Reuters)

 

As it did in Venezuela, reaching agreement with Hugo Chavez where between 2007 and 2013 the China Development Bank loaned out to Venezuela close to $40 billion with Venezuela's oil wealth as surety, boosting Hugo Chavez's plan for "a Great Wall" erected to fend off U.S. hegemonic reach. And then Venezuela's oil resources ran into trouble with refining problems because no funding was directed to upgrading its oil infrastructure. After investing to that degree Beijing felt compelled to continue in the face of Venezuelan mismanagement and lent out another $20 billion, and all too soon Venezuela defaulted.

That might have been a lesson in not hedging bets, failing to look ahead to the future when all the signals were already in evidence. But the Belt & Road followed nonetheless. "Chinese foreign policy and policy bank officials entered into their outsized economic and political relationship with [Venezuela] with a combination of hubris, ambition and naivete. [This] has contributed to the region's worst economic, humanitarian, and political crisis in decades", wrote Matt Ferchen of Merics, a think tank based in Berlin.

And that hinted at what is now proceeding with the Belt & Road, where at least 18 processes of debt renegotiation with China have occurred in 2020 -- and yet another dozen countries still in discussions with Beijing, covering $28 billion in Chinese loans as renegotiations have proliferated since the pandemic hammered emerging economies in Africa and elsewhere wherein Beijing saw opportunities for  massive Belt & Road investment.

Originally, when Xi Jinping addressed a hall of heads of state and delegates from over 130 countries in Beijing, he proclaimed "a project of the century". Where he promised that China was prepared to spend a stunning $1 trillion on building infrastructure, mostly in developing countries around the world, financing almost all of it through its own financial institutions. Data published this week indicates that President Xi's script has been revised downward. The world's most ambitious development program is now on hold.

 

 

China is now looking at the unwanted potential of its first overseas debt imbroglio. Chinese financial institutions tasked to drive the Belt & Road in tandem with bilateral support to governments has hit a detour leaving Beijing mired in debt negotiations with a host of countries it had so assiduously wooed. Researchers at Boston University maintain an independent database on China's overseas development finance, and they have found lending by the China Development Bank and the Export-Import Bank of China in free fall, collapsed from a peak of $75 billion in 2015 to last year's $4 billion.

Falling under the direct control of China's state council the two banks function as arms of the state providing the overwhelming bulk of China's overseas development lending. Funds disbursed by the two banks rival in scale the disbursement of the world's largest multilateral lender, the World Bank. Between 2008 and 2019, the two Chinese banks loaned out $462 billion, a tad less than the $467 billion the World Bank extended. 

 

Photo: LAKRUWAN WANNIARACHCHI/AFP/Getty Images

The sharp scale-back  of lending by the Chinese banks represents an economic earthquake and should it persist, an infrastructure funding gap in Asia alone will be exacerbated, a gap that has reached $907 billion at this point. Chinese credit has formed a large portion of infrastructure financing in Africa and Latin America, and the gap between what is needed and what may be available is expected to become wider, as well.

Beijing has regrouped, examined its losses and decided to scale back, retreating from overseas development finance, to shift policy from outside the country to internal investments. "China is consolidating, absorbing and digesting the investments made in the past", advised Wang Huiyao, an adviser to China's state council, president of the Centre for China and Globalization think tank. The politboro  will now place greater emphasis on China's domestic market, and less on commerce with the outside world.

 

Germany, Past and Present

"[Germany should approach the fight against the disease] more like a marathon than a sprint."

"Future measures must be designed and prepared in such a way that, on the one hand, they ensure good health care and, on the other hand, that they can be sustained over the necessary periods of time."

"Planning for this transition must begin immediately in politics, administration, companies and other organizations."

"The attempt to centrally control the resumption of production would ... not work in practice. This resumption must be controlled primarily by the institutions and companies themselves." 

Academic report, Ifo Institute for Economic Research

A man with a mask passes by an empty street during the coronavirus crisis in Berlin, Germany.

The first Western democracy that succeeded admirably in containing the COVID-19 spread is now prepared to begin the laborious process of re-opening its economy. Perhaps it is no coincidence that it is led by a woman. German Chancellor Angela Merkel is also by profession a trained scientist and as such is by definition a professional analyst with a degree in quantum chemistry. She is practical, plainspoken, firm and resolute as a leader, and Germans love their leader.

Coincidentally, Taiwan too has a trained scientist in its government in vice-President Chen Chien-jen, an epidemiologist and scientific researcher of some global renown. As an Asian democracy that prides itself on its sovereignty with a physical proximity to China, the source of the zoonotic SARS-CoV-2, Taiwan no doubt, like Germany, profited handsomely in gaining control of the novel coronavirus with the guidance and knowledge of its vice-president.

Having a background in science and economics is a great leg up in evaluating and analyzing complex data, aiding in decision-making beyond the capacity of lawyers and business leaders who typically become national leaders. Had matters moved forward for Germany as they did elsewhere, where the coronavirus established itself in large numbers it would not now be in a position to contemplate relaxing the measures it took early on in view of the emergence of that highly contagious virus.

Michael Kappeler / DPA / Alamy

Science-based policies succeeded in overcoming the deleterious effect of a densely populated country encircled by other nations that experienced high death rates. Germany's death rate of 54 deaths per million is immensely lower than that of other countries located nearby in Europe; Spain as example with 437 deaths per million; Italy with 384 deaths per million, France with 296 deaths per million, and that of the United Kingdom of 237 deaths per million population.

Much can also be attributed to the German temperament and culture of discipline and efficiency. During the worst days of the raging pandemic, Germany's Chancellor addressed the nation calmly and rationally with readily digestible explanations and statistics and a rationale for decisions taken. Most Germans trust and respect their Chancellor, her ethics and her values and her conscientious and conscious sense of humanity.

Her early imposition of stringent social-gathering limits, school closings, business closures, slowing of the economy and lockdowns in response to the early days of the novel coronavirus sweeping through the country along with the state of preparedness of its medical community to deal with the health crisis, the focus on testing and tracing of "every infection chain", all contributed to containing its spread.

It helped that, unlike other European and North American countries struggling to cope with the novel coronavirus in the absence of adequate, reliable personal protection equipment Germany was self-sufficient in medical devices, test kits and the production of equipment, with a surplus of ICU beds. It was able to initiate a robust testing program where now 120,000 tests are completed daily in a population of 83 million.

Leading to Germany's instituting a program of issuing "immunity cards" for people identified as having developed antibodies to the disease, enabling them to return to work, to travel and to socialize with a view to expanding the system to the degree that the country will gradually fully reopen its economy. The disciplined mind-set of the population, obedient to authority, resilient and given to national pride in this instance has been put to good use to benefit all of society.

Those same attributes seventy-five years ago led to a majority of the German population electing a political party calling itself the National Socialist German Workers' Party which most know in its abbreviated form: Nazi Party -- to which it was loyal and trusting. A party and a leader that led it to stretch beyond the bounds of human conscience, tolerance and compassion for those it accepted through a tremendous propaganda machine as sub-human, ripe for extermination.

This time, thankfully, it is a virus that German efficiency and bureaucracy is fixated on exterminating.

"Since the Second World War there has not been a challenge for our country in which action in a spirit of solidarity on our part was so important." -- Angela Merkel

Yad Vashem Security guard stands at the empty Hall of Names in the Yad Vashem Holocaust Memorial Museum in Jerusalem on April 19, 2020 (Yonatan Sindel/Flash90)