Comeback Kid Mandelson points the way to China. The Tories don't even know where it is

Say what you like about Peter Mandelson, but he’s certainly played a blinder this week. First, a Conference speech in which he just about realised the impossible dream of winning the love of the Labour Party. Using his own comeback(s) as an inspiration for the desired comeback of his Party was a piece of unbelievable chutzpah; in this form he leaves Derren Brown standing as an illusionist.

And now a full-dress piece on China in today’s Telegraph. The impression (however misleading) is that the great man has found time amid the hurly-burly of a crucial Conference to regale us with words of well-matured wisdom.

It’s hardly an original observation that China will be a key economic player for the foreseeable future. But Lord M is reminding us of two things: firstly, that we have not done as much as we might have to realise those opportunities; and secondly, more subtly, that one racks one’s brains for the slightest scrap of evidence that Messrs Cameron and Osborne even know where China is. (Note for Tory conference organisers: it’s up in the top right hand corner, usually coloured yellow.)

It’s an uphill struggle. The Chinese – and who can blame them – are determined that if there’s money to be made out of their modernisation, it should be made by Chinese people. In the early days of China’s opening to the world economy, it used to be horribly difficult to repatriate one’s profits even if one made any. The example Mandelson gave of a successful British project was the Pilkington glass plant in Shanghai. Nothing wrong with that. But this project began in the 1980s, and I imagine returns in the early days were not high. You need to hunker down for the long term, as many Germans, Americans etc. have done. An atmosphere in which you have to deliver shareholder value in six months max or you can forget it doesn’t help.

But it’s no good telling us today what we should have been doing 25 years ago. What should we be doing today? All I can think of is being prepared to punt some money, and to get down and dirty. Don’t waste time schmoozing leaders – or does government create wealth all of a sudden? By all means be polite enough to them to ensure they don’t do you down, but remember that they’re just politicians – and ones without the chastening restraints of a free press, to boot. Don’t just stick around Beijing and Shanghai; they’ve been done to death, and costs are rocketing. Get out of the comfort zone. Find a sharp young English-speaking local fixer, and head out to the monoglot boonies. There are provinces you’ve never heard of with populations equal to Britain plus France. Your favourite restaurant will still be there when you get back; in the meantime, get those wobbly bits down you. Learn a bit of the lingo (hint: single people will work out how best to do this). Ten years of this, and you may have dysentery, cirrhosis and knackered lungs; you may also be suffering from morbid obesity of the wallet. And remember, Lord Mandelson is right behind you.

German elections: a quick guide to what's really going on

The more one looks at the German election result, the more one wonders. On the one hand, it is a clear majority (well, 48.4%, but who’s counting?) for a coalition with a clear ideological direction; on the other, a colourful spectrum of intriguing possibilities. The Social Democrats put in their worst performance in the history of the Bundesrepublik; but then so did Merkel’s CDU/CSU, on a record low of 33.8%. In a system where a 5% hurdle was built in to keep out the nutters, Germany has now entered the age of five-party politics: this would still be the case had the hurdle been 10%. How different from the old days, when there was Left and Right and a little liberal party in the middle holding the balance, ensuring that Hans-Dietrich Genscher retained the Foreign Minister slot with the dogged unshiftability of the Vicar of Bray.

But the real attention will of course be on the new government, which will probably take two or three weeks to fit its disparate parts together. Yes, they’re all singing from the same hymn-sheet as regards capitalist conservatism of a faintly Cameroonish tinge: but there are considerable differences which will need bridging. Even Merkel’s own party is actually two parties, linking the solid but open-minded Protestant work ethic, from which the Chancellor herself hails, to the stuffier do-as-you’re-damn-well-told types from what might be called the Ratzinger country. Add in the bouncy, terribly progressive, turbocapitalists of the FDP – hedge funders meet the Stop the War Coalition – and you’ve got quite a rich mixture. The FDP want to slash taxes – Merkel, who happily endorsed a raising of the top rate in her outgoing government, does not appear to see that as a panacea. The FDP want to run down participation in the “war on terror” to a point just short of open revolt against the US; Merkel remains a solid Atlanticist. This might be even more exciting than the three-party squabble over the future of the Left on the other side of the house.

We shall see. But I would bet that, amid the sound and fury, German politics will trundle along its well-worn paths with the same dour predictability with which their monumentally unexciting football team keeps bloody well winning things.

University term begins again, and the Chinese are back

I was in Sainsbury’s yesterday afternoon. (Don’t you just hate columns, blogs etc which begin like that? But I crave indulgence.) Fortunately our local Sainsbo’s doesn’t assault its customers’ ears with Muzak, so mine were lulled with the ubiquitous sound of a familiar language. Mandarin Chinese. Looking around me I might have been in Guangzhou Tesco. The occasional foreigner (as they will insist on calling us, even in our own country), but otherwise wall-to-wall the sons and daughters of the Middle Kingdom. And then I remembered; it is the end of September, and I live in a small university town.

Yes, around this time of year we go Chinese. I merely observe; I have no racist reactions, and nor does anyone else. Firstly, this is the era of globalisation; virtually a quarter of the world’s population is Chinese, and why shouldn’t that be the case here? Secondly, these are all bright and valuable undergraduate and postgraduate students; they’re not on the dole, and if you get beaten up late at night it won’t be one of them who does it. No doubt they keep our university afloat with the fees they pay. (Economists often complain about the high Chinese savings rate; I wonder if they realise what a large proportion of those savings go to British and American universities, to educate the savers’ grandchildren.)

The strange thing is that Chinese universities are riding high in the world rankings. Only the very best UK/US places of learning can compete with the best of Beijing and Shanghai. So why are so many Chinese parents so keen to send their kids to our universities?

Partly, of course, because the top universities in Beijing and Shanghai are not so easy to get into. The word is that it doesn’t exactly depend on school results. Natives of those cities enjoy a built-in advantage, and good connections also help. Chinese who don’t enjoy these advantages feel better off sending their kids to Western universities than second-rate Chinese ones. Western education, you see, still carries a certain innate cachet. In a society where “face” is everything, it’s interesting to see that our products are seen as automatically superior, however debased we may sometimes feel it is. The Chinese theoretically believe their culture is superior to all others; but they are voting with their feet, or at least their children’s and grandchildren’s feet – and long may it remain so.

German elections: meet the new boss - same as the old boss

Well, it looks as though the German Right has got what it wanted in their election. Of course an election based on PR is never likely to attract the sort of excitement that a first-past-the-post election brings; alternatively, perhaps it’s just that no-one believes a German election is ever going to change anything much. Both of these rather flippant statements are entirely true.

No-one ever doubted that the babetastic Frau Angela Merkel was going to continue in her role as Chancellor. The only issue was whether she would be able to ditch her current coalition partners (the Social Democrats, i.e. liberal capitalism with trade unions) for a more Right-wing lot (the Free Democrats, i.e. liberal capitalism without trade unions). This she seems to have achieved. Those (somewhat numerous) Germans who are trying to cast the good lady in the role of a Frau Thatcher are, however, doomed to disappointment: nothing changes in Germany, and it isn’t going to start now. While we argue over the 48-hour week, the Germans are still holding the line in the 37-38 region. It won’t get any easier to get any sense out of anyone on a Friday afternoon. I love the place.

Unemployment won’t come down very far in a country where you have to have the exactly appropriate qualifications to apply for any sort of job. In the unlikely event that Frau Merkel tries to change any of this, she will be reminded in no uncertain terms that that was not what she was voted in for.

Meanwhile, the Left will now be off the leash; the Social Democrats, roughly equivalent to New Labour, are out of government and able to position themselves to benefit from any disillusionment. In competition, of course, with the Greens and the Left Party, who got not far off 25 per cent of the vote between them. All that Frau Merkel can really congratulate herself on is still being there: it doesn’t seem that her position has improved much.

What the hell is the point of the United Nations?

So the circus has come to town again. The unspeakable Gaddafi is given a reasonable 15 minutes to speak, and goes on for an hour and three quarters of clowning, tearing up the UN charter and talking complete nonsense about swine flu. Well, you might say, that’s what Gaddafi does. But why do they let him? OK, manhandling him from the room might have been a bit much to expect, but they could at least have switched his mike off. But naturally everyone simply submitted to having their schedule thrown out and their time wasted. And then, naturally, Mugabe with more of the same. Why can this organisation not impose its own agreed rules?

Because “national leaders” are just too important, like two-year-olds taken at their own self-estimation (“Look at me!”). Every meeting starts unconscionably late, because in some parts of the world one demonstrates one’s importance by keeping other people waiting. (Rather like inviting women on dates: her punctuality will be in inverse proportion to her desirability.)

On two occasions during my diplomatic career I was offered a job at the UK representation in New York. This was quite a prestigious posting, but I wouldn’t touch it with a bargepole; I know what goes on there. You spend all morning and all afternoon in meetings where no-one has a sense of the value of time; and then at 5 p.m. you go back to the mission and the real working day starts. I had small children whom I wanted to see from time to time. A no-brainer.

No doubt some people will be thinking that all this sounds a bit racist, imperialist, etc. Where do I get off, despising representatives of poor Third World countries? Well, if they were real representatives I wouldn’t despise them. Of course the people of Libya have a right to be represented in the counsels of the mighty; I just don’t think their interests are served in any way by highly paid and busy people having to listen to Gaddafi. Leaders of democracies have to identify themselves to a fair extent with the needs of their peoples because they want to get re-elected; all dictators are interested in is staying in power for ever and ever, and forming alliances with other dictators to that end.

Yes, of course we have to be realistic, and there have always been countries with sub-optimal political arrangements with whom we have to deal. And there are countries which may not be tremendously significant in political or economic terms which do genuinely represent a people whose voice deserves to be heard. But there are plenty of “leaders” who should simply be told: “You’re not representative, and you don’t matter. Go away.”

America owes China two trillion dollars. But what does that mean?

There are one or two issues of major global importance which get too little attention, simply because they are so complex. One of them is the uncomfortable economic stand-off between China and America, about which learned articles have rumbled on for months in the stiffer journals, read by few and understood by even fewer. Now they are snapping at each other about little bits of protectionism, but that’s just the tip of the iceberg.

We are all familiar with the aphorism which goes: “If you owe someone a thousand pounds, you’ve got a problem. If you owe someone a million pounds, he’s got a problem.” Now, the US owes China two trillion dollars. Who’s got the problem?

In an earlier blogpost I flippantly suggested that if the US’s debt to China got any bigger China would in effect “own” the USA. Of course this is nonsense, because China has no way of staking its claim. Should the US default on a payment, they can hardly send the bailiffs round to repossess California. Every now and then the Chinese mutter about the possibility of doing down the dollar by changing some of their reserves into yen or euros, but they don’t mean it: they don’t want to undermine the dollar while they’re still owed so many of them.

Meanwhile, the Americans grumble endlessly that the Chinese are keeping the value of their currency artificially low. It is a logical nonsense that one of the world economy’s biggest players still has a currency which is not freely convertible and allowed to find its own level on the markets. But it’s not exactly hard to see why the Chinese are not yet prepared to venture forth on the choppy waters of untrammelled currency speculation. Their current policy originated as a defence against the worst of the Asian financial crisis in the late 90s, and its wisdom wasn’t exactly shaken by more recent events.

So, to the American plea to level the terms of trade by letting the currency float, the Chinese simply say “Why should we?” Well, because it’s not fair in the context of free trade. But the Chinese have an all-purpose get-out: we may be a major player in absolute terms, but per capita we’re still a poor developing country. So we need these little unfairnesses to help us get on level terms with you. The implication is that China won’t treat the US as an equal until their per capita economies are of similar size, i.e. when China’s economy is five times the size of America’s.

How do we get out of this double bind? We’ll see if any bright ideas come up at the G20. I’m not holding my breath.

A Chinese passport: the mark of Cain?

One of the biggest drawbacks to being Chinese is holding a passport which is regarded as the equivalent of the medieval leper’s bell and call of “UNCLEAN!” Travelling with my Chinese wife, I dread each encounter with immigration officials, as, impeccable though her papers always are, they still have “People’s Republic of China” on them (the worst problems we encountered were in Hong Kong of all places). Now my quasi-brother-in-law (i.e. the chap who’s going to marry my wife’s sister in November) is finding out all about it.

After an incredibly time-consuming paperchase, he has procured for his fiancée a marriage and settlement visa. Now he is, not unnaturally, trying to arrange a honeymoon. Only problem is, they’d have to spend half their time until the wedding sorting out the visa, and sorting out the wedding is going to take up quite enough of the time, thank you. So, my friend has gone on the Net to find places where Chinese people can go without too many tedious formalities. The results have been instructive.

The problem is, of course, that no nation wants to be seen as a soft touch for Chinese, fearing that they’ll find a billion or so of them on the doorstep. It’s less than twenty years since it really was like that in Beijing: word would soon get around about who had revised their visa policy, and the queues would lead round several blocks first thing next morning.

There are a few places in Africa you can go (Djibouti, Comoros, Ethiopia anyone?). Various islands in the South Pacific. In the Americas you are more or less limited to the Dominican Republic; in Europe to the holiday paradise of Kosovo. There are a few places in Asia, but not so many at the top of most people’s wishlists. Still, they do include Thailand and Sri Lanka. So all is not lost, and my sister-in-law will get a suitably exotic honeymoon.

I’d have settled for the Lake District myself. But I suppose it’s bloody cold up here in December.