TPP concerns; Iran nuclear treaty; US dodges push to recapture Tikrit; Capital punishment double standards By Hamish McDonald.

Chinese feel less zen over growth targets

Chinese hostesses pose in front of Beijing’s Great Hall of the People during the 2015 National People’s Congress.
Chinese hostesses pose in front of Beijing’s Great Hall of the People during the 2015 National People’s Congress.
Credit: AFP

The annual meeting of China’s pseudo-parliament, the National People’s Congress, always has a surreal atmosphere, and this year’s session at the Great Hall of the People in Beijing has not disappointed.

As the ABC’s Stephen McDonell hilariously reported, the avowedly atheistic Chinese Communist Party has taken issue with the Dalai Lama’s recent floating of the idea that he might not reincarnate himself after all once his present body dies. “This decision is not up to him,” spluttered Padma Choling, a leader of the hand-picked Tibetan delegation to the congress. “When he became the 14th Dalai Lama, it was not his decision. He was chosen following a strict system dictated by religious rules and historical tradition and also with the approval of the central government.”

A decision by His Holiness not to return to human life would certainly put a spoke in the prayer wheel as Beijing’s religious affairs apparatchiks plan their own choice of the reincarnation, as they did with the most recent Panchen Lama.

But far more earthly issues got an airing at the congress, which will have a direct bearing on Australia’s economy in the short to medium term. Premier Li Keqiang announced a growth target this year of 7 per cent, down from the 2014 target of 7.5 per cent, and the lowest in more than two decades. Many China experts think even this subdued (for China) outlook is too rosy.

Peking University economist Michael Pettis thinks growth rates will fall by a percentage point or more every year for the rest of the decade, and party supremo President Xi Jinping will be lucky to average 3 to 4 per cent growth over his 10 years at the top (until 2023). American and other policymakers are nervous that trying to sustain 7 per cent growth will see China joining the rush to currency wars and “quantitative easing” pursued in Europe and Japan. Already the Chinese yuan is weakening and China has begun selling down its massive holding of United States Treasury bonds.

There are even more alarming scenarios. David Shambaugh, a leading China specialist at George Washington University and the Brookings Institution in Washington, wrote this week that “the endgame of Chinese communist rule has now begun” − citing as part of the evidence the massive capital flight out of China to havens such as Australia. Pettis points out that the more that strong political regimes such as the Chinese communists (or the Japanese conservatives in the 1980s) postpone corrective reforms for the sake of high growth, the harder the landing and the longer the stagnation. With such subdued expert prospects, it may not be a good time for Joe Hockey to get picky about Chinese capital inflows.

1 . TPP concerns

Negotiators from Australia and 11 other countries got together in Hawaii this week for what they hoped would be a final dash towards agreement on the Trans-Pacific Partnership free trade deal. True to form the meeting was conducted with minimal publicity in this country.

Trade Minister Andrew Robb keeps assuring us he won’t commit to anything that is against the national interests of Australia, but already serious concerns are being raised here about the effect of tighter and longer protection of intellectual property, particularly in pharmaceuticals. With the Treasury’s latest Intergenerational Report raising the dire prospects of an ageing population, one wonders if the extra costs of medication likely to be created by the TPP have been factored in.

The TPP is already being treated with scepticism by economists generally in favour of opening up trade, such as the Australian National University’s Peter Drysdale. Perhaps that’s because, like the European single currency, it is an idea being pushed more by politicians and national security types than economists. The TPP was dragged in by Barack Obama to give more substance to his “pivot” to Asia. It would tie the economies of present regional allies such as Japan, Singapore and Australia (and later South Korea) closer to the US, and draw Vietnam away from China.

Whether it flies depends on Japan making the necessary concessions to open its markets, and Obama being given fast-track negotiating authority by congress, which means he  can simply submit the final draft to the senate for a yea or nay vote. Robb effectively has that authority already. Our parliament can consider it, but not make amendments without throwing the draft back to all 11 countries.

2 . Iran nuclear treaty

The US senate will probably give Obama that trade authority, being now dominated by Republicans usually close to the big corporations that will benefit from the TPP, but the chamber is being churlish about the president’s imminent nuclear agreement with Iran.

On Monday, 47 of the Republican senators wrote to the leaders of Iran warning that any deal signed by Obama would amount to only an “executive agreement” that could be undone by congress or a future president. The White House said it was part of a push towards a military strike at Iran’s nuclear facilities, a measure that would only harden Iran’s resolve to build nuclear weapons. The only precedent foreign policy experts could think of was an effort by Richard Nixon’s 1968 campaign to derail peace talks with North Vietnam, or a later bid by conservative senator Jesse Helms to stop a transfer of power to blacks in Zimbabwe.

Iran’s foreign minister, Javad Zarif, dismissed the letter as “mostly a propaganda ploy” and pointed out that the imminent agreement would be between Iran and the five UN Security Council permanent members plus Germany. Whether such a multilateral agreement requires approval by a two-thirds majority of the senate is also being debated by US legal scholars. A late surge by centre-left Israeli opposition leader Isaac Herzog against Prime Minister Benjamin Netanyahu ahead of Tuesday’s elections could possibly lower the heat on the Iranian issue as well.

3 . US dodges push to recapture Tikrit

Elsewhere in the Middle East, Iran was on the American side, sort of. A collection of Iraqi army units and Shia militias were reported to be close to recapturing the city of Tikrit – the home town of Saddam Hussein – from the Islamic State.

Directing the operation has been the Iranian general Qassem Suleimani, and dozens of advisers from the elite and fanatical Quds Force drawn from the Revolutionary Guards, the inner security circle of the theocratic Iranian regime.

All this, apparently, without air support or direct involvement by the US and its allies. US officials were reported as saying they were uncomfortable with the prominent role of Shia militias and Iranian military officials in taking a predominantly Sunni city. But Tony Abbott may get his chance for our special force advisers to help the next big operation, to retake Iraq’s second-largest city of Mosul, where local partners will include the Kurdish peshmerga. This will not be risk free: a Canadian special forces soldier has just been killed in a mix-up with the Kurds.

4 . Capital punishment double standards

The legal and political campaign to save Andrew Chan and Myuran Sukumaran from the firing squad continued through the week.

President Joko Widodo still seemed intent on marking his first year in office with more than 60 executions of such drug smugglers.

On Monday, Saudi Arabia beheaded a Filipino convicted of murder, bringing their number of executions so far this year to 40. About 40 Indonesians are also on death row in the kingdom, mostly housemaids convicted of killing or casting fatal spells on their employers. In April last year, the Indonesian government chipped in to help pay seven million riyals in “blood money” to the victim’s family in order to save one such convict.


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This article was first published in the print edition of The Saturday Paper on March 14, 2015 as "Chinese feel less zen over growth targets".

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Hamish McDonald is a Walkley Award-winning foreign correspondent.

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