This post is late.
It began germinating nearly three months ago when my Google news alert for terrorism stories first spoke about the Unites States shifting to what was termed a “hybrid war strategy” so it could adequately address national security concerns tangent to GWOT – the global war on terror.
http://www.nytimes.com/2009/06/23/world/americas/23military.html?_r=1
http://www.nytimes.com/2009/08/21/world/asia/21military.html?_r=2&src=twt&twt=nytimesworld
Then last June Mr. Robert Gates became the first US Secretary of Defense to visit Manila in ten years, followed by CIA Director Alan Panetta. That culminated with President Arroyo finally being invited for a whistle-stop nearly hour-long meeting with President Barack Obama.
Now we have Sec. Gates disclosing that the elite 600-man ‘Joint Special Operations Task Force’ composed of Navy Seals, Marines, and Special Forces ‘military advisers’ will remain on extended duty.
Two statements stand out in the announcement of the extended mission of the elite US military special operations task force in the Philippines:
Pentagon press secretary Geoff Morrell:
Based on his briefings heading into Manila and his meetings on the ground there, Secretary Gates just felt this is not the right time to begin scaling back our support.
While we have made real progress against international terrorist groups there, everyone believes they would ramp back up their attacks if we were to draw down.Ambassador Kristie A. Kenney:
Measuring the impact of the military mission there is difficult, but the task force’s efforts are multiplied by being closely coordinated with the Filipino government and American development assistance. This is not just a military counterinsurgency effort.
Further information comes from the web site of this American military unit about its mission: t
At the request of the Philippine government, theJoint Special Operations Task Force – Philippines (JSOTF-P) will work alongside the AFP to defeat terrorists and create the conditions necessary for peace, stability, and prosperity in the Southern Philippines. The JSOTF-P consisted of between 500 and 600 personnel, including Army Special Operations Forces, Navy Seals, Air Force special operators, and a host of support personnel from all four U.S. military services. The Task Force was organized around a headquarters element, temporarily located at Camp Navarro, Zamboanga City, and 3 subordinate regional task forces. Camp Navarro is an Armed Forces of the Philippines facility. These Task Forces are: Task Force Archipelago, based at Camp Navarro, Zamboanga del Sur Province; Task Force Mindanao, based at Camp Siongco, Maguindanao Province; and Task Force Sulu, based at Camp Bautista, Jolo Island, Sulu Province. A handful of JSOTF-P personnel also worked in Manila to coordinate activities with the US Embassy Country Team and AFP General Headquarters.
So this ‘Delta Force’ in an official advisory/training mode actually operating from three strategically-located Philippine military bases with their force projection covering the entire Mindanao area as marked out here:
Now consider these strategic security findings from papers of the Potomac Institute of Policy Studies, and the US Defense Tactical Information Center:
A New Strategic Concept: Hybrid War
The foregoing problem calls for a new strategic concept for use of U.S. military forces in non-permissive environments in failing states. This new concept calls for greatly expanded roles and missions for our ground forces to support the political, informational and economic projections of national power, in addition to conventional military force, to achieve political objectives. As in the example of Nehemiah, future US ground forces will be required to execute stability and reconstruction operations and armed combat missions with equal facility. In other words, war of the next century will comprise a kind of hybrid5 war, projecting all elements of national power along a continuum of activities from stability, security, and reconstruction operations, to armed combat.
More specifically this hybrid war paradigm requires a new approach to using our armed forces for a broader and more comprehensive war of scale, ranging from purely peaceful
humanitarian missions as preventive measures, to the development of hostile conditions, through traditional warfighting operations employing traditional combat strategies, to post conflict reconstruction and stabilization efforts, where security and peace derive from thriving economic and political status.Hybrid war envisions employment of a comprehensive and highly-nuanced variety of military activities, resources, programs, and applications, tailored to maximize a non-violent, persuasive use of economic and political influence to reform hostile governments, movements, or trends in politically, socially, and economically unstable conditions, characteristic of failing and failed states.
It also includes a full range of military intelligence capabilities, non-conventional (including non-lethal) weapons, armaments, support units, and combat equipment, available for instant employment if ever opposition elements of regular forces or irregular insurgents, terrorists, or other non-state actors cross the hostility threshold and constitute a direct threat to or threaten these non-hostile activities.
Defining the Threat in Failing States
Identifying the characteristics of failed and failing states is necessary for understanding
why the new hybrid war paradigm must embrace stabilization operations in these states.
Foreign Policy Magazine and the Fund for Peace maintain an Index of Failing States, using socioeconomic and political criteria.For the purposes of this index, a failing state is one in which the government does not have effective control of its territory, is not perceived as legitimate by a significant portion of its population, does not provide domestic security or basic public services to its citizens, and lacks a monopoly on the use of force. Other aspects of failing states are an economy in decline (GDP/capita less in real terms than in earlier years), very high levels of government and business corruption, large “informal” (underground) economic sectors and low levels of trade with developed states, except for commodity exports. Public provision of education, health care, sanitation, and a predictable, objective justice system all seem underprovided in failing states.
Failing states are also characterized by large areas within their borders of ungoverned or
undergoverned space. Frequently these areas are totally beyond control of the central government of a state, and whatever social services or security are provided come fromdissident groups, warlords and criminal gangs. These areas are fertile ground for terrorist groups of global reach to establish bases, recruit fighters and suicide bombers, raising funds through illegal activity such as drug trade, counterfeiting, and so forth. In short, ungoverned space in any state represents a potential threat to U.S. national security interests.Further, ungoverned space engenders non-terrorist threats to the world economic system by facilitating drug smuggling, human trafficking, pandemic disease, counterfeiting and copyright violations, and piracy. Thus, such spaces and the evils they harbor are common enemies of mankind and of Western globalization and need to be reduced or eliminated.
By definition, the central governments of the states hosting these spaces are incapable of
removing them, i.e., restoring full governmental services, security, and infrastructure to support economic progress. Even large inflows of aid to such regions from international and private volunteer organizations, are likely to be ineffective, due to corruption and lack of security.Examples include: Palestine in 2006, Somalia in1993, and Kosovo in 1999. Therefore, in order to realize physical, economic, and social security and stability in such a region and prevent development or establishment of a terrorist threat, a combination of armed force to provide security and foreign assistance in the form of humanitarian aid and infrastructure construction must be coordinated.
Identifying trends and precursors to states ‘at risk’ for terrorist infiltration, will require
strategic thinkers to focus on nations within the “non-integrated gap” described by Thomas P.M. Barnett in The Pentagon’s New Map,10 roughly “developing” states within what was formerly called the “Third World”. Many states within the non- integrated gap have ungoverned, or under-governed, areas within their borders in which terrorist groups with global reach can flourish. These states are not unique to a particular region: Colombia and Tri-Border Region in the area of responsibility of Southern Command contain under-governed spaces, as do a number of states in the Middle East. Of direct concern for future stability and reconstruction operations, however, are nations on the continent of Africa, especially those below the Sahara.Such states are involved in a clear struggle for control between Muslim extremist groups and more Western oriented Christian and animist groups. The characteristics and peculiarities of weak or failing states constitute hotspots of the world that present the most pressing requirement for development of the paradigm of hybrid war to meet national security objectives. US national security objectives for this paradigm require not only early detection of weakening governance, but also development of effective strategies for intervention. An intervention, if undertaken, needs to stabilize democratic indigenous government institutions, strengthen the national economy and enhance the rule of law in order to staunch the spread of anti-western terrorist organizations in this state. This type of intervention is necessarily a long-term commitment of US power to a particular state. Short-term “peacekeeping” SSTR operations do not produce the desired effects on a permanent basis.
Evolution of Stability and Security Operations
The United States military has had much recent experience in conducting stabilization and reconstruction operations in failed and failing states, from the Balkans and Haiti in the early 1990s, through Afghanistan and Iraq today. What has emerged from over five years of the Global War on Terrorism and four years of war in Iraq is the realization that stability operations, to succeed, are long-term US commitments requiring large amounts of human and financial capital. Developing comprehensive plans to project all the elements of US national power into successful stabilization of a region requires a robust variety of skills and experience.
http://www.potomacinstitute.org/publications/Potomac_HybridWar_0108.pdf
http://www.dtic.mil/cgi-bin/GetTRDoc?AD=ADA468398&Location=U2&doc=GetTRDoc.pdf
This writer cannot avoid connecting the dots between the description for failing or failed states and the diplomatically crafted statements by the officials herein quoted and the domestic situation we Filipinos know it to be.
The Philippines is, de facto, one of the United States’ real-life laboratories for its Hybrid War Strategy for the Global War On Terror.
The U.S. publication Foreign Policy Magazine On-Line Edition recently released its ‘Failed States’ Index for 2009.
The Philippines and Cambodia are the only Southeast Asian countries with dismal rating and are tagged as being “at risk of failing,” with even Cambodia four rungs higher than the Philippines.
The Philippines has a score of 85.8 while Cambodia has 87.3
China is ranked at 57th spot with an 84.6 mark.
(The 2009 Failed State Index was produced through a collaboration between the Fund for Peace, an independent research organisation, and Foreign Policy magazine.
The index is based on a set of indicators, including demographic pressures, number of refugees and internally displaced persons, human flight, group grievances, uneven development, economic decline and delegitimization of the state.)
http://www.foreignpolicy.com/articles/2009/06/22/the_2009_failed_states_index
Thispoints to the undeniable challenge to both the outgoing Arroyo regime, and the politicians jockeying to succeed her next year.
I wonder who among the 15 individuals dreaming of becoming the country 15th President is a Moses who can lead us out of our Egypt.
The wannabees so far are Vice Pres. Noli de Castro, Chief …Justice Reynato Puno, Former Pres. Erap Estrada, Senators Mar Roxas, Manny Villar, Chiz Escudero, Loren Legarda, Richard Gordon, Sec. Gilbert Teodoro, MMDA Chairman Bayani Fernando, Makati Mayor Jejomar Binay, Gov. Among Ed Panlilio, Bro. Eddie Villanueva, Bro. Mike Velarde, and a certain Dr. Felix Cabrera Cantal who worked for the UN for 16 years and will banner the Philippine Green Republican Party.
The final names in the ballot will emerge onNov. 3o, the candidacy filing deadline will
I wonder who among these people really are serious in thinking about what they can offer Filipinos, and who are in the race “just for the FUND of it or who will really just slide down after being ‘incentivized’ not to spoil the broth, in a manner of speaking, and just settle for a run at the Senate, or even the promise of cushy job in the next government.
Now comes this admission
Presidential economic spokesman Gary Olivar:
The threat posed by Islamic extremism is no longer confined to the Philippines but is now a serious global security problem.
“If before, the situation in Mindanao was a local problem, now it is part of the fundamentalist movement in the Middle East. There is now the al-Qaeda and it has already established links with our local Muslim rebels so it cannot be avoided that we are now part of the global war against this kind of fundamentalist terrorism.“We now have a role to play as a member of the global war (against terror).”http://www.philstar.com/Article.aspx?articleId=498832&publicationSubCategoryId=63
On the side of the U.S. further insight can be gleaned here:
Scot Marciel, Deputy Assistant Secretary for East Asian and Pacific Affairs and US Ambassador to ASEAN (Speaking before the Center for Strategic International Studies in Singapore):
Recent developments have highlighted the difficulty and importance of achieving a lasting peace in Mindanao.
We are not serving as intermediaries or getting into details. That’s for the Philippines to do, but we are doing what we can to encourage both sides to reach an agreement that can make a big difference for the future of the country.
The ASEAN region is of crucial importance to the United States. The US has two primary interests in the region – for Southeast Asian nations to remain strong, stable, free and prosperous; and for them to remain “good partners” in regional and global issues ranging from addressing climate change to containing the threat of weapons of mass destruction (WMD).http://www.abs-cbnnews.com/nation/10/02/08/mindanao-focus-us-southeast-asia-peace-and-stability
Where will this take us?
Popularity: 5% [?]
We dont know about the U.S. strategy. But, the U.S. Special Forces and U.S. Navy SEALS were the Forces that would had taken out the Former Dictator Marcos. If things had not been easy for him to vacate
Malacanang Palace, during the EDSA I. Is Gloria Arroyo facing the
same situation ? Watch out for the NEXT SCENARIO. It may become interesting…Watch out for those “asungot” na Generals. You may end
up like the late Gen. Custodio of the PAF. Will you go down with
your Boss ?
Hyden: US special forces to intercede should it be needed for an evacuation of the Malacanang resident as reason for the the Joint Special Operations Task Force – Philippines (JSOTF-P).
And I thought it is the Pinoy special skills in jungle fighting and how to avoid enemy ambush that the USA wants.
It is just a personal observation and opinion. You can
have your own opinion on the situation.
Historical perspective and analysis to be a little
bit acurate…
If China is a failed (or failing) state then that ‘Failed States’ Index is a joke. China might have a lot of problems on it’s western border but that doesn’t make it a failed-failing state. They should redo the definition because Alaska fits that definition if it is an independent state.
A country ruled by a Politburo that does not trust its own people and a people who generally do not trust their rulers is not sustainable.
Chinas economic model is slowly fraying as it tries to contain the flaws in its attempt to move rural labor from the countryside to urban areas through an export dominated policy.
It needs to reverse course and that would mean less state control on the economy and raising wages and salaries to stimulate domestic demand. It cannot now revert to a Stalin/Putin style command economy as the imbalances in incomes between a high income urban sector and low income rural sector has to be bridged. No country in the world has a low income rural sector the size of China that was used to propel the development of the urban areas. Keeping incomes low in the rural sector was pivotal in keeping labor costs low for export competitiveness. Low food prices means low wage costs. Low food prices means low incomes for the rural sector.
Consumption must shift from the public sector to the private household sector. That would mean less command from the top… For markets to be effective in wealth generation there has to be freedom… They will have to shift from command to regulating markets. Russia’s shift was catastrophic. The Chinese know this. Already workers in some state steel mills that were to be privatized took to the streets and the government had to back down.. It is now going to be easy…
Now that has to change.
Correction: It is not going to be easy…
China is a socialist market economy guided by the principle of democratic centralism and the mass line, in its political apparatus. The Chinese communist party is deeply rooted in the people.
In case you all noticed – China has long moved out of the command economy. ano ba yan.
China is very cognizant of the mistakes of the Russian experience, and at the same time wary of the Western powers that once carved it into mini-fiefdoms.
Alaska would be off the list now that Palin has resigned.
Joe
Hi supremo,
I paused myself when I saw China’s mark and mused about the subtext of the ‘grade’ is which methinks is anchored in the area of Western democratic parameters and the simmering territorial/racial conflicts (think Tibet, Xinjiang, Hehai, Urumqi)in the world’s most populist nation and Asian economic powerhouse.
However, this ‘flaw’ in the index does not invalidate the reading of the Philippine situation.
I wonder where your Moses is taking you to? More wandering in the desert? Platform Plez.
You are spot on, here, along with Benigz…
Ding,
Excellent piece. I suggest the Philippines put the arm on the US for more development funds in the target areas, with specific plans outlined, that focus on the most vulnerable and poverty stricken areas. That is a key element of the new military strategy.
Joe
Hi joe,
We’re on the same page.
But given the waning tenure of the government of the day, it is logical, and imperative, that a comprehensive reassessment of the two allies military ‘arrangement’ be set into motion.
I would, in fact, surmise that back-channel discussions clothed with diplomatic deniability are ongoing.
I deny agreeing with you, of course.
Joe
The thesis is flawed. For the reluctant empire, nation building cannot succeed where no state exists. You can pour all the money you want but the institutions do not exist to channel them anyway.
The Empires quest for one size fits all nation building is deeply flawed. You have a lot of unsavory characters down in the South even within the so called state apparatus.
The reason for the degree of state failure in the South is the weakness of the central state government.
The U.S. will find out the policy of nation building cannot work unless a massive pacification campaign is undertaken first. Think of the Indian tribes in the 19th century and the Philippines pacification campaign.
Genocide was acceptable then but not today.
Afghanistan and the Philippines will prove this nation building policy wrong..
http://www.thenation.com/blogs/dreyfuss/465010/fixing_afghanistan
J_ag,
I think Obama understands this. Thus the shift to peacemaking in the form of development in Afghanistan, alongside a pointed hunt for terrorist leaders.
In the Philippines, I think jobs = peace.
Joe
Joe
I have no doubt that Obama understands this but he is not in charge of American foreign policy. Congress is…
The fanatical nihilist Islamic insurgency is not state initiated.
The fanatics comprise a very small minority. However their message is resonating wherever there are weak Muslim states or territories.
Smuggling, piracy, kidnapping are the sources of funds for these non- state actors in the Philippines. To simply label them Islamic insurgents is wrong.
Al Qaeda which directly translated means the base can subsist only in areas where state actors are non-existent or weak.
The Iranians would like to dominate the Sunnis while the Sunnis in Pakistan together with the Taliban would like to dominate the Shias.
In Iraq the problem is magnified by the Kurds.
Right now the U.S. is making more enemies in Afghanistan and this has resulted in the emergence of the Pashtun led Taliban…
In both the Philippines and Afghanistan the people in the middle are getting killed.
Recently we saw the emergence of “non-state” actors engaging in dialogue with N. Korea and Burma…
The special ambassador to the M.E. Mitchell opened up a dialogue directly with the Syrians.
Development is a generational enterprise. American administrations are limited by the electoral process. Domestic interests rule elections.
If the Lehman fiasco happened after the U.S. elections we could have had McCain/Palin in the White House.
Empires fall when they overextend themselves.
The pragmatism being displayed by the U.S. today is a sign they recognize their limits…
But the U.S. tiger is badly wounded and it would not take much for it to lash out..
Iran would likely be the candidate…
J_ag,
Good points all, although I think the US would not lash out internationally because of domestic financial problems. They might, however, “allow” Israel to lash out.
Joe
joe, I mean we are on the same page on this point:
“…more development funds in the target areas, with specific plans outlined, that focus on the most vulnerable and poverty stricken areas…”
Well.. if the Philippines is looking for Muslim countries on ASEAN to gang up on the Philippines, by all means practice genocide.
US fighting two wars, plus another theater opens in the Philippines – and all over ASEAN.
You are all military geniuses :)
And to say there is no state in the Soutu, is preposterous given the history (or the collective denial of the indios who at the time of the Sapnish colonizers -NEVER OWNED PROPERTY OR RANK UNLESS someone in their family became a whore for the Spaniards), the Philippines is an artificial state propped by colonial edict – and a whore of nation that exports servants and whores.
Thanks for that link, J_ag.
Reading through that article and the subsequent linked pieces, two point jupm out in the on-going debate among American political pundits which are tangent to the situation obtaining in Mindanao:
“…the primary motivation for extremist organizations like the Taliban and Al Qaeda is their opposition to what they regard as unwarranted outside interference in their own societies. Increasing the U.S. military presence and engaging in various forms of social engineering is as likely to reinforce such motivations as it is to eliminate them.” – Stephen Walt
“… the U.S. has already tried the Do Nothing approach and the Do It Light approach in Afghanistan, the results of which are well known. The Obama administration is now attempting a Do It Seriously approach, which has a real chance of success.” – Peter Bergen
to BongV: You give me the impression that you are hyperventilating with this genocide genocide thingy. Malaysia, Indonesia, Philippines, to include New Zealand, USA and Australia are cooperating with regards J/I and terrorists. All countries seem to agree that JI is NOT exactly looking out for the welfare of the Philippines nor Indonesia nor Malaysia. All countries mentioned seem to agree that JI (and ASG) pose a threat to all the governments of Malaysia, Indonesia, Philippines, others.
The MILF is a Philippine problem that merits the attention of Indonesia, Malaysia, USA, New Zealand, Australia because of the terrorism problem. J/I and ASG will cease to exist in Mindanao the moment that the supportive environment (safehouses, transport, even weapons and food for JI and ASG) provided by MILF “lost commands” cease. To repeat — the position is that terrorism-supporting MILF sectors are “lost commands” who are defying the official policies of the top-level MILF leadership. The working position also is that it is the GovtRepublic Philippines that is government over Mindanao. USA-Australia-others (including governments of Saudi Arabia, Syria, others) want GRP to succeed in getting to an agreement with the MILF so that the supportive environment in chunks of Mindanao territory for JI and ASG, to dry out. Again remember that JI and Al Qaeida and the governments of Saudi Arabia and other Middle East Islam countries are enemies.
J_ag,
Your “Empires fall when they overextend themselves,” raises the obvious question that begs an answer: what happens to the Empires’ fiefdoms ‘pliant client-states?
Ding if you mean which countries will rise up due to the start of the end of the reluctant Empire?
It looks to be three of the BRIC countries. China, Brazil and India. Japan will continue to dominate North Asia but there is no question that China will dominate the rest of East Asia.
Most of it is already Chinese owned and controlled. The real secret of Chinas success is opening up part of their markets to allow the overseas Chinese to come in and bring in their skill sets.
ASEAN + 3 is the new Greater Asian Co-Prosperity Sphere. The U.S. knows that the start of the end of the dollar empire is at hand. We will surely have a new Asian grouping around the yuan/yen anchor soon. China has started the process of slowly making their currency convertible with their soon to be client states.
The big question mark is the turmoil and instability in the M.E., Central Asia and South Asia. Then you have Russia… Access to resources (water and oil/gas) will be drive future conflicts.
To make my query clear…. am canvassing your prognosis… hen the ‘Empire’ falls, will we logically fall with them?
J_ag,
“reluctant Empire”
I love your characterizations and appreciate your willingness to project likelihoods. I may start asking for a percent “probability” assessment to see how committed you are to some of your forecasts. And if I can find one to wager on, will see if you put your money behind it.
Goliath powers 50 years from now: (1) China, (2) US, (3) European Union. Trailing, Russia. South America could be a power organized as a European Union, but is unlikely to go that route, and separately will just represent good markets for the goliaths. As you point out, the Middle-East could be a commanding power except they have bickered for millennia and are likely to continue destroying one another . . . the richest bunch of malcontents in the world.
The Philippines can’t organize to its own best interest and so will likely be exploited piecemeal once foreign investors are allowed in.
I don’t think the US will fade as precipitously as you suggest or be reluctant about stepping down from world leadership. It is a thankless position, actually.
Joe
Byron V,
The commanding heights of the industrial capital infrastructure of China is still owned by the state. Land is leased through a usufruct system. The state is absolute owner.
They are a hybrid command economy. In point of fact the major industrial economies of the world have not given China market economy status…
J-Ag:
Bago ka magsulat ng concept, sigurohin mong angkop sa scenario.
Of course, the infrastructure is owned by the state – it is socialist.
However, the companies that go into China – is a different story – they produce based on demand.
Now, if one were to say that production forecasting is a form of a command economy – yeah.. China is a command economy..
The commanding heights of an industrial capitalist system is state ownership of the strategic upstream industries.. Steel and other metal manufactures. Petrochemical industries. Oil and energy industries. The mother of capital the capital goods industries. Producers of machines and tools that are capable of producing other machines and tools.. Financial sector. Transportation sector to include ships, cars planes etc. Communication sector etc..
Foreign car companies are mainly assemblers that have to partner with state owned enterprises. The domestic Chinese car manufacturers are state owned for the most part.
Now the export sector that builds from mostly imported parts are private for the most part. Those that manufacture consumer goods.
Chinas industrial capitalist infrastructure refers to their upstream industries.. They are the critical part of the centralized planning system run by the state.
Take the more successful company Huawie a so called “private” company started by a former army officer who builds communication equipment. The company supplies large part of the communication equipment to the Chinese military. It also supplies a lot of telecoms equipment overseas. It is an example of the hybrid command wherein it can outsell its competitors since it raw material base is supplied from manufactures owned by the State. Plus its biggest client is the State. The entire telecoms infrastructure is state owned.
Then you have ZTE. Do you actually believe that both these companies are purely private enterprises. The invisible hand of the state is dominant within this strategic companies. The state allows private participation to reward innovation and invention in sectors that are part of the new communication revolution. But the results of these inventions become part of the common property owned by the state to strengthen the state capitalist model of China.
The state also directs credit to these emerging sectors of the economy to ensure that they dominate their markets.
You can have your private sector in the production of Barbie dolls and toys but the components all come from state owned enterprises. The plastic injection machines are all made by companies owned or controlled by the State.
Engines, motors and turbines are all manufactured by the Chinese state owned enterprises.
The students of Mao and Marx in China have learned that the real means of production is the ever expanding human creative ability that comes out of research and development of technology to raise the productive capacity of the productive sectors in the division of labor.
Foreign companies that go into China move their facilities there to take advantage of cheap labor costs.. That gives them an edge in price in their own markets.
That in turn is what drove the process of disinflation in many parts of the world. The drop in prices.. All sustained with cheap credit financed by the same countries that gained surplus from the sale of cheap labor…
All part of the centralized planning system of the CCP.
Jag:
If that’s your scenario – You might as well claim that the US is also a command economy :)
One novel – and entirely wrong.
China is a mixed economy. After adopting market oriented reforms – it is no longer a command economy.
As simple as that.
In 2005, 70% of China’s GDP was in the private sector. The relatively small public sector is dominated by about 200 large state enterprises concentrating mostly in utilities, heavy industries, and energy resources.
command economy ?
J_ag:
try this for change – http://www.china.org.cn/english/2003chinamarket/79411.htm
Command economy – noong 1950. 2009 na ngayon!
Big deal – most modern states are considered dirigist.
Moreover, a quick review of your online reference shows that:
“While the term has occasionally been applied to centrally planned economies, where the government effectively controls production and allocation of resources (in particular, to certain socialist economies where the national government owns the means of production), it originally had neither of these meanings when applied to France, and generally designates a mainly capitalist economy with strong economic participation by government. ”
Now, let’s go back at your previous statement:
The reply, China has already moved out of the command economy – and fashions itself as a “socialist market economy”. To which you replied – it is a dirigist economy. Well the original definition of dirigist as applied to the French is a capitalist (NOT SOCIALIST) economy with strong government participation.
The point of the matter is NOT THE DEFINITION OF DIRIGISTE. The issue is whether China is still a planned economy, or whether it will go back to being a planned economy. Clearly, it is no longer a planned economy, nor does it intend to go back to being a planned economy. What is this animal called “socialist market economy”. One can use wikipedia:
Mahirap talagang maging good at torpe. Part of the planned society that the CCP has in mind is the creation of the nationalist industrial burgis. Hence some private capitalists are now members of the CCP.
However they are always partnered with top members of party cadres to include the families of the top officials of the party. Below from the FT which a gauge of real conditions on the ground.
Anytime the state simply takes over from the still shallow base of private capitalists. When the state wishes to stimulate the economy they target state owned enterprises. Hence the stimulus packages of $500B in an economy the size of $4 trillion almost all goes to state owned enterprises to increase their fixed assets. They increase productive capacities. That means more capital goods…
China’s Shandong Steel closes in on Rizhao
By Jamil Anderlini in Beijing
Published: August 25 2009 22:40 | Last updated: August 25 2009 22:40
A hostile takeover of one of China’s largest non-state steel groups by a state-owned competitor could be finalised as early as next week in a deal that has heightened concerns about creeping renationalisation.
State-owned Shandong Iron and Steel Group, the world’s ninth-largest steelmaker by capacity, is likely to take a two-thirds stake in privately held Rizhao Iron and Steel, according to two people familiar with the matter and Chinese media reports.
Du Shuanghua, Rizhao’s majority owner and China’s second-richest man last year according to the Hurun Report rich list, has fought a bitter battle to avoid losing his company to Shandong Steel, a newly formed group controlled by the provincial government of Shandong, in the country’s east.
Mr Du attempted to block the takeover by handing up to 30 per cent of Rizhao’s shares at a low valuation to Kai Yuan Holdings, a Hong Kong-listed company which is controlled by close relatives of Hu Jintao, Chinese president, according to people familiar with the trans-action and Hong Kong media reports.
Kai Yuan Holdings did not respond to requests for confirmation or comment.
The plan to block Shandong Steel’s advances eventually failed because the involvement of the president’s relatives was too obvious and any perception of favouritism would have been politically dangerous for Mr Hu, the people said.
In the first half of this year, when many state-owned steel mills reported losses, Rizhao’s profits hit Rmb1.8bn ($263m) while Shandong Steel, three times the size of Rizhao in terms of production capacity, reported a loss of Rmb1.3bn for the same period.
According to Chinese media reports, Shandong Steel will inject Rmb16bn of new capital into Rizhao in exchange for the two-thirds stake, leaving Mr Du to share the remainder of the company with his new Hong Kong-listed partner.
The Hurun Report conservatively estimated Rizhao to be worth about Rmb30bn at the end of last year but Shandong’s investment values the company at about Rmb8bn, according to Rupert Hoogewerf, Hurun Report chief executive. He said: “This strikes me as a rather low valuation, especially compared with overseas competitors.”
The deal is being closely watched in the Chinese business world, where many private entrepreneurs complain the state is expanding aggressively in industries that were partially privatised over the past decade, such as airlines, metals, petrochemicals and consumer goods.
The late 2008 arrest of Huang Guangyu, founder of Gome electronics retailer and China’s then richest man, was seen as a political decision by senior leaders who feared Mr Huang’s business empire had become systemically important to the Chinese economy, according to people familiar with the matter.
Analysts say the central government does not have a policy of actively encouraging renationalisation but that Beijing’s response to the economic crisis has accelerated a process known in Chinese as “guojinmintui” or “the state advances as the private sector recedes”.
The flood of bank lending and stimulus spending unleashed since the start of the year to battle the crisis has mostly been channelled into the state sector, allowing government-owned enterprises like Shandong Steel to survive with the help of generous credit lines while more efficient private competitors struggled.
Shandong Steel was formed just last year when the provincial government merged two state-owned steel producers. That consolidation and the Rizhao takeover are part of a central government plan to consolidate the world’s largest steel industry and create state-owned giants that can compete globally.
Some Chinese media reports have suggested Rizhao did not receive all the required government approvals when it was established in 2003, allowing the Shandong government to aggressively pursue the takeover with support from Beijing.
Rizhao Steel said the Shandong Steel acquisition was still under discussion. Shandong Steel could not be reached for comment and the Shandong provincial government, which controls the company, refused to comment.
Additional reporting by Eliot Gao
Learn to distinguish between gross exports and net exports of China. While the figure of gross exports is at $1.4T + (larger than the combined economies of ASEAN) the actual value added is small as a lot of exports are routed through HK, Taiwan, Singapore, S. Korea and Japan and then to Europe and the U.S.
The manufacturing value added for China is relatively small. The wholesaler trader makes most of the profit.
Chinas total trade surplus in 2008 was $280+ trillion. It will always be difficult to get the actual net exports of China as foreign companies dominate the export sector. They operate in the export zones. That is where private sector participation is greatest. Their products are mostly import dependent.
But the domestic market economy is another thing altogether. The gross export volume of China is even greater than the entire economy of India. But that is still based on the lure of cheap labor and subsidized rents for factory sites.
This process of market opening is what propelled the entry of technologies that the Chinese quickly copied on a massive scale. Backward integration was relatively simple since they already had an industrial infrastructure laid out.
To suggest that private capital leads in allocating resources China is a joke. The state decides. That is the single most important determinant in what a state command structure is all about.
Look at the U.S. the private banks and private capital decide on business investments and credit allocation. The Federal government plays no part in it. Now tell me in China who decides on this allocation… Household demand is only 30-40% of the expenditure side. Credit allocation is pretty much in the hands of the State.
Dirgist economies like economic models vary amongst different countries.
In the U.S. where private capital is supreme the private banks own and operate the Regional Federal Reserve Districts. The elect the President of each district. The Federal Government gets to appoint the Federal Reserve Board with Congressional oversight. Now tell me who allocates resources in the U.S. and who allocates the resources in China. Private banks or State banks?????
Mahirap talaga ang good at torpe…
The issue is not who is allocating what – the issue is you stated China is a command economy.
Then you changed tack to say it is a dirigiste economy. Which upon further scrutiny reveals that the original context was to the a capitalist economy with strong government participation.
ano ba talaga -
A. COMMAND ECONOMY (your first answer)
B DIRIGISTE ECONOMY (your next answer – after it was pointed out that China is not a command economy)
Ding in the long run we are all dead anyway… Keynes always reminded people about that. The Philippines as a country will survive like the street kid that she is. As far as the Philippine state that is another question altogether.
I notice that neither DingG nor anyone has yet has made a one-line blog-comment : American troops in Mindanao — TALSIK DIYAN!!!
And then there is Evelyn Ursua. One has to hand it to her for consistency (which is either consistency to “no foreign troops on Philippine territory”, or consistency with getting herself into the news).
http://newsinfo.inquirer.net/breakingnews/nation/view/20090826-222102/US-troops-join-combatex-RP-Navy-exec
another politician world leader — dead. Senator Edward Kennedy of Massachusetts, 77.