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By Elizabeth M. Lynch, February 8, 2010

In Petition: The Court of Complaints, director Zhao Liang (pronounced Zhwow Le-ang) takes on a huge and important subject – the Chinese petitioning system.  While the documentary fails to produce a cohesive story, it does successfully portray vignettes of a society very much in turmoil and tells the story of the many people left behind by China’s progress.

In China, the petition system is a way for individuals to lodge complaints against corrupt government officials or corrupt governmental process to higher authorities.  Also known as “Letters and Visits” (from the Chinese xinfang and shangfang), it’s a form of extrajudicial action that can trace its origins to imperial days.   If an individual believes that a judicial case was decided not in accordance to law or local government officials illegally violated his rights, he can complain to officials in a higher level of government to hear his case, re-decide it and punish the lower level officials.  In some ways, every country has a similar process – if you don’t like the way a government official in New York City is treating you, you can complain to your city council member or write a letter to the mayor.  But what makes the petitioning system different in China is the fact that it is a formal process.  Every level and office in the Chinese government has a bureau of “Letters and Visits.”

The petitioning system is vital to the Chinese government’s success, be it today’s Communist government or to the

Beijing's new Letters & Visits Office - near the South 4th Ring Road

imperial courts of the past.  By ruling a large country through an authoritarian dictatorship, the Chinese central government inevitability leaves much discretion in the hands of local officials.  But through the petitioning system, complaints of local official corruption will eventually make its way to top levels of government and allow the government to solve the problem, satisfy the aggrieved individuals, and by getting rid of corruption, solidify its rule.  The petitioning system serves as a safety valve in a system that does not allow popular participation or protest.

But as Zhao’s documentary successfully shows, the petitioning system, which receives over 5 million petitions a year according to Chinese statistics (many outside of China speculate that the number is closer to 10 million), is largely a failure.  Zhao focuses on the thousands of petitioners who travel from the provinces to lodge their complaints in person with the highest petitioning body, the State Bureau of Letters and Calls in Beijing.  But many of these petitioners are there for years, repeatedly getting the brush-off by state officials.  With one petitioner, Qi, who is in Beijing to seek compensation for her husband’s death after local officials beat him, we watch her daughter, Ju’an, grow up before our eyes on the streets of Beijing.  Only twelve at the start of the movie, Ju’an eventually leaves Beijing with her boyfriend and returns years later with her husband and son only to find her mother still petitioning.

If all that was lost was time, the petitioning system might not be so bad.  But there is also violence, and a lot of it.  Zhao captures many of the “retrievers” beating petitioners.  Retrievers are thugs hired by the local officials whom petitions are being filed against.  Because each petition to the central government is a black mark on a local official’s advancement, these local officials are desperate to prevent the petition from being heard.  An easy way is through

A "lawyer" of sorts to help others with the petitioning process - Beijing, China

intimidation and violence.  In one particularly troubling scene, Zhao films an overhead shot of a group of retrievers chasing and beating a single petitioner.  Zhao also juxtaposes one scene of a petitioner discussing his case with another scene where the petitioner has a black, bloody eye after a day of beatings.

Petition also raises the issue of forced psychiatric confinement of individuals the government deems “difficult,” something that is becoming more common in China.  Petitioner Qi is repeatedly detained and forcibly sent to a mental hospital.  Another petitioner describes the treatment at the psychiatric hospital – forced medication of drugs that have not been tested.  After a stint at a Chinese mental hospital and a diet of untested anti-psychotic drugs, one wonders if these women are still in fact sane.

While Zhao successful portrays many of the horrors of the petitioning system, he never describes if this system works for anyone or if there are any redeeming characteristics of the system.  If the petitioning system is abolished, would that mean the people would be better off if this is their only outlet?  At one point, Zhao shows a group of petitioners calling for democracy.  After a female petitioner is hit and killed by a train while running away from a group of retrievers, her neighbors in the petitioners’ tent village decide to launch a protest in her memory.  Zhao films the rhetoric of some of these protest-petitioners, with many of them discussing the prevalent corruption, the need for transparency, and the desire for democracy.

But these calls for democracy should not necessarily be seen as a new revolution in China.  The petitioning system relies on the average citizen’s belief that the government system has failed on the local level but that the highest levels in Beijing still work; each petitioner thinks the same thing – if only President Hu Jintao could hear what I have to say, he would understand that this isn’t just a violation of my rights but is also terrible for our country.  They have to believe this; if petitioners believed that the central government was just as corrupt as the local level, they wouldn’t petition.  Zhao’s focus on these protesting petitioners and their calls for democracy are certainly attractive to a Western audience.  But it’s unclear how these petitioners define their “democracy” and whether that democracy excludes a role of the Chinese Communist Party.

While there is room for improvement (especially the 2 hour length), in all, Petition: The Court of Complaints is worth the watch if only to feel the frustrations of a multitude of people and to allow them to finally be heard.

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By Elizabeth M. Lynch,

Where: Woodrow Wilson Center, 5th floor Conference Room, Washington DC

When: Thursday, February 11, 2010, 2:15p – 4:15p

Who: Veerabhadran Ramanathan—University of California, San Diego (UCSD)

Susan Shirk—UCSD

Dale Evans – US EPA

RSVP: cef@wilsoncenter.org

Black carbon—which is mainly generated by diesel engines, coal plants, and cook stoves—is estimated to be the second leading contributor to global warming after carbon dioxide.  And its effects are not limited to atmospheric warming; black carbon causes increased snow and ice-pack melt in the arctic and the Himalayas and can lead to serious pulmonary health effects. A reduction in black carbon reduction technologies in automobiles and coal plants would be a major step towards improving public health and achieving global climate benefits.

As part of our Cooperative Competitors initiative, CEF will be having a meeting on February 11^th, 2010 to cover the energy and climate issues relating to black carbon in China and the United States. Veerabhadran Ramanathan of the Scripps Institute of Oceanography at the University of California, San Diego will give an overview of the current research being done on black carbon. Susan Shirk, the Ho Miu Lam Endowed Chair of China and Pacific Relations of the University of California, San Diego will be serving as the discussant.

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By Elizabeth M. Lynch,

Screening & Discussion of the Documentary “Petition: the Court of Complaints”

Director: Zhao Liang, China, 2009, 123 min

The film, an official selection of the Cannes Film Festival, looks at the lives of petitioners who come to Beijing to visit a government Complaints Office, and who wait for years on end to air grievances against local abuses of justice.

Followed by a discussion with the filmmaker Zhao Liang.

Co-sponsored by NYU’s Department of Cinema Studies (Tisch)

Free & Open to the Public

Date & Time: Saturday, Feb. 6, 1 PM – 5 PM

Location: Cinema Studies Screening Room, 721 Broadway, 6th floor

For more information please email zz6@nyu.edu

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By Elizabeth M. Lynch, February 2, 2010

In yesterday’s New York Times, Helene Cooper argued that the Obama Administration’s recent announcement of over $6 billion in arms sales to Taiwan shows a “new toughness” toward Beijing and perhaps even a “fundamentally new direction” in the Administration’s China policy.  But, by focusing on the arms sales, Ms. Cooper overemphasizes the event.  U.S. arms sales to Taiwan are far from novel or tough, and some may argue, periodically required under U.S. law.

Similarly, Beijing’s angry reaction was predictable.  In fact, for each prior Administration’s arms sales to Taiwan, the Chinese government has responded in much the same way: postponement of military-to-military meetings, issue formal protests with U.S. officials, and saber-rattling for the domestic consumption.  However, Beijing’s recent threat of sanctions against U.S. companies involved with the arms sales is new and serious.  But this is more a reflection of China’s growing confidence and less a reflection of a changed or “tough” U.S. policy toward China.

Why Does China Care so Much about Taiwan?  Isn’t it a Separate Country?

Nope, scrap that vision from your mind.  Taiwan is not a separate country, at least not in the eyes of the Chinese, Taiwanese or U.S. governments.   The People’s Republic of China (a.k.a. the mainland) views Taiwan (a.k.a. “The Republic of China”) as a renegade province and any relations between Taiwan and other countries is viewed as interference in the mainland’s domestic affairs.  While Taiwan has largely developed as an independent society, it agrees with the mainland’s assessment that there is only “one China.”  The Taiwanese government has never called for independence and the Kuo Min Tang party (pronounced Gwo min-dang and a.k.a. “the Nationalists” or KMT), which has ruled Taiwan for most of Taiwan’s separate existence, also espouses the view of “one China” and that eventually, the mainland and Taiwan will reunite.  The difference is who rules this reunited China.  For Taiwan, it’s the KMT; for the mainland, the Chinese Communist Party (CCP).

All of this stems from World War II.  After the War ended in 1945, the KMT and the CCP resumed their civil war, a civil war that was put on hold to fight the Japanese invasion from 1937 to 1945.  By 1949, the CCP’s victory was certain and the KMT government fled to the province of Taiwan to continue the Republic of China.

Thus began the baffling existence of two Chinas – the communist People’s Republic of China on the mainland and the KMT’s Republic of China on Taiwan.  Each China claimed that it was the “official” and “rightful” China and the other a mere province; each forced the international community to recognize only one China – either China on the mainland or China on Taiwan – hence the birth of the “one China” policy.

The U.S. continued to ally itself with the KMT and the Republic of China, recognizing Taiwan as the official China and all but denying the existence of the mainland.  But starting in 1972, with President Richard Nixon’s historic visit to the mainland, relations between the U.S. and the PRC began to improve and in 1979, the U.S. switched recognition of China from Taiwan to the mainland.

Obama’s Arms Sales to Taiwan Is Par for the Course in U.S.-China Relations

The Obama Administration’s recent announcement of arms sales to Taiwan follows a long line of arms sales by the U.S.  Almost every president since 1978 has sold arms to Taiwan.  In fact, the U.S., under the 1979 Taiwan Relations Act (TRA), is required to sell defensive arms to Taiwan.  In 1979, after changing recognition to mainland China, the U.S. did not want to leave its former ally completely open to attack or takeover.  As a result, Congress passed the TRA.

The TRA authorizes quasi-diplomatic relations between the U.S. and Taiwan.  For example, instead of having an official embassy on Taiwan, the TRA allows for the “American Institute in Taiwan.”  Additionally, and more importantly, the TRA established the U.S.’ responsibility toward Taiwan if it is threatened.  At issue here is the TRA’s requirement that the U.S. periodically sell defensive arms to Taiwan.

In announcing arms sales to Taiwan, the Obama Administration is merely following its obligations under the TRA.  Additionally, the Obama Administration has not acquiesced to Taiwan’s request for F-16s.  During the George W. Bush Administration, Taiwan repeatedly requested the purchase of F-16s.  Similarly, Taiwan put out feelers with the Obama Administration to see if there was a possibility that they could purchase F-16s.  Again, Taiwan was told not to put in a formal request for F-16s.

The F-16s are a big issue since they are not “defensive” arms; Beijing would very much view a sale of F-16s to Taiwan as going a bit too far.  But Obama’s package to Taiwan merely includes the usual: Patriot missiles, Black Hawk helicopters, mine-hunting ships and information technology.

If the Obama Administration wanted to use the Taiwan arms sales requirement to “toughen” its stance to Beijing as the New York Times claims it has, the Administration would have acquiesced to Taiwan’s request for F-16s.  Instead, it merely sold similar arms to Taiwan that President George W. Bush sold in 2008.

This is not to say that the Obama Administration does not have a strong China policy.  Secretary of State Hillary Clinton’s recent policy speech on internet freedom was a robust critique of countries like China that censor their internet and partake in cyberhacking.  This follows President Obama’s strong and public criticism of internet censorship while in China this past November.  The New York Times would have done better to focus its argument on the Administration’s novel and forceful rhetoric on internet freedom vis-à-vis China.

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By Elizabeth M. Lynch, January 31, 2010

China Law & Policy went live on the West Coast today, making our radio debut on Ian Masters‘ “Background Briefing” on KPFK 90.7.   A show that goes behind the headlines, we discussed the implications of the Supreme Court’s Citizens United decision and the ability for foreign money to potentially influence U.S. elections.  Feeding off of our recent article in the Huffington Post, we paid special attention to Chinese corporations.

Click here to Listen to “Background Briefing” on China & Citizens United
Length: 19 minutes

Mr. Masters, a trained BBC-trained broadcast journalist, puts on a very engaging and informative show.  Those of you in the L.A. area can listen every Sunday from 11 AM – 1 PM PST on 90.7.  The rest of us can live stream through the KPFK website.

Thank you to Susan T for her superb audio splicing talents!

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By Elizabeth M. Lynch, January 30, 2010

On Sunday (1/31), China Law & Policy will make its radio debut.   I will be on Ian Masters show, “Background Briefing,” at 3:30 PM EST/12:30 PM PST discussing the international implications of Citizens United.

You can listen live over the web at: http://www.kpfk.org/listen-live.html

For those of you on in southern California (L.A. area), tune your dial to KPFK 90.7

Thanks!

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By Elizabeth M. Lynch, January 29, 2010

Originally Posted on the Huffington Post

In 1966, because of the fear of foreign influence in U.S. elections, Congress passed the Foreign Agents Registration Act.  Eventually incorporated in the 1974 Federal Election Campaign Act, the law prohibits foreign governments, foreign political parties, foreign corporations and individuals with foreign citizenship from contributing, donating or spending funds, either directly or indirectly, in any U.S. election.

What started it all - Hillary the Movie

While this law has been important to the functioning of our democracy, the Supreme Court, in the case of Citizens United v. Federal Election Committee, has moved perilously close to abolishing it and opening the U.S. political process to foreign money, influence and—given the structure of some multinational corporations—direct pressure from foreign governments.

This change stems from the majority opinion’s unprecedented elevation of corporations to equal status with individual citizens in the sphere of political speech.  For convenience’s sake, the law does periodically describe corporations as “legal persons” and “citizens” of the state in which they are incorporated.  But in Citizens United, the majority has taken this legal short-hand literally.  In the majority’s opinion, courts are no longer permitted to take into consideration elements such as limited liability, perpetual life and preferential tax treatment that distinguish a corporation from an individual citizen when analyzing a corporation’s rights, nor are courts allowed to treat corporations differently from actual persons (as they have been  doing since the country’s founding.)  After Citizens United, the law can no longer look behind the curtain of the corporate form: Citizens United commands that the law pertaining to political speech treat corporations exactly as individual citizens.  Simply put, distinctions between corporations and human beings are no longer permissible and limitations on corporations’ political speech are unconstitutional.

In treating corporations the same as individuals, Citizens United leaves the door wide open for foreign influence in our politics.  In the case of Chinese corporations, this also means foreign government involvement.  Most multinational Chinese corporations, like Haier, China Telcom, and China State Construction Engineering Corporation (CSCE), have U.S. subsidiaries.  These are companies incorporated in the United States: Haier’s U.S. subsidiary, Haier American Holding Corporation, China Telecom’s subsidiary, China Telecom Americas, and CSCE’s subsidiary, China Construction America, are all incorporated in Delaware.

Under Citizens United, all three of these subsidiaries are citizens of Delaware and enjoy the same political speech rights as any other citizen of the United States.  Citizens United does not permit us to look behind their corporate veil to see their relationship to foreign corporations.  But make no mistake: these subsidiaries are heavily influenced—if not outright controlled—by their Chinese parent corporations.  This is not unique to Chinese corporations.  In a parent-subsidiary relationship, especially for foreign corporations, there is a lot of overlap between the parent and its U.S. subsidiary; the parent usually owns a majority, if not all of the shares of the subsidiary; capital is often infused to the subsidiary from the parent; and directors from the parent’s board usually sit on the subsidiary’s board of directors.  This is the relationship that Haier, China Telcom, and CSCE all have with their U.S. subsidiaries.

What is unique to Chinese corporations is the scope of their government ties—indeed, some are controlled outright by the Beijing government.  Unlike in, say, Western Europe, places like China, Russia and Vietnam still have a fair share of government-run corporations.  Haier, China Telecom and CSCE are all officially government-run.  While the Chinese government does not meddle in the corporation’s daily affairs, it will exert its influence if it suits the government’s self-interest. For example, in 1994, Haier, a manufacturer of washing machines and refrigerators, was pressured by the Chinese government into acquiring a pharmaceutical company, a venture that ended badly.

Citizens United allows for the very real possibility of the Chinese government’s direct influence in our elections through a Chinese corporation’s U.S. subsidiary.  While no official number exists about the number of Chinese companies with a U.S. subsidiary corporation, Dan Harris, a partner at the international law firm Harris & Moure and editor of the China Law Blog, believes that the number is substantial.  “My small firm represents a number of U.S. companies that are wholly-owned by Chinese companies or by Chinese citizens and that convinces me there must be thousands of such companies in the U.S.”  While certainly not all of these Chinese companies with a U.S. presence are directly owned by the Chinese government, there are likely many more than just Haier, China Telecom and CSCE.  And given China’s vast currency reserves ($2.4 trillion, the world’s largest), the Chinese government certainly has the money to spend on U.S. elections should it choose to do so.  Corporations in other countries, particularly oil-rich ones like Saudi Arabia and Russia, also own U.S. subsidiaries.  The threat of foreign involvement in our elections has been noted by the White House, as seen in the Obama’s critique of the decision during his State of the Union, and by Congress as it explores ways to nullify Citizens Untied.

This issue wasn’t completely lost on the majority in Citizens United—they simply chose not to deal with it.  While the majority hinted that there could be a compelling interest in preventing foreign nationals, foreign corporations or foreign governments from influencing the political process, the logic underlying Citizens United’s literal definition of the corporation as citizen prevents this.  After Citizens United, courts are no longer allowed to look behind the curtain of the corporate form to the realities of the situation or to distinguish between corporate citizens and individual ones; the majority opinion allows no leeway to examine the foreign origins of the shareholders.  For the purposes of political speech, one person’s U.S. citizenship, be it from a passport or from the documents of incorporation, is just as good as another’s; to draw distinctions would be discriminatory.

Given that the majority in Citizens United so easily overturned it previous rulings with regard to limitations on

Justice Samuel Alito

corporate participation in elections, one ought not expect the Court to maintain any consistency when a case involving political donations from a U.S. subsidiary of a foreign corporation comes before it.  The Justices will want to reach the result that American subsidiaries controlled by foreign entities cannot provide support to political activities; Justice Alito, with his mouthing of the word “not true” during Obama’s State of the Union address, certainly signaled this.  Such a result, however, will require the Court to overturn the logic of the corporate citizen as equal to an individual citizen. A majority will likely call this an “exception.” In reality, it is more of an excuse.  In either case, such a ruling will likely prove difficult to enforce.

Many Chinese corporations have American subsidiaries that are private, i.e., are not subject to the same reporting requirements as publicly-traded ones.  In some states, such private corporations have no reporting requirements at all.  With a private corporation, it is difficult to determine share ownership, identity of officers or even names of the directors.  This difficult detective work will become the responsibility of the Federal Election Commission (FEC).  Ironically, the majority in Citizens United found that the campaign finance law’s requirement that corporations work through their Political Action Committees (PACs) during the law’s 30-60 day quiet period was too burdensome since it required copious amounts of paperwork.  Imagine the time, effort and money the FEC will be required to put into determining the ownership of any number of private corporations.

In equating corporate citizenship with individual citizenship, the Court does more than just disregard its own rules of precedent and stare decisis.  It also provides an image of a corporation completely disconnected from reality, does a grave disservice to our political process and jeopardizes our democracy.  And that, Justice Alito, is the truth.

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By Elizabeth M. Lynch, January 28, 2010

State of the Union addresses are mandated by the Constitution, and like most requirements in life, are often dull.

Barach Obama's first State of the Union

The speech usually turns into a laundry list of the President’s priorities with little rhetorical flair.  Often the most exciting part is when the TV cameras pan the audience and catch Senators and Congress members misbehaving.  This year it seems as if everyone Congress member was “tweeting” on their blackberry.

So to spice it up a bit, we at China Law & Policy decided to analyze President Obama’s first State of the Union address in terms of China.

Not surprisingly, President Obama’s speech focused mostly on the domestic agenda.  But China was mentioned twice, although both times only briefly.   China was first mentioned in regards to the technology behind its fast trains.  Similarly, when President Obama brought up China a second time, it was in regards to its technological advancement and that the U.S. must not fall behind.  In both instances, China was used more as a foil than anything else.

More compelling were the points when China wasn’t named but perhaps should have been.  In terms of trade partners, President Obama stated that he wanted closer ties with Panama, South Korea and Colombia.  But this is likely less of a snub to China than the fact that the Obama Administration is waiting on Democrats in Congress to approve free trade agreements with these three nations.

China was also absent when President Obama discussed the nuclear threat from both North Korea and Iran.  In fact, no other nation was mentioned and while President Obama was very forceful in threatening the two countries with increased sanctions, his actions appeared rather unilateral.  This is in contrast to his predecessor; in George W. Bush’s 2003 State of the Union address, the President specifically mentioned China as necessary to reach a peaceful solution on the Korean peninsula.

Does this mean that the U.S. is not receiving China’s support on this front?  It’s hard to tell.  Given the American public’s focus on the economy, health care and the corruption culture of Washington, it’s not surprising that President Obama’s speech had very little focus on foreign policy.  To draw any conclusions from the little he did say is speculative, but at the same time is something to be aware of and to watch.

Click Here for a Transcript of the State of the Union Address

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By Elizabeth M. Lynch, January 24, 2010

Thomas Friedman

It is dangerous to use financial analogies to describe a non-financial event; the comparison usually misses the mark and often overly simplifies a complex issue.  Thomas Friedman fell into this trap last week when he recommended short selling the Chinese Communist Party (CCP) in his op-ed.  In attempting to predict the CCP’s fall, Friedman failed to do his due diligence and realize that like most things in China, it’s not all black and white.

First, the metaphor of “shorting” non-financial products has to stop.  Or at the very least be explained.   For readers of this blog and Friedman’s column who are not day-traders, “shorting” is a specific financial term.  When you “short” a stock, you borrow shares of the stock from a third party and sell these borrowed shares on the assumption that the price will decline in the near future.  When the stock is trading lower, you purchase it and return the shares borrowed, thus making a profit.   In essence, “shorting” implies that the product is presently overvalued and the value will decrease in the near future.

While you can’t actually “short” a country or a ruling party, Friedman uses the analogy to imply that the CCP is currently overvalued and its value, or in this case its power, will eventually decline.  According to Friedman, the CCP’s power will decrease because of its insistence on suppressing the Chinese public’s freedom to information, specifically over the internet.  For Friedman, this pits two different segments of Chinese society against each other: “Command China” which he defines as “traditional state-owned enterprises” and other extensions of the CCP and “Network China” which is made up of “highly entrepreneurial” companies that feed off of the creative energy of a free internet.

In drawing this distinction, Friedman paints with too wide a brush.  If the Chinese business world could easily be divided into decrepit, state-owned industries run by the Party and vibrant, Silicon Valley-like companies that are independent of the Party, the CCP’s demise likely would have already occurred.

Network China is not as independent of the CCP as Friedman makes it out to be.  A company’s success in China, even a

Shorting the CCP?

small technology company, is often dependent on the owners’ connections with government officials.  The companies of Network China are not outsiders to the system; they are very much insiders and largely profit from good relations with the CCP.  Take for example Baidu, China’s homegrown search engine.  Although Google’s search engine is at least as good as, if not better than Baidu’s, due to Baidu’s close relations with the government, it has a much larger share of the Chinese market.  Government and Party connections are important assets on a company’s balance sheet and, at times, are instrumental to a company’s success.  The companies of Network China continue to profit from their connections; it is unlikely that they will be the ones to seek change.

Furthermore, Command China and Network China are inextricably linked.  The Chinese banks that provide loans to the start-up companies of Network China are state-run and members of Friedman’s Command China.  When it comes to loaning money, the Chinese leadership has more than a bully pulpit; it can out right force its banks to provide these loans, as it did for much of 2009 while banks in other parts of the world constricted their lending.  In many ways, the government’s control of the state-run banks has been a boon for Network China.  Why change it?

The Chinese government’s increasing censorship of the internet is troubling, and not just for those of us abroad.  The Chinese people themselves have been in an uproar about Google’s threat to leave China and realize the damage that a censored internet can have on their development.  Just don’t expect change to come from Friedman’s Network China; these companies are already co-opted by the system.  If change is to come, expect it to come from average Chinese netizens and expect it to be a long process; not exactly ideal for short selling.