China’s Fuzzy Math

China just released a host of encouraging new financial data, leading some analysts to conclude that the nation’s economic problems are “bottoming out.”


Don’t take that for granted. China is famous for making up important economic numbers to mask serious problems—or to present a “harmonious” picture for its society and the world.
The latest figures, made public last week, showed sudden and surprising growth in industrial output, retail sales, and investments in fixed assets like new business facilities or machinery, among other encouraging numbers.
It was Li Keqiang, an economist and now China’s new premier, who originally admitted several years ago that China’s GDP numbers “are ‘man-made’ and therefore unreliable,” according to an American diplomatic cable that WikiLeaks made public in 2007.


But there’s more. Many Chinese companies are notorious for listing fake sales, false overseas shipments, and other fictional deals to compensate for corruption and other illicit activities. And the nation’s unemployment figures never seem to change, even while the economy, by every other measure, is dropping. The reason: The government counts only registered urban workers, not migrants from rural areas who work in the cities—at least 230 million people.


And don’t forget that just a few weeks ago China suffered a so-called “cash crunch” because banks found themselves overextended with more loans than they could afford. Has all of that suddenly cleared up, making way for strong new economic indicators? Not likely.


After all, local governments are believed to hold debts that in total range from $2 trillion to $3 trillion. This spring the International Monetary Fund reported that all this local debt appeared to be equal to 50 percent of the nation’s GDP. And the amazing thing is, the central government has little idea how much money those local officials owe. Local governments keep that secret.


Last month, Tsinghua University of Beijing published a survey of 289 localities. Researchers found that only 13 cities, or 4 percent of those surveyed, were willing to disclose their debt levels.
Whatever the actual total, the debts helped precipitate China’s banking cash shortage last spring. The localities certainly have not paid off their massive debts since then.


When Li revealed that the nation essentially made up its GDP figures, he noted that one way to monitor economic activity accurately is to measure electricity consumption. Almost every company requires electricity to produce its products, of course. Well, electricity consumption is reported to have risen 4.9 percent in the last few months, seeming to support the notion that the economy is growing. But some analysts note that the increase could just as easily be because China is suffering an unprecedented heat wave, leading to widespread usage of air conditioners and fans.


I was in Taiwan last Thursday, 100 miles away from mainland China, when the state’s Central Weather Bureau recorded a temperature of 103 degrees—the highest temperature recorded for that day in 117 years.

Kremlin Crooks: Putin’s ‘Patriotic’ Hypocrites

f the level of domestic political repression in Vladimir Putin’s Russia has not yet reached the scale of that in the Soviet Union—though several dozen Russian political prisoners are being held behind bars on fabricated charges—the level of officially sanctioned anti-Western agitation, and anti-Americanism in particular, is certainly comparable to the worst years of the Cold War. Hardly a day goes by without hate-filled reports on state television. Regime officials and senior legislators angrily accuse the United States of “interfering in Russia’s internal affairs” through its supposed proxies inside the country, by which they, of course, mean Russian human rights groups and other nongovernmental organizations that are critical of the Putin regime. All NGOs that receive funding from abroad are required by a new law to label themselves as “foreign agents” (which, in the Russian public discourse, is synonymous with “spies”) or face closure. Needless to say, these groups have refused to comply. (How could, for instance, Memorial, an organization co-founded by Andrei Sakharov to perpetuate the memory of victims of political repression, declare itself a “foreign agent”?) As a consequence, prosecutors are conducting disruptive raids on the offices of Russia’s leading human rights groups, which they charge with violating this law.


Kremlin propaganda holds that it is the US State Department that organized the 2011–2012 anti-Putin rallies across Russia—the largest pro-democracy demonstrations since 1991. Russian opposition leaders who visit the US are accused of “treason.” Just as in Communist times, all human rights and democracy causes are declared to be part of the West’s “anti-Russian” agenda, and those who oppose the current regime, by implication, are deemed to be a Western “fifth column.”


Indeed, the Kremlin stops at nothing to drive its anti-American message. Perhaps the most heartless and cynical example of its propaganda is the recent law banning adoptions of Russian orphans by American citizens, which Putin called an “adequate” response to passage by the US Congress of the Magnitsky Act, which banned corrupt Russian officials and human rights violators from visiting or owning assets in the United States. (The law is named after the thirty-seven-year-old Russian lawyer Sergei Magnitsky, who was prosecuted and arrested by the same officials he had accused of masterminding a $230 million tax fraud scheme. He died in a Moscow prison in 2009.) As a result of Putin’s retaliation on behalf of torturers and bribe takers, thousands of Russian orphans—many of them gravely ill or disabled—have been denied a second chance in life. In January, tens of thousands of Muscovites marched through the center of the Russian capital in protest against this measure, popularly dubbed “scoundrels’ law” and reportedly backed personally by the president despite the objections of close advisers. The introduction of the adoption ban was accompanied by a propaganda offensive about how American families constantly and purposefully mistreat their adopted Russian children. One pro-Kremlin legislator even suggested that US families adopt Russian orphans for organ transplants, sexual abuse, and to conscript them as cannon fodder in American wars.


There have indeed been tragic cases of adopted Russian children dying or being killed in the US—twenty cases in the last twenty years. But during this time, more than sixty thousand Russian orphans found families and homes in the United States, a fact almost never heard in the discussions of this issue on Russian state television.


As in Soviet times, anti-Americanism is an indispensable component of the Kremlin’s domestic political agenda. Faced with a falling popularity (according to a February poll by the respected Levada Center, only thirty-two percent of Russians would vote for him in a presidential election), unprecedented street protests against his rule, an increasingly assertive civil society, and rising public awareness of the endemic corruption and election fraud, Putin needs an “external enemy” that is supposedly planning to “destroy Russia” in order to present himself as a defender of the Motherland and mobilize what remains of his public support—mostly in the regions where the Internet is not yet widespread, and where people still rely on Kremlin-controlled TV channels for their news.

Yet there is an important difference between the anti-Americanism of the nomenklatura in the Soviet era and that of Putin’s clan today. While chastising the West and denouncing (and jailing) human rights activists for alleged ties to foreign countries, members of the old Politburo and the Supreme Soviet did not hold bank accounts in the Virgin Islands, own luxury property in the US, or send children to study in England. In this, at least, they were consistent. Their sweetest dreams were limited to comfortable state dachas, vacations in elite Crimean sanatoria, and access to special Communist Party stores with luxury goods and delicatessen unavailable to most Soviet citizens.
Not so with members of the current regime. Take, for example, Vladimir Pekhtin, one of the founding fathers of Putin’s United Russia party, who once headed its parliamentary caucus, served as deputy speaker, and, until recently, chaired the Duma ethics commission. Pekhtin has cheered the abolition of direct gubernatorial elections, praised the conviction of Mikhail Khodorkovsky—Russia’s most prominent political prisoner, recognized by Amnesty International as a “prisoner of conscience”—and called former Soviet leader Mikhail Gorbachev a “traitor” for initiating perestroika. More recently, he backed the law labeling Russian NGOs as “foreign agents” and—fully in line with the Kremlin’s declared “state patriotism”—supported the prohibition for Russian officials to own property or assets abroad. Unfortunately for Vladimir Pekhtin, property deed records in the United States are public information, and it did not take long for Russian scientist and blogger Andrei Zayakin, acting in cooperation with anticorruption campaigner Alexei Navalny, to find property belonging to Pekhtin and his son in Florida—more than $2 million worth of luxury real estate in Flamingo South Beach, Ocean Drive (both of them in Miami Beach), and Ormond Beach. (Owning real estate in the US is not in itself illegal—though somewhat hypocritical for a committed Putinist—but omitting it from the official property declarations, which Pekhtin had to file as a member of Parliament, is.) Questions also arose as to the sources of Pekhtin’s income, since his Duma salary would clearly be insufficient for such an investment. In an interview with the pro-Kremlin newspaper Izvestia, Pekhtin insisted that he has “practically nothing” in the way of property abroad, prompting an avalanche of sarcastic responses in the Russian blogosphere that ranged from “Russian elections are practically honest” to “Khodorkovsky is practically free.”
In a potent sign of the widening reach of the Internet and the growing muscle of civil society, Pekhtin had to resign from the Duma in the wake of the revelation, after more than thirteen years of loyal service to Putin and his party. His name gave birth to a new term among Russian bloggers—pekhting, which means unearthing and publicizing the hidden assets of regime officials.
Another victim of this campaign has been the billionaire senator Vitaly Malkin (a former business partner of Georgia’s current prime minister, Bidzina Ivanishvili), who made headlines last year when he came to Washington to lobby against the Magnitsky Act by posthumously smearing Sergei Magnitsky himself. According to Valery Borshchev, a member of Russia’s Presidential Human Rights Council, Magnitsky was beaten to death by rubber clubs. Senator Malkin presented a different version—in his words, Magnitsky died of pancreatitis, and was an “unsportsmanlike” person who abused alcohol.
When he made these charges, many suspected that the Western visa ban and asset freeze on certain Russian officials not only offended Malkin’s sense of “patriotism” but also his personal financial interests. Sure enough, journalists discovered a $15.6 million duplex in New York City’s Time Warner Center that belonged to the senator’s company. But that was not all: from 1994 to 2011, Malkin owned one hundred and eleven condominium units in Toronto, and, by his own admission—which he made in his application for landed immigrant status in Canada—had “business interests” in that country. Needless to say, the Canadian property was not disclosed on Malkin’s declarations, while business activity is directly prohibited for members of Parliament.
The senator’s application for Canadian immigrant status was rejected because of his association with organizations that “are known to have engaged in a pattern of criminal activity, including money laundering.” Following the publication of this information, Malkin resigned his seat in the upper house because of alleged disgust at what he called “the constant leaking of negative information.”
State Duma member Alexander Sidyakin is a different case—an avowed America-basher when it comes to politics who makes no secret of vacationing in the United States. Last year, the legislator spent his summer holiday in San Francisco, and over the Christmas break, Sidyakin traveled to New York City and Florida. As the popular Moscow newspaper Moskovskii komsomolets sarcastically enquired, “Where else should an implacable crusader against . . . ‘orange revolutions’ and a Russian patriot spend his vacation?” A “crusader” he certainly is: it was Sidyakin who introduced two of the most notorious repressive bills signed by Putin in 2012: the law on public rallies, which raised the maximum fines for “violations” to 300,000 rubles ($9,500—ten times the average Russian’s monthly salary), and the law on “foreign agents,” which, as Sidyakin boasted, he “wrote personally.” The United Russia member has openly accused Russian NGOs that advocate for human rights and democratic elections of “being, in one way or another, under the [US] State Department,” because “someone is trying to poke their snotty nose in our affairs,” and has used the Duma rostrum to accuse Putin’s opponents of being a “fifth column” and “instigators of mass unrest” and to stomp on a white ribbon, the symbol of the 2011–2012 protests, which he called “a symbol of treason, a color of an exported revolution, which foreign political technologists are trying to impose on us.” Given his views, Sidyakin should be congratulated on his bravery for spending his vacations in the enemy’s den.

Western Europe is another sought-after destination for Putin’s anti-Western “patriots.” The wife of Andrei Isaev, a senior legislator and functionary in United Russia, owns a hotel near Trier, Germany; the property—including both the land and the building—is estimated to be worth some 800,000 euros ($1,040,000). The lawmaker claims that the St. Thomas am Brunnenhof is not a hotel, but a hostel for Russian Orthodox pilgrims (the Trier Cathedral is home to the Holy Robe of Christ and other revered Christian relics) and that “it is difficult to even call it a business.” Yet, for some reason, travel websites omit the religious aspect of the hotel, emphasizing instead that it is “located in the romantic wine-growing village of Bekond,” that “guests can relax on the Brunnenhof’s sunbathing lawn or play in the bowling alley,” and that “the surrounding Moselle countryside is ideal for hiking or cycling.” In addition, the purported pilgrim’s hostel prides itself on offering its guests “pickled ham and sausages, schnitzels and game”—all this during Lent, when Orthodox believers are not supposed to eat meat.


Andrei Turchak, Isaev’s United Russia colleague, has been a leading figure in the Young Guard, the ruling party’s youth branch that specializes in harassing the opposition. His father, Anatoly Turchak, had been Vladimir Putin’s deputy in the St. Petersburg branch of the Our Home Is Russia party in the 1990s. Since 2009, the junior Turchak has served as the (Kremlin-appointed) governor of the Pskov region. Earlier this year, Alexei Navalny, the anticorruption campaigner, discovered a 1,270,000-euro ($1,654,000) villa in Nice, France, that belongs to a company by the name of SCI Villa De Flirey. According to official French documents, the company was co-founded by Andrei Turchak’s wife, brother, and father.
Perhaps the most outrageous hypocrite among all of these is Pavel Astakhov, the Russian president’s ombudsman for children’s rights. Astakhov, a graduate of the Higher School of the KGB and founder of the For Putin movement, was the leading voice in the Kremlin’s campaign to ban adoptions of Russian orphans by US citizens. He has systematically accused American parents of abusing their adopted Russian children; has urged the public “not to make a tragedy” of the several dozen cases of orphans who have already bonded with their prospective adoptive US parents, but will now be unable to join them because of the law; and has called for prohibiting adoptions of Russian children by all foreign citizens. But while feigning concern for Russian children, Astakhov has made sure that his own youngest son was born in France, and that his oldest son studied in Great Britain and the United States. Astakhov reportedly owns a luxurious villa on the Côte d’Azur. His family lives in the south of France, where he travels, by his own admission, “almost every weekend.” His most recent winter vacation was spent in Monte Carlo.


As for the US, where Russian children, according to his pronouncements, are so badly mistreated, Pavel Astakhov once considered it his home. “I never forget that Pitt Law has become my second Alma Mater and the United States my second motherland,” reads Astakhov’s letter that is still available on the website of the University of Pittsburgh School of Law, where he received his master’s degree in 2002. “By means of my life and my personal example, I am doing my best to strengthen our friendship and struggle for peace throughout [the] world.”



“There is one thing I just don’t understand about these United Russia people,” remarked opposition leader Boris Nemtsov. “Many of them have real estate in America. Many send their children to study there. So why are they always ranting hateful stuff about the States? So that no one guesses that their real dream is to stroll along [New York City’s] Fifth Avenue? So that no one thinks to look at the online property databases for Miami and Los Angeles?”


The real problem is not that Russian lawmakers or officials own property or bank accounts abroad—in today’s open and interconnected world, that is no crime. Nor is dual citizenship, which Vitaly Malkin (in his case, the dual citizenship of Russia and Israel) was accused of having—in April 2010, the Grand Chamber of the European Court of Human Rights unanimously found that the ban on dual citizens holding elected office was both “disproportionate” and in violation of the European Convention. The real problem is in the constant lying and concealment, in the manifest discrepancy between the declared income and the value of overseas “investments,” and, above all, in the hypocrisy of those who try to instill in the Russian people a hatred for the West and for the values of liberty and democracy, while fully enjoying the spoils of privileged life (funded by ill-gotten gains) in these same allegedly decadent and insidious Western countries. This flagrant hypocrisy was a major reason why Russia’s opposition and civil society—and, indeed, Russian public opinion—supported the US Magnitsky Act. According to a December 2012 poll by the Levada Center, forty-four percent of Russians backed the idea of targeted US and EU visa sanctions and asset freezes for Russian officials who violate human rights (twenty-one percent were against, thirty-five percent held no firm opinion). The Magnitsky Act was the most pro-Russian law ever passed by the United States Congress—and it is to be hoped that European Union countries will soon follow suit. Those in Moscow who have grown accustomed to governing in the manner of Zimbabwe or Belarus, treating Russians like third-rate citizens who should have no rights and simultaneously opting for a comfortable Western life for themselves and their families, will face a choice once the era of double standards comes to an end.

Source:  http://www.worldaffairsjournal.org