Month: May 2020

The death of Hong Kong?

Posted on by j.giglio

Hong Kong’s reputation as an international business city may be finished. The Chinese Communist Party (CCP) is fixing to impose a sweeping national security law that bypasses Hong Kong’s own legislative process. The law would erode the city’s high degree of autonomy guaranteed under the “one country, two systems” formula.

The law would ban secession, foreign interference, terrorism and all seditious activities aimed at toppling the central government. Additionally, it is designed to “prevent, stop and punish” activities that endanger China’s national security. It also reveals plans to establish new national security agencies for the first time in Hong Kong. In sum, Hong Kong loses the rule of law and it is replaced by the rule by law with the courts, police, and prosecutors controlled by the CCP.

The smart money knew this legislation was coming. To deal with last year’s protests in Hong Kong, President Xi Jinping, the most authoritarian Chinese leader since Mao Zedong, has to show he is boss by reasserting dominance over a piece of Chinese territory.

The CCP doesn’t play softball. While the international community is facing down the Covid-19 pandemic, dealing with its economic fallout, litigating the past, and reminiscing about the future, they made their move with all the finesse of German brown shirts in the 1930s. The CCP gives less than a tinker’s damn what other countries think.

This is the latest in a series of aggressive foreign policy moves by the CCP since the outbreak of the Covid-19 pandemic, including upping its presence in contested areas of the South China Sea. The CCP is intent on China becoming the regional hegemon in Asia, just as United States has been in the Western Hemisphere since the late 19th century.

The CCP is going to do what it wants in Hong Kong without fear of the consequences. Quite apart from reigniting the pro-democracy movement, they know full well that no one in the international community is going to war over Hong Kong. Political figures around the world have decried the new national security law for Hong Kong. They argue that the new law is a “flagrant breach” of the Sino-British Joint Declaration that returned Hong Kong to China in 1997 with the understanding that Hong Kong residents would enjoy basic freedoms until 2047.

Under the agreement, Hong Kong was to be governed under the “one country, two systems” principle which was meant to guarantee a high degree of autonomy for Hong Kong for 50 years. But the international community will not stand up to China or boycott Chinese goods. With the exception of the United States, the reaction will continue to be all rhetoric and no action. It is wishful thinking to expect St. George to come to the rescue and slay the dragon in the guise of the CCP.

Legislation has been introduced in the United States Senate that would sanction CCP officials enforcing the national security laws in Hong Kong. It would also penalize banks that do business with any entity enforcing the law. Secretary of State Mike Pompeo has threatened to revoke certain economic and trade privileges Hong Kong enjoys with the United States that do not extend to China as a whole. Such an action might result in the city losing its status as a major hub for global finance.

For the other Asian countries, this move is the canary in the coal mine. They will have to fall in line and recognize China as the dominant power in the region while the rest of the international community is kept off balance as to their next move. For certain, Taiwan is in the CCP’s line of sight.

The passage of the National Security Law will be a game changer. With the passage of this law, Hong Kong will become just another Chinese city. Undercutting Hong Kong’s political autonomy and civil liberties will undermine the city’s attractiveness as an international business and economic center.

Humility and effective leadership

Posted on by j.giglio

It has been a busy year for death in the United States. The coronavirus killed more Americans in the last two months than died in the Vietnam War. The world has been disrupted and the collateral damage is omnipresent. Catastrophic events such as COVID-19 are hard to predict. They expose weaknesses in society and reveal the consequences of earlier bad decisions such as failing to diversify supply chains.

The pandemic has placed extraordinary demands on business and government leaders. Its scale and attendant uncertainty, unpredictability, and ambiguity make it challenging to navigate the crisis.

Crises also demonstrate that recovery is most likely under effective leaders who lead with humility, make tough decisions, tell the truth, and are able to identify and deploy resources with dispatch. Leadership matters and character is foundational to good leadership. Character refers to the distinctive qualities of an individual and, as Aristotle said character is revealed through action.

There are scores of books, articles, and studies about leadership. They often include a checklist of the characteristics that cumulatively constitute effective leadership, including vision, accountability, courage, drive, collaboration, integrity and more, many more.

One trait that receives insufficient attention is humility. If leadership has a secret sauce that may well be it, and humility seems to be in short supply today. Humility has nothing to do with being weak or indecisive. Put simply, a humble leader understands the things he or she doesn’t know, so they listen. It improves their hearing as well as helping them get smart on issues.

Successful leaders rely on the opinions and decisions of other people in times of crisis, especially when the cause of the crisis is outside their area of expertise. Effective leaders project self -confidence and authenticity when they check their egos at the door and acknowledge their failures and weaknesses. They understand the world is just too complicated for them to have all the answers.

Humility and ambition are not always at odds. Consider, for example, the case of Abraham Lincoln, who never let ego get in the way of his ambition to create an enduring union.

In contrast, consider leaders who don’t want people who say no. They are suspicious of any plan that doesn’t originate with them. You can argue with them but you must be careful how and when. You are better to give way on every possible point until the vital point, to position yourself as in need of guidance rather than appearing to believe that you know better than they do. Remember, these types of leaders want more than to be advised of their power, they want to be told they are always right. Other people commit errors or deceive them with false information. They are insecure in their insecurities.

These self-absorbed leaders who tell the truth less than half the time can’t be trusted to keep their promises, often pass off blame to others, and are especially bad at understanding and caring for people, they lack empathy. Leaders who do not have the humility to recognize their own errors and omissions will not make necessary course corrections to ensure success. Such leaders don’t catch the joke that if you think you are the smartest person in the room, you are in the wrong room and the only one who is incapable of learning.

Humility is a mindset for leaders who want to do big things in a world filled with uncertainty and ambiguity. These leaders motivate and empower those around them and listen well. As C.S. Lewis said: “Humility is not thinking less of yourself, it’s thinking of yourself less.”

A strategy for dealing with China

Posted on by j.giglio

On Feb. 22, 1946, George Kennan, U.S. Chief of Mission in Moscow, sent the State Department a long telegram explaining the behavior of the Soviet Union and how best to deal with it. The gist of the telegram was that the Soviets, pressed by economic failure and bound by Marxist-Leninist ideology, found a perfect enemy in the United States and were uninterested in compromise.

This being the case, the best way for the U.S. to deal with the Soviet Union was to build up the still-free countries of Western Europe and do all it could to contain Soviet expansion. This policy became known as “containment” and its immediate result was the massive aid program to post-war Western Europe known as the Marshall Plan.

A year later in, writing under the byline “X” in Foreign Affairs, Kennan expanded upon these views. He was a realist who believed international relations ought to be “guided strictly by consideration of national interest,” not treaties and alliances. While often revised, Kennan’s containment strategy would largely define U.S. policy toward the Soviet Union until the end of the Cold War.

Now, more than 70 years later, the U.S. and its allies again face a communist rival that views the United States as an adversary, seeks global influence, and wants to supplant America as the world’s dominant power. The Chinese Communist Party’s (CCP’s) challenge is generational and cuts across economic, military, political, and social spheres.

The United States is at war. Don’t be deceived because soldiers of the People’s Liberation Army, a branch of the CCP, aren’t running down the street.

While America and the world are in the grip of the made in China COVID-19 pandemic, the CCP has launched a global disinformation campaign reminiscent of the Cold War, blaming others for the spread of the virus. Equally important, it is moving at warp speed as the first major world economy to end lockdowns and start up its economy. The CCP is acting to shape the pandemic narrative and geopolitical shifts in the post-COVID 19 world.

Ever since President Nixon’s opening to China in 1972, the U.S. has largely sought constructive engagement, which would supposedly help democratize China and integrate it into the American-led international economic order. As a “responsible stakeholder” in the international system, China would be highly motivated to maintain peaceful relations with other countries.

The integration strategy has not worked. Nor has the bipartisan support for China’s admission into the World Trade Organization. Recent events confirm that China is challenging the existing international order with impunity.

Look no further than its land reclamation efforts, claiming some 80 percent of the South China Sea as its sovereign territory, challenging Japan’s administrative control of the Senkaku islands, the “One Road, One Belt” new Silk Road Eurasian integration plan, and more.

While the United States has wasted decades in its dealings with the CCP, it is still not too late and George Kennan’s notion of containment remains relevant. The United States strategy should be to preserve and deepen relationships with Asian countries fearful of China’s power and aggressiveness.

China has few allies in the region. The United States should be working closely with India, Vietnam, Japan, Philippines, Australia, Taiwan, and others to contain China, and in the process advance America’s economic, political, and security interests in the Asia Pacific region. Closely related, the U.S. should be forging relationships with developing nations across the globe to counter China’s Belt and Road Initiative.

Today, George Kennan’s prescription that “the main element of any United States policy toward the Soviet Union must be that of a long-term, patient but firm and vigilant containment of Russian expansive tendencies” offers the best hope of containing China’s ambitions. The challenge is that Americans seek instant gratification, while China plays the long game. One thing is certain: Everyone will be feeling their age before this contest is played out.

What went wrong in China ?

Posted on by j.giglio

The news today is totally dominated by talk of the coronavirus pandemic, with occasional relief provided by the weather report. Little effort is made to review how we got here, or what to do about it.

For decades, Western academics, policy makers, captains of industry, and politicians assumed that China’s embrace of capitalist economic policies would set the stage for democratic reform. George Orwell was right when he said: “Some ideas are so stupid that only intellectuals believe them, for no ordinary man could be such a fool.”

Put in simple terms, the theory was that economic freedoms would cause the Chinese people to begin to demand political freedom, resulting in a democracy. That has not happened in China, where the Chinese Communist Party (CCP) remains firmly in power.

China has been ruled by the CCP since 1949. The regime doesn’t tolerate political competitors. It is authoritarian, an all or nothing proposition. Its goal is to control all aspects of public and private life. It controls the army, the courts, the police, the media, and the economy.

The Chinese people are merely the state’s subjects. Just consider the CCP’s version of Soviet gulags, called reeducation centers, where up to a million Muslims have been incarcerated. Student-led pro-democracy demonstrations in Hong Kong show that millions of Chinese people want to be free of the party’s yoke.

Calling out the CCP and their role in the COVID-19 pandemic is not racist. It began in China and could have been stopped at its source. But the CCP lied about this deadly virus, which cost the rest of the world many weeks of preparation, countless lives, and forced shutdowns of the American and other world economies.

No year in recent history has brought such devastation. As of April 26, there are over 202,000 deaths around the world and over 55,000 in the United States from COVID-19, according to numbers compiled by the Johns Hopkins University. People worldwide are struggling to get comfortable with the uncomfortable realities of a new normal.

The US and other countries face a Sophie’s choice: They cannot directly attack the CCP over the pandemic and its role in triggering an unparalleled global economic and public health crisis, nor hold it accountable for the COVID-19 outbreak when the world depends upon the CCP for medical supplies and protective equipment. Name-calling and demands for reparations come out of Washington, but the harsh reality is that payback is not in the cards. The CCP’s list of transgressions may be long and shameful, but the US is dependent on them for life-saving exports.

The economic downturn is a completely artificial event and any economic rebound will depend on when the public health containment policy ends and a safe and scalable vaccine is developed. The longer pandemic containment lasts, the more parts of the economy deteriorate. Truth is, the economic pain will continue into the foreseeable future.

Congress and the White House may put together another economic relief package that they will characterize as a stimulus package similar to the CARES legislation. This is a misnomer, for much of the $2.2 trillion CARES act simply made up for lost wages; it won’t generate additional spending. Politicians in Washington will be out campaigning this summer rather than engaging in serious discussions about how to decouple essential supplies coming from China.

A modest start would be to slap “buy American” provisions on government agencies and provide tax incentives for American companies to bring back their supply chain to the US or American allies. Notions about introducing legislation to allow Americans to sue China in domestic courts to “recover damages for death, injury, and economic harm caused” by the CCP’s reckless response to the COVID-19 outbreak will simply result in the party giving the middle finger to any adverse judgments, just as they do to other international institutions.

The CCP plays by its own rules.