The Mysterious Orient

A few years ago we visited a popular Buddhist monastery in Guangzhou, China. In the center of a beautiful interior courtyard there is a large incense burner. Nearby is this enigmatic sign:

What is one to do? If you ignore the burner and don't light a joss stick is that a sign of disrespect? But if you're seen burning joss sticks, does that mark you as an irreverent Buddhist?

Damned if you do and damned if you don't.

Credit Crisis: What We Haven't Been Told

"The danger was that the system was fundamentally unstable. Almost overnight it could go from working well to collapsing. If any one of the Asian countries piling up dollars (and most were doing so) began to suspect that any other was about to unload them, all the countries would have an incentive to sell dollars as fast as possible, before they got stuck with worthless currency."

James Fallows, "Countdown to a Meltdown",
Atlantic Monthly, July 2005

Even Princeton economist Paul Krugman has expressed puzzlement over why the Bush administration went into panic mode over the economy so quickly and without much warning a week and a half ago. And where did the number of $700 billion come from?

After all, FED chairman Bernanke and Treasury Secretary Paulson spent most of this year and last reassuring everyone who asked that the economy was strong and the derivative mortgage meltdown was "contained." Suddenly, last week they changed their tune and demanded $700 billion with no strings attached, no oversight, and no clear explanation of how they planned to spend it.

What explanations they offered publicly have puzzled everyone. Vague statements about diminishing confidence in our financial institutions; true but insufficient descriptions about the burden on the books of banking institutions posed by unmarketable mortgage derivative assets; the threat of uncollectible CDOs; broad descriptions of concern that the credit markets are freezing up.

On one level, we are just as puzzled as you may be about the three largest mysteries hanging over the financial crisis:

• How did this crisis come upon us so suddenly?
  
• Why are FED chairman and Secretary of Treasury so spooked?
• Why won't Bernanke and Paulson come clean in public?
  

We hasten to add that we have no inside information. We weren't involved, and have not spoken to anyone who was, in those private meetings where Bernanke and Paulson scared the bejesus out of key administration and congressional leaders. And, of course, we didn't personally witness Secretary Paulson fall to his knees last night and beg Democrats to save the nation from Republicans.

So, what we are about to say is purely the product of what education we have, what we have read, and thinking about those three mysteries. Here is what we have come to believe the facts strongly suggest:

Bernanke and Paulson anticipate the U.S. economy is on the verge of a meltdown because one or all of China, Japan, the United Arab Emirates, and/or Russia have signaled they are pulling the plug on the U.S. dollar.

In all the credit crisis reporting, there has been almost no mention of this possibility. Conventional news sources cover the issue as if it were exclusively a domestic matter between the greedy crooks on Wall Street and the taxpayers from Main Street.

But what if we're right? What if the triggering factor is the imminent collapse of the American economy because foreign nations are no longer willing to fund our profligate ways?

This would explain the vagueness of the explanations offered in public, the seeming suddenness of the crisis, and why those in the know -- like Bernanke, Paulson, and a tight circle of others -- are scared witless. To publicly place the blame on foreign countries -- even if we're the ones who put ourselves in hostage to them -- is to invite the same kind of wrath against "the other" that Americans now feel about Wall Street brokers.

Judging by comments one hears from average Americans, most of us want to jail the Wall Street crooks. But you can't jail another country. You can only make war against it.

The most useful linkable sources we can point to as support for our theory are two little-noticed articles by James Fallows in the The Atlantic Monthly. The first appeared in the July, 2005 issue. The title was "Countdown to a Meltdown." The second article, in January of 2008, was titled: "The $1.4 Trillion Question."

"Meltdown ... $1.4 trillion." Do those words sound familiar?

Fallows long has been a highly respected American author and magazine editor. He's been living in China the past few years, after having had an even longer sojourn in Japan before that. From that distance, he has had a unique opportunity to objectively see how the U.S. economy fits into and relates to the larger world economy. That has led him for some time to become very worried over the prospect of a world-wide financial crisis -- one that easily could be the very thing that is terrifying Paulson and Bernanke.

Fallows' 2005 article was written as if it were penned in the year 2016 and the writer was looking back on this very time. It is scarily prescient, except that he thought the credit crisis would fall upon us in 2009, not 2008.

He begins with what was known when the article was written: Bush's massive tax cut plan for the wealthy. "Everything changed" on 9/11? No, it changed the day those tax cuts were enacted -- June 7, 2001.

[H]ere is what really mattered about that June day in 2001: from that point on the U.S. government had less money to work with than it had under the previous eight presidents. Through four decades and through administrations as diverse as Lyndon Johnson's and Ronald Reagan's, federal tax revenue had stayed within a fairly narrow band. The tax cuts of 2001 pushed it out of that safety zone, reducing it to its lowest level as a share of the economy in the modern era.

What followed were escalating U.S. trade deficits... a "plummeting" U.S. dollar ... hugely increasing U.S. budget deficits... and inappropriately low interest rates... a "jobless recovery"... and "the evaporation of personal savings."

Americans saved about eight percent of their disposable income through the 1950s and 1960s, slightly more in the 1970s and 1980s, slightly less and then a lot less in the 1990s. At the beginning of this century they were saving, on average, just about nothing.

The possible reasons for this failure to save — credit-card debt? a false sense of wealth thanks to the real-estate bubble? stagnant real earnings for much of the population?—mattered less than the results. The country needed money to run its government, and Americans themselves weren't about to provide it. This is where the final, secret element of the gun-cocking process came into play: the unspoken deal with China.

The terms of the deal are obvious in retrospect. Even at the time, economists discussed the arrangement endlessly in their journals. The oddity was that so few politicians picked up on what they said. The heart of the matter, as we now know, was this simple equation: each time Congress raised benefits, reduced taxes, or encouraged more borrowing by consumers, it shifted part of the U.S. manufacturing base to China.

In Fallows' own version of Looking Backward, Fallows then projected an "oil shock" followed by loss of confidence on the part of foreign countries in the value of the dollar. What he predicted is what we're seeing right now, before our eyes:

As the dollar headed down, assets denominated in dollars suddenly looked like losers. Most Americans had no choice but to stay in the dollar economy (their houses were priced in dollars, as were their savings and their paychecks), but those who had a choice unloaded their dollar holdings fast.

The people with choices were the very richest Americans, and foreigners of every sort. The two kinds of assets they least wanted to hold were shares in U.S.-based companies, since the plummeting dollar would wipe out any conceivable market gains, and dollar-based bonds, including U.S. Treasury debt.

Thus we had twin, reinforcing panics: a sudden decline in share prices plus a sudden sell off of bonds and Treasury holdings. The T-note sell off forced interest rates up, which forced stock prices further down, and the race to the bottom was on.

Fallows issued a second, even more explicit warning, in the January 2008 issue. As he explained:

Through the quarter-century in which China has been opening to world trade, Chinese leaders have deliberately held down living standards for their own people and propped them up in the United States. This is the real meaning of the vast trade surplus—$1.4 trillion and counting, going up by about $1 billion per day—that the Chinese government has mostly parked in U.S. Treasury notes. In effect, every person in the (rich) United States has over the past 10 years or so borrowed about $4,000 from someone in the (poor) People’s Republic of China. Like so many imbalances in economics, this one can’t go on indefinitely, and therefore won’t. But the way it ends—suddenly versus gradually, for predictable reasons versus during a panic—will make an enormous difference to the U.S. and Chinese economies over the next few years, to say nothing of bystanders in Europe and elsewhere.
* * *
Neither government likes to draw attention to this arrangement, because it has been so convenient on both sides. For China, it has helped the regime guide development in the way it would like—and keep the domestic economy’s growth rate from crossing the thin line that separates “unbelievably fast” from “uncontrollably inflationary.” For America, it has meant cheaper iPods, lower interest rates, reduced mortgage payments, a lighter tax burden. But because of political tensions in both countries, and because of the huge and growing size of the imbalance, the arrangement now shows signs of cracking apart.

Remember, this was written nine months ago, when the Bush administration was assuring everyone that things were hunky-dory and, indeed, the only economic need on the horizon was to make permanent the Bush tax cuts for the wealthy -- just as John McCain urges now.

Were there any warning signs the Bush administration missed? In that January article, Fallows answers with a resounding "yes."

In the past six months, relative nobodies in China’s establishment were able to cause brief panics in the foreign-exchange markets merely by hinting that China might stop supplying so much money to the United States. In August, an economic researcher named He Fan, who works at the Chinese Academy of Social Sciences and did part of his doctoral research at Harvard, suggested in an op-ed piece in China Daily that if the U.S. dollar kept collapsing in value, China might move some of its holdings into stronger currencies. This was presented not as a threat but as a statement of the obvious, like saying that during a market panic, lots of people sell. The column quickly provoked alarmist stories in Europe and America suggesting that China was considering the “nuclear option”—unloading its dollars.

Again, speaking for ourselves, we don't know for a fact that China -- or Japan for that matter, or the Arab Emirates, or Russia or any other creditor nations holding dollar-denominated U.S. Treasury bills -- actually has threatened the "nuclear option." But, clearly, something quite sudden spooked the Treasury Secretary. And the scary scenarios James Fallows has been trying to warn us about are shockingly similar to the sort of thing we're witnessing now.

What does it all mean?

First, our own chickens are coming home to roost. Much as we might like to think otherwise, we can't blame only Wall Street or even China and the other creditor nations. We are responsible for our own past foolishness. The sooner we realize this, the quicker we can begin working on a real solution.

Second, the Bush administration isn't telling us the complete truth. Most likely, it's fearful of coming clean because this is a financial crisis that the Bush administration precipitated with its signature 2001 tax cuts that effectively wiped out the budget surpluses of the Clinton years.

Third, everyone in Washington knows the widespread sentiment of average Americans is to "string up those Wall Street criminals," as a woman told us yesterday at a local fitness center. She is so mad she actually said, "I'd be willing to go through a depression so long as I see those crooks in jail."

But Washington knows, too, that there is a very broad nativist streak in our populace. How much more ungovernable -- and dangerous -- might we become if we thought the credit crisis could be blamed on "the yellow race" or Arabs?

Fourth, if James Fallows was right in his predictions, then what Paulson and Bernanke are trying to do is calm our international creditors, not so much Wall Street. Like a home owner with a mortgage he can't pay who offers the bank part-payment in hopes of forestalling foreclosure, in just seven years the United States has become a nation with debts it can't pay. Paulson and Bernanke are asking for nearly $1 trillion to mollify our creditors in hopes they won't, in effect, 'foreclose' on the U.S. dollar.

Finally, if we're right, then what this means is whether or not Congress gives Bernanke and Paulson what they want, this is just the beginning of the credit crisis. It will take America as many, or more, years to get out of this mess as it takes for a bankrupt to re-establish good credit.

"This Sucker Could Go Down"

We haven't read of such panic in the White House since the bad old Watergate days when it was revealed that Nixon has tapes. From today's New York Times:

WASHINGTON — The day began with an agreement that Washington hoped would end the financial crisis that has gripped the nation. It dissolved into a verbal brawl in the Cabinet Room of the White House, urgent warnings from the president and pleas from a Treasury secretary who knelt before the House speaker and appealed for her support.
* * *
It was an implosion that spilled out from behind closed doors into public view in a way rarely seen in Washington.
* * *

“We’re in a serious economic crisis,” Mr. Bush told reporters as the meeting began shortly before 4 p.m. in the Cabinet Room, adding, “My hope is we can reach an agreement very shortly.”

But once the doors closed, the smooth-talking House Republican leader, John A. Boehner of Ohio, surprised many in the room by declaring that his caucus could not support the plan to allow the government to buy distressed mortgage assets from ailing financial companies.

Mr. Boehner pressed an alternative that involved a smaller role for the government, and Mr. McCain, whose support of the deal is critical if fellow Republicans are to sign on, declined to take a stand.

The talks broke up in angry recriminations, according to accounts provided by a participant and others who were briefed on the session, and were followed by dueling news conferences and interviews rife with partisan finger-pointing.

In the Roosevelt Room after the session, the Treasury secretary, Henry M. Paulson Jr., literally bent down on one knee as he pleaded with Nancy Pelosi, the House Speaker, not to “blow it up” by withdrawing her party’s support for the package over what Ms. Pelosi derided as a Republican betrayal.

“I didn’t know you were Catholic,” Ms. Pelosi said, a wry reference to Mr. Paulson’s kneeling, according to someone who observed the exchange. She went on: “It’s not me blowing this up, it’s the Republicans.”

Mr. Paulson sighed. “I know. I know.”

Our favorite quote? It's one for ages:

“If money isn’t loosened up, this sucker could go down,” President Bush declared Thursday as he watched the $700 billion bailout package fall apart before his eyes, according to one person in the room.

There is more... a lot more, and it's shocking.

Making Iraq Safe for China

This is why we sacrificed our blood and treasure?

"China, Iraq Reach $ 3 Billion Oil Service Deal."

China and Iraq have signed a $3 billion deal revising an earlier agreement for China's biggest oil company to help develop the Ahdab oil field, an official at the Iraq's Oil Ministry said Thursday.

The deal, restoring a project canceled after the 2003 U.S.-led invasion of Iraq, was signed late Wednesday by Chinese officials and Iraqi Oil Minister Hussain al-Shahristani.

Good-bye Games

BBC:

The spectacular farewell in front of a packed house of more than 90,000 at the Bird's Nest stadium is set to last three hours and will include fireworks displays at 18 locations across Beijing.
The organisers have promised a more light-hearted show than the opening ceremony, which focused heavily on Chinese history.
* * *
The closing show will also feature a duet by Chinese folk singer Song Zuying and Spanish tenor Placido Domingo, along with a performance by a 350-strong kung-fu group.

Kung Fu? How much more light hearted can you get?

The Other Side of the China Story

We were startled to recognize a person we know in a photo of the protestors in this week's anti-CNN demonstration in downtown Chicago. You might have missed the news. There has been no national news coverage of it.

News of public protests in foreign climes has been there for the reading, albeit abbreviated. Most readers probably know there have been public demonstrations in Chinese cities like Beijing, Shanghai, and Jinan, among many others. And there has been some slight media coverage in the West about calls by millions of Chinese to boycott certain French businesses.

But almost no U.S. media outlet is reporting that all across the United States tens of thousands of Chinese-Americans took to American streets last week to express outrage at our own media's news coverage of the tensions over Chinese rule in Tibet. What coverage there has been is largely local, which is how we happened to learn of it.

The Chicago man we recognized is a very nice, very smart older businessman who emigrated to the U.S. almost four decades ago. He owns a successful retail shop near the loop. He, his wife, and children are as American as... well, as Jack Cafferty, you might say.

We know the fellow in the photo to be mild-mannered, progressive, and exceptionally even-tempered. But he and his friends are really hot about what they see as a virulent anti-Chinese bias in the U.S. media.

As it happens, we had a chance to speak with him later the same day. We asked him, Why the protest? He answered, "It's not about opinion. Everyone is entitled to their opinion. It's about getting the facts wrong."

Referring to recent news reports of violence in Tibet, he told us of one shooting that the U.S. media attributed to Chinese soldiers when in fact, so he says, Nepalese gunmen were behind it.

How he knows this we can't say. But there certainly is substance to complaints about American media bias which echoed throughout the Chicago loop and in other U.S. cities over the past week.
As for the larger issue of China-Tibet relations, a number of Chinese-American friends have told us there is another side to the story that U.S. media never mentions. In their view, a large part of the problem is that as long as Tibet was ruled by the Dali Lama the Tibetan people were hopelessly mired in grinding poverty.

"They were living in the Dark Age," one man told us. "No clean water, no sewers, no medicine, no roads, no schools for the children, no economy. All the time the [Buddhist] temples grew richer and richer."

Certainly, it's true that Chinese government censorship in Tibet contributes in a large way to alienating the world's press and thus undermining any effort we might want to make to become better informed about the issue. Speaking for ourself, we simply don't know enough about the history of Tibet, or China for that matter, to have an informed opinion.

Except for this: If there is another side to the story, a Chinese side that's being voiced right here in the streets of the Land of the Free, or in obscure college newspaper columns, why aren't we hearing about it in the "fair and balanced" U.S. media?

An Innocent in the Orient

"Everything that walks, crawls, flies, or swims is edible."

If you haven't considered it before, think seriously about a vacation trip to China. It's a vast, beautiful, and endlessly fascinating nation with more to see than one could possibly cram into a dozen lifetimes.

Apologies for a Snapshot

The sheer size and complexity of China would make it difficult to summarize in a series of books, much less in one tiny blog article like this. Add that to the fact that we spent two weeks essentially traveling throughout only two of 23 provinces -- Hebei in the north and Guangdong in the south -- and altogether visited perhaps a dozen other cities, towns, and small farming settlements, and you can see it would be impossible for us to describe China as a whole.

The best we can do is to share a mere snapshot of what we saw and heard in the limited time we had over a discrete but variegated geographical area. The only advantages we had were that we were accompanied by Chinese friends who grew up and lived in the areas we visited, we were guests in many of their homes, and the occasion of our visit enabled us to meet many other Chinese friends and government officials at all levels of social, political, educational, and economic life.

Having traveled widely in the U.S. and other countries throughout Central and South America, Southern Europe, North Africa, and Asia, inevitably we were tempted at times to draw comparisons to what we were seeing. But we tried to resist such temptations whenever we became conscious of them, for it seems to us every country should be experienced on its own merits. But we know that we weren't always successful.

Expectations

Of one thing we can be sure: this not the China our Mother had in mind when she told us so many years ago to eat the canned peas on our plate because "there are starving children in China."

(The connection between the peas on our plate and empty stomachs halfway around the world never was clear to us, which may account for why those peas usually stayed right where they were. With the shrinking of today's world and the growth of world trade, ironically, the connection is easier to understand -- but no more compelling when it comes to canned peas.)

To be sure, there are many poor people in China -- 80% of the population, by the estimate of one highly placed provincial official we spoke with ten days ago. Millions of them, as the Chinese media candidly reports and Government and Communist Party officials openly acknowledge, live at the very edge of existence. Indeed, one English-language newspaper article out of Shanghai reported that as many as one million homeless people arrive in China's largest cities every day from the impoverished rural areas.

But with a total population topping 1.3 billion, there is also a huge, energetic, and rapidly-expanding middle class. Even twenty percent of the total population of China works out to a population nearly equal to everyone in the United States.

This middle class is transforming China's economy, modernizing its infrastructure and cities at a furious pace, contributing to the rapid improvment of life for poorer farm families, and building a truly impressive array of commercial enterprises, universities, media outlets, museums, and all the other familiar institutions, businesses, and entities that make for a vibrant and exciting social, economic, and cultural climate.

Eats

We could find no canned peas in China. The distinctly different regional foods we experienced, however, are wonderfully varied, imaginative, healthy, delicious, and plentiful.

Guangdong Province lies in the south about two hours north of Hong Kong. It enjoys a balmy, Florida-like climate the year around.

There, as the saying goes, the local cuisine consists of "everything that walks, crawls, flies, or swims." This means, among other meats, fish, shellfish, arthropods, and other delicacies which are readily recognizable to western eyes, we ate snakes, sea urchins, jelly fish, baked chicken heads, fried chicken feet, worms, a wide variety of unidentifiable insects, pig's knuckles, scorpion soup (sip the soup but don't eat the scorpion), dog, and a cornucopia of vaguely familiar fruits and vegetables, strange-looking leafy things, rice, sweet rice dishes, rolls, pastries, etc. Seasonings and dipping sauces are light to allow the natural taste of fresh ingredients to predominate.

In northern Hebei Province and the nearby capital city of Beijing, where the climate closely approximates that of Chicago, the cuisine tends to revolve more around meats -- pork, beef, mutton, fowl, etc. -- and fresh water fish prepared with distinctive spices and sauces. Although warned by friends in the U.S. against the infamously "glutinous" and heavy Peking Duck, which they had been served in Hong Kong, we were surprised (and relieved) to find ours delicately prepared, expertly sliced thin with no hint of fat, and accompanied by a tasty choice of sauces and side dishes.

When we inquired of Chinese friends about this discrepancy later, we were told that Hong Kong restaurants have given the dish an undeservedly bad name. Maybe so. Or, maybe this is another of the urban legends which reveal a strong competitive sense our Chinese friends seem to share when it comes to anything Hong Kong offers.

Sad to report, both Beijing and Guangzhou also boast several McDonald's and KFC fast-food resturants which, to judge from what we saw, are generally packed with young, hip Chinese youth text-messaging each other on the latest cell phones.

City Construction

There is an astounding amount of new and renovation construction going on in every Chinese city and town we visited, and many rural villages as well. The BBC has reported that "more construction work is going on in Beijing than anywhere else on the planet, with half the world's production of steel and a third of its concrete being used in the greatest makeover of a metropolis ever."

Certainly, preparations for the 2008 Olympics in Beijing is evident and it has attracted the attention of the foreign press as well as local Chinese. Many locals told us quite candidly that they disapprove of the national government's 'waste' of a billion dollars or more on "ten days of games" when poorer rural areas and villages still have so many unmet needs. The suspicion runs deep among the people we met that hosting the Olympics merely feeds the egos of government politicians.

Yet, from what we could see Olympics preparations actually account for comparatively few of the dozens upon dozens of towering construction cranes at work throughout the city. Indeed, literally hundreds of new high rises have been constructed over the last decade and dozens more are underway now. By far, the greater number are the product of a rapidly expanding Chinese economy rather than the games.

With so many steel-and-glass high rise buildings and daring designs, the skylines of Beijing (China's second largest city at 16 million) and Guangzhou ( eighth largest, with a population of 10 million) look positively futuristic. Closer to the ground, Chinese as well as foreign architects are having the time of their lives experimenting with mostly tasteful and often breath-takingly daring designs.

Still, there are plenty of drab, decrepit Soviet-style constructivist apartment and office buildings to be seen lurking in the shadows of newer skyscrapers or alongside the elevated freeways that thread across the skies of Beijing and Guangzhou. Typically, these older buildings are tattooed with ugly rust stains down the facade, shaky balconies on every level useful only for hanging out the wash, and boxy window air conditioners that seem to have been stuck onto the sides of the buildings as a tardy after-thought.

Gentrification

We were invited into two lovely neighborhoods of older homes in Gangzhou which the locals describe as "artist colonies." A couple of decades ago, the dilapidated condition and low lease costs of these older buildings attracted writers, painters, sculptors and other talented but impecunious intellectuals. As these urban pioneers remodeled and repaired the apartments and townhouses, one by one, richer Chinese businessmen and politicians were attracted to them, bought out the artists, and moved in. Today, prices have risen so high that with few exceptions what was once shabby but comfortable has been gentrified into respendent and expensive.

Sound familiar? SoHo is alive and well in the Orient.

Even today, however, if you look hard for $40 a month it's still possible to buy a 50-year or 75-year lease of a narrow, three-story townhouse in dilapidated condition with a walled private courtyard adjacent to a picturesque, heavily treed sidewalk that traces the cement banks of a flowing canal. "Handyman special. Real estate agents need not apply."

Patterns of suburban sprawl and gentrifying inner city neighborhoods also are evident in Beijing. There, ancient single family houses (reminescent of the older 'shotgun' houses in Pensacola's Seville Square district) arranged in quadrangles around a common courtyard which are known as hutongs, are beginning to attract artists, writers, and expatriate residents almost as quickly as developers can level them elsewhere to make way for new townhouses and taller apartment buildings for the wealthier classes.

Downside of Growth

It has to be said that all of this construction, rehab, and highway building is kicking up a great deal of dust, exacerbating the air pollution problems of every city, town, and village we visited. Several locals asked anxiously if their city "smelled bad" to us. They feared they were growing so accustomed to the polluted air that they could no longer discern it themselves.

The rivers, streams, canals, and creeks flowing through urban areas all were badly polluted by floating trash. One can only speculate what chemicals may be lurking beneath the surface.

The mix of auto, truck, bus, motorbike, and bicycle traffic is a fright. The Chinese, it is said, drive with their horns and not their brakes. In the streets and towns, the gridlock would make Atlantans feel right at home. On the roads and highways leading to rural areas, only a stock-car racer would feel at ease.

Everyone ignores the heavy signage along the shoulders of roads and in break-down lanes for divided highways, and passes on the right as readily as the left even on the edge of mountainous drop-offs.

Rural China

Even the Chinese seem flabbergasted at the rapid economic progress their nation has achieved in recent years. One friend who now lives half the year in Canada and half in southern China told us that in his wildest dreams he never could have imagined it possible fifteen years ago.

For anyone who has wondered how 1.3 billion people can inhabit the same nation, the residential patterns of the rural areas we saw offer a compelling answer. In rural areas like, say, the Midwestern states of the U.S., one usually travels 15 or 20 miles between small towns. In the rural China we saw about half that distance separates each small town; and the towns themselves have perhaps twice as many residents as you would expect of a typical farming community in the Midwest.

We were surprised to find that the rural areas are reasonably well served by good roads and highways. In this regard , it was impossible for us to resist comparing China to the much more poorly-served farm lands of rural Mexico, Morocco, and Russia, where bad roads historically have been a major contributor to serious harvest shortfalls. You can't count the grain if it's still rotting along the side of the road, but that is not a problem for China.

On the downside, western visitors -- especially women -- will be discouraged by the customarily primitive public bathroom facilities in most of rural China. Although modern toilet fixtures are commonplace enough in the cities (Kohler signs blanket the construction fence surrounding the in-progress Olympic Stadium), in the rural areas of China we visited a ceramic bowl flush with the floor was the most commonly encountered toilet. In some especially remote areas, they do not yet know about the ceramic part.

Accommodations

Otherwise, accommodations in China are modern enough to satisfy western standards everywhere but in the very smallest of farming villages. Even there, although we speak no Mandarin we found enough English was spoken that we could easily get by on our own, when needed.

Certainly in the cities, and even in modestly sized farm-market towns, comfortable and reasonably priced hotel accommodations to suit every taste and budget are plentiful. Five-star hotels (at about $150-$200 a night) seemingly are ubiquituous in Guangzhou and Beijing, for those who want luxury. Four- and three-star hotels there, and in smaller towns, are plentiful as well.

Public air, train transportation, and city bus service within the provinces we visited are readily available, inexpensive, and at least as comfortable and secure as in the U.S. Inter-city bus transportation, however, generally is not recommended by locals. We did see some privately chartered tour buses in the major cities and towns that looked as safe and comfortable as the best in the U.S.

Weekly or monthly car rental reportedly is much more difficult to arrange. But new international road signs being installed everywhere we went suggest that this may be changing soon. As it was, we were favored with an assigned driver -- a personal friend of our host -- and private car throughout our travels.

Education
No summary of our China experience would be complete without mentioning a frequently recurring theme which arose in many discussions with government executives and Communist Party officials whom we happened to meet.

It may have been a function of the annual National People's Congress in Beijing, which coincided with our visit, or it may be a more chronic and persistent concern transcending that event, but almost every politically connected official and politician and many ordinary citizens as well talked passionately about the high priority of finding a way to close the gap between the urban rich and the rural poor of China. As one highly placed official told us, although recent economic reforms have improved the lives of rural as well as urban people, the gulf between them has continued to widen.

All seemed to agree that broadening public education opportunities for the young offers the only realistic hope for long-term improvement. You may be as surprised as we were to learn that in China every child of every age is required to pay tuition to attend public school. As a consequence, literally millions of children whose families cannot afford it do not attend school.

The first week we were in China the national government announced a new program to forego the tuition for rural children in K through 8th grades, but only in a handful of the western provinces. The plan is to "completely eliminate tuition and miscellaneous fees for all poor rural students" in every province within two years.

The Chinese government is counting on this more than anything else to raise the living standards of the rural poor. If the free tuition program were extended to the cities, it occurs to us it might help to eliminate child labor factories, such as the one we happened to come across in Beijing.

Artistic Freedom

Apart from the cannard about canned peas and starving children, this also is not the China which older Americans will expect if they remember the 1950's campaign demogoguery of Joseph McCarthy and Richard Nixon during their "China Lobby" years. ("Who lost China?" these despicable politicians routinely demanded in an accusatory way every election year, as if China was ever ours to 'lose'.)

China's much-revered president Deng Xiaoping (1904-1997) and his successor, president Jiang Zemin (1926 - ), have loosened individual economic constraints to a dramatic degree since the mid-1980's. This is well known in the West. Less well known is how much more individual freedom of thought and expression Chinese citizens appear to be enjoying.

Owing to the root purpose of our trip, we had ample occasion to meet, talk privately with, and review the current work of many of the leading artists, poets, musicians, teachers, university professors, and journalists in the towns we visited. While it would be idle for us to pass judgment on them, we can report that the people we met with convinced us they are feeling more encouraged to test the boundaries of free artistic expression than ever before. They almost become giddy as they share artistic ideas and plans which just a decade ago would have been unthinkable.

Neverthless, some degree of overt governmental censorship of political and other expressions, and even internet access, certainly persists in China as recent news accounts leave no doubt. Yet, there is a palpable sense of newly achieved liberty among those we lived with, spoke to, and whose publicly exhibited or published works we saw. The constraints on individual artistic freedom of expression are loosening almost as quickly as those which once restrained economic freedom.

At the same time, our friends candidly admit, there are no guarantees what the Government's rules will be tomorrow. When Government is unconstrained by law, the people cannot be sure what the future will bring. Inevitably, this leads to some self-censorship in the excerise of one's liberties of expression. If you can't be sure today what is 'acceptable' tomorrow, you're likely to constrain yourself long before any government censor has to do it.

More Like Them

As in many of the other countries we have visited over the years -- from Russia at the very start of the Glasnost movement to Mexico when presidential candidate Luis Donaldo Colosio was assassinated, to Guatemala at the end of its long-running civil war, and Greece shortly after the military junta dissolved -- we had the sense in China that most ordinary citizens feel largely disconnected from the government that rules them. It is as if they are mere passive, disengaged creatures whose opinions count for nothing; who at times may be acted upon by their government, if their luck turns bad, but who themselves are unable to act upon it.

There was a time when we considered this a very alien sentiment. Back home after earlier travels, we often had a renewed appreciation for how Americans enjoy a keen sense that we ultimately control our government. Our government is in the hands of the people, not the other way around.

We are an engaged people, we used to think. We are informed. We debate. We speak out. When we disagree with our government, we openly dissent and work to change it. We used to take special comfort in knowing that this was the real beauty of America.

No more. Shortly after returning from China, we read that Senate Majority leader Bill Frist was again --

"making a rancid and consummately undemocratic point -- that to criticize the President or to hold him to account for his illegal conduct is tantamount to treason... a despicable equivalency which [Bush administration officials] have been peddling for years, ever since John Ashcroft in December, 2001 warned the Senate that questioning the Administration was the same as aiding our enemies."

Something seems to have gone very wrong in America over the last few years and it is most clearly seen when one has returned expecting to find something else. If pressed, we would date the decline in our democratic self-governance to the jingoistic run-up to the Iraq war. It's something that leads this traveler to suspect that as a people we Americans have become more like the rest of the world, more like the Chinese, than we can bring ourselves to admit.

Karen Kwiatkowski came close to putting her finger on it in a speech titled "How Do We Fix the Mess in Iraq? which she delivered at John Hopkins University just a couple of days after our return from China. After first recounting how the people of the United States were deceived into passively accepting the Bush administration's claims about Iraq's responsibility for 9-11, Saddam's supposed search for 'Niger yellowcake' and the claimed threat that Iraq posed to our own security -- all of which have since been unmasked as grotesque untruths -- Kwiatkowski observes:

There is a growing sense of American responsibility for what our politicians, specifically our President, Vice President and our Congress have done not only to Iraq, but to our own American credibility, financial solvency, and to our preferred image of ourselves as the most law-abiding and simultaneously the most free country on earth.
* * *
Leaving Iraq does nothing to solve the primary problem that plagues our national policy and financial stability. * * * The system that allows boutique wars of choice to be pursued at the whim of the President and his advisors is still in place. The government media system that manufactures lies, reports those lies to the people, and then charges truthtellers with being traitors and terrorists, is still in place in America. It is hard to believe, but this system is even more robust than it was three years ago.

* * *
Instead of fixing Iraq, we ought to focus on fixing our own country.

* * * The [Founding Fathers] fully expected that our government would not be completely guided nor constrained by the Constitution. They fully expected that our government would become corrupted, arbitrary, militaristic and unaccountable to the people. Ben Franklin famously warned moments after signing the constitution when asked by a lady on the street "What have you given us, sir?" He answered, "A Republic, if you can keep it."

* * *
Fixing Iraq is actually far easier for us than recovering our own innocence. But I believe that if we remember that we ARE the people, and that we only suffer the government that we ourselves consent to suffer, we can indeed fix the mess we have made, and certainly prevent future such disasters in our foreign policy. At least, I hope so.

It is strangely disquieting to return from China and realize that here, just as there, ordinary people no longer are taking responsibility for fixing the mess their government has made. The mess we have made by electing the present government.

To be sure, public opinion polls show Mr. Bush's popularity has dropped to historic lows comparable only to the lows of Richard ("I am not a crook") Nixon. But where is the public pressure on our congressmen and senators? Where is our collective voice demanding to hold our president and cabinet secretaries accountable for their incompetence and lawlessness?

Have we become so neglectful of our inherited freedoms that we are now mere passive observers, like our Chinese friends, who quietly hope for a better day but assume they'll have no hand in bringing it to pass?