anxious state

AMONG those with most to celebrate as the Chinese Communist Party marks its 90th birthday on July 1st are the country’s bourgeois reactionaries. Perhaps now the most important pillar of the party’s support, China’s middle class was virtually non-existent until it was recreated in the late 1990s. So far, the communists have amply fulfilled their side of a tacit bargain in which well-off city-dwellers have traded political choice for fast-growing prosperity. But as the economy slows over the next decade, the party will struggle to keep its word. Indeed, peace and prosperity may depend on the very sort of political reform the party has tried so hard to avoid.
An affair to remember
In the past 15 years the middle classes have supported the party because of what it has done for them. Its rule has produced incredible economic progress, asserted China’s rightful role as a global power and, crucially, kept the country from falling back into the chaos that plagued it during so much of the 20th century. The post-Communist travails of the former Soviet Union have been valuable as what the party used to call “teaching by negative example”.

However, the love affair between a party that calls itself the vanguard of the proletariat and its actual, middle-class supporters is now under threat. At the root of this is an inevitable slowing in economic growth. As our special report on China in this issue explains, the first decade of the century, with its relentless double-digit growth, may well have seen the peak of China’s economic exuberance. A sudden crash is not impossible: there could be a botched attempt to tackle either the property bubble or what the prime minister calls the “uncaged tiger” of inflation (now at 5.5%, its highest level in nearly three years). But an immediate upset is still unlikely: inflation is not yet out of control, still far below the 27.7% it reached in 1994. The danger is more in the medium term: growth will inevitably slow over the next decade, as China settles into its status as a middle-income country, and the burden of caring for an ever larger number of elderly people in a slower economy may make middle-class life far more uncomfortable.
To compensate, the party will have to usher in wrenching change. It is struggling to shift China away from the current unsustainable model, where growth is propelled by vast investment and export-led manufacturing, towards one where domestic consumption plays a bigger role. The country still has a long journey ahead in its efforts to build health-care, pension and social-security systems to reassure citizens: all of these are necessary to persuade the middle class to save less.
In addition, China’s state-owned businesses have an insatiable appetite for capital, which many of them waste. Curbing state companies means taking on all of the well-connected people who ride on their coat-tails, including parts of the middle class. The party’s creed (“Marxism-Leninism-Mao Zedong thought”) means nothing to most such people. The party is secretive about recruitment to its 80m-strong ranks. But an official report in 2008 said that, of new applicants for membership, by far the biggest category comprised university students over the age of 18. Although the decision by these young careerists to sign up shows the party’s clout, they have very different ambitions from those of the old ideologues.
The party will also have to work harder to sustain the urbanisation that has fuelled the economy. China has done the easy part: attracting underemployed young rural residents to urban jobs. But the supply is beginning to slow. It would help if farmers could sell or mortgage their rural land and use the money to help gain a stronger foothold in the cities. But the party remains overly fearful of privatising farmland, partly for atavistic fears of a destitute peasantry, and partly for ideological reasons.
Worse still, the system of household registration, or hukou, defines even long-staying urban migrants as rural residents, cutting them out of housing, education and other benefits. No wonder that the migrants are increasingly restive. Of the tens of thousands of protests each year, most are still rural, typically by farmers enraged by inadequate compensation for land appropriated for development. However, urban unrest, such as recent riots by factory workers in the southern province of Guangdong, is now more common. If the party is to keep the peace in cities and if it is to continue to attract migrants in sufficient numbers, it needs to find ways to turn them into full-fledged city-dwellers, with the consumer power to match.
Of taxation and representation
Here it runs up against the middle class most directly. To give migrants the same housing and other benefits as urban hukou holders, and to build a proper social safety-net will be expensive. And if more tax is the solution, then the middle class could well begin demanding a greater political say.
That is a day the party dreads. Since the nationwide student-led protests of 1989, the educated urban elite has mostly been politically quiescent. But the party fears them far more than it does unruly farmers or migrants. Beijing’s centre was flooded with police earlier this year when calls for an Arab-style “jasmine revolution” circulated on the internet.
The middle class’s anxieties have not yet fermented into a broader anti-government rage. But then the inevitable erosion of some of their privileges has barely begun. If the bourgeoisie does start to protest, the party will be faced with an old dilemma: liberalise or step up repression. All the evidence of the past—and of the recent crackdown—is that it will choose repression. But that in itself may help politicise the middle class. In other Asian countries a taste for democracy has risen with income; and repression would mean withdrawing freedoms from people used to their liberty gradually increasing.
In 2012 the party’s leadership—and the task of managing these tensions—is to pass to a new generation. The most recent leadership transition, in 2002, went smoothly. But every previous generational shift in the party’s 90 years has been chaotic, and, a decade on, the tasks faced by the leaders who took over in 2002 look almost easy by comparison with today’s.

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Mr Wen goes to Berlin

THE Chinese prime minister, Wen Jiabao, is visiting three countries on his European tour this week. But his previous stops, in Hungary and Britain, were sideshows next to today’s visit to Germany. To this Mr Wen has brought 13 ministers (to meet their ten German counterparts). The two countries plan to sign 22 co-operation agreements and 14 economic deals. The meetings mark the start of permanent consultations, a relationship Germany has with just a handful of countries and that China has had until now with none. Before Mr Wen’s visit China issued a “white book” on its relations with Germany, its first such report on a European country.
It is a meeting of winners whose economic relationship is deepening by the day. Trade leaped nearly 40% in 2010 to €130 billion ($185 billion); that accounts for one-third of the European Union’s total trade with China. German companies have invested some €21 billion there. Investment flows the other way are small but growing, and Germany wants more. The widespread fear of Chinese economic might—as Charlemagne wrote yesterday, the European Council on Foreign Relations, a think-tank, is soon to issue a paper saying that China “is taking over Europe”—found little echo in Berlin as Mr Wen came to town.
The visit marks the final burial of the ill feeling that erupted four years ago when the German chancellor, Angela Merkel, had the temerity to receive the Dalai Lama, the exiled leader of restive Tibet, in her office. One Chinese diplomat grumbled at the time that Mrs Merkel viewed China as a bigger version of communist East Germany, where she was born and raised.
That is all forgotten, at least on the official level. In an apparent gesture of goodwill towards Europe, last week China released from detention Ai Weiwei, an artist, and Hu Jia, another dissident. Still, China continues to bridle at the attention paid by ordinary Germans to its human-rights abuses. In a bizarre column for Handelsblatt, a business newspaper, China's vice-foreign minister complained of “arrogant accusations” by the German press.
For their part, the Germans want to avoid making their relationship with China look too mercenary. “Intensive polit. & econ. relations with China are in Germ. interest, don’t rule out plain talk on human rights,” tweeted the government spokesman, Steffen Seibert. But neither country wants such issues to spoil the mood.
For the moment, interests matter more than values. The United States remains Germany’s most important ally, but on economic issues the world’s top two exporters increasingly speak the same language. Germany and China joined forces at last year’s G20 summit in Seoul to block an American proposal to cap current-account imbalances. Long-running economic arguments may, slowly, be abating. Although China’s lax protection of intellectual-property rights remains an irritant, it is modelling its patent-protection standards on those of Germany rather than on the weaker practices of the United States, notes Michael Hüther of the Cologne Institute for Economic Research.
Some tensions continue to fester. The EU, of which Germany is the weightiest member, still does not recognise China as a market economy, which exposes it to trade sanctions. A new dispute has flared up over the EU’s plans to tax carbon emissions on flights to and from Europe. China has threatened to boycott purchases of Airbus planes over the issue.
Yet Mr Wen and Mrs Merkel are unlikely to let such concerns get in the way of their burgeoning friendship. “Whatever global issue we have, China is part of the problem and part of the solution,” says Eberhard Sandschneider of the German Council on Foreign Relations. Along with its western allies, Germany wants Chinese help to thwart Iran’s nuclear ambitions, restrain North Korea’s aggression, pacify Sudan (which is about to split up into two separate countries) and avert climate catastrophe. The EU’s failure to act coherently on foreign policy makes Germany by default China’s most important European partner.
The flurry of contacts and agreements between German and Chinese ministers touches on everything from hospital management to electric cars. The creation of a mechanism for such discussions is more important than the subject matter (even if Chinese ministers count for less than Communist party bosses). Such consultations have helped Germany and France through rough patches in their relationship, points out Mr Sandschneider. They mean that “you have to meet on a regular basis, whether you like it or not.”

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New York says "I do"

TIMING is everything. Forty-two years, almost to the day, after the Stonewall riots (often credited as the catalyst of the contemporary gay-rights movement); some 36 hours before the gay-pride march; and two years after a failed attempt, New York became the sixth and most populous state to legalise same-sex marriage. Late Friday night New York's senate passed the Marriage Equality bill by a 33-29 vote. New York's governor, Andrew Cuomo, who made gay marriage a top priority of his first term, signed it into law at 11:55 pm. It will go into effect on July 24th.
The Senate is Republican-controlled, and the bill passed when four Republicans joined the 29 Democrats who supported it. One, Mark Grisanti of Buffalo, opposed gay marriage for religious reasons, but could not justify denying equal rights to gay couples. He told his fellow politicians that as a Catholic brought up to think marriage was between a man and woman, he struggled with the decision. "I cannot legally come up with an argument against same-sex marriage. Who am I to say that someone does not have the same rights that I have with my wife, who I love, or to have the 1,300-plus rights that I share with her?" (Mr Grisanti was referring to the 1,324 state benefits afforded to married couples.) Roy McDonald, another Republican from upstate New York, told reporters on June 16th that he was going to support same-sex marriage, and that everything is not black and white or good and bad. "I'm trying to do the right thing," he said.*
For months, Mr Cuomo cajoled, pressured, leaned on and in recent weeks enthusiastically negotiated with legislators to get the bill passed. When it did, he called New York a beacon for social justice. Republicans and Democrats agree the bill would not have been passed without Mr Cuomo's guidance. He worked closely with gay-rights groups who spent millions on the advocacy campaign. In 2009 supporters of same-sex marriage were riven by divisions and infighting; this time they worked under a single banner, “New Yorkers United for Marriage", and they worked with Republican consultants. Commercials featuring athletes, politicians and celebrities advocating support for the bill flooded the airwaves. The most effective were the ones starring regular New Yorkers with gay relatives: the parents who wanted their son to marry his long-time partner, a second-world-war veteran who wants to see his grandson marry whomever he wants.
The 2m energetic onlookers at Sunday’s gay-pride march down Fifth Avenue hugged, hollered, danced and cheered. One onlooker observed, “This year has more energy than other years.”  Loud cheers were directed at an elderly gay couple, sitting in a rickshaw, celebrating 54 years together. Many other couples dressed in bridal gear were greeted enthusiastically by the watching crowd. One happy fellow wore a bridal skirt and a tuxedo jacket. The noise went up several decibels when New York’s police department’s marching band played “Here Comes the Bride”.  The loudest cheers were reserved for Mr Cuomo who was accompanied by Michael Bloomberg, New York’s mayor, who waved a rainbow flag, and by Christine Quinn, the openly gay New York City Council Speaker. Hundreds of marchers carried signs that read “Promise Kept” on one side and “Thank you Governor Cuomo” on the other.
In 2009, the last time the bill was sent to Albany, it was rejected soundly. Not a single Republican supported it and eight Democrats voted no. One noted that 73% of his constituents were opposed to gay marriage in 2009, but this year 80% supported it. Recent polls show that nearly 60% of New Yorkers are in favour of same-sex marriage. Nationally, the number supporting marriage equality hovers around 50%, but polls also show that a majority of younger voters support it. Success in New York will undoubtedly help give advocates a boost in Oregon, Maine, Washington and Maryland, all of which are considering similar measures.
Essential to New York’s passage were measures exempting religious organisations from having to participate in same-sex marriages and protecting them from discrimination lawsuits. Still, this did not satisfy Catholic leaders. Nicolas DiMarzio, bishop of Queens and Brooklyn, said that “Governor Cuomo has opened a new front in the culture wars that are tearing at the fabric of our nation.” He also called on Catholic schools and parishes to ban gay-marriage supporters from speaking at their events. Timothy Dolan, New York's archbishop, lambasted lawmakers for tampering “with a definition as old as human reason”. But polls show a disconnect between the beliefs of Catholic hierarchy and those of parishioners: a poll taken in May found that 64% of American Catholics say homosexuality should be accepted by society, compared with 58% of all Americans.
Catholic churches will probably remain gay-wedding free for some time, but marriages at restaurants, hotels and catering halls are likely to begin later this summer. And, according to a 2009 report by the New York City comptroller, gay marriages could generate up to $210m for the state's economy over three years.
* Initially we reported Mr McDonald's quote as, "Well, fuck it. I don't care what you think. I'm trying to do the right thing." He was directing at least part of that quote to reporters pestering him about same-sex marriage.

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Always waiting for the US cavalry

It LOOKED, for a moment, like a return to the days of European interventionism. For the first time since Suez, Britain and France led an intervention in the Middle East. And unlike the disaster in Egypt in 1956, the action in Libya of 2011 was supported by America and by part of the Arab world too.

America was visibly reluctant to get involved, let alone lead the action. And, having helped to knock out Libya’s air defences and conduct some of the initial air-to-ground strikes, it pulled back from the front-line operations. But America's role remains essential, not least in providing air-to-air refuelling, as well as intelligence and reconnaissance for the European allies. 

The war in Libya, far from heralding a new era of European activism, has once again highlighted the limits of Europe’s military power, as Robert Gates pointed out today in his valedictory speech in Brussels. He is not the first American defence secretary to complain about low, often declining, defence spending in Europe (The Economist recently ran an interesting chart). Nor is it the first time Mr Gates himself has bemoaned the weakness of European allies. Last year he said the "pacification" of Europe, at first a great achievement, had gone too far and posed a threat to Western security. But his comments today were delivered with the sharpness of a man who knows he is at the end of his career and no longer needs to beg for favours. The speech is worth reading in full. But here is one passage that should make Europeans cringe.

To be sure, at the outset, the NATO Libya mission did meet its initial military objectives – grounding Qaddafi’s air force and degrading his ability to wage offensive war against his own citizens. And while the operation has exposed some shortcomings caused by underfunding, it has also shown the potential of NATO, with an operation where Europeans are taking the lead with American support. However, while every alliance member voted for Libya mission, less than half have participated at all, and fewer than a third have been willing to participate in the strike mission. Frankly, many of those allies sitting on the sidelines do so not because they do not want to participate, but simply because they can’t. The military capabilities simply aren’t there.

In particular, intelligence, surveillance, and reconnaissance assets are lacking that would allow more allies to be involved and make an impact. The most advanced fighter aircraft are little use if allies do not have the means to identify, process, and strike targets as part of an integrated campaign. To run the air campaign, the NATO air operations centre in Italy required a major augmentation of targeting specialists, mainly from the US, to do the job – a “just in time” infusion of personnel that may not always be available in future contingencies. We have the spectacle of an air operations centre designed to handle more than 300 sorties a day struggling to launch about 150. Furthermore, the mightiest military alliance in history is only 11 weeks into an operation against a poorly armed regime in a sparsely populated country – yet many allies are beginning to run short of munitions, requiring the US, once more, to make up the difference.

As well as a paucity of European military resources, NATO faces two other dangers, Mr Gates said. One is the passing of his generation of American leaders, like himself, for whom the security of Europe was the over-riding pre-occupation of their careers. The second is that America, itself under pressure to cut defence spending to curb high deficits and debt, might soon give up on Europe: if the European taxpayers do not want to pay to preserve their own security, why should Americans shoulder the burden? Only five of the 28 NATO allies meet NATO’s recommendation that countries should spend at least 2% of GDP on defence: America, Britain, France, Greece and Albania. Today America’s key security interests are in the Middle East and in Asia. Europe will be the obvious place for America to cut expensive overseas commitments.

Europe has more soldiers than America, but can deploy far fewer of them on overseas operations. This is partly the result of history: in the cold war European armies were built to hold the line in Europe, while awaiting reinforcement by American forces which, by definition, had to be designed for expeditionary warfare. Another is that “Europe” is not a sovereign state, but a collection of small- and medium-sized countries. Its considerable defence spending is hoplessly fragmented among a multitude of armies, air forces and navies.

Specialisation, pooling and sharing equipment is the obvious way forward. Defence experts across Europe have known this for a long time and, here and there, countries have embarked on some important experiments. A recent paper by the Centre for European Reform, and think-tank in London, makes some sensible recommendations (PDF). But what is rational in terms of defence accounting too often falls foul of political and operational reality. Many smaller countries have little interest in international commitments. And the bigger states that still retain some kind of global vision, like Britain and France, do not want to be dependent on smaller states for their military capability.

Poland, which takes over the presidency of the European Union next month, plans to make a renewed attempt to boost European defence co-operation. It is also pushing for a bigger EU autonomous military headquarters, though the need for this is unclear, given that even the NATO air operations centre had to be reinforced by American experts, as Mr Gates noted acidly. Moreover, Poland is among those countries singled out by Mr Gates for failing to do enough in Libya.

That said, Mr Gates did pick out some allies for praise in carrying out a disproportionate share of the bombing campaign in Libya: Norway, Denmark, Belgium and Canada. Why have they stepped forward when so many have not? Perhaps, suggests one American officials, it is because the action in Libya is seen by them not as an act of big-power bullying, or as part of an endless and ill-defined "war on terrorism", but as a humanitarian action: the first test of the UN's new doctrine of “responsibility to protect”. It is not just the fate of Libyans that is in the balance in the war against Muammar Qaddafi, but the commitment of Europeans to maintain - and, when necessary, deploy - serious military forces. Responsibility to protect requires, first and foremost, the means to protect.

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