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https://www.nationalreview.com/2020/10/the-capital-note-what-to-expect-from-chinas-19th-party-congress/

Welcome to the Capital Note, a newsletter about business, finance and economics. On the menu today: China’s 19th Party Congress, vaccine diplomacy, insider trading from home, and a look at the Microsoft antitrust case.

What to Expect from China’s 19th Party Congress Entering the fifth plenum of the 19th Party Congress next week, the Chinese Communist Party (CCP) has much to celebrate: Beijing appears to have emerged from the COVID-19 pandemic with less scarring than its international competitors. The International Monetary Fund reports that China will be the only major economy to grow this year, thanks in large part to a surge in exports of personal-protective equipment and other manufactured goods.

Yet Beijing’s short-run successes have deepened structural economic imbalances that will likely handicap its long-run economic goals. For years, the Chinese leadership has attempted to transition from an export-driven manufacturing economy to a domestic-demand-driven service economy. After its last Party Congress, the CCP released a five-year plan emphasizing domestic consumption and entrepreneurship as the pillars of sustainable economic growth.

Those reform efforts have seen limited success: Household consumption remains below 40 percent, far lower than the 60 percent average in the developed world. Meanwhile, the Chinese economy remains overleveraged, with an overall debt-to-GDP ratio as high as those in advanced economies. The recent surge in exports, while a boon to GDP growth, also reveals an economy that has failed to gain sustainable footing.

Chinese president Xi Jinping is now advocating “dual circulation,” described as “a new development pattern that takes domestic circulation as the main body with domestic and international circulation reinforcing each other.” In a July speech, Xi said that trade tensions and slow global growth meant that China would need to modernize “the domestic industrial and supply chains, vigorously promote technological innovation, accelerate research on key core technologies, and create new advantages for future development.”

It sounds a lot like what Chinese policymakers have been saying for the past decade. In 2007, Premier Wen Jiabao acknowledged structural weaknesses in the then-booming Chinese economy, describing it as “unbalanced, unstable, uncoordinated, and unsustainable.” After the 2008 financial crisis, CCP rhetoric focused on harnessing its burgeoning middle class to ween itself off exports.

12 years later, the Chinese economy is yet more unbalanced, unstable, uncoordinated, and unsustainable. The forthcoming five-year plan will call for reforms to boost consumption and entrepreneurship, but if recent history is any indication, it won’t usher in meaningful structural changes.

https://www.gatestoneinstitute.org/16663/vatican-china-religious-persecution

Perhaps the most stinging criticism in Pompeo’s article was his having pointed out the marked contrast in the Vatican’s current position on Communist China with the Holy See’s moral witness which helped liberate Central and Eastern Europe from communism in the late 20th century.

The pope, according to Cardinal Zen, is being manipulated by his advisors. Cardinal Charles Maung Bo… is another outspoken opponent of the Vatican’s “opening” to China. Cardinal Bo, who has vilified the Communist Party of China for its “moral culpability for the COVID Virus pandemic,” also has declared that “the CCP is a threat to the whole world”…. U.S. Cardinal Raymond Burke… no doubt added to the Holy See’s indigestion.

Possibly the most abrasively received comment came at the close of Pompeo’s article in First Things where he reminded the Vatican of the Apostle John’s counsel that “the truth will set you free.”

In the 1980s, the uncompromising condemnation by the sainted Pope John Paul II and President Reagan of the USSR’s “Evil Empire” helped tear down Moscow’s “Iron Curtain.” Maybe the victory of the Americans in the Cold War is not to the liking of Pope Francis. Is it really his intention to “undo all of the good work that the great John Paul II did in pursuit of human freedom and dignity?”

US Secretary of State Michael Pompeo’s September 30 – October 1 visit to the Vatican was a diplomatic profile in courage. Despite the Pope’s refusal to meet the U.S. Secretary of State, Pompeo repeated his warning to the Holy See that if it goes ahead with plans to renew the 2018 Sino-Vatican Agreement, it will compromise the Catholic Church’s moral authority. Pompeo also urged the Vatican to live up to its mission of defending human rights in China, where Catholics churches and shrines are being destroyed and priests imprisoned, and also urged the Pope to reconsider renewing the secret agreement with Beijing, which permits the Communist Party of China (CCP) to have a key role in appointing Catholic Bishops in China.

The Vatican has refrained from any condemnatory comment on the CCP’s persecution, incarceration, torture and forced labor of millions of Uyghur Muslims in Xinjiang Province, and has remained silent about Beijing’s contravening its pact with Hong Kong to honor “one country, two systems” until 2047. China has violated the civil rights of Hong Kong’s citizens.

https://www.gatestoneinstitute.org/16662/china-fentanyl-source

For one thing, the Communist Party, through its cells, controls every business of any consequence…. Beijing tightly controls the banking system and knows of money transfers instantaneously…. Furthermore, fentanyl cannot leave the country undetected, as virtually all shipped items are examined before departing Chinese soil.

Chinese gangs are large and far-flung. In China’s near-totalitarian state, it is not possible for them to operate without the Communist Party’s knowledge. And if the Party somehow does not know of a particular gang, it is because it has decided not to.

China’s postal service has to know that it has become, among other things, the world’s busiest drug mule.

The regime has adopted the doctrine of “Unrestricted Warfare,” explained in a 1999 book of the same name by Qiao Liang and Wang Xiangsui. The thesis of the authors, both Chinese Air Force colonels, is that China should not be bound by any rules or agreements in its attempt to take down the United States…. The regime, consequently, is using criminality as an instrument of state policy…. China’s officials will stop at nothing to increase the power of their regime.

“I’m not alleging any kind of conspiracy, I suppose, but just the plain facts of it: fentanyl and Covid both came from China, China’s our main rival, they’re benefitting from the deaths of many thousands of Americans,” Tucker Carlson noted on his October 16 show.

China’s regime has been pushing fentanyl into the United States for years.

Fatal drug overdoses in the U.S. last year hit a record 70,980, according to the Centers for Disease Control and Prevention. Of those deaths, 36,500, were from synthetic opioids such as fentanyl. Cocaine and methamphetamine fatalities were also up, largely because these substances were mixed with fentanyl.

It is, as Vanda Felbab-Brown of the Brookings Institution states in a July paper, “the deadliest drug epidemic in U.S. history.”

There is no doubt where this drug comes from. “Since 2013, China has been the principal source of the fentanyl flooding the U.S. illicit drug market—or of the precursor agents from which fentanyl is produced, often in Mexico,” reports Felbab-Brown.

A Drug Enforcement Administration Intelligence Report issued in January comes to the same conclusion as to the source of deadly fentanyl.

https://quillette.com/2020/10/19/the-coming-post-covid-global-order/

The COVID-19 pandemic has devastated economics in the West, but the harshest impacts may yet be felt in the developing world. After decades of improvement in poorer countries, a regression threatens that could usher in, both economically and politically, a neo-feudal future, leaving billions stranded permanently in poverty. If this threat is not addressed, these conditions could threaten not just the world economy, but prospects for democracy worldwide.

In its most recent analysis, the World Bank predicted that the global economy will shrink by 5.2 percent in 2020, with developing countries overall seeing their incomes fall for the first time in 60 years. The United Nations predicts that the pandemic recession could plunge as many as 420 million people into extreme poverty, defined as earning less than $2 a day. The disruption will be particularly notable in the poorest countries. The UN has forecast that Africa could have 30 million more people in poverty. A study by the International Growth Centre spoke of “staggering” implications with 9.1 percent of the population descending into extreme poverty as savings are drained, with two-thirds of this due to lockdown. The loss of remittances has cost developing economies billions more income.

Latin America had seen its poverty rate drop from 45 to 30 percent over the past two decades, but now nearly 45 million, according to the UN, are being plunged into destitution as a result of the novel coronavirus pandemic. In Mexico alone, COVID-19 has caused at least 16 million more people to fall into extreme poverty, according to a study by the National Autonomous University of Mexico (UNAM).

https://www.gatestoneinstitute.org/16659/western-lives-matter

“This is not an act of ‘separatism’, it is a declaration of war that must be dealt with accordingly”. — Pascal Bruckner, French author.

France’s elites… fail to understand the ideological war that the enemies of open societies have declared on them. You can see it from the targets of the attacks by extremists: Jews, a priest, cartoonists, tourists, ordinary people, policemen, now a teacher.

An entire community of immigrants, who enjoyed all the freedoms we had granted them, ambushed him…. It is a racism condoned by imams who had called [the beheaded teacher] Paty “delinquent”.

“[T]here is the continuity of our submission. I am convinced that if we had known how to say no, we would not be here. They all bowed their heads out of fear of appearing racist or out of patronage.” — Élisabeth Badinter, author, Le Point, October 16, 2020.

If the French authorities do not take the many warnings to heart, even after a school teacher was beheaded in broad daylight by a terrorist shouting “Allahu Akbar”, it means that the fight is over and they might as well raise a white flag over the Eiffel Tower.

Western Lives Matter. We should ask all the journalists, the politicians, the clerics, the people of the street, to kneel for Samuel Paty. This French school teacher was the victim of the most ferocious racism that circulates today in Western democracies, that of fundamentalist beliefs against “infidels”. The Chechen terrorist, after beheading Paty, called him a “dog”. “In the name of Allah, the most gracious, the most merciful…,” the terrorist wrote after the attack, “Macron, the leader of the infidels, I executed one of your dogs who dared to belittle Muhammad…”.

Paty was murdered for having carried out his work as a teacher with conscience and courage, educating his students to respect the founding values ​​of our societies and the three words mounted over the doors of his school: Liberté, égalité, fraternité, freedom, equality, brotherhood. Paty had shown Charlie Hebdo’s Mohammed cartoons to his students to sensitize them to freedom of expression. He had also asked his pupils to create a drawing based on those three words.

“A borderline in the abominable has just been crossed” essayist Pascal Bruckner said.

https://www.gatestoneinstitute.org/16618/turkey-religious-sects

The school curriculum teaches boys that the female sex is inferior and second-class, while it teaches girls to be a slave to a man. — Professor Esergül Balcı, Report from Izmir September 9th University, September 5, 2020.

In 2010 a scandal in Siirt in southeast Turkey revealed serial rapes in this conservative little town, including cases of adults raping minors and minors raping toddlers, even killing one…. “This is a small town,” the mayor said… “Almost everyone is related to everyone.”…. No one was prosecuted.

When, in 1925, Mustafa Kemal Atatürk, the founder of modern Turkey, banned all Islamic sects, dervishes, lodges and other religious cults dating from the Ottoman times, he publicly said, “The Turkish Republic cannot be a republic of sheiks, dervishes and their disciples. The only right sect is the sect of civilization.” Almost a century after the birth of a modern nation, nevertheless, the Turkish Republic has indeed become a republic of sheiks, dervishes and their millions of disciples.

The findings of an academic from Izmir’s September 9th University are worse than scary. The following is from Professor Esergül Balcı’s alarming report:

Islamic sects, cults and orders in Turkey have flourished in coalition with [President Recep Tayyip Erdoğan’s] Justice and Development Party (AKP) as their members have successfully built networks in public service.
The number of madrassas [Islamic schools] has risen sharply [since the AKP came to power in 2002].
The Treasury’s financial support for schools run by Islamic sects has reached TL 1 billion [approximately $126 million].
About one million pupils attend schools run by sects.
A total of 2.6 million Turks have some kind of connection with a religious order.
There are primarily 30 sects, their 400 branches and 800 madrassas.
Parents enroll children as young as three years old at religious schools. A third of Turkey’s 10,000 private schools have links with at least one sect. So do 2,800 of the country’s 4,000 private dormitories.
The school curriculum teaches boy students that the female sex is inferior and second-class, while it teaches girls to be a slave to a man.

https://www.wsj.com/articles/trouble-in-putins-neighborhood-11603149025?mod=opinion_lead_pos4

Changes to the Russian constitution approved earlier this year allow Vladimir Putin to remain president well into his 80s. While he has consolidated power at home, one of the little-remarked events of the year has been the authoritarian’s inability to stop disorder in Russia’s near-abroad.

In 2005 Mr. Putin said “the demise of the Soviet Union was the greatest geopolitical catastrophe of the century.” More than a decade later, the former KGB officer mused that if he could go back in time he would prevent the 1991 collapse. The USSR isn’t coming back, but the Russian Federation still tries to maintain stability on its periphery through deep economic, military and cultural ties with former Soviet Republics.

This project hasn’t been going well, even in countries that generally view Moscow favorably. The latest headache comes from Russian ally Kyrgyzstan. Opposition parties accused ruling elites of voter fraud after Oct. 4 parliamentary elections, and chaos continued even after the results were annulled last week.

President Sooronbai Jeenbekov announced his resignation Thursday. The nationalist Sadyr Japarov, newly sprung from prison, has become prime minister and acting president. But a Kremlin spokesman said Thursday that Russia would pause economic support for Bishkek because “there is no government as such, as far as we see.” Mr. Putin has reason to worry about instability in the resource-rich country, which hosts a strategically important Russian air base.