The Prize China Didn't Want to Win

Giving Liu Xiaobo the Nobel Peace Prize was a defeat for the government in Beijing -- and a victory for human rights everywhere.

UPDATE: International television broadcasts went dark in China Friday as the Nobel Prize Committee, citing "his long and non-violent struggle for fundamental human rights in China," announced that Liu Xiabo was indeed the 2010 recipient of the Nobel Peace Prize. The following article was published on Wednesday, before the announcement. - FP

Most international awards are eagerly coveted by the Chinese government, but there are exceptions. One of the names being mentioned for the Nobel Peace Prize this year is Liu Xiaobo, a Chinese writer and political essayist currently serving an 11-year prison term for his crusading views. He is one of China's most famous dissidents, known for his unflinching advocacy for free expression, human rights, and democracy over two decades. In 2009, he was charged with "incitement to subvert state power and overthrow the socialist system" as a result of his role in drafting "Charter 08," a political manifesto calling for gradual political reforms in China, and for authoring several other online essays critical of the government published between 2005 and 2007.

Born in 1955 in the northeastern industrial city of Changchun, Liu received a degree in literature from Jilin University and moved to Beijing to continue his studies. After obtaining a Ph.D. in comparative literature at Beijing Normal University, he started teaching there as a lecturer. In late 1988 he became a visiting scholar at Columbia University, but cut short his stay to participate in the 1989 Chinese democracy movement. In the early hours of June 4, 1989, as the People's Liberation Army rolled into Beijing and closed in on the remaining students in Tiananmen Square, Liu acted as a negotiator between the students and the troops, ultimately brokering a deal that allowed many students to avoid the bloodshed witnessed in other parts of the capital.

Labeled by the government as a "ringleader" and a "black hand" of the student movement, Liu was arrested on June 6 and spent 18 months in Qincheng Prison on charges of "counterrevolution." He was ultimately released in January 1991, but barred from teaching or holding any academic position. He continued to write essays in favor of freedom of expression and human rights, gaining a national and international following as "China's conscience" for his unflinching, selfless, and peaceful advocacy for his ideals. In 1995 he was placed under house arrest and later sentenced to three years of "re-education through labor" for a series of essays criticizing the government. Upon his release in October 1999, Liu continued to write critical essays, mostly published overseas but widely circulated inside China.

Then on Dec. 8, 2008, Liu was arrested again. It was the eve of Human Rights Day, the date that the more than 300 original Chinese signatories had chosen for the publication of Charter 08.

Charter 08 was consciously modeled after Charter 77, the pathbreaking document published in 1977 in which Czech and Slovak intellectuals courageously pledged "to strive individually and collectively for respect for human and civil rights in our country and throughout the world." It called for an end to the Communist Party's one-party rule and the establishment of a system based on human rights, the rule of law, and democracy in the former state of Czechoslovakia. Liu is sometimes called the Vaclav Havel of China.

"The Chinese people," wrote the Charter 08 signatories, "include many who see clearly that freedom, equality, and human rights are universal values of humankind and that democracy and constitutional government are the fundamental framework for protecting these values."

Charter 08, drafted over several months, did not come to the attention of Chinese authorities until several days before it was to be released. After Liu's arrest, a large-scale coordinated police operation was launched to "root out the organizers" and prevent the distribution of Charter 08. In the following weeks and months, the police interviewed each of the 303 initial signatories, among them writers, lawyers, journalists, academics, former party members, and ordinary citizens, stressing that the Chinese authorities thought that Charter 08 was "different" from earlier dissident statements and "a fairly grave matter."

The Chinese government may have been initially worried about a possible global outcry over the arrest of the country's most famous dissident. However, the international diplomatic response was at best muted.

Meanwhile, in February 2009, Secretary of State Hillary Clinton pledged on the eve of a visit to Beijing that the United States would not let human rights concerns "interfere" with other important aspects of the U.S.-China relationship.

On June 23, 2009, Liu was formally arrested and transferred to Beijing's main detention center, Beikan. The trial, which took less than two hours, was held on Dec. 23, and Liu's sentence -- the longest given for charges of "inciting subversion" since that crime was included in the Chinese criminal code in 1996 -- was announced on Christmas Day, when much of the foreign press corps was on vacation, in an apparent attempt to minimize international coverage.

During Liu's trial, the government argued that Liu had "exceeded" the limits of freedom of expression by authoring essays that had "openly slander[ed] and incite[d] others to overthrow our country's state power." The appeals court that upheld the original 11-year sentence wrote, "Furthermore, the crime was committed over a long period of time, and the subjective malice was immense. The published articles were widely linked, reproduced, and viewed, spreading vile influence. He is a major criminal offender and should be given severe punishment according to the law."

In fact, in the nine essays that the prosecution singled out, Liu consistently defended the idea that political change could only be gradual and peaceful. Liu stressed in the court statement he prepared but was never allowed to deliver, "in the past two decades ... I have always expressed the view that China's political reforms should be gradual, peaceful, orderly, and controlled. I have also consistently opposed quick one-leap radical reforms, and even more so violent revolution."

Liu's lawyers crafted legal arguments for his defense along these lines, invoking Chinese legal provisions and international standards on freedom of expression. The court's response consisted of one line at the end of the judgment: "There is insufficient reasoning in the defense's appeal statement by Liu's Xiaobo's counsel; therefore, this court does not accept the arguments."

(The nine essays listed by the prosecution as evidence, along with all the legal documents from Liu's trial, are available on the site of China Rights Forum, an online and print magazine published by the New York-based advocacy group Human Rights in China.)    

The trial provided a thin veneer of legality to a political decision made about Liu in advance by the Chinese leadership. Liu himself was clear-eyed about the outcome: "I have long been aware that when an independent intellectual stands up to an autocratic state, step one toward freedom is often a step into prison," he wrote after his arrest. "Now I am taking that step; and true freedom is that much nearer."

Liu is the most famous of countless Chinese government critics languishing in prison for peacefully expressing their views. He falls squarely into the Nobel Peace Prize tradition of honoring human rights activists who are calling for peaceful political reform. Kim Dae-jung, Lech Walesa, and Aung San Suu Kyi are but a few previous such winners.

If Liu were to win, the most positive effect would be a groundswell of interest in Charter 08 and Liu's writings in China itself. Whereas the writings of dissidents have so far been limited to the relatively small circles of Chinese citizens who know how to circumvent Beijing's extensive Internet censorship, the Nobel Prize would confer to Liu an instant notoriety that would make it impossible to prevent the mass diffusion of Charter 08 and Liu's other writings.

As the Chinese leadership seemed to have feared when it decided to jail Liu, many among the larger Chinese public -- including party and government officials -- might recognize themselves in the propositions advanced by Charter 08.

Dignitaries including Havel himself have urged the Nobel Committee to award Liu this year's peace prize. Despite the Chinese government's warning that giving the Nobel Peace Prize to Liu would be "totally wrong," history might judge otherwise.



Financial Shock and Awe

The world's central banks are at war. What does that mean for the rest of us?

In popular histories of World War I, the outbreak of hostilities is portrayed as essentially inadvertent. Rather than resulting from the struggle for dominance between a rising power and its established rivals, the war was a byproduct of a series of misunderstandings. Today, the flashpoint may be currencies rather than the Balkans, but the danger -- of misunderstanding leading to escalation and retaliation -- is fundamentally the same.

The misunderstanding is the belief that the phenomenon we are now witnessing -- vaulted into the front pages last week when Brazil’s finance minister decried the onset of an “international currency war” -- is a zero-sum game. The story goes like this: The The Bank of Japan (BOJ), it is said, by intervening in the foreign exchange market to weaken the yen is making life harder for other countries. The Bank of England, likewise, is happy to see sterling decline, given how domestic demand is depressed by the government's aggressive austerity program, but this only creates problems for its neighbors. The Fed has no objection if the market produces a weaker dollar, even if this frustrates the BOJ's best efforts. The People's Bank of China continues to intervene big time to keep the renminbi down. Other emerging markets, from Brazil to India to South Korea, find themselves either having to fight fire with fire or watch as their manufacturing sectors wither. Meanwhile, the economy most desperately in need of a competitive exchange rate, Europe, ends up saddled with the opposite.

This diagnosis, which is now conventional wisdom, reflects a series of dangerous misunderstandings. First, it is a misunderstanding to believe that the policies pursued by the BOJ, the Fed, and the Bank of England come at one another's expense. What we are seeing, in all three cases, is not exchange rate manipulation but what is known as quantitative easing, actual or incipient. The evolution of BOJ policy makes this clear. What two weeks ago started as a modest foreign exchange market intervention has now turned into an explicit program of purchasing 5 trillion yen of Japanese treasury bonds and bills, commercial paper, exchange traded funds, and real estate securities. The Bank of England has made no bones about its continued commitment to quantitative easing. The Fed is moving slowly, slowly in the same direction.

This, of course, is precisely what is needed in a world where deflation has again become a problem and fiscal policy, for better or worse, is off the table. It is not a "beggar thy neighbor race to the bottom." If anything it is a race to the top.

Second, the current situation reflects misunderstandings over strategies on the part of other central banks, many of which are still fighting the last war. (Here, of course, the analogy is with the Maginot Line and World War II.) The European Central Bank (ECB) insists on fighting yesterday's enemy, inflation, when deflation is Europe's clear and present danger. The ECB evidently thinks that now, when growth everywhere else in the world is decelerating, is the time to scale back its special credit facilities and prepare to raise interest rates. This beggars belief. Back in 2007, some economists thought emerging markets could "decouple" from the advanced economies. We now know better. If the ECB believes that Europe can decouple it is about to learn the same lesson the hard way. If the euro strengthens as a result of quantitative easing elsewhere and the European economy gets smashed then the ECB has only itself to blame.

The People's Bank of China and, more importantly, its political masters similarly insist on fighting the last war, which in their case means keeping the exchange rate at levels that maximize the growth of exports. China cannot continue to grow indefinitely on the basis of exports alone. It should start rebalancing its economy toward demand. And the easiest way to do so is by letting its currency rise.

Not only will this be good for China, but it will ease the strain on other emerging markets, such as Brazil and India, that are seeing their manufacturing sectors atrophy as a result of overly strong currencies. Their producers compete with China, partly on the basis of low labor costs, to a much greater extent than do, say, those in the United States. A strong renminbi won't solve all their problems, but it will make it at least somewhat easier for them to compete.

Tensions and recrimination are not inevitable. What is needed to avoid them is leadership from the three big central banks. The Fed needs to stop dithering and make precise the extent of the quantitative easing it intends. Uncertainty about whether it will move in increments or adopt a policy of shock and awe is contributing to the erratic behavior of the dollar exchange rate.

Not only would more clarity help that exchange rate settle down, but in addition it would make it easier for other central banks to calibrate their own policies. In particular, a Fed policy of shock and awe which, recent data increasingly suggest, is what is called for will make it easier for China to calibrate an appropriate response. With China experiencing inflation rather than deflation, looser credit conditions are the opposite of what it needs. Its challenge is to continue to modestly cool off its economy. Delinking from Fed policy by delinking from the dollar is the obvious way of achieving this result.

The only thing now standing in the way is the belligerence of politicians and commentators in other countries, since the last thing the Chinese government is willing to do is lose face. Even U.S. Treasury Secretary Timothy Geithner, an experienced China hand, feels compelled for domestic political reasons to pile on. This is not helpful.

The ECB, for its part, needs to start planning for the next battle instead of incessantly fighting the last. If it ends up with an exchange rate of $1.50 to the euro, the European economy tanks, and in the absence of growth the Greek, Irish, and other fiscal austerity programs will collapse. It will only have itself to blame. Here's a prediction: Contrary to what the markets currently assume, the ECB will eventually join the quantitative easing bandwagon. The only question is whether by the time it does it will already be too late.

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