In Box

What Hu Jintao Wants to Know

How the Chinese president views the world.

In November, Forbes dubbed Hu Jintao the world's most powerful person. One might quibble with that ranking, or the magazine's bald assertion that the Chinese president can single-handedly "divert rivers, build cities, jail dissidents and censor [the] Internet without meddling from pesky bureaucrats." But take it as a sign of the times: China has arrived on the world stage in a major way, and there's no question Hu had a lot to do with it. After eight years in office, Hu is one of the world's most experienced leaders. He sits atop a massive bureaucracy and party apparatus that is structured to collect, assess, and provide the information he requires. In superficial ways, what Hu needs to know in 2011 resembles what Barack Obama or Angela Merkel needs. But it would be a mistake to compare him to the U.S. president or the German chancellor. Better to start by constructing a map of his priorities modeled on Saul Steinberg's often imitated 1976 New Yorker magazine cover illustrating how Manhattanites view the world. What does Hu see?



As the first decade of the 21st century draws to a close, I am pleased to affirm that it has been the most successful in the history of the People's Republic of China. Our country has displaced Japan as the second-largest economy, our people are more prosperous than ever, and China's influence has never been greater. Thanks to the wise leadership of the party and strict adherence to the strategy of reform and opening articulated by former leader Deng Xiaoping, China emerged from the global financial crisis more quickly than any other country. Our economy continues to grow at a rate of 9 to 10 percent, more than three times faster than Germany's. This growth has bolstered national pride and earned the respect of people around the world. But it has also raised expectations at home and reinforced foreign concerns about China's rise. Our successes have made it even more important to make progress on corruption, perceived injustice, and other long-standing problems. To deal with these challenges, I must have timely information and analysis of developments germane to the issues summarized below:

Societal concerns and domestic tranquility. As I always tell foreign leaders who visit China, we are still a developing country. Economic growth has brought benefits to all, but gaps between rich and poor, urban and rural, coastal and interior, educated and uneducated, are growing and becoming more obvious and less acceptable as expectations rise and citizens become increasingly aware of developments via the media, the Internet, and other fast-spreading technologies. Urban residents need, and demand, better schools, public transportation, and more and cleaner water. The tensions between official residents and the "floating population" that has moved to the cities in search of jobs and better living conditions are also escalating, with potentially dangerous consequences.

Rural residents are falling further behind their urban counterparts and becoming increasingly angry about their inferior education, health care, and other services. Like city dwellers, they are increasingly intolerant of perceived injustice and corrupt behavior by officials who transfer land-use rights, ignore violations of environmental regulations, divert tax revenues to personal use, and commit other similar offenses. They are justifiably angry about our slow response to natural disasters like the mudslides in Gansu and the Sichuan earthquake, dangers to children from contaminated milk and other products, or the death of workers in illegal mines. Last year, we investigated more than 2,500 government officials and some 9,300 government workers suspected of malfeasance and infringement of people's rights, as well as more than 10,000 cases of commercial bribery involving government workers.

I need to know about any such developments in time to do something about them. As importantly, I must know immediately about any attempts to organize demonstrations, petition drives, or direct action against factory managers or officials. I need to have information that will enable us to understand the issues and determine how best to respond. We cannot simply shut our eyes to problems, as some officials did with respect to industrial pollution of drinking water in Jiangsu or the quality of school buildings in Sichuan.

Politics and political reform. Sustained growth depends ultimately on the efficacy of our policies and the unity and skill of our party. The year ahead will be especially crucial in this regard because we will be picking the leadership team for the next five to 10 years. Some in the party see this as an opportunity to accelerate, or roll back, specific reforms and are already maneuvering to build support for their positions and preferred candidates. Others want to increase the amount we spend on defense, road construction, or other sectors. This give-and-take is natural and, if consistent with the requirements of intraparty democracy, good for our country. As general secretary, I have an obligation to enforce party discipline, but I also have an obligation to use the experience I have gained over the past two decades and my knowledge of senior cadres across the country to ensure that my successors are able to sustain and build on what we have accomplished. To do this, I need information on what others in the leadership are doing to influence the selection of people for key positions and the policies they hope to see adopted. In particular, I need to know whether any factions are developing to oppose my chosen successor, Xi Jinping. I know that some in the party resent his "princeling" background and would prefer someone with more humble roots.

Developments beyond our borders. As Deng observed 30 years ago, China's ability to become stronger, wealthier, and more influential requires a prolonged period of peace. It also requires forestalling attempts by other countries, above all the United States, to constrain our ability to challenge their hegemonic position, especially here in Asia. The stronger and more influential we become, the greater our implicit challenge to American preeminence and the more likely that Washington will take steps to thwart our peaceful rise. I must know about U.S. efforts to degrade our nuclear deterrent by promoting missile defense and increasing its conventional military superiority. I must know about U.S. efforts to collect intelligence on our military capabilities and diplomatic activities. I must know what Washington is doing to strengthen its alliances and buttress its containment strategy, such as forging a strategic relationship with India. How serious is the Obama administration's drive to sell American weapons to our neighbors? Should we be concerned by the growing number of joint war games the Americans are holding in our region? Similarly, I must be informed about U.S. efforts to pursue its own agenda vis-à-vis Iran, North Korea, Pakistan, and other places that could endanger our access to energy resources, undermine the stability of friendly neighbors, or in other ways impact China's interests. I need to know what the United States is doing with respect to Taiwan, Tibet, and Chinese territories claimed by other countries, some of which, like Japan and the Philippines, are allied with the United States.

As China becomes ever more engaged on the world stage, our interests and my information needs are expanding. In 2010, our investments in Africa totaled more than $10 billion, our trade was more than $90 billion, and more than 500,000 Chinese are living in African countries. We have an obligation to protect those interests and therefore need to know about anything that puts them at risk or threatens to tarnish China's international image, such as attacks on Chinese oil workers in Sudan or violence at Chinese-run mines in Zambia. The same is true of many other regions. With our growing dependence on oil from the Middle East, we must stay on top of developments there because anything that threatens oil exports threatens our economy and social stability. We have a delicate challenge on Iran: cooperating just enough with the Americans to prevent a war that would damage our interests, while maintaining good relations with Tehran and allowing Chinese energy companies to do business. But we must be careful to stay out of the Arab-Israeli conflict. That's America's problem. For now.

Photo by Reneé Comet for FP

In Box

Welcome to Minegolia

How the land of Genghis Khan became a new 
Gold Rush San Francisco on the steppe.

View a slide show of Gucci in the land of Genghis Khan.

For the first time in as long as anyone can seem to remember, there have been traffic jams in Ulan Bator -- a place previously known mainly either as the answer to a trivia question (Which capital city has the coldest average temperature?) or as a historical curiosity: Asia's Timbuktu, the fabled homeland of Genghis Khan. Until recently, the Mongolian capital had more horses than cars.

No longer. Mongolia is in the middle of an epic gold rush -- think San Francisco in 1849 -- but it's copper and coal that have enticed businessmen, investment bankers, and miners from London, Dallas, and Toronto by the planeload. Today, Ulan Bator is abuzz with talk of options and percentages, yields and initial public offerings. Not since the 13th century, when Genghis Khan consolidated the nomadic tribes of these remote steppes and established an empire that eventually spanned from Eastern Europe to Vietnam, has Mongolia seen so much action. The country's stock exchange (though still the world's smallest) rose 125 percent last year, and the IMF forecasts double-digit GDP growth rates for years to come. Others aren't nearly so pessimistic: Renaissance Capital -- an investment bank that specializes in emerging markets, one of many that have recently set up shop in Mongolia -- notes that overall economic output could quadruple by 2013.

"Mongolia is about to boom. Of that, there is no longer any doubt," says John P. Finigan, the Irish CEO of one of Mongolia's largest banks. A veteran of developing markets in scores of countries, he says the only comparable growth potential he has seen has been in the Persian Gulf oil states.

The reason for the boom can be summed up in a word: China. Mongolia has some of the world's largest undeveloped fields of coal, vital for its southern neighbor's hungry steel mills and power plants. Mongolia is also rich in copper, needed for the power-transmission lines being strung at record rates in fast-growing Chinese cities and for the production of batteries, especially those for the booming market in electric cars. China currently consumes nearly 7 million tons of copper each year (about 40 percent of global demand), but it's on track to triple its copper needs within 25 years, according to CRU Strategies, a London-based mining and metals consultancy.

Twenty years ago, when I first visited Mongolia, it had just emerged from seven decades under the Soviet umbrella. Ulan Bator had a shellshocked otherworldliness about it. There were a few grimy hotels fronting Sukhbaatar Square, named for the leader of the 1921 revolution that transformed Mongolia into the world's second socialist state. After decades of decline, the city looked like a set for an apocalyptic movie, especially in the crush of winter, when the sky was a perpetual charcoal gray.

Nowadays, Ulan Bator looks increasingly like a Chinese boomtown, with all the same trappings -- exploding property prices, huge capital inflows, rising concerns about corruption, widening gaps in income disparity, and a flood of flashy automobiles on the roads. A year ago, a Louis Vuitton boutique opened for business in the posh Central Tower building near Sukhbaatar Square. A glass cabinet holds a horse saddle encrusted in gems. "It's one of a kind, custom-made for Mongolia," the manager notes. Downstairs, the offerings are more conventional. A crocodile purse fetches $20,000; watches run $17,000. The sums are astounding in a country that is still among the world's poorest. Per capita GDP in 2008 was about $3,100, making Mongolia the world's 166th-poorest country -- just ahead of the West Bank. Yet that hasn't stopped Ermenegildo Zegna, Hugo Boss, and Burberry from opening up. "There's lots of new money here," says Zoljargal, marketing manager for Shangri-La Ulaanbaatar, which is rushing to finish a new shopping plaza, along with Mongolia's first luxury hotel.

The luxury disappears as soon as you leave the capital. On the town's outskirts lie ger camps, nomadic tent communities where tens of thousands of people live in poverty; beyond, there is little sign of civilization, just the vastness of the Gobi Desert. The harsh conditions and lack of infrastructure have hampered habitation and development for centuries.

But this inhospitable terrain is also key to the boomtown future. For here is Ovoot Tolgoi, a coal mine 30 miles from the Chinese border run by a Canadian company called SouthGobi. The company has invested $200 million in a state-of-the-art facility that is on pace to sell 4 million tons of coal to China annually, with plans to double production by 2012. "Mongolia: the Saudi Arabia of Coal," reads the slogan on the firm's website.

The optimism becomes understandable as I tour the site, where an ocean of coal covers the surface of the sandy earth. The seam averages more than 50 meters wide -- one of the world's thickest -- and 250 meters deep, though portions of it go down at least 600 meters. Ovoot Tolgoi has proven initial reserves of 114 million tons, enough to last up to 16 years, but that's a conservative estimate and that's just the one mine in production. SouthGobi also has licenses for two other sites. Layton Croft, a vice president at SouthGobi, compares the rush to the heady days of the dotcom era. "It is a bit like," he says. "The difference is, this boom is for real, and it's going to last a long, long time."

There are obstacles in the way, not least a government that is prone to corruption and more accustomed to reeling from regular shortages of fuel and food than managing a sudden windfall. "Of course, the worry is this revenue will lead to bad political decisions," says S. Oyun, a member of parliament and head of the Zorig Foundation, a government watchdog group. But President Tsakhia Elbegdorj brushes away concerns that Mongolia could end up the next poster child of the resource curse. "We are very much aware of the Nigeria case, the Dutch disease phenomenon, and so on," Elbegdorj tells me. "Mongolia is a democratic country of educated people. Our people and democracy are the guarantees that our country will not become another Nigeria."

It's hard to root against a people who've long had so little finally getting a slice of the pie. But in this stark land of fabled warriors, something will inevitably be lost if Mongolia becomes north Asia's Saudi Arabia. Genghis Khan wouldn't be caught dead wearing Prada.

Timothy Fadek