Free trade agreements and nuclear trade-offs

U.S. President Barack Obama is carefully planning his upcoming visit to Israel and, with it, he is also complicating a negotiated diplomatic solution to the Iranian nuclear crisis and undermining the rather unusual efforts of the European External Action Service. 

On March 15, with no extra publicly available data to back the statement and no special provocative statements from Iran, President Obama warned that, despite the Iranian bomb could be more than one year away, a military option remained pretty much on the table.

On a more discreet note, although equally important and closely related, last February 28, the U.S. Senate passed Resolution 65, calling the U.S. to provide support for Israeli strikes on Iran, aimed at preventing the Islamic republic from acquiring nuclear capabilities, in the form of military, economic and diplomatic backing.

To make things even more complicated, it all comes in the aftermath of North Korea’s latest long-range missile test, in December 2012, and third nuclear test, earlier in February, both taking place on the heels of the signature of a bilateral cooperation  agreement in the fields of science and technology – signed in Tehran on September 1, 2012 with both Iranian President M. Ahmadineyad and North Korean Chairman of the Presidium of the Supreme People's Assembly Kim Yong-nam present at the official ceremony – and allegedly supported by (and even carried out on behalf of) Iran, which has also successfully test-fired two different short-range missiles.

This conflict-geared agenda is undermining the efforts of other international players to defuse tensions and negotiate a palatable solution to the conflict over Iran’s nuclear plans. Most notably, the almost unprecedented proactive efforts of the often reactive European Union diplomatic arm to take the lead in negotiating a peaceful resolution to the Iranian nuclear issue are being not-so-subtly being put aside by the combined efforts of the revamped Netanyahu cabinet (now including a right-wing defense minister M. Yaalon) in Israel and its American ally.

It also comes at a complicated time for the European Union to answer back and hold its ground: after several months of preparatory meetings and negotiations, the European Commission has given the green light to launch talks leading to a comprehensive Free Trade Agreement (FTA) with the United States of America, Europe’s main trade partner, an agreement that would remarkably boost transatlantic cooperation and bilateral trade.

Signing this FTA not only makes economic sense for the sputtering EU economy, but also carries great diplomatic and geostrategic clout: amid notable cuts in defense budgets all across Europe – military expenditure across Asia has overtaken Europe’s for the first time in contemporary history – and fears that NATO’s role and capabilities are being undermined in the context of Washington’s much-trumpeted “pivot to Asia” , Europe’s democracies are trying hard not to become irrelevant in the multipolar 21st century.

When silence is the only sound coming from the European External Action Service and the loudest voices can be heard in the Directorate Generals for Trade and Economic and Financial Affairs, the only valid conclusion one can reach is that Europe needs to export its way out of the crisis and thus further improve its balance of trade, a discourse that has two clear implications for the involved parties. First, the EU enjoys a healthy and growing positive trade balance with Israel (up from under €3 billion surplus in 2009 to over €5 billion surplus in 2011 when combining trade in goods and services) and is not willing to see it vanish overnight. Second, free trade with the United States would notably boost European exports across the Atlantic, raising European aggregated GDP an estimated 0.5% per year, and any source of growth is now sorely needed. In the words of Mr. Vale de Almeida, EU Ambassador to the U.S., “it is good to see Europe perceived again in Washington as a source of growth, and we must seize the moment.”

Green light, therefore, from Brussels for Israel and the United States to take the course they consider more fit for the Iranian nuclear issue... of course, China and its strategic energy interests permitting.

Betting everything on China

How North Korea really aims at China with its threats against South Korea and the United States

Since its 12 December long-range missile / satellite launch and 12 February nuclear test – already its third, the most powerful yet and allegedly funded by and performed on behalf of Iran –, the Democratic People's Republic of Korea (DPRK) has been all over the news, most recently by threatening to cut all communication lines with Seoul and voiding the 1953 armnistice – one of the few elements that keeps the unstable peace in the Korean peninsula alive – in response to the passing of UNSC Resolution 2094, considered the most punitive to date (albeit not the harshest that could be imposed), which condemns North Korea's nuclear activities "in the strongest terms", imposes new financial sanctions, strengthens states' autohority to inspect suspicious cargo from the DPRK and imposes additional sanctions on individuals and entities.

However, further from the passing of yet another UNSC Resolution (in fact, another resolution against North Korea, no. 2087, was adopted last January), the reelection of Barack Obama or the even more recent investiture of new South Korean President Park Geun-hye, the reasons behind the unusually bellicose behaviour of the Kim Jong-un regime, dialectically already surpassing that of 2010, which preceded the shelling of the allegedly disputed Yeonpyeong island, have to be found in the menacing attitude shift coming from China. The stakes are too high for the regime, which is now resorting to indirect brinkmanship negotiation tactics to make sure China has no choice but to keep supporting it.

Several warning signs are arising from China. Although the Chinese government's worst nightmare would be a North Korean collapse, which would trigger a flood of impoverished refugees crossing China's border and create a security nightmare until North Korea's nuclear weapons were found and secured, Beijing's stance has perilously drifted from near-unconditional support to a more critical stance. Two unprecedented moves reflect this potential attitude shift.

First, critical voices from inside China's Communist Party have been allowed to publicly question Beijing's support of the Kim regime. In one of the most resounding pieces, whose publication in the Financial Times guaranteed its international impact, Deng Youwen, deputy editor of the journal of the Central Party School of the Communist Party, asserted that the benefits of this privileged relationship are unclear: ideology-based relationships are dangerous, the Cold War is over and North Korea's strategic value should not be overstated, North Korea will not reform (i.e. will not open its economy to Chinese businesses looking for cheap labor) and Pyongyang is drifting away from Beijing (i.e. it does not follow anyone's orders). In fact, Deng was just voicing the concerns of a growing number of Chinese intellectuals and party members. Despite the obvious fact that trade with North Korea has helped revitalize the impoverished Northeastern provinces of Liaoning, Jilin and Heilongjiang, especially since the start of the Northeast Asia Project in 2002, North Korea has been testing China's patience for too long, and weariness is starting to show.

This leads us to the second change in China's behaviour vis-à-vis North Korea. Until recently, Pyongyang's only ally and regime guarantor refrained from actively supporting UNSC Resolutions against North Korea, unless in those related to the 2006 and 2009 nuclear tests. However, it all changed last December, when Chinese dilomats joined their U.S. counterparts to proceed with a UNSC resolution criticizing North Korea for its latest missile launch. As asserted by Kurt Campbell, this surprised and enraged Pyongyang and set the stage for the February nuclear test, a strong warning to China that North Korea has no interest in playing the role of vassal state (i.e. what Deng Youwen qualifies of "Pyongyang drifting away from Beijing"). Not surprisingly, China played an active role in drafting UNSC Resolution 2094, implicitly threatening the eventual enforcement of these strengthened sanctions. 

In the past, China-DPRK trade has even increased in the aftermath of UN sanctions, as implementing regulations passed by the United States, the EU and other states and trade blocks were put into effect but circumvented via China, which consistently failed to create detailed lists of forbidden imports of the luxury items that the North Korean elite craves. If China's attitude changes – and that is still to be seen, although there are some early promising signs –, the effects for the luxurious lifestyle of Kim's clique could be devastating, potentially triggering severe internal discontent and instability. Further from the economic benefits for the Chinese nationals engaging in trade activities with the Korean elites, Beijing is very much aware of the risk of regime collapse if trade or aid are severely cut down. Pyongyang knows it and is playing its cards to make sure China's fears overwhelm its desire to please the international community on the North Korean issue amid growing tensions tied to its trade surplus, growing military clout and territorial demands in the South China Sea and the Sea of Japan.

Professor Jennifer Lind has ably asked herself whether China will finally bite North Korea. The answer is still up in the air and, as she says, the significance of these recent developments should not be exaggerated, as the Chinese have still watered down the degre of punishment imposed against Pyongyang despite actively backing the sanctions. Plus, if past behaviour can be of help to predict the future, Chinese firms have, with Beijing's consent, consistently helped North Korea evade sanctions. So far, the only obvious fact is that Pyongyang is placing a strong bet on its fearful brinkmanship tactics, hoping they play into Beijing's fears of instability in its backyard. We can just hope that Pyongyang's China-aimed strong words and threats do not end up in violent provocations, which could eventually trigger a disastrous major conflict.

American symbolic power projection: Syria as a response to the Palestinian blunder

After its diplomatic near-isolation in the recent UN vote to give observer status to Palestine, and with the Iranian crisis still unresolved, the United States will strive to reestablish its symbolic leadership role in world affairs by promptly recognizing the Syrian rebels as the legitimate government of the embattled country, thus opening the door to greater involvement in the ongoing, bloody civil war.

Face-saving and symbolism do matter in international relations, especially when it comes to great or hegemonic powers whose privileged position of dominance seems threatened, such as today's United States. The recent UN General Assembly vote on Palestine, in which the US joined just seven other nations apart from Israel (most notably Canada, the Czech Republic and a bunch of Pacific microstates) in trying to deny the Palestinian Authority 'non-member observer status' (and everything it entails). Even America's 'special partner', the United Kingdom, abstained, together with schadenfreude obsessed Germany. This abrupt show of diplomatic near-isolation will probably have further consequences for the geopolitics of the Middle East.

With the Iranian nuclear crisis still far from being resolved -- an Israeli strike has never been off the table -- and the upcoming North Korean satellite/ballistic missile test, perfectly timed to defy America's chief allies in the region -- Japan holds an early general election on December 16, while South Korea will have its presidential election on December 18, with the first anniversary of Kim Jong-il's death sandwiched right in between --, the Obama administration, with the political reassurance that only four more years in office can bring, will probably seek to reaffirm its wounded symbolic leadership in global affairs by heightening its involvement in yet another crisis involving the Arab world, Syria's civil war, namely by openly backing the rebels via their recognition as the legitimate government of the country.

The time also seems right for geopolitical reasons, as America's two major strategic rivals, China and Russia, remain mired in the process of reaffirming their political, economic and military supremacy in their immediate neighborhoods: China with its much-commented squabbles and dangerous nationalistic discourse on the South and East China seas, and Russia with the still latent conflict in the South Caucasus and Georgia, its suspicious political union with Lukashenka's Belarus and the Soviet-era throwback Customs Union, so far including just Belarus, Kazakhstan and Russia, with Kyrgyzstan set to join soon. Indeed, Russia's comprehensive bid to consolidate its power within the former Soviet area even includes a highly symbolic proposal to recreate the former Soviet soccer league, which has reportedly been well received by relevant clubs far West of Moscow.

Therefore, despite China and, above all, Russia's staunch support of the Assad regime both for economic (arms sales, anyone?) and geostrategic reasons (Syria's Tartus naval base is the last Russian military base outside the former Soviet Union), opposition could be handed with the usual mix of diplomatic sticks and carrots -- any deal could be sweetened by offering to withdraw outstanding minor WTO trade suits with China and proposing further cooperation with NATO via minor concessions on existing differences to Russia.

We should not expect, however, an unilateral decision: in order to offset Chinese and Russian reticence, the Obama administration should seek agreement by and coordination with its NATO allies. That should not prove overly difficult: the oft-dissident France already broke the diplomatic ice barely two weeks ago by being the first Western state in recognizing the coalition of opposition groups as the legitimate Syrian government, immediately prompting questions about if and when the rest of the West would follow suit. The next step, NATO agreeing on stationing Patriot missiles along the Turkish border with Syria, is just around the corner, with strong support from Germany, the Netherlands and, of course, the U.S.

The main question marks behind this move would be related to the presence of chemical and biological weapons in Syria and El Assad's Foreign Ministry's recent threat to use them in case of 'external aggression' and, obviously enough, to the rebels themselves and the future of Syria in case the current dictatorial government is toppled. Not enough is known about these 'freedom fighters', who are thought to include several subgroups of jihadists among their ranks. Moreover, the widespread optimism that accompanied the 2011 Arab Spring revolutions has already fizzled, and for good reasons: Tunisia is mired in a deep economic crisis and (violent) political turmoil; there is still no semblance of normality in Libya, more than one year after Gaddafi's death; and Egypt's President elect, Mr. Morsi, has just passed laws granting himself total immunity and quasi-dictatorial powers, while the Muslim Brothers were busy drafting a constitution enshrining the Sharia as the main source of law in the country, prompting widespread violent protests that could spark a civil war.

Potential risks, however, will not deter the U.S. from making this diplomatic move. Only strong, combined opposition form China and Russia added to a lukewarm response by Washington's allies could put the brakes on a decision that will suppose a tactical reaffirmation of American symbolic supremacy in world affairs, even if its strategic outcomes are still far from certain.

Explaining the unreliability of surveys in the 2012 Catalan elections

Somehow deviating from the original purpose of this blog, this post will focus on the possible explanations behind the lackadaisical victory obtained by CiU in the recent Catalan elections, which was not predicted by any of the numerous pre-election surveys and polls. I argue that there is no single reason behind this major surprise, but a whole combination of factors making all predictions worthless.

Recent results in the Catalan regional elections pose a very interesting challenge for anyone interested in political science and voting dynamics, as well as with the predicting power of surveys and polls. This time, it's nothing like the usual 'Gallup against the world' issue, but outcomes remarkably deviating from all polls, predictions and expectations (including those of the candidates themselves!)

According to all pre-election polls, performed by news outlets and official sources apiece, the ruling party, Artur Mas’ Convergence and Union (CiU), would at least repeat the results it obtained in 2010, with 62 seats out of the 135-strong parliament. However, when it was all said and done, CiU was again the prevailing force, but only took 50 seats. Talk about a bitter victory.

How could such a reversal of sorts happen? Why did not just one, but all polls fail to reflect this fiasco? The answer obviously lies in the extraordinary high number of undecided voters reflected by all polls, up to an average 30% of the respondents. Let's imagine a survey with a sample of 1,000 respondents. Given that the number of potential voters in Catalonia hovers around 5 million, this combination would normally produce results with a 4-5% margin of error and a 99% confidence level, meaning that we should be 99% sure that the results will be the ones obtained, within a +/- 4-5% range.

However, if 30% of respondents report being undecided, only 700 real answers will be given. If, out of those 700, 330 report their intention to vote for CiU, projections will assign this party almost half the seats in the Parliament. In fact, even a lower number should suffice, as the Catalan voting system, a modified version of the d'Hondt method, strongly overrepresents the less populated, more rural provinces of Girona, Tarragona and Lleida, traditional CiU strongholds. In other words, the number of undecided voters practically equaled that of CiU-leaning respondents, thus making any projections wildly unreliable: if 30% of the sample are unable to give what we should consider a statistically valid answer, the reliability or validity of any such survey should be seriously doubted.

Or shouldn't we? Despite reporting relatively high levels of undecided voters, such pre-election polls tend to get the results fairly right, both thanks to the overgenerous  margin of error or projected bracket we obtain when taking all the major polls combined (in this particular election, CiU was projected to obtain anywhere between 60 and 70 deputies, a a +/- 8% margin of error) and to the fact that undecided voters usually end up distributing their final choices in a rather regular and predictable pattern across the whole political spectrum – barring major campaign breakouts or breakdowns. Even if the campaign was a especially vicious one, there was only a very modest downward trend for CiU results in polls published up until the very end of the 2-week campaigning period. In short, nobody was able to predict what was actually coming. Beside the inordinate number of undecided voters, what are the reasons behind this highly unusual predictive breakdown?

First – and maybe foremost – the record-breaking turnout, which reached 70% of the electorate, benefited left–wing parties, all of them obtaining far better results than initially predicted. The biggest gains went to the Republican Catalan Left (ERC), a pro-independence left-wing party who collected thousands of votes of disaffected former CiU voters. Even the Socialist Party (PSC), despite taking a hard beating, ended up with 20 deputies, up from the predicted 16-18. The green-socialist party Iniciativa per Catalunya Verds (ICV) went from 10 to 13 seats, and even the radical anti-capitalist, pro-independence popular movement CUP took home 3 wholly unexpected deputies. The fact that CiU has lost just 90,000 votes (or 7.5% of the total votes they obtained in 2010) but 12 deputies (nearly 20% of the previous total), while left-wing parties collected an extra 531,000 votes (going from a mere 447,000 in the 2010 election to 978,000 now, more than double) tells the whole story here.

A second reason is the newfound strength of the so-called 'hidden vote': namely, people who are ashamed to acknowledge they support unpopular political options, such as anti-separatist parties in Catalonia. Social polarisation due to the mainstream pro-separatist discourse set up the breeding ground for an unusually high number of hidden votes: the populist Ciutadans (C's) wildly beat all projections by tripling its representation, going from 3 to 9 deputies, while Mariano Rajoy's People's Party (PP) also did well, gaining an extra seat despite the tough austerity, centralising policies coming from Madrid. In the case of C’s, their explosive rise – which was only partially predicted in the surveys – demonstrated that the PSC was indeed a 'mixed bag' until now. Its power base in the Barcelona area industrial towns, mainly made of former internal migrants and their working-class offspring, deserted en masse. Some went for the alternative socialist option, ICV, but most undecided former socialist voters, and also some traditional CiU voters – scared off by its newfound separatist thrust – switched to Ciutadans.

Finally, last-minute hardball tactics by the right-wing Madrid press, wholly supported by relevant figures of the PP-controlled central government and highlighted by the leak of an alleged police report incriminating Artur Mas, Home Affairs Minister of Catalonia Felip Puig and CiU patriarch and former President Jordi Pujol, also played their part. Despite the still unclear validity (or even existence) of this document, it surely scared off many undecided voters who might be leaning towards CiU, believing in Mas' rhetoric, but were definitely disappointed at even the rumors tying his name to a further corruption scandal – something all too common when it comes to Spanish and Catalan politics, including CiU. Most of these disappointed people moved left to ERC, seen as a more genuine pro-independentist, clean force, but some others moved to the populist C’s or even the PP.

To sum up, an unusually high number of undecided voters in all pre-election polls combined with an unusually high turnout and the unexpectedly uneven allocation of the votes of those undecided citizens – which massively opted for left-wing, pro-independence ERC, ICV or CUP or populist, anti-separatist C's – shattered all predictions. Right-wing parties, such as CiU and the PP, traditionally enjoy a strong, loyal base of supporters: this army of loyalists always comes handy, but it can also fall short of breaking the bank, especially when turnout is unusually high. Austerity, recession, unemployment, dirty politics and miscalculations did the rest.

Mao’s (lack of) family planning skills: how China’s untimely population growth is coming back to haunt the dragon

Famously enough, Deng Xiaoping, when asked about Mao Zedong’s legacy, asserted that the Great Helmsman had done 70% right and 30% wrong. Although Deng was credited for far more precise policies and on-the-spot quotes during his fruitful leadership years, it might be time for current and upcoming Chinese leaders to update this dubious percent distribution due to Mao’s terrible, nation-mortgaging family planning skills. In other words, China’s population exploded too early, and this might well be the main cause of today’s economic ills in the most dynamic world economy in the last 3 decades.

The basic reasoning goes like that: facing a much-anticipated economic growth slowdown, partially due to global economic tensions and instability both in the EU and the US, the Chinese economy badly – according to some analysts, rather desperately – needs to boost internal consumption and, therefore, lower the savings rates of much Chinese citizens, which hover above 50% of total disposable income.

One way to boost consumption would be, obviously enough, to increase total disposable income of Chinese workers and middle-income families, which, by all estimates, is relatively low in comparison with other countries with similar per capita GDP. However, this would probably suppose a death knell for the still developing Chinese economy, transitioning from an export-focused, labor-intensive, low-added value model to a hi-tech, added value model. In other words, raising salaries further – i.e. apart from persistent inflationary pressures – would mean a sudden loss of competitiveness for an economy which still exports its way to growth and which is facing increasing international pressure to keep revaluating its undervalued currency, the yuan. In other words, this is not the way Chinese political and business leaders are keener to follow.

What else can they do, then? Not much, indeed. The Chinese public was already heavily incentivized towards consumption by financial sector regulations that offered them a real negative return on their savings: while inflation was running well above 6% a year, interest rates for saving accounts have been capped below 3%. This also explains why many middle-class Chinese resorted to buying property, thus fueling an investment-led bubble that is now set to deflate, if not to explode, as prices reached unsustainable levels and the value of the investment decreased.

This undervaluing of savings has indeed allowed Chinese banks to fuel their almost uncontrolled lending practices vis-à-vis state-owned enterprises (SOEs), in a Chinese-way variant of the unchecked lending that caused massive leveraging in huge Korean chaebols by the mid-90s and subsequently fueled the massive Asian financial crisis of 1997-1998. Although China’s economy is far less exposed to foreign capital (prone to flee when the going starts getting rough) and strict capital controls make it difficult for local money to suddenly exit the country, the way most profits from undervalued private savings have been reused might not have been the wisest possible.

Sure enough, doling out credit to SOEs – including development companies headed by local and regional party leaders – meant fast profits for both the banks and the local, regional and national politicians behind both the banks and the SOEs. However but not reforming the currently inexistent social security net can have severe consequences for a country that has been unable to solve a legacy problem from the Mao era: China might be reaching a demography-led point of no return.

Let’s go back to the starting point: why do Chinese people save so much if their options are limited and real return on investment is even negative? As argued in a recent blog post on the ills of Chinese SOEs with the rather explicit title The Macroeconomics of Chinese Kleptocracy, poor and even middle-income Chinese want to be sure they will have enough money not to starve when they are old. 

China, a traditionally Confucian society, has always emphasized and relied upon the filial piety paradigm, according to which sons and grandsons would care for the elderly when necessary. Based on that, China could progressively scrap its social security net starting from the end of the Mao era without much initial social or economic backlash: although the one-child policy had already been implemented, the demographic trends still allowed for a massive marginal growth in working-age population – a growth which will be totally over by 2015.

However, current Chinese society is mostly based on inverted pyramid families (not to mention the alarming lack of young females due to culture and policy-led infanticide), in which one can find just one child with up to four grandparents. Obviously enough, current and future elders can no longer rely on filial piety alone to feed them (or pay for their medicaments), so they save as much as they can to compensate for the lack of old-age pensions, efficient public healthcare and other social safety measures that indirectly fuel consumption and discourage excessive saving in most developed countries. As long as future prospects of a more relaxed retirement do not come to reality, most Chinese will keep saving their hearts out.

Should, therefore, the Chinese government hasten to create even a limited version of European, East Asian (think Japan’s or South Korea’s) or U.S.-style welfare states? That should have probably been the answer, but it might be already too late for two reasons: global context, both thanks to structural factors and issues related to the current conjuncture, and demographic pressure.

As previously argued, marginal demographic growth of working-age population is grindingly coming to a halt, thus putting extra pressure on the flows of impoverished rural immigrants willing to work for low wages at export-oriented factories. Added to that, the increasing and otherwise unstoppable technologization and digitalization of China’s manufacturing sector – for instance, Foxconn, the huge electronic component maker, will 'hire' a million mechanical arms between 2012 and 2013 – and the necessary transition to a knowledge-based, greener economy can also severely hurt a country with a big chunk of its population still suffering from poverty or relatively low incomes – even if per capita GDP at purchase-power-parity already stands at $8400 (2011 data; source: CIA World Factbook), China’s income inequality is extremely high, and rising, with a GINI index of  48 (2009 data; source: CIA World Factbook), making it the 27th most unequal country worldwide.

Added to that, while the current number of Chinese over 65 years of age is still relatively low for developed country standards, it is no longer so for a developing country devoid of a social safety net. Moreover, the problem is set to dramatically increase in the coming decades, with a projected XX% of the population over the age of 65 by 2050 – i.e. before China, even if generous growth rates are somehow maintained, reaches an economic development level comparable to that of richer countries.

Unemployment benefits for future out-of-job low-skilled factory workers, old age pensions for a growing mass of elderly people, healthcare benefits for an increasingly restive population of rural immigrants residing in cities without the corresponding urban hukou and other much-needed reforms might pose a very serious, growing economic burden for the Chinese state, especially in the midst of a probable global double-dip recession mostly affecting its key economic partners.

Bad timing? Probably. Bad policy choices? Maybe. In any case, major blame should not be put upon sheer luck or the often-maligned one child policy, which indeed was a desperate measure aimed at stopping undue demographic pressure on a country whose natural resources are already stretched to the maximum. Rather, blame should rest upon Mao Zedong’s belief that the key element for national survival in a time of political unrest lay upon a huge population not only helped fuel China’s Communist chaos, but also created an untimely time bomb whose consequences might be dearly felt in the next few years.

While it is undeniable that China’s explosive birthrates and subsequent rural healthcare improvements in the 50s and the 60s set the basis for the economic surge of the 80s and the 90s – again, this massive marginal growth in working-age population, – the explosive growth it helped create might have also sown the seeds of future demography-led stagnation and crisis.

Obviously enough, only time will tell how events will truly unfold. China’s low public debt and deficit levels, as well as its massive foreign exchange reserves, standing at $3.3 trillion at the end of 2011, give ample maneuverability to the Government in case it decides to do something about China’s most pressing economic problem. However, and independently of the route taken by the future caste of Chinese leaders, in case Deng Xiaoping counted Mao’s family planning policies within his 70% positive decisions, it is about time that his successors recalculate the Mao-era plus/minus ratings and start implementing social-based reforms before it might be truly too late.