After China placed limitations on candidates for Hong Kong’s city leader, Hong Kong erupted in protest. This, of course, presents a large challenge to Xi Jinping and the PRC. Edward Wong and Chris Buckley write for the Times:

China’s Communist Party has ample experience extinguishing unrest. For years it has used a deft mix of censorship, arrests, armed force and, increasingly, money, to repress or soften calls for political change.

But as he faces massive street demonstrations in Hong Kong pressing for more democracy in the territory, the toolbox of President Xi Jinping of China appears remarkably empty.

It’s an especially difficult challenge for Beijing because their options are so limited. If they come to an agreement with the protesters, or even remove the limits entirely, it will not only show weakness on Beijing’s part (something they are loathe to do), but could encourage similar protests in China proper. But they also have little ability to clamp down on protests in Hong Kong.

This is as large a threat to the PRC we’ve seen in years, and it has the potential to rival the 1989 protests.

China’s increasing rate of education is astounding:

Sheer numbers make the educational push by China, a nation of more than 1.3 billion people, potentially breathtaking. In the last decade, China doubled the number of colleges and universities, to 2,409.

As recently as 1996, only one in six Chinese 17-year-olds graduated from high school. That was the same proportion as in the United States in 1919. Now, three in five young Chinese graduate from high school, matching the United States in the mid-1950s.

They have very little choice but to increase the number of people receiving a college education at a dramatic rate because China must transition from infrastructure investment and low-cost labor-fueled growth to an economy based more around consumption and higher-value work in the next two decades.

Their challenge, though, is that finding qualified people to teach is very difficult, and that while they may be increasing the quantity of students receiving a college education, they are not necessarily receiving one of the same quality as international schools provide.

In Guangzhou, China, journalists for the Southern Weekend newspaper are striking in opposition to censorship of an op-ed that called for rights in China’s constitution to be better respected.

After passing through China’s censorship process, the op-ed was altered to praise China’s current political system.

Significantly, many people have showed up to support the protest, and a number of famous actors have voiced their support. This could end up being a major test for the new regime led by Xi Jinping, and an indicator of how he intends to rule. If he sides with the protestors (in some form), it should indicate that he seeks to decrease censorship of China’s news media. Or he could side with the government and maintain China’s status quo.

Follow this story. It may quiet down, but it could also end up being important.

Eveline Chao has one of the better overviews of China’s Internet censorship I’ve seen:

Sina Weibo users can post anything they like, and often sensitive posts will even appear in their personal feed, but the post is blocked from search results. In other words, a user might have no idea their post has been “disappeared” and their friends and other users can’t see the post in their feeds. After a term has been unblocked, it quietly reappears in users’ feeds and search results.

Because what’s censored and how it’s censored is not uniform, the effect on speech may be even worse than a strict program for censoring defined topics in every case. Since people aren’t always sure what’s going to be censored (or in some cases, if it is censorship at all), there’s a freezing effect. You can get around a well-defined censorship program, but it’s much harder to get around one that is always changing.

The China Model continues to impress:

The owner of an Internet cafe in southwest China was given an eight-year prison term for criticizing the ruling Communist Party in online messages and for seeking to establish an opposition party, his wife said Thursday.

Chinese economist Zhang Weiying is gaining in audience in China for his view that China’s Keynsian, state-run model has mis-allocated investment and made conditions worse:

In other words, the stimulus was a poster child for Mr. Zhang’s Austrian theories. And the sheer size of the failure suddenly has people paying attention. “The Keynesian policy didn’t deliver what it promised,” he says, so “more and more people realize that . . . when the government makes investment [in] something that’s useless, recession will come.”

Chinese officials no longer treat Mr. Zhang as a pariah. He reports that Ministry of Agriculture officials tell him they enjoy reading his articles. Other ministries and local governments, including in Henan and Liaoning provinces, invite him to speak. He says that when he recently wrote an article praising the late Austrian economist Murray Rothbard, the Communist Party secretary of Shanghai—a fairly high-level apparatchik—told him he liked it.

Interesting, especially because only a few short years ago, the “Beijing Consensus”—a sort of state-directed capitalism—was lauded across the world for its success.

Reporters Without Borders has a video of Liu Xia, Liu Xiaobo’s wife, looking out her window and smoking a cigarette at night, one of the few freedoms she has. The video is haunting. This is her only day-to-day contact with the world.

China has held dissident Liu Xiaobo’s wife under house arrest for 2 years, since Liu was imprisoned for calling for democratic reforms in China. The Chinese government is holding Liu Xia under house arrest without any legal justification, and it’s believed they are doing so to try to pressure Liu Xiaobo to go into exile:

His wife Liu Xia, an even softer-spoken poet and photographer, has been similarly silenced. She’s being held in her own flat in Beijing.

She’s been there for two years, detained just a couple of days after her husband was announced as the 2010 winner.

That’s what the Chinese government (and CCP) does: it imprisons people who are critical of its actions, and harms their family and friends to silence them. The party has no compunction for squashing its own people, because the party is more important than mere individuals. Individuals are merely grist to the mill, resources to be ground up to achieve their goals.

Bo Xilai will face prosecution:

Mr. Bo is accused, among other things, of abusing his power in relation to the case of a British businessman who authorities say was murdered by Mr. Bo’s wife and of taking “massive bribes” directly and through his family, according to Xinhua, the state news agency.

It says a lot about China’s system that someone as corrupt as Bo, and who ruined as many people’s lives as he did, was only charged with crimes when his actions became inconvenient for the CCP. In China, that tends to be the only way to get justice: give the party no other choice.

Patrick Chovanec:

Many in Washington have developed a serious case of China-envy, seeing it as an exemplar of how to run an economy. In fact, Beijing’s mandarins are no better at picking winners, and just as prone to blow money on boondoggles, as their Beltway counterparts.

Minxin Pei argues that by overestimating China’s strength, and the CCP’s grip on power, the U.S. is not thinking through potentialities for China’s future and how we should respond to them:

The most consequential effect of this disconnect is the loss of an opportunity both to rethink U.S. China policy and to prepare for possible discontinuity in China’s trajectory in the coming two decades. The central pillar of Washington’s China policy is the continuation of the status quo, a world in which the Communist Party’s rule is assumed to endure for decades. Similar assumptions underpinned Washington’s policies toward the former Soviet Union, Suharto’s Indonesia, and more recently Hosni Mubarak’s Egypt and Muammar al-Qaddafi’s Libya. Discounting the probability of regime change in seemingly invulnerable autocracies has always been an ingrained habit in Washington.

Ai Weiwei: Never Sorry is a documentary about the Chinese artist and his work to highlight and work against China’s rights violations. Watch the trailer—I think you’ll be moved by it. It’s opening at theaters across the country right now.

(Via Alicia Liu.)

Minxin Pei argues China is having difficulty transitioning to a more consumer-based economy because doing business in China is excruciatingly difficult:

But there is another explanation for China’s excessive export dependence, one that has more to do with the country’s poor political and economic institutions. Specifically, export dependence partly reflects the high degree of difficulty of doing business in China. Official corruption, insecure property rights, stifling regulatory restraints, weak payment discipline, poor logistics and distribution, widespread counterfeiting, and vulnerability to other forms of intellectual-property theft: all of these obstacles increase transaction costs and make it difficult for entrepreneurs to thrive in domestic markets.

By contrast, if China’s private firms sell to Western multinationals, such as Wal-Mart, Target, or Home Depot, they do not have to worry about getting paid. They can avoid all of the headaches that they would have encountered at home, because well-established economic institutions and business practices in their export markets protect their interests and greatly reduce transaction costs.

Solving this will require implementing the rule of law, rather than China’s autocratic, CCP-controlled system. As Pei argues, though, doing so will require the party to give up control of the state and society. Unless something dramatic changes, the CCP has no easy decision to make. China’s future could require them to lessen their grip, but their own future would be put in question.

The Chinese government is censoring criticism of its economic policies ahead of their power transition:

Publicly controlled enterprises have become increasingly lucrative, generating wealth and privileges for hundreds of thousands of Communist Party members and their families. And in a clear sign of its position, the government has moved to limit public debate on economic policy, shutting out voices for change. While political reform has always been a taboo topic in China, in economics, from the late 1970s to the early 2000s, almost anything went, with powerful voices backing strong measures that challenged the status quo. But now, despite the rise of social media, fewer prominent voices within China are able to make the case for a systemic overhaul that would prepare the nation for long-term prosperity on sturdier foundations.

China is at a very important juncture that, I think, will be nearly as important as the transition after Mao’s death. It’s disconcerting that the party seems to be backsliding on reform.

When a Foreign Ministry spokesman was asked to explain why Chen Guangcheng had been imprisoned in his own home, this was his reply:

“After Chen Guangcheng was released from prison, he is a free person as far as I know. He has been living in his own house,” Mr. Liu stated. Challenged on that, he responded: “That’s what you said. As far as I know, he’s living in his hometown.” He also deflected a spate of other questions about Mr. Chen and Liu Xiaobo’s wife, Liu Xia, mostly saying that China’s legal system ensures proper treatment of all citizens.

“That’s what you said.” Asked about a fact that every one is aware of, a fact whose validity is unchallenged, the Chinese government’s official position is to pretend it doesn’t exist. Rather than deal with the reality and therefore that the government imprisoned a man for concocted crimes and, when set free, imprisoned him again in his own home, the Chinese government pretends that isn’t the case.

That’s what an authoritarian government that tries to mold what people perceive as reality into something convenient for them looks like. That’s this government’s strategy for maintaining power—deny inconvenient truths, prevent people from learning of them (the Great Leap Forward, Cultural Revolution, Tiananmen Square, Liu Xiaobo, Chen Guangcheng), and focus people’s attention on what you want them to look at: economic growth and, when convenient, “meddling” from foreign aggressors.

And that’s why the Chinese government is so afraid of Chen. Here is a blind, self-taught lawyer who escaped cordons and fences around his home, went to the nation’s capital, and evaded police. He revealed the Chinese state—the all-powerful Chinese state—to be incapable of finding a blind man with an injured foot in Beijing. In one night, he undermined the government’s work to deny what they do to people who are inconvenient to them, and what has been done to people as a result of the nation’s one-child policy. In other words, he not only embarrassed the government, he threw their abuses back in their faces, and in the world’s face.