THE UNITED NATIONS BIGGEST WINS… AND WORST FAILS

Casually saving the world since 1945

United Nations - casually saving the world since 1945The United Nations was set up in 1945.

Its aim: to prevent another world war and make the world a better place. Its mission statement is laid down in the UN charter.

The UN is made up of 193 member states. Members convene at the United Nations General Assembly, which is the main policy making section of the UN. All sounds very important.

The UN Security Council maintains international peace and security. No big deal.

The Security Council has five permanent members;

France, Russia, China, the USA and the UK. 10 additional nations serve two-year terms.

 

So far the United Nations have had great successes;

In 1961 the United Nations created the World Food Programme. This provides food to around 90 million people. The number of starving people in the world has dropped by around 100 million in the last decade.

 

United Nations Yokosuka, Japan (Oct. 28, 2004) - Hospital Corpsman 3rd Class Tiffany Long of San Diego, Calif., administers the influenza vaccination to a crew member aboard USS Kitty Hawk (CV 63). Currently in port, Kitty Hawk demonstrates power projection and sea control as the U.S. Navy's only forward-deployed aircraft carrier, operating from Yokosuka, Japan. U.S. Navy photo by Photographer's Mate Airman Joseph R Schmitt (RELEASED)

The UN has vaccinated thousands against deadly diseases.

Eradicating smallpox is one of the United Nations greatest achievements, according to Alex Buskie at the United Nations Association.

By vaccinating more than half the world’s children against deadly diseases the UN is estimated to save 2.5 million lives a year.

The UN also takes a tough stance on war criminals.

A war crime is defined as an act carried during a war that violates accepted international rules of war.

Think: killing civilians and torturing prisoners. Not nice stuff.

In 2003 the UN set up a tribunal to trial Liberian politician Charles Taylor for war crimes during the Liberian Civil war. Taylor was sentenced to 50 years in jail. Go UN!

 

Oh, and the UN has a list of Global Development Goals which will make the world a better place. Read: the United Nations’ plan to save the world

However, not everything has gone to plan;

Nuclear Bombs Explained: Map of the world showing which countries have nuclear weapons

Nuclear Bombs Explained: Blue = NPT states (with nuclear weapons, Red = other states with Nuclear Weapons, Brown = Suspected of having weapons, Navy = NATO nuclear weapon sharing states, Green = Formally had nuclear weapons

A 1970 UN nuclear treaty committed most members to getting rid of all nuclear weapons. Some countries like South Africa have got rid of their weapons. Yet in 2015, there are still around 15,000 nukes in the world. Yikes.

The United Nations has also struggled to make headway in the fight against climate change.

In 2009, all the UN states met at a summit in Copenhagen to agree on a deal to tackle climate change. It was expected a legal treaty would be signed – but everyone came away with nothing. UN member states meet again in Paris this year to try to lock in a deal. If at first you don’t succeed.

Explained; everything you need to know about the Paris Climate Talks.

Though the UN keeps the world looking pretty by protecting World Heritage Sites it failed to stop Islamist group Islamic State blowing up ancient temples at Palmyra, Syria.

United Nations peacekeepers are now being dispatched to protect other heritage sites around the globe. Better late than never.

 

Failure to stop Genocide

Graves in Srebrenica, Bosnia

The UN failed to save lives in Srebrenica

The United Nations has also been criticised for the failure of some of its peacekeeping missions. Let’s just say the success rate is well below 100%.

In Rwanda, Africa the UN failed to stop thousands of the Tutsi minority from being murdered by the Hutu majority. It’s claimed that the UN knew it was going to happen beforehand.

The United Nations also failed to prevent another genocide (mass killing of an ethnic group or large group of people) in Srebrenica, Bosnia.

During the Bosnian civil war killings occurred inside zones that were deemed as “safe havens” by UN peacekeeping forces.

According to Human Rights Watch “United Nations peacekeeping officials were unwilling to heed requests for support from their own forces stationed within the enclave, thus allowing Bosnian Serb forces to easily overrun it and

— without interference from U.N. soldiers — to carry out systematic, mass executions of hundreds, possibly thousands, of civilian men and boys and to terrorize, rape, beat, execute, rob and otherwise abuse civilians being deported from the area.”

Not the UN’s finest hour.

 

Frenemies at the United Nations Security Council

Nuclear War Explained: President Barack Obama and President Vladimir Putin sit awkwardly in silence

Things are still tense between the USA and Russia

Though the Security Council is supposed to reduce international conflict there’s been tension between certain member states. Ahem, America and Russia.

The five Permanent council members have a veto power, or the power to reject plans put forward by other states. If just one of the five permanent member vetoes a particular action, it cannot go ahead – even if the other 14 countries voted for it.

Things got awkward when the UK, France and the USA wanted to intervene in the Syrian civil war… only to be blocked repeatedly by Russia and China.

Explore; why are things so tense between Russia and the West?

Then there’s the selection of Saudi Arabia as the head of the UN human rights panel.

With reports of beheadings, floggings and planned crucifixions coming from within Saudi Arabia it could be argued the country’s record on human rights is questionable to say the least.

Do we need the United Nations?

Despite some of the shortcomings listed above it is clear that the United Nations has done a lot of good in the world. However some still call it “outdated” and say that it needs to be reformed. What do you think?

 

Subscribe to our newsletter and let us do the explaining. Also Like and Follow for regular decoded news.

Why Is The UK Suddenly Getting Cosy With China?

The UK is China’s new bezzie pal… or is that the other way around? What do we need from China and what do they want in return? Time for some explaining;

 

What’s with the UK and China bro-mance?

China's President Xi Jinping

China’s President Xi Jinping visits the UK

This year the UK government signed up for the Asian Infrastructure Investment Bank (AIIB).

This is a proposed investment bank which will focus on developing infrastructure in Asia. Think: roads, railways, airports.

The UK was the first non-Asian country to join the AIIB, followed rapidly by other European countries.

By backing the bank, we won a place in China’s good books.

Now the Chinese President Xi Jinping makes the first state visit to the UK in 10 years. Our prime minister David Cameron says the UK can be “China’s best partner in the west”.

So why are we suddenly being all friendly?

 

Why is the UK buddying up with China?

China has the second largest economy in the world, after the USA. Unlike Western countries, China’s economy is growing fast. For the past few years China’s economy has grown at a rate of 10% per year. Compare that to the UK’s economy, which is growing at around 0.7% per year.

Academic Martin Jacques mentions that the last time a Chinese President visited the UK, our economy was bigger than China’s. So there. Now the tables have turned, and some predict China will be bigger than the USA in a few years. So it makes sense for us to cosy up to the world’s new superpower.

Put simply: China’s economic worth is going up and the UK wants in.

The UK wants a slice of the Chinese pie as China’s wealth means it can invest in UK projects. China is interested in backing investing in UK nuclear power, the high-speed HS2 railway and the “Northern Powerhouse”.

FYI the Northern Powerhouse is the Conservatives’ idea to invest in the north of England to boost the economy of the area, focusing on the cities of Manchester, Liverpool, Leeds and Sheffield.

 

OK, so everyone’s happy then?

Ummm, not exactly.

Some economists were skeptical when the government started schmoozing China. You see, although China’s economy is still growing, it’s growth rate is slowing down. We explained it for you in a neat video;

Explained; Everything You Need To Know About The Chinese Economy

 

 

A NYC sewer cover labelled made in China

China’s economy relies on exporting to other countries

This year China’s growth rate slowed to around 6.8%. The Chinese Stock Market suffered some major drops in value. All signs that the country’s economic model may not work in the long-term.

In simple English: China’s economy might be in trouble; UK investment might be a bit of a gamble.

Part of the reason the Chinese economy was doing so well in recent years is because it exports products to other countries.

The downside is that these cheap exports are threatening British jobs. As the Chinese President arrived the Tata Steel company announced that 1,200 UK jobs will be cut in Scotland and the North.

They blame cheap Chinese exports for lowering the price of steel. So much for the Northern powerhouse.

 

Joining the Asian Investment Bank didn’t do much for UK relations with the USA. The Americans see the new bank as a threat to the International Monetary Fund (IMF), the international organisation set up to ensure the stability of the world’s economy. They also aren’t happy about the Chinese building massive sea bases in the South China Sea.

 

Doesn’t China have a poor human rights record?

Protesters demonstrate against human rights abuses in China

Human rights in China have been criticised

The Communist Party is China’s single political party and asserts strong control over its people.

Officially the country’s constitution allows freedom of speech, however the government uses media regulations to censor what information is released.

Anti-government bloggers and activists are often jailed and prisoners are reportedly beaten and electrocuted. China has the death penalty and last year China handed out the highest number of death sentences in the world.

Earlier this year students in the Chinese territory of Hong Kong protested against the Chinese government, claiming that new rules made it easy for the Communist party to screen out candidates they don’t approve of.

In the UK protests over human rights abuses are expected throughout President Xi’s visit. Labour leader Jeremy Corbyn was warned by the Chinese ambassador not to make a fuss about China’s human rights.

 

Not all bad?

However, it’s worth saying that life in China today is a whole lot better than it once was. Martin Jacques notes that the country has lifted 600 million people out of poverty, “arguably the single biggest global contribution to human rights over the last three decades.” Fair enough.

The Chinese Ambassador to the UK acknowledges that “China and the UK differ very much because we have different history, different culture, we are in different stage of development”.

He added “it’s natural we have differences, even in regard to human rights. In China we care more about rights to better life, to better jobs, to better housing.”

The UK has been criticised in the past for doing business with countries which have questionable human rights. The excuse often given is – it’s not our country; we shouldn’t interfere. Yet if we’re not doing business with a country, does that mean we’re quicker to point the finger over human rights abuses?

 

 

UK Chinese love-fest decoded; do we need China more than it needs the us?

Is teaming up with the Chinese a smart move by the government? Should we ignore China’s human rights record?

Stay tuned: subscribe to our weekly newsletter for the latest on Israel and Palestine. Like us on Facebook and follow @scenesofreason.

No Harm In A Little Perspective: Nuclear Weapons

A Vintage Threat

Black and white image of a stereotypical 1950s family in a nuclear bomb shelter

Nuclear weapons have a kitschy old school feel

Nuclear weapons have a kitschy old-school feel. The threat of nuclear Armageddon is what our parents grew up with, not us. It is not something we tend to think about from day to day. We did some research, though, and were surprised to find the likelihood of nuclear war today is higher than we might think.

The closest the world ever came to nuclear devastation was completely by accident. On September 26th 1983 Soviet Russia picked up signals that a US ballistic missile was heading their way. The poor sod in charge, Stanislav Petrov, had to make the call whether or not to retaliate with their own missiles. Refusing to be ‘that guy’ who started World War III, Petrov decided it was a false alarm and did nothing. Luckily he was right – and the world was spared millions of deaths. Neat. Close call though.

And now for something completely obvious: This would not have happened if nuclear weapons didn’t exist.

Well duh-doy. Donald Trump wouldn’t keep happening if he didn’t exist. Then again, the world’s nations haven’t signed a treaty promising to rid the planet of him, like they have with nuclear weapons.

Ever since 1970 with the Nuclear Non-proliferation Treaty or NPT, the whole world, including Britain, has been officially committed to global nuclear disarmament. If we all agree with the UN party line: getting rid of nuclear weapons makes the world a safer place.

Meanwhile, in Britain, senior members of every major political party insist that Britain should keep and update its own nuclear weapons in order to make Britain a safer place. Members of Jeremy Corbyn’s shadow cabinet have even said they would resign if the new Labour leader did not support the renewal of Britain’s nuclear weapons programme, Trident. [What is Trident?] A Telegraph column stated recently that possessing nuclear weapons is what keeps European countries protected and free.

Hang on just a tick. How can eliminating nuclear weapons make the world safer while at the same time Britain needs nuclear weapons in order to be safe?

Deterrence Theory: Explained

The logic that solves this conundrum is called deterrence theory.

Deterrence theory is very simple: Take two enemy countries: Country X and Country Y. If Country X possesses nuclear weapons, they are capable of inflicting such enormous damage that Country Y wouldn’t dare attack them.

If both countries have nuclear weapons, their early-warning systems mean that if they are attacked, they will have time to retaliate with their own missile before they are hit. If Country Y was to launch a nuclear missile on country X, deterrence theory suggests that they can expect to have a missile launched right back at them.

False Alarm?

False Alarm?

 

The result is that no one dares do anything.

So – according to this theory – possessing nuclear weapons deters other countries from making aggressive moves. A recipe for everlasting peace?

Perhaps, except when false alarms very nearly lead to nuclear war like it did in 1983. Since we’re only human and liable to make mistakes from time to time, would it not still be safer for the world to get rid of all these weapons of mass destruction? Keep Out of Reach of Humans?

 

The problem with this: now that nuclear weapons exist, we can never un-exist them. They are out there now, like the bad smell of a cooking experiment gone wrong. And like bad smells, not everyone wants to own up to making them.

There are 15,000 nuclear bombs in the world. Here is a map to show you where those bombs are. Five of the eight countries who possess nuclear weapons have signed the non-proliferation treaty, recognising that any aggressive use of their nuclear weapons would be illegal under international law and stating that they will take concrete steps towards worldwide disarmament. These countries are Britain, China, France, Russia and the US.

There are three other countries who have openly tested and declared possessing atomic bombs who have not officially agreed to play nice with their bombs: these are India, North Korea and Pakistan.

Still from Team America of Kim Jong Il

North Korea have got Alec Baldwin. And also nuclear bombs.

 

Meanwhile, Israel is believed to have been developing nuclear weapons since the 1950s and there has been major diplomatic work in the last year to ensure Iran is not making nuclear weapons on the sly.

The key word here is uncertainty. Some reckon that nuclear states like Britain would be mad to get rid of their nuclear deterrents at a time like this. This is because no one can be 100% certain which other countries may or may not possess weapons of mass destruction, and how they intend to use them. Better safe than sorry?

But uncertainty can easily turn into scaremongering: rogue states like North Korea are not the number one threat the UK faces. The Campaign for Nuclear Disarmament points out that the UK government’s National Security Strategy sees international terrorism, cyber-attacks and climate change are greater threats than nuclear war. These problems cannot be solved with a nuclear deterrent. As the old saying goes, you can’t nuke a terrorist.

Bad for the world, Good for Britain?

What does this mean for the UK’s nuclear weapons programme, Trident? (Tell me again, what’s Trident?). The programme, funding and nuclear technology are outdated and due for renewal – and the House of Commons will vote next year on how, and if, this should be done.

Every major political party, except the Scottish National Party,  supports Trident renewal in principal. So Trident = good?

Not everyone thinks so. The No to Trident campaign argues that the £100 billion needed to renew the programme would be better spent on other methods of national defence, seeing as the threats Britain faces like terrorism and climate change cannot be tackled with nuclear weapons.

This £100 billion cost for renewing the Trident programme is disputed.

According to the Guardian, the Commons library estimates the cost of renewing the programme to be closer to £25 billion.

Whichever estimate convinces you, it’s a lot of monies.

A pricey safety net or necessary investment?

A pricey safety net or necessary investment?

Is Trident an expensive but necessary investment in UK security, or is it a very pricey safety net that we do not need?

The safety of the nation is not the only thing in question. Britain’s status in the world as a nuclear power is what guarantees it a place on the Security Council.

It’s not all or nothing. Britain does have the option of remaining a nuclear power, but reducing its stockpiles of nuclear weapons. The UK has in fact been gradually dismantling its own nuclear warheads from 225 to a goal of 180 by the mid 2020s. This may not seem like much, but it is similar to the agreed joint-reduction of nuclear warheads by the US and Russia that earned President Obama a Nobel Peace Prize.

Are these the concrete steps towards global nuclear disarmament the UK has signed up to under the non-proliferation treaty? Are they enough? Would renewing Trident negate these actions, or is it still a necessary part of Britain’s defence?  

Nuclear weapons explained: When nuclear weapons were invented, we opened a Pandora’s box that cannot be shut.

We now live in a world where we cannot be certain who does and does not possess weapons of mass destruction. Because of this, some would argue that it is better to be safe than sorry, and to use nuclear weapons as a deterrent: the most deadly defence mechanism ever. The counterargument is that nuclear weapons are not what we need to tackle the problems we actually face today, and that they are an unnecessary, expensive and potentially deadly safety net. It is difficult to face the ugly truth of how peace works now, and there are decisions and judgement calls we have to make that we wish would go away, but won’t.

Take Action as part of the International Day for the Total Elimination of Nuclear Weapons

 

The differences between South and North Korea explained

Where is North Korea?

North Korea is a country situated next to China.  Founded in 1948, it’s been ran as a totalitarian state ever since. This means the leaders of the country have total control over the citizens and society. Currently North Korea’s ruler is Kim Jong-Un. He’s the third member of the Kim dynasty which has ruled since the country formed.

North Korea is closed off from the outside world. Citizens require permission from the government to leave the country. Foreign tourists are allowed to visit, but it’s rare for foreign journalists to be issued visas. Because of this there’s not a lot that we know for sure about this mysterious country.

We teamed up with young expert Thomas König to find out more;

 

Why is it called North Korea?

Map of North Korea and South Korea next to China

North Korea explained: the two countries sit next to China

Right to the south of North Korea is a country called South Korea. These two countries used to be one single country called (you guessed it) Korea.

North Korea is also known as the Democratic People’s Republic of Korea or DPRK. South Korea also goes by the Republic of Korea, or ROK.

Japan ruled Korea from 1910 up until World War II. During the conflict Russia declared war on Japan. In an agreement with the USA they occupied the north of Korea up to a geographic area called the 38th Parallel.

America then attacked Japanese forces in the south and eventually Japan surrendered.

However, Korea didn’t return to normal. Both Russia and the United States agreed to occupy Korea temporarily. This was to assist in the creation of a free and independent Korean government. Russia occupied the north of the country with the USA in the south. Doesn’t sound like a recipe for success.

 

Communism Vs. Democracy

North Korea Explained: U.S. Marines engaged in urban warfare during the battle for Seoul in late September 1950. The Marines are armed with an M1 rifle and an M1918 Browning ..

North Korea explained: soldiers fighting in the Korean War

Political disagreements between Russia and the USA delayed the formation of a Korean government.

Back then Russia favoured Communism. This political system means that all means of production are owned by the community rather than by individuals (in theory at least). Communist states are often run as single party states. One single political party runs the country.  Other  parties are either banned or only allowed minor participation in elections.

Just as it is today, America was ran as a Democracy. This system of government gives power to the people, who rule either directly or through freely elected representatives. Many political parties take part in elections – the more the merrier.

America and the West also favour a political system called Capitalism. Put simply: trade, industry and the means of production are privately owned and operated for profit.

 

North Korea and South Korea split by the DMZ  on a map

North Korea Explained: the demilitarized zone (DMZ) splits the two countries

These tensions between Russia and America meant that by 1948 there was still no Korean government for the entire country. Two separate governments formed in the north and south of Korea.

Unsurprisingly they took on the political ideas of their occupiers. North Korea followed Russia and adopted a Communist style system. The pro-US South Korea favoured a democratic approach. However it was 1987 before a multi-political party system was fully established. Guess these things take time.

Both opposing sides saw themselves as the legitimate government for the entire country. In 1950 North Korea invaded the South, sparking the three-year Korean War. Technically the two countries are still at war; a peace treaty was never signed. However, the 1953 Armistice Agreement between the countries meant that hostilities ceased.

Since then North and South Korea are both separated by a “De-militarised Zone” or DMZ. “De-militarised” doesn’t mean they’ve got rid of all the weapons there. The 4KM wide DMZ is the most heavily militarised border in the world. Crossing it is not permitted.

 

Potential for peace?

North Korean soldiers marching

North Korea’s nuclear and military ambitions worry the rest of the world

North Korea has isolated itself from the rest of the world. After the Korean War the North Korean leader Kim Il-sung promoted the philosophy of Juche. This means self-reliance. The West views North Korea with suspicion due to its policy of isolation and it’s unclear foreign policy.

Western countries also take issue with North Korea’s nuclear ambitions.

In 2006 North Korea announced it had tested a nuclear bomb. This was despite having joined the Nuclear Non-Proliferation Treaty (NPT) in the 1980s. Similar announcements followed in 2009 and 2013.

It’s thought North Korea doesn’t have the technology to launch the bomb as missile. That didn’t stop the rest of the world going “Oh, s%$t!” and hammering North Korea with lots of economic sanctions.

 

North Korea Explained: the demilitarized zone (DMZ) splits the two countries

Skirmishes at the DMZ border are becoming more regular

In the early 1990s South Korea seemed to be trying to move on from the conflict with its neighbour. South Korea sent aid packages across to the poorer North Korea. South Korea also called for the rest of the world to end economic sanctions put on North Korea.

In 2000 both North and South agreed to work towards a potential reunification in the future. Yet in 2008 a newly elected government took a tougher line. The North’s failure to cut back on nuclear activities was a problem. In 2010 a South Korean ship sunk; investigators believe a North Korean submarine was to blame.

The relationship between the two countries has disintegrated. Increasing tensions and skirmishes at the border have put both on high alert.

 

What is it like in North Korea?

North Korean leader Kim Il-sung promoted the philosophy of Juche. This means self-reliance.

North Korea’s leader Kim Il-Sung and his descendants are praised in the state run media

North Korea closes itself off from the rest of the world. So it’s difficult to give a balanced and accurate picture of what life there is like.

Few citizens leave the country, and most countries advise against going to North Korea. What little we know is based on the stories of the few who manage to escape the country and those who visit it.

Charity group Liberty in North Korea reports the hardships North Korean citizens face. Leaving the country or even visiting different regions requires a government visa.

Many citizens live in poverty and North Korea has suffered a food shortage since the 1990s. Floods in the mid-1990s led to famine across the country. Bad agricultural management means North Korea relies on aid from abroad to feed people. It’s estimated around 2 million people have died due to food shortages.

Yet these poor living conditions for many in the country are not reported. Propaganda praising the government is distributed by the media controlled by the state. International news is covered but stories must be approved by the government. Radios are specifically modified to pick up government channels. They can be adapted to pick up outside channels – but it’s illegal to own a tunable radio.

Instead of the internet North Koreans have an “intranet”. This has limited access to official North Korean websites. Phones can’t make international calls.

This propaganda video is an example of North Korea’s anti-West bias. Though cleverly edited to portray the West in a certain way you could argue that some of what it says is true.

North Korea is also accused of human rights abuses. Speaking out against the regime will get you into serious trouble. Criticise the government and you risk being “disappeared” or sent to a labour camp. Human Rights Watch reports that people are routinely arrested and tortured.

 

North Korea Explained: Kim Jong-un

Current leader Kim Jong-Un

“Common forms of torture include sleep deprivation, beatings with iron rods or sticks, kicking and slapping, and enforced sitting or standing for hours. Guards also sexually abuse female detainees.”

Liberty in North Korea also reports that North Koreans are forced to worship the Kim family which has ruled the country for over 60 years. “Propaganda starts in nursery school and a large proportion of the curriculum for all students—even at university—is dedicated to memorizing the ‘history’ of the Kim family. State media provides a constant stream of myths about the Kims and lauds the sacrifices they supposedly make for the people.”

The current leader Kim Jong-Un demands attention as well as adoration. News agencies reported how he had his security chief killed for falling asleep in a meeting. Next time your boss bawls you out think yourself lucky it’s not him.

Negative reports haven’t stopped some people wanting to travel to North Korea. 1,500 Westerners visit each year. Business Insider reports how simple it can be to travel to the country as a tourist. Don’t expect to explore unattended: North Korea appoints special tour guides for anyone entering the country.

 

Is North Korea actually so bad?

 

North Korean village huts

Positive angle: community is strong in the North Korean villages

Positive stories about life in North Korea are scarce. Ever wishing to play devil’s advocate we did find some. NK News interviewed a North Korean Jae-Young Kim and she had this to say:

“Although media and news only show negative aspects to life in North Korea, there are actually positive and good aspects about life in the DPRK. Of course there are differences between individuals, but compared to my current life in the South, life in North was mentally rich – even if it was materially insufficient.  The reason for this is because of the pure heart and affection of North Koreans. Here, in South Korea, there are lots of people with affection, but in North Korea, especially in rural areas, affection between neighbors is very pure and deep.”

Despite having some positive memories of North Korea Jae-Young Kim is one of many who wished to travel to South Korea.

 

Western brand shops in Seoul, South Korea

Life in South Korea; economically stronger

Jae-Young Kim mentions that although “lectures portray the South as evil and impoverished, some North Koreans see evidence to the contrary in the form of food, fertilizers and medicines that come from the South. As a result, many North Koreans know that the South is wealthy and feel envious.”

South Korea followed other Asian countries in using exports to boost its economy. It’s now one of the highly developed Asian “Tiger” economies which grew rapidly in the last century.

It’s easy to see North Korea as the repressive regime, and South Korea as civilised and progressive.

However South Korea is not all that innocent. Al Jazeera’s People & Power recently investigated and reported on the country now being titled as Suicide Nation. Suicide in South Korea has become the fourth most common cause of death and it is most prevalent in children and young adults aged between 10 and 30. The cause: an unavoidable pressure from a “hyper-competitive society”. Unfortunately it doesn’t stop there and particularly when it comes to spreading propaganda.Whilst partaking in a military exercise South Koreans blasted out indoctrinating pop music. In the past both countries have used loudspeakers along the DMZ to blast messages towards the opposite side. Real productive, guys.

Having a democratic government is no guarantee of sensible action. It’s questionable whether South Korea’s military exercises near the border were a good idea, or whether the country is taking progression is bit too far? Who’s to say which side is right or wrong?

As well as wishing to travel to the South it’s thought that many North Koreans wish the two countries to be reunited. A poll of 100 North Koreans stated that 95 wanted to reunite the two countries. Whether this study is representative of the rest of North Korea is unclear.

However reunification is definitely high on the agenda in the South. Latest polls suggest 80% of the Southern population are interested in reuniting with the North. What’s not clear is how this would work, and what the economic impact would be if South Korea joins up with its poorer neighbour.

 

North Korea Learnings; calling yourself democratic doesn’t mean you live in a democracy.

How responsible are the USA and Russia for the current situation between North and South Korea? Should the two be reunited or are they better apart?

 

Chinese Economy Explained; China’s got economic problems

China’s economy is slowing down and the Chinese Stock Market is about to crash. What does this mean for the rest of the world?

 

What’s so special about China’s economy?

Economy; “the state of a country in terms of the production and consumption of goods and services and the supply of money within the country”

So a strong economy is one which grows at a stable rate, increasing the amount of money in the country. A weak economy is one that is unstable and may shrink, decreasing the amount of money in the country.

The Chinese economy is made up of a vast amount of goods and services – just think how many technological goods, clothing and cars are produced in China. China has a population of around 1.3 billion people and Chinese labour costs are exceedingly low. These factors make China’s economy the second largest in the world (the USA is the largest).

For the past few decades the Chinese economy has been steadily growing by around 10% each year. That all changed this summer. Economic growth slowed down and the Chinese Stock Market saw a massive drop in value.

 

 

Chinese Economy Explained:
1) The Chinese Economic Model supposedly doesn’t work anymore, but first, what is that?

Chinese Economy Explained: a container ship passes through Queensferry

Chinese Economy Explained: China makes most of its money from exporting good to other countries

The Chinese economy relies on investment from other countries. This is because it’s economic model is based on exports. This means selling goods and services to other countries.

China is the largest exporter of goods in the world. The export model means the majority of Chinese goods are exported to other countries, rather than being consumed and used within China itself.

This doesn’t mean that goods made in the country can’t be sold to the Chinese people, but for the moment most companies are focusing on selling abroad. China’s top export products include computers, telephones and office equipment. Last year China’s exports were valued at $2.34 trillion. Wowzers.

Like China, other Asian countries like Japan, Thailand, Indonesia and South Korea use the export model to make money and increase living standards. Nevertheless there is and was a catch: the model is not sustainable.

 

“Not sustainable”

The Export model made China one of the leading economies in the world. It aims to bring money into the country by industrialising. For China this meant encouraging investors to build factories and transport links in order to build and sell even more products.

China encouraged foreign investment from other countries by establishing “special economic zones” in the 1980s. These zones are areas in the country with special tax benefits for foreign investors. Offering lower tax rates to companies means they are more likely to set up shop in the country.

Chinese Economy Explained: empty Chinese factory

Chinese Economy Explained: China invested in building lots of factories but the recession meant other countries bought less Chinese exports

Foreign investment means more money coming into the country. China’s low wages means manufacturing costs are kept low, meaning more profit for businesses. However, as the China Business Review notes, it didn’t matter how cheaply China could make things as “developed economy demand for manufactured products cannot increase without limit”

In plain English: eventually there will be a limit to what other countries can afford to buy from China.

The Economist agrees that the model is “only a part of the answer to establishing a sustainable economy”.

Economic strategist Patrick Chovanec explained to the Washington Post how “after the financial crisis in 2008, there were signs that… other countries could not afford to go deeper into debt to consume that much. So you started to see a significant falloff in Chinese exports”.

Meaning: China’s exports were dropping, as countries couldn’t afford to buy as many Chinese goods. Given the Chinese economy depends on exporting to other countries; this was a big problem.

 

Chinese Economy Explained:

2) The Chinese Government has a plan; apparently it’s problematic

To understand Chinese government’s plan to boost the economy we need get our heads around the Stock Market. Don’t panic if you didn’t study business (we didn’t either).

 

The Stock Market works like this:

Businesses need money in order to expand and grow. To raise this money quickly the bosses sell off part of the company.

One way of doing this is to sell shares in the company. A share is literally a share in the ownership of the said company. The more shares you have, the more of the company you own.

Think: Dragon’s Den (Shark Tank if you’re American).

Investors buy into the company by purchasing shares. The company uses the cash they receive to grow and expand. Investors hope that the value of the company will increase. If it does their shares (the part of the company they own) also become more valuable.

This is sometimes called owning Equity or Stock in a company.

Shares are bought and sold on Stock Markets. Some, like the New York Stock Exchange, are actual locations where stock traders meet to buy and sell. Others, like the Nasdaq, are virtual market-places where traders complete deals via computer.

 

Now within the context of the Chinese Economy?

Chinese Economy Explained: two traders in the lobby of the Shanghai Stock Exchange

Chinese Economy Explained: shares in companies are sold on the Stock Market

After the Global Financial Crisis China’s economic growth began to slow. Within a few years the growth had dropped from 10% to around 7%. This seems like a small change but it was not good news for China.

The Chinese government wanted to boost economic growth. One of their ideas was to change the rules of the Chinese Stock Market. For the first time many ordinary Chinese citizens could buy shares in companies.

 

Chinese government thinks: more local investment = bigger economic growth.

 

Government-owned media (newspapers, TV, radio) encouraged people to invest. Many Chinese families borrowed money to buy shares, or invested their savings. They hoped that their shares would eventually grow in value.  Between 2014 and 2015  more than 40 million new stock market accounts were opened. However, many of these new investors had no understanding of the financial market. Doesn’t exactly sound like a recipe for success.

Chinese Economy Explained: a stock trader looks at share prices on a computer

Chinese Stock Market Explained: millions of new investors pushed up the price of shares by investing borrowed money

As millions of new investors started placing borrowed money into the stock market, share prices were pushed up to inflated levels. The Chinese government realised that allowing people to buy all these shares with borrowed money was a bad idea.
First, if people ended up losing money by making a bad investment then they would then owe a lot of money. Second, these inflated prices were bound to drop at some point.
When they eventually did, investors panicked and sold off their shares to pay back the money they had borrowed.

This mass selling pushed share prices down even further and in June 2015 the market crashed downwards. The equivalent of $3 trillion was lost as a result of the drop in share prices. Not a good day to be in finance.

The government tried to encourage business by reducing the value of the Chinese currency, the Yuan. This was meant to make Chinese goods cheaper, encouraging other countries to buy them. So far it hasn’t worked. Investors around the world still fear the problems in the Chinese economy will spread abroad. This isn’t just paranoia BTW; it could actually happen.

 

Chinese Economy Explained:
3) The Chinese Economy affects the rest of the world

London City Skyline

Problems in the Chinese economy have an effect on the London Stock Market

At the moment only 1.5% of Chinese shares belong to foreigners. Despite this fact, the slowing of growth in the Chinese economy and their recent stock market crashes are affecting financial markets in the UK, Europe and America. Put simply: when the Chinese economy goes a bit wobbly, we all feel the effects. Yes, “wobbly” is a technical term.

The BBC reports how stock markets in London, New York and Paris are also seeing drops in value. The value of the FTSE 100 (the UK’s top 100 companies) dropped by around 5% – the largest fall in value this year. These British companies lost the equivalent of £60 billion as a direct result of China’s economic problems.

To recap: there is strong evidence to suggest that China’s export model isn’t working. Economists argue China needs to switch to an economic model called Domestic Consumption (whoever said economics wasn’t sexy?!). In this model goods and services created in the country are bought and used within China.

To achieve this the Chinese government needs to encourage Chinese people to consume more. For example; they attempted to increase the number of washing machines sold to Chinese people in rural communities by distributing coupons and offering a discount.

We’ll have to wait to see if the issues in the Chinese economy lead to trouble around the world. But things don’t look good.

 

Chinese Economy Lessons; to make money from exports you need someone to export to.

What happens in China… affects all of us. For the latest on the Chinese Economy explained subscribe to our weekly news digest The Week: Decoded, like us on Facebook and follow @scenesofreason