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From Wall Street to Barkhor Street
By Email[Tuesday, January 06, 2009 11:07]
By Therang Buengu

It might be true that the beating of the wings of a butterfly can eventually cause storms on the other side of the earth. But in my memory, the storms of Wall Street have never before reached Lhasa’s Barkhor Street. But for better or worse, this time may be different.

No, I'm not talking about Wall Street's possible impact on those lachebas or "cadre class" (in Lhasa we generally call lachebas anyone who gets a salary from the state) who rushed to Shanghai and Shenzhen stock market over the past few years. Their money was long gone even before the current Wall Street crisis. Over a year ago, they may have been bragging during their daily mahjong games about how much money they had made. But these days no one is even allowed to talk about the stock prices in the nangmas (Tibetan-style nightclub) because the price of shares is so low it makes them depressed to even hear about it. All their profits and most of their original investments have evaporated. It is sad to see them these days, but that’s not what I want to talk about. What I want to talk about is the global economic downturn's possible impact on Tibet.

Global - China – Tibet

One thing is clear. The collapse on Wall Street has already had a major impact on China's export driven economy and therefore potentially on China's political landscape. Recently at a dinner table, a prominent Chinese scholar told me that he, like many of his colleagues, thought a few months ago that this US financial crisis would be like Asia’s financial crisis. China might have to close down some factories in the south, and the central government might need to pump some more money into the market. But China would be able to weather the storm without facing serious challenges. However, "[i]t looks though this time it is going to be different," he said. How different remains unknown, therefore no one can really predict how Wall Street's drama will play out on Barkhor Street. These days, more than ever before, Tibet’s prospects seem mostly dependent on what China becomes. How China deals with this global economic crisis will determine what impact it will have on Barkhor Street.

Among the Chinese commentators, there is a wide range of views on what might take place if this global economic downturn drags China into a major economic crisis. Some think that as laid off workers stage demonstrations, unrest will spread throughout the nation. The Communist party will do what it knows best - tightening up politically and cracking down on any dissent. China might begin backtracking some of the progress it has made in the past three decades. Others believe that while the Beijing leadership will anxiously try to use its power to increase political control in a time of political and economic uncertainty, walking backward is no longer an option. If the economic crisis is prolonged, then finally it might induce the long awaited political reform in China. Still other Chinese commentators think that if this global economic crisis took place ten years ago, then China would be in serious trouble, but now that China's economy is large enough to take a blow, the effects will be painful but at least limited to the economy. In other words it won’t be painful enough to produce a political earthquake. Among them some even believe this is a historic opportunity for China to assert its economic and political power on the international stage while the West is weakened by the economic crisis. They hope the century old dream of China becoming a world power might finally be realized.

It is without question, a major political earthquake, whether China tightens up or liberalizes; whether it plunges into chaos or becomes the leading world power. All these scenarios will have a disproportionate effect on a politically hypersensitive place like Tibet. But at this moment it is hard to predict whether this economic downturn will turn into a political one or not. I think the dreams of China becoming a world power may still have to wait another long night. So let us stick to the things already taking place and see what they might mean for Tibet.

Two Economies in Two Orbits

According Champa Phuntsog, this year TAR's GDP is expected to grow 10.1. He forecasts that it will continue with double digit growth for the next year. Now I don’t particularly like to be in agreement with Champa Phuntsog on any issue, but if you go by the TAR's economic data in general, I think his assessment is about right. TAR's GDP has been mostly driven by Beijing's subsidies. The sea of money from Beijing is largely divided by the TAR officials or invested into the sector that will serve these officials or poured into some trophy project. So much so that as London-based economist Andrew Fisher put it: now the TAR's administration itself is the engine of TAR's economic growth. In this kind of politicized economy, political climate is more important than economic conditions. Given the current political environment in Tibet, Beijing will not only continue to senselessly pour money into Tibet, in fact it is most likely to increase. Therefore, TAR's GDP will continue to grow even as China faces economic hardship. Furthermore, to deal with the economic slowdown, the Chinese central government is already committed to a trillion yuan stimulation package and promises more to come. So far, the Chinese government intention is to use this money mainly on infrastructure projects, so more mega-projects along with more Chinese workers coming into Tibet is to be expected. The GDP most likely will continue to increase in the coming years.

Those lachebas, who have been gambling on the Shanghai stock market, already lost most of their money long before this economic crisis, so I don't expect to hear much of their cursing of the big Chinese investors who manipulate the market in the coming year. The rest of the Tibetan population has always been in a different economic orbit. The chance of Tibet’s subsistence economy intersecting with China's mainstream economic orbit is negligible. Therefore unless there is a natural disaster, the majority of Tibetan farmers and nomads wouldn’t notice much from this global economic downturn. But that doesn't mean that the global economic crisis wouldn't have any real impact on the Tibetan economy.

Tibet's Economy vs Tibetan Economy

To understand the current economy in Tibet, first we need to separate two concepts that people often perceive as one: the so-called “Tibet's economy” as often described in the Chinese official media; and the economic well being of the Tibetan people in Tibet which rarely people talk about in the public arena. These two things do overlap and intersect with each other, but they are not only not the same thing, but sometimes they are even diametrically opposed to each other. When you hear from Tibet Daily how quickly Tibet's economy is expanding, it might be true in one sense, but they in no way reflect the economic reality that matters most to Tibetans. What is good for Tibet's economy might not always be good for Tibetans.

Intersection of the Two Economies

As I said before, while the two economies are largely orbiting on two different paths, they do intersect and sometimes even overlap. The impact of this global economic crisis will be most visible in these gray areas. One of these overlapping areas is tourism. In the past few years, attracted by Tibet's ancient towns and cities, by the clean air and blue skies, tourism was boomed in Tibet as flocks of newly rich Chinese traveled to the region. In 2007 it reach to a new pitch with over four million visitors arrived in TAR. With the expectation of continued growth in the coming years, many Tibetans invested in new hotels and restaurants, while even poor villagers hoping to earn a fistful of cash led horses for annoying Chinese tourists. But with this year’s protests the government was the one that busted the boom by violently cracking down on the ground, while demonizing Tibetan culture and people through the airwaves. This year the number of tourist visits to the TAR was down almost 70 % from last year. These days hotels in Lhasa are putting out 70% - 80 % discount signs but few tourists seem interested in the enormous discounts. But if you talk to people who have much stake on the industry, they are still hoping this is a temporary setback. If some kind of stability returns, next year they can be back in business again.

But with the economic downturn both in China and globally, the outlook for tourism in Tibet is increasingly bleak even assuming the political atmosphere can return to the pre-March 2008 situation. These days, if the chilly scenes in China’s winter vacation meccas, Sanya and Sadam (Lijiang), are any indication of what to come, then next year the streets of Barkhor will not be jammed with Chinese tourists. The Implication for such a scenario for Tibet and Tibetans are complex. While for many Tibetans who economically depend on tourism this will be a huge disappointment, for many others who are anxious about the transformation of the holy city into an ugly Little Chengdu, this is may be a silver lining in this global economic crisis.

The majority of Tibetan farmers and nomads are still living in subsistence economies, just as they have for thousands of years. In some areas people depend on selling cordyceps and mushrooms. For those who doing credible business, it hasn’t been a good year and the coming year will most likely be evening harder. For the mushroom growing region, we have to see how badly the "Japanese housewives" are doing on their morning money exchange market - whether they still feel rich enough to indulge in exotic wild mushrooms from Tibet or not, or whether those Chinese middle men driven by the economic downturn in China will make them even more bloodthirsty to squeeze poor Tibetan farmers and nomads even harder than before. All the signs are not good but let us hope for the best.

Another direct impact of the economic crisis seems to be on the housing market in Tibet, especially in Lhasa. In the past few years booming real estate market in Lhasa has produced double digit price increases every year. Lured by the prospect of enormous profit, everyone who has a little money or the connection to get loans from the bank bought not only a home in which to live, but two, three, even four houses for investment. Being utterly new to the modern real estate business, Tibetans in Lhasa still don’t believe there is such a thing as a housing market downturn and price decline or even collapse. But I’m afraid that they are just about to learn a lesson in Economics 101. While housing prices in Lhasa remain stable, people who try to sell their extra houses will tell you they are no longer able to find buyers. In a mature market, everyone knows that supply exceeding demand is the first sign of a coming decline of housing prices. If this economic crisis, in combination with political instability, drives the housing market into a deep ditch in Lhasa, that will have a huge impact on Lhasa’s Tibetan cadre class.

Whether this Wall Street-led global economic crisis will force China to change its politics or not, the economic earthquake alone will make some Tibetans on Barkhor Street feel real tremors.

For better or worse, even economically, Tibet is no longer an isolated place.

The writer is a Tibetan who has studied in Tibet and China. The name used is a pseudonym

The views expressed in this piece are that of the author and the publication of the piece on this website does not necessarily reflect their endorsement by the website.
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Good article (RangzenRoblang)
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