Why is Falun Gong Banned?

Leeshai Lemish looks at the history and causes of the Chinese Communist Party’s campaign against Fal

‘If Falun Gong is benign, why is the Chinese government afraid of it?’ After nine years of persecution this basic question remains common. I’ll try answering it here.

In the 80s, Chinese parks brimmed at dawn with some 200 million people performing slow-movement exercises known as qigong. In 1992 Master Li Hongzhi introduced Falun Gong, outwardly a qigong practise like any other. But Master Li uniquely placed emphasis not on healing or supernormal abilities, but on self-cultivation towards spiritual perfection.

Falun Gong became an almost instant hit. Master Li travelled through China introducing the practise and its principles. Word of Falun Gong spread quickly, and it could soon be found in thousands of parks. The Chinese embassy in Paris invited Master Li to teach in their auditorium, and an official study found that Falun Gong saved the country millions in health costs.

Fast-forward to July 1999 and suddenly Falun Gong is public enemy number one. Practitioners are sentenced to ‘reform through labour’ camps where they are starved, beaten, and tortured with electric batons. By 2008, there are over 3,000 documented cases of practitioners killed by state persecution. Increasingly solid evidence suggests many more have been targeted as unwilling donors of kidneys, livers, and hearts. How many more, we have no idea.

Why, then, this bizarre persecution?

Weak explanations

Facing international criticism and domestic sympathy for Falun Gong, the ruling Chinese Communist Party scrambled to rationalise its campaign. It has claimed Falun Gong is a menace to society - a superstitious, foreign-driven, tightly organised, dangerous group of meditators. State-run media tell gruesome stories of mutilation and suicide, but outsiders aren’t allowed to examine them. When investigators somehow manage to scrutinize such cases, they find stories of individuals who don’t exist and crimes committed by people who have nothing to do with Falun Gong. Human Rights Watch simply calls the official claims ‘bogus’.

Some Western academics have suggested Party leaders feared Falun Gong because it reminded them of past religions-turned-rebellions. But the broad-brush parallels ignored how bloody those groups were – the often-referenced Taiping, for example, was responsible for 20 million deaths. Falun Gong has been strictly non-violent and had no rebellious plans.

One final flawed explanation is that the April 25, 1999 gathering of 10,000 Falun Gong practitioners in the political heart of Beijing startled Party leaders and triggered the oppression that followed.

But the peaceful demonstration actually came after three years of escalating state oppression already taking place. In fact, it was a direct response to practitioners being arrested and beaten in nearby Tianjin and a smear media campaign against them.

The individual leader explanation

The incident was pivotal, but for different reasons. That April day, Premier Zhu Rongji engaged members of the gathered group and listened to their grievances. Those arrested were released. Practitioners who were there told me they had felt elated about the open communication between the government and its people.

But that night, then Chairman Jiang Zemin rebuffed Zhu’s conciliatory stance. He labelled Falun Gong a threat to the Party and said it would be an international loss of face if Falun Gong were not immediately crushed. Indeed, many experts attribute the campaign to Jiang’s obsession with Falun Gong as much as any other factor.

The popularity explanation

What appears to have scared Jiang and other Party hardliners (some who are still in top posts, maintaining the campaign) was how popular and cross-social strata Falun Gong had become. In northern cities, workers practised Falun Gong together in factory yards before heading to the machines. Professors and students meditated on Tsinghua University lawns. Party leaders’ wives and senior cadres had their own little group in central Beijing.

This fear of Falun Gong’s popularity explains why its main text, Zhuan Falun, was banned from publication weeks after becoming a bestseller in 1996. And why, when a government report estimated there were more Falun Gong practitioners (70 million plus) than Party members, security agents began interrupting exercise sessions.

The predatory Party-state explanation

For decades the Party has persecuted different groups – intellectuals, artists, clergy, conservatives, reformists – through political movements. Some are targeted because they are outside Party control or have their own ideology. Falun Gong, with its spiritual teachings, sense of community, and independent network falls into that category.

Others are targeted when Party leaders manoeuvre to align power to themselves. Falun Gong appears to be a victim of that, too, as the persecution provided an excuse for strengthening state security apparatuses. It gave the Party an opportunity to oil its machinery - from Cultural Revolution-style purges to Internet surveillance systems.

As torture survivor Zhao Ming told me in Dublin, ‘the Party’s machinery of persecution was there - Jiang pushed the button’.

Leeshai Lemish has researched and written about Falun Gong since 2001. He has spent the past year travelling around the world to interview its practitioners, including labour camp survivors, for a forthcoming book.
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We're racing towards another private debt crisis - so why did no one see it coming?

The Office for Budget Responsibility failed to foresee the rise in household debt. 

This is a call for a public inquiry on the current situation regarding private debt.

For almost a decade now, since 2007, we have been living a lie. And that lie is preparing to wreak havoc on our economy. If we do not create some kind of impartial forum to discuss what is actually happening, the results might well prove disastrous. 

The lie I am referring to is the idea that the financial crisis of 2008, and subsequent “Great Recession,” were caused by profligate government spending and subsequent public debt. The exact opposite is in fact the case. The crash happened because of dangerously high levels of private debt (a mortgage crisis specifically). And - this is the part we are not supposed to talk about—there is an inverse relation between public and private debt levels.

If the public sector reduces its debt, overall private sector debt goes up. That's what happened in the years leading up to 2008. Now austerity is making it happening again. And if we don't do something about it, the results will, inevitably, be another catastrophe.

The winners and losers of debt

These graphs show the relationship between public and private debt. They are both forecasts from the Office for Budget Responsibility, produced in 2015 and 2017. 

This is what the OBR was projecting what would happen around now back in 2015:

This year the OBR completely changed its forecast. This is how it now projects things are likely to turn out:

First, notice how both diagrams are symmetrical. What happens on top (that part of the economy that is in surplus) precisely mirrors what happens in the bottom (that part of the economy that is in deficit). This is called an “accounting identity.”

As in any ledger sheet, credits and debits have to match. The easiest way to understand this is to imagine there are just two actors, government, and the private sector. If the government borrows £100, and spends it, then the government has a debt of £100. But by spending, it has injected £100 more pounds into the private economy. In other words, -£100 for the government, +£100 for everyone else in the diagram. 

Similarly, if the government taxes someone for £100 , then the government is £100 richer but there’s £100 subtracted from the private economy (+£100 for government, -£100 for everybody else on the diagram).

So what implications does this kind of bookkeeping have for the overall economy? It means that if the government goes into surplus, then everyone else has to go into debt.

We tend to think of money as if it is a bunch of poker chips already lying around, but that’s not how it really works. Money has to be created. And money is created when banks make loans. Either the government borrows money and injects it into the economy, or private citizens borrow money from banks. Those banks don’t take the money from people’s savings or anywhere else, they just make it up. Anyone can write an IOU. But only banks are allowed to issue IOUs that the government will accept in payment for taxes. (In other words, there actually is a magic money tree. But only banks are allowed to use it.)

There are other factors. The UK has a huge trade deficit (blue), and that means the government (yellow) also has to run a deficit (print money, or more accurately, get banks to do it) to inject into the economy to pay for all those Chinese trainers, American iPads, and German cars. The total amount of money can also fluctuate. But the real point here is, the less the government is in debt, the more everyone else must be. Austerity measures will necessarily lead to rising levels of private debt. And this is exactly what has happened.

Now, if this seems to have very little to do with the way politicians talk about such matters, there's a simple reason: most politicians don’t actually know any of this. A recent survey showed 90 per cent of MPs don't even understand where money comes from (they think it's issued by the Royal Mint). In reality, debt is money. If no one owed anyone anything at all there would be no money and the economy would grind to a halt.

But of course debt has to be owed to someone. These charts show who owes what to whom.

The crisis in private debt

Bearing all this in mind, let's look at those diagrams again - keeping our eye particularly on the dark blue that represents household debt. In the first, 2015 version, the OBR duly noted that there was a substantial build-up of household debt in the years leading up to the crash of 2008. This is significant because it was the first time in British history that total household debts were higher than total household savings, and therefore the household sector itself was in deficit territory. (Corporations, at the same time, were raking in enormous profits.) But it also predicted this wouldn't happen again.

True, the OBR observed, austerity and the reduction of government deficits meant private debt levels would have to go up. However, the OBR economists insisted this wouldn't be a problem because the burden would fall not on households but on corporations. Business-friendly Tory policies would, they insisted, inspire a boom in corporate expansion, which would mean frenzied corporate borrowing (that huge red bulge below the line in the first diagram, which was supposed to eventually replace government deficits entirely). Ordinary households would have little or nothing to worry about.

This was total fantasy. No such frenzied boom took place.

In the second diagram, two years later, the OBR is forced to acknowledge this. Corporations are just raking in the profits and sitting on them. The household sector, on the other hand, is a rolling catastrophe. Austerity has meant falling wages, less government spending on social services (or anything else), and higher de facto taxes. This puts the squeeze on household budgets and people are forced to borrow. As a result, not only are households in overall deficit for the second time in British history, the situation is actually worse than it was in the years leading up to 2008.

And remember: it was a mortgage crisis that set off the 2008 crash, which almost destroyed the world economy and plunged millions into penury. Not a crisis in public debt. A crisis in private debt.

An inquiry

In 2015, around the time the original OBR predictions came out, I wrote an essay in the Guardian predicting that austerity and budget-balancing would create a disastrous crisis in private debt. Now it's so clearly, unmistakably, happening that even the OBR cannot deny it.

I believe the time has come for there be a public investigation - a formal public inquiry, in fact - into how this could be allowed to happen. After the 2008 crash, at least the economists in Treasury and the Bank of England could plausibly claim they hadn't completely understood the relation between private debt and financial instability. Now they simply have no excuse.

What on earth is an institution called the “Office for Budget Responsibility” credulously imagining corporate borrowing binges in order to suggest the government will balance the budget to no ill effects? How responsible is that? Even the second chart is extremely odd. Up to 2017, the top and bottom of the diagram are exact mirrors of one another, as they ought to be. However, in the projected future after 2017, the section below the line is much smaller than the section above, apparently seriously understating the amount both of future government, and future private, debt. In other words, the numbers don't add up.

The OBR told the New Statesman ​that it was not aware of any errors in its 2015 forecast for corporate sector net lending, and that the forecast was based on the available data. It said the forecast for business investment has been revised down because of the uncertainty created by Brexit. 

Still, if the “Office of Budget Responsibility” was true to its name, it should be sounding off the alarm bells right about now. So far all we've got is one mention of private debt and a mild warning about the rise of personal debt from the Bank of England, which did not however connect the problem to austerity, and one fairly strong statement from a maverick columnist in the Daily Mail. Otherwise, silence. 

The only plausible explanation is that institutions like the Treasury, OBR, and to a degree as well the Bank of England can't, by definition, warn against the dangers of austerity, however alarming the situation, because they have been set up the way they have in order to justify austerity. It's important to emphasise that most professional economists have never supported Conservative policies in this regard. The policy was adopted because it was convenient to politicians; institutions were set up in order to support it; economists were hired in order to come up with arguments for austerity, rather than to judge whether it would be a good idea. At present, this situation has led us to the brink of disaster.

The last time there was a financial crash, the Queen famously asked: why was no one able to foresee this? We now have the tools. Perhaps the most important task for a public inquiry will be to finally ask: what is the real purpose of the institutions that are supposed to foresee such matters, to what degree have they been politicised, and what would it take to turn them back into institutions that can at least inform us if we're staring into the lights of an oncoming train?