TIME China

China Struggles to Stay Rosy as Confidence and Markets Plummet

The Aug. 24 stock-market disarray was dubbed Black Monday

Monday was a really bad day for global stocks, and the Chinese state-run media duly covered the volatility. But the official Chinese press was more reticent in its coverage of China’s own stock-market rout, which triggered the worldwide sell-off.

On Monday, the Shanghai Composite Index dropped 8.5%, the worst decline since 2007. Tuesday saw a 7.6% fall. The latest drop in a summer of sell-offs means that the once buoyant Chinese bourse has shed more than $4 trillion since peaking in June — either a much-needed correction of an overheated market that had more than doubled in a year or a symbol of China’s more troubling economic slowdown, or quite likely both.

Even as punters counted their losses and one group even briefly kidnapped the head of a metals exchange in Shanghai, Monday evening’s prime-time newscast on CCTV, the state broadcaster, totally ignored the nation’s market woes. On Tuesday, as the Shanghai exchange opened 6.4% lower, the People’s Daily, the mouthpiece of the Chinese Communist Party, published a dispatch from Shanghai that reported not on the market fallout but instead on the installation of 12,000 sensors on manholes in one city district. The manholes, whose safety is apparently looked after by 19 separate agencies, will be monitored by satellite.

Control — even on manholes — is something with which China’s ruling Communist Party is clearly enamored. Chinese President Xi Jinping has consolidated power surprisingly quickly since taking over in late 2012 and will use the occasion of the 70th anniversary of Japan’s defeat in China to project his authority. A Sept. 3 military parade is planned, with world leaders (and some former ones, like Tony Blair) gathered to check out China’s latest in martial hardware.

But the past few weeks haven’t exactly gone according to the party’s plan. Earlier this month, a chemical explosion in Tianjin, which killed at least 129 people, coupled with official media obfuscation, dented confidence in the party’s leadership and commitment to transparency. Earlier in the summer, the government’s unprecedented stock-market intervention only served to spook investors, leading to further declines. This past weekend, the government announced that Chinese pension funds would be allowed to invest one-third of their capital in the stock market — yet another move to try to prop up the nation’s bourses. The move was followed by Black Monday, as the Aug. 24 stock-market disarray has been dubbed. “The government still thinks it can control everything,” says Mose Ma, who works for a venture-capital firm in Beijing. “But this is the stock market, and markets fluctuate. It abides by its own logic and rules.”

Most Chinese don’t trade in stocks and foreigners only own a tiny percentage of China-listed shares. Still, the market rout, along with the Chinese government’s bungled attempts to bring stability to the market, has raised larger questions about the health of the world’s second largest economy — and the competence of its stewards. After decades of double-digit growth, China’s economy is slowing. With the nation cutting back on commodities and imports, countries that depend on Chinese consumption are bracing for impact. And for a generation of Chinese accustomed to torrid growth, the new normal is frightening to behold.

Griffin Gao, a project manager for a financial-leasing company in Shenzhen, says he escaped Black Monday only because the stocks he holds are still frozen because of an earlier suspension in trading due to steep losses. “I’m not very confident,” he says, noting that most of his customers are from the manufacturing industry and that many have closed shop in China and are now building factories in Southeast Asia. “China’s infrastructure-construction boom is over.”

In the meantime, China’s official press is focusing on preparations for the upcoming military parade. Many local papers reserved prime front-page space to articles on shock and awe, including live-fire naval drills scheduled to take place off the eastern coast of China over the next three months. Diversionary tactics are just as useful for propaganda artists as they are for military strategists.

— With reporting by Gu Yongqiang / Beijing

TIME Korean Peninsula

Beijing’s Absence Conspicuous as the Two Koreas Engage in Tense Negotiations

“Kim’s recent actions are very clearly designed to drive a wedge between Seoul and Beijing”

As the two Koreas, which have traded artillery fire and very loud K-pop over their border in recent days, continue slogging through talks to de-escalate tensions, one traditional actor is missing: China. Beijing used to hover noisily around such talks. But as the negotiations, which are now routinely being described as “marathon,” drag on into their third day, China — North Korea’s historic brother-in-arms and South Korea’s largest trading partner — has resorted to quietly sniping on the sidelines.

“As North Korea’s only ally and South Korea’s new best friend in the region, China has a natural role,” says John Delury, an associate professor at Yonsei University in Seoul and an avid watcher of both China and the Koreas. “Beijing has been noticeably, almost painfully, absent from the escalating tension on the Korean peninsula in the last couple weeks. Other than anodyne calls for everybody to exercise self-restraint, Beijing has had nothing to say or do to improve the situation.”

Despite a truce in 1953, the two Koreas are still technically at war, and the latest frictions were catalyzed earlier this month by the maiming of South Korean troops in the demilitarized zone (DMZ) border area by land mines presumed to have been laid by the North Koreans. As talks ground on, South Korean President Park Geun-hye demanded an apology for the attack — for which the North Koreans deny responsibility — even as the South kept up its psychological warfare against its cloistered neighbor by broadcasting news and pop music from loudspeakers on the border. North Korea has responded to the aural assault by firing over the border, prompting South Korea to respond with its artillery. The South Korean Defense Ministry says that North Korean troops are amassing at the border and that North Korean submarines have left their normal base.

The relationship between China and North Korea used to be famously close, in Mao Zedong’s words, as “lips and teeth.” China sent waves of its troops to fight on the North Korean side during the Korean War; Mao’s own son died during the conflict. One of the members of China’s current Standing Committee, the country’s seven-man leadership clique, was educated at Kim Il Sung University in Pyongyang, where he studied — as hard as it may be to believe — economics.

But China-DPRK relations, already cooling during the rule of Kim Jong Il, have turned even frostier under the leadership of his son, Kim Jong Un. Chinese President Xi Jinping, himself in office since late 2012, has made it clear he believes North Korea should abandon nuclear weapons — a position not appreciated by Pyongyang. One Chinese expert on North Korea — who wishes to remain anonymous because he was not authorized to speak to the foreign media — says that he has heard that Chinese leaders have tried in recent months to arrange high-level meetings in Pyongyang but have been rebuffed. “The Chinese do not like to kowtow to a strange man,” he says, referring to Kim Jong Un. “We are losing our patience.”

Earlier this year in Dandong, a Chinese border town with North Korea, businessmen complained about how trade had dried up, ever since Kim’s uncle Jang Sung Taek, who was a leading proponent of economic reform, was executed in 2013. A fancy new bridge designed to facilitate economic activity between the two countries — paid for, naturally, by China — appeared empty and forlorn. Rather than tales of business deals, locals talked about the latest North Korean soldier who had slipped across the border and robbed Chinese at gunpoint. “Business is getting worse and worse,” said one Dandong businessman who has been to Pyongyang dozens of times. “No one knows when it’s going to get better.”

Meanwhile, on Aug. 24, the Global Times, a Chinese Communist Party–affiliated daily, published an editorial warning that forces on the Korean peninsula might be trying to “strip China of its strength and geopolitical advantages.”

China, under President Xi, has spent months building up to a blowout military parade scheduled for Sept. 3 in Beijing to mark the 70th anniversary of Japan’s defeat in World War II. South Korean President Park, representing a country that was brutally colonized by Japan, is expected to be in Beijing at that time, although it’s not clear whether she will attend the military festivities. There is, however, no word on the planned whereabouts of the North Korean leader. “Kim’s recent actions are very clearly designed to drive a wedge between Seoul and Beijing,” says Zhu Feng, a foreign policy expert at Nanjing University. “There is a lot of disappointment and dissatisfaction on both sides [in China and North Korea].”

The Global Times op-ed speculated that the latest Korean hostilities, some of the worst since the North sank a South Korean navy ship in 2010, could be aimed at forcing Park to cancel her trip to Beijing, at a time when China hopes to show off new military hardware and flex its geopolitical muscle. “Beijing will not be led by the nose,” went the editorial, “and there is no force on the [Korean] Peninsula that could easily maneuver China.”

For all its expanding military arsenal and economic influence abroad, China’s diplomatic efforts have been less successful. “The whole situation [of China’s absence in the latest Korea talks] speaks to the limits of Beijing’s diplomatic clout, even with its neighbors, despite all the talk of China’s rise,” says Yonsei University’s Delury.

Instead, he says, “in a situation like this of real crisis, the United States is the key third party as far as both Koreas are concerned. Indeed, the North Korean Foreign Ministry went so far as to obliquely chide Beijing for telling them to have restraint, in the face of large-scale military exercises by South Korea and the U.S. I would not go so far as to say this is any kind of tipping point in China–North Korea relations, but rather, it underlines how weak the ties are between Xi Jinping and Kim Jong Un.”

TIME Thailand

At Least 20 Dead in Bangkok Bombing

Foreigners were among the fatalities

The Erawan Shrine, nestled between giant malls in downtown Bangkok, is normally a riot of incense, garlands, tourists and Buddhist worshipers who come to pray to a Hindu deity. On the evening of Aug. 17, at the height of rush hour, the shrine area was shaken by an explosion that killed at least 20 people and injured 140 more, according to police and local media, who reported that foreigners were among the fatalities. Police blamed the carnage on a bomb and said they had defused a second explosive device nearby.

Initial reports said the bomb, which exploded at about 7 p.m. local time (7 a.m. E.T.) had been hidden inside a motorcycle, though police later backtracked on that claim. The popular shrine was located at the Rajprasong intersection, the site of antigovernment demonstrations in recent years. Thai Defense Minister Prawit Wongsuwan said it was too early to ascribe political motives, but said the bomb had been intended to “damage tourism and the economy,” the BBC reports.

Bangkok has been hit by other small explosions in recent months, some of which were later blamed by the country’s military regime on antigovernment forces. In 2010, the streets near the Erawan Shrine were also bloodied when the army cracked down on antigovernment protesters, killing dozens.

For all its tourist appeal — the country markets itself as the Land of Smiles — Thailand is not a wholly peaceful place. In its Deep South, shadowy Muslim militants have waged a campaign of bombings, shootings and beheadings that have claimed thousands of lives over the past decade. Their deadly crusade has generally not strayed outside of the nation’s southernmost provinces, which were once part of a Malay Muslim sultanate before Thailand annexed them.

After the latest coup last year — the kingdom has endured more than a dozen successful ones over the past eight decades — Thailand is now ruled by a military junta that has little sympathy for Western-style democracy. The return to army rule under the National Council for Peace and Order (NCPO) comes after the nation’s electorate voted for years for populist parties aligned with exiled Prime Minister Thaksin Shinawatra. Ousted by the army in a 2006 putsch, Thaksin was convicted in absentia of abuse of power. His sister Yingluck Shinawatra later became Prime Minister but was forced to resign last year after the nation’s constitutional court found her guilty in another abuse-of-power case.

Thailand’s current Prime Minister is Prayuth Chan-ocha, a retired general who has ruled out polls this year and has warned journalists that he has the power to execute them should they write stories that anger him. Prayuth is backed by a handpicked parliament that has shown little concern for the desires of Thailand’s poor but populous northeast, which formed the backbone of Thaksin’s support. “One year since the military coup, Thailand is a political dictatorship with all power in the hands of one man,” said Brad Adams, Asia director of Human Rights Watch, in May, the one-year anniversary of the last coup. “The date for elections continues to slide, with no certainty when they will happen. Backsliding on respect for basic rights and democratic reform seems to have no end in sight.”

The nation’s monarch, 87-year-old King Bhumibol Adulyadej, is a unifying figure. But he is ailing. Criticism of the royal family can earn offenders lengthy jail terms for lèse majesté, and the number of such prosecutions has picked up in recent years. Hundreds of others, including political activists, have been tried by military courts for opposing the NCPO and its policies.

Thailand’s years of political instability have affected one of Southeast Asia’s biggest economies. Monday evening’s fatal bombing at a popular tourist site will also surely spook holidaymakers as they plan their next vacation. The Erawan Shrine is where some Thais go to pray for good fortune. The nation desperately needs it.

TIME China

China Scrambles to Reassure Wary Tianjin Residents Over Possible Chemical Exposure

Soldiers of the People's Liberation Army anti-chemical warfare corps work next to a damaged firefighting vehicle at the site of Wednesday night's explosions at Binhai new district
China Daily/Reuters Soldiers of the People's Liberation Army antichemical-warfare corps work next to a damaged firefighting vehicle at the site of the Aug. 12 explosions at Binhai new district in Tianjin, China, on Aug. 16, 2015.

Beijing's censorship apparatus has whirred into action following the deadly blasts

A harmless-looking white powder, sodium cyanide is lethal if ingested or inhaled. But the hazardous compound is useful in extracting gold from mines, among other things. China is now the world’s largest consumer of sodium cyanide, and domestic production has skyrocketed. On Monday, He Shushan, the deputy mayor of Tianjin, announced that the Aug. 12 warehouse blasts in the northeastern Chinese port city — which have killed at least 114 people and left 70 others, many firefighters, missing — damaged some 1,800 containers loaded with toxic chemicals. Hundreds of tons of sodium cyanide were stored in the Tianjin warehouse complex, less than 1 km from upscale residential areas.

On Sunday, residents within a 3 km radius of the blast site were evacuated, as authorities confirmed that sodium cyanide had been found nearby. Chemical-warfare troops have been dispatched. The fear is that rain — thunderstorms are expected later on Monday — could spread lethal materials stored in the warehouses, including sodium cyanide and calcium carbide, into a city of 14 million.

Inclement weather and volatile chemicals notwithstanding, the official line in China is one of control and confidence from the top levels of officialdom. On Sunday, China’s Premier Li Keqiang, along with a team of identically dressed officials in white button-down shirts and black trousers, visited the blast site and honored the firefighters who had died on duty. The central government has dispatched investigators to determine if dereliction of duty could have led to the apocalyptic explosions. Tianjin Deputy Mayor He said that any sodium-cyanide residue in the perimeter of the blast site would “mostly be cleaned up” by Monday evening.

But such assurances are hardly of comfort to relatives of the missing, who wonder why the government has done little to update them on their loved ones. Even families of firefighters have taken to social media to complain that local officials have neglected to keep in contact with them. Residents of high-end Tianjin apartment buildings, now shattered and shaken, have protested that, unbeknownst to them, they were living dangerously near warehouses storing toxic chemicals. Chinese law forbids the storage of such poisonous materials less than 1 km from residential neighborhoods. Why were bags of sodium cyanide allowed to be stacked so close by?

The People’s Daily, the Chinese Communist Party’s mouthpiece, reported over the weekend that Rui Hai International Logistics, the firm that owns the warehouses where the blasts took place, may have been smuggling chemicals. An employee of Hebei Chengxin Co., one of China’s largest producers of sodium cyanide, confirmed to TIME on Monday that the firm stored the compound at Rui Hai’s warehouses before sending batches overseas to foreign buyers. The last shipment of sodium cyanide from Hebei Chengxin arrived at Rui Hai’s warehouses about a week before the blasts, said the employee, who refused to give his name. “Chengxin is a legitimate company and did not violate any laws, including the environmental-protection law,” he told TIME. The employee said that Hebei Chengxin’s boss, along with around 140 other staff, had descended on Tianjin to help with the cleanup efforts.

Hebei Chengxin is based in Hebei province’s Yuanshi county, an area where cornfields and chemical factories collide. (Hebei province abuts Tianjin.) In recent years, residents of cities both big and small in China have protested against the construction of polluting or potentially dangerous factories near them. So-called NIMBY (not in my backyard) protests have been among China’s most successful civil actions — and most contentious, with local governments often cracking down on residents for daring to oppose potential drivers of local economies.

On Monday, Caijing, a Chinese business publication known for its occasional scoops, reported that one of Rui Hai’s stakeholders was Dong Mengmeng, the son of an ex-police chief of the Tianjin port. Although Rui Hai’s official share structure does not include his name, an unnamed source told Caijing that Dong was involved in the company. While the former public-security boss’s son could well be a legitimate private businessman, the nexus of power and money in China is such that the Caijing allegation, if true, raises the specter of corruption in the development of one of northern China’s fastest-growing zones.

The explosions, which registered a 2.9-magnitude on domestic earthquake scales, took place in the Tianjin Binhai New Area, a vast economic zone that has been heralded as a showcase of China’s hybrid capitalist-communist economy. There are only a handful of such special zones in China, including Shenzhen, near Hong Kong, and Pudong in Shanghai. Binhai’s rapid development is associated with Zhang Gaoli, Tianjin’s political boss for five years beginning in 2007, who now serves on China’s seven-man leadership committee. Chinese state media noted that while China’s economy slowed during that period, Tianjin recorded 16.5% GDP growth for five consecutive years.

On Monday, the Communist Party–linked Global Times published an editorial headlined “Tianjin Officials Fumble to Communicate,” alleging that “officials at grass-roots levels are not willing or not good at facing the public voice.” But when that public speaks or speculates, the results can be risky. China’s Internet regulator has disciplined 50 websites for “creating panic by publishing unverified information or letting users spread groundless rumors” about the explosions, according to state media. Censors warned domestic publications to only use reporting about the Tianjin blasts from official newswire Xinhua, according to China Digital Times, which monitors such propaganda directives from California.

Over the past few years, as industrial accidents and other safety scandals have exploded across China, officials have vowed transparency. Yet each time, censorship and official obfuscation have prevailed. On Sunday, China’s Public Security Minister Guo Shengkun demanded that authorities “release information concerning the Tianjin blasts and rescue operation in a timely and transparent manner, to respond to public concerns,” according to Xinhua.

Yet independent domestic reporting on the Tianjin blasts is now much reduced, even as fires and new explosions were reported at the blast site on Monday morning. Chinese citizens must surely wonder what is going on, even if they have been warned not to speculate on social media. On the afternoon of Aug. 17, the People’s Daily tweeted a breaking story in English: soldiers of an antichemical-warfare regiment patrolling the Tianjin blast site had rescued a fluffy puppy.

With reporting by Gu Yongqiang / Beijing

TIME Aviation

Chinese Families Remain Suspicious Despite ‘Confirmation’ MH370 Crashed in the Ocean

"I have lost my faith in the investigators”

A whole 515 days after Malaysia Airlines Flight 370 disappeared from the skies en route from Kuala Lumpur to Beijing, Malaysian Prime Minister Najib Razak confirmed early Thursday that a barnacle-encrusted fragment of wing that had washed up last week on the remote Indian Ocean island of Réunion, a French territory, was indeed from the doomed flight. “It is with a very heavy heart,” Najib told a press conference organized around midnight in Malaysia, “that I must tell you that an international team of experts has conclusively confirmed that the aircraft debris…is indeed MH370.”

In France, where aeronautical experts near Toulouse were examining the flaperon, as the chunk of the wing spotted on the pebble beach is called, prosecutor Serge Mackowiak used less definitive language, instead saying that there were “very strong indications” that the Boeing 777 chunk was from MH370. (No other Boeing 777s have been reported missing in the Indian Ocean area.)

Najib, whose government has been criticized for fumbling the investigation into the jetliner’s disappearance, said the confirmation of the flaperon’s origins “will at least bring certainty to the families and loved ones of the 239 people onboard MH370,” most of whom were Chinese. The Malaysian leader spoke of the “unspeakable” nature and “torment” of their loss.

But several families of Chinese passengers felt no certainty in Thursday’s announcement — and even less a sense of closure. “I don’t care if they found the wreckage, and I don’t care where the plane is,” says Li Huiyun, whose husband was on the jet. “If they cannot find the bodies and know what happened to our relatives, it’s meaningless.”

Since the March 8, 2014, disappearance, family members have endured ham-fisted coddling from Malaysian authorities. After initial support from the Chinese government, relatives of those on MH370 endured repression when they veered outside of the officially sanctioned parameters of grief. Relatives have been physically harassed by Beijing authorities, one so badly she ended up in the hospital. Others have been detained, some accused of breaking Chinese rules against unapproved public gatherings.

With no sense of what exactly happened, despite search efforts by 26 nations, certain family members have expressed skepticism in the commonly accepted explanation that the plane went down somewhere over the southern Indian Ocean. (Australian authorities are around half-way through combing 46,000 sq. mi. of ocean floor around 1,000 miles west of Perth, and say the discovery of the wing part has not shifted their focus.) “I do not believe the plane is stranded on the sea floor as some people say,” says a woman surnamed Yuan whose husband was also on the flight. (Yuan does not want her full name used or that of the husband she married just a couple months before the plane’s disappearance.) “How can I trust [the investigators]?”

Messages in Chinese chat groups organized by family members speculated whether the plane was actually hijacked by radical Islamic terrorists who secretly landed in the wilds of Central Asia. Others blame the CIA for having somehow captured it. Wu Xia, whose husband was also one of the MH370 passengers, wonders whether some of the passengers even got on board. “I suspect they fabricated the whole thing about the wreckage being found,” she says. “Why did it take so long for them to verify the [flaperon]? I have lost my faith in the investigators.”

It took two years for investigators, working out of the same Toulouse aeronautics center where the MH370 wing part is being examined, to figure out what happened with Air France Flight 447, which plummeted into the Atlantic Ocean in 2009 on its way from Rio de Janeiro to Paris. For the families of the MH370 victims, the wait could be even more extended — a long time to keep the faith.

—With reporting by Gu Yongqiang/Beijing

TIME olympics

Beijing Wins Bid to Host 2022 Winter Olympics

The huge financial burden prompted most candidates to drop out

The final choice for the host city of the 2022 Winter Olympics was uninspiring. One candidate, Beijing, which co-bid with the lesser-known Chinese city of Zhangjiakou, spent months trying to convince International Olympic Committee (IOC) delegates that its famously bad air — not to mention lack of natural snow — shouldn’t scupper its chances.

The other contender, Almaty, boast lots of powdery stuff because of its positioning at the foothills of the Tian Shan range. (Almaty’s slogan, perhaps aimed at Beijing and its man-made snow, was Keeping It Real.) But Kazakhstan’s former capital had to overcome a serious obstacle: its obscurity, especially compared with a Chinese city of more than 20 million people.

The two candidates shared other weaknesses: neither has much in the way of global winter wonderland appeal. And both are tainted by the authoritarian governments that lead them. In recent months, China’s President Xi Jinping, who just hours before the Olympic decision appeared in a video pitching Beijing 2022, has presided over a crackdown on civil society, in which hundreds of people — such as lawyers, writers and women’s rights activists — have been detained. Kazakhstan’s President Nursultan Nazarbayev claimed a 98% victory in this year’s polls but the long-serving leader has a habit of muzzling the media and jailing his opponents.

On July 31, at a secret vote by around 85 IOC members in Kuala Lumpur, Malaysia, the 2022 Winter Olympics were awarded to the oddmakers’ favorite, Beijing. After all, the Chinese capital had successfully hosted the 2008 Summer Olympics. No one doubts China’s ability to build needed infrastructure within seven years. “There can only be one winner,” said IOC President Thomas Bach, in a razzle-dazzle ceremony, complete with soaring music. Xi, in his video campaign, had already projected that Beijing 2022, the 24th Winter Olympics, would be “fantastic, extraordinary and excellent.”

The K.L. polling was marred by technical doubts in which the initial vote by electronic tablet was considered possibly lacking in “integrity,” forcing IOC members to vote again by written ballots. Previous IOC ballots, including one in which Beijing lost to Sydney by two votes for the right to host the 2000 Summer Games, were marred by vote-buying scandals. The IOC vowed to root out corruption within its ranks. Late last year, the powerful group also unveiled reforms designed to limit the budget overruns that have plagued recent host cities.

The IOC was left with Beijing/Zhangjiakou and Almaty by default, after cities such as Oslo and Stockholm pulled themselves out of the race because of financial concerns. (Lviv’s bid was derailed by war in Ukraine.) Olympics may bring global prestige but they have a habit of saddling host cities with huge bills and sporting facilities that rust away after the crowds disperse. The 2014 Sochi Olympics, for instance, cost Russia an estimated $50 billion.

For 2022, Beijing and Almaty gave estimates of $3-5 billion (including some infrastructure not specifically for the Games) but Olympic cities rarely stick to their budgets. Sochi overspent by $36 billion. Earlier this week, the U.S. Olympic Committee pulled the plug on Boston’s bid to host the 2024 Summer Games, after local opposition to the potential financial burden.

In the run-up to the July 31 victory, Beijing brought out Chinese icons like towering basketball legend Yao Ming to promise that the Games would be “athlete-centered.” Other former Olympians gave assurances about Beijing’s air, which city officials said had improved by around 15% in the first half months of 2015, compared to the same period last year. “We will improve the air quality not only for the Games but also for the demand of our people,” said Shen Xue, a pairs figure-skating gold medalist, according to Chinese state newswire Xinhua. “No matter whether we win the bid or not, we will take efforts to improve the air quality.”

Chinese Olympic officials vowed that snow-making efforts would be “sustainable” in a chronically parched region. To speed the journey to the ski slopes of Zhangjiakou, which are around 200 km from downtown Beijing, city-planners have promised to build a high-speed rail system that will transport athletes in less than an hour — a third of the time it now takes. In other countries such a project might seem overwhelming. But this is a country that has already expanded its national rail network in record time.

Beijing’s 2022 bid slogan was translated in English as Joyful Rendezvous Upon Pure Ice and Snow. (It sounds better in Mandarin.) President Xi has enthused about the potential for winter sports development in his homeland — just imagine, 1.3 billion lugers, biathletes and curlers, if Xi’s estimate of future winter sports enthusiasts is to be believed. Still, sports are not integrated into daily life in China as they are in, say, Brazil or even India. Zhangjiakou, where Olympic snowboarding, biathlon and certain skiing events will take place, has developed resorts for aspiring Beijing skiers but it was traditionally better known for fur production.

The Beijing 2008 Olympics were expertly choreographed and allowed China to proclaim its rising super-power status. China won 51 gold medals, more than any other country. The medal haul was all the more impressive given that China won just five gold medals two decades before in Seoul. But the Beijing Olympics suffered from a fun deficit. Compared to other Games, there were fewer public venues where locals could gather to watch the competition on TV and rejoice in China’s sporting glory; some residents resorted to peering through a metal fence at the lavish venues. Even today, despite efforts by the government to encourage nationwide fitness, school sports remain underfunded for children who aren’t being cultivated as potential Olympians. (Chinese kids need to spend more time cramming for tests.)

The fact that China has already hosted an Olympics and made history may explain why the domestic reaction to the 2022 race was relatively muted. On Friday morning, a corruption investigation of a retired People’s Liberation Army general generated more cyberspace comment than the Winter Olympics vote. International human-rights campaigners, however, used the occasion to highlight human-rights violations in both candidate nations. “Whether China or Kazakhstan wins the honor of hosting the 2022 Winter Games, the IOC will face an extreme test of its new commitment to improve human rights protections,” said Minky Worden, Global Initiatives director at Human Rights Watch, before the final vote. “The International Olympic Committee should insist that the host country rigorously comply with the Olympic Charter and basic human rights rules — or risk losing the right to host the games.”

At least Beijing is a known quantity, even if co-host Zhangjiakou is less recognized. (Zhangjiakou progressively lost shared billing with the Chinese capital as the bid progressed.) Any guesses where the 2018 Winter Olympics will be held? That would be Pyeongchang, South Korea. Not exactly a world-famous winter retreat like Innsbruck (the 1964 Games), Sapporo (1972) or Vancouver (2010).

TIME Singapore

Exclusive: Singapore Prime Minister Lee Hsien Loong Speaks Candidly with TIME

Lee Hsien Loong
Terence Tan—AP Prime Minister Lee Hsien Loong addresses the nation about the passing of his father, Singapore's founder Lee Kuan Yew, during a live broadcast on Monday, March 23, 2015, in Singapore

On Aug. 9, 1965, Singapore became an independent state. A half-century of unparalleled prosperity later, this Asian trading hub faces very different challenges

As Singapore gears up to celebrate the 50th anniversary of its independence, the city-state once dismissed as a “little red dot” at the midpoint of regional maps now serves as the epicenter of Asian-style development. By combining Confucian values with state-sponsored capitalism, Singapore in little more than a generation moved “from third world to first,” as a memoir of founding father Lee Kuan Yew puts it.

In truth, Singapore — a mix of majority Chinese and smaller Malay and Indian communities — wasn’t quite as backward upon independence as its boosters claim. The city-state’s economic development was unmatched by individual political liberties. The nanny state admirably manicured Singapore but it had little patience for dissonant voices. Still, as TIME’s anniversary special on Singapore reports in this week’s magazine, the “little red dot” claims outsized geopolitical influence in the region and is a magnet for migrants worldwide.

“You don’t always agree with your parents, but I never had long hair or wore bell-bottoms”The rapid influx of foreigners into Singapore, though, has frustrated the electorate, which punished the ruling People’s Action Party in 2011 polls. (The party, now headed by Prime Minister Lee Hsien Loong, Lee Kuan Yew’s son, still garnered a majority of votes.) The government was trying to make up for a precipitous decline in Singaporean fertility by importing more than 1 million people into a nation that now has a current population of roughly 5.5 million. Yet there was a sense that the flood of foreigners, particularly mainland Chinese, was straining the city-state’s much-vaunted public works, pushing up property prices and diluting the national character. “We are all sons and daughters of immigrants,” says Manu Bhaskaran, an economist whose forebears came from southern India. “But this immigration policy has made us addicted to cheap labor, and it was done without providing enough infrastructure to cope.”

Over the centuries Singapore has proven a master of reinvention. As a British colony, the island grew rich from a trade in rubber and tin. After independence, the country’s port — now the world’s second-largest by certain measures — again proved invaluable as a waystation for the products being churned out by East Asia’s export-led economies. To move up the value-added chain, Singapore also began focusing on developing its own oil-refining and IT industries, as well as luring foreign banks and other global companies to its shores. The city-state has reclaimed acres of land to provide space for the regional headquarters of these multinationals, as well as for a casino meant to lure deep-pocketed Chinese tourists.

Singapore’s latest round of reinvention will require the island to yet again leverage its geography, at a time when tensions are growing between the U.S. and China — both friends to the city-state. But Singapore’s greatest feat at age 50 will be to unleash the potential of its biggest asset: its people. Highly educated and boasting some of the world’s highest per-capita incomes, Singaporeans may no longer be quite so obedient. If the nation is to fulfill its ambition to transform into an innovation hub, perhaps that’s just as well. The question is whether the ruling party, the longest serving in the developed world, also sees it that way. On July 10, TIME spoke with Prime Minister Lee Hsien Loong about the nation at the half-century mark, his reading of regional geopolitics and whether the son of Singapore’s founding father was ever a rebellious teenager. Excerpts below:

What is the single-biggest challenge Singapore faces?

If you are looking at 10 years, getting the economy to the next level is a very big challenge. If we don’t get to the next level then we will have malaise and angst and even disillusionment, which you see in many developed countries. And in 25 years, if we can’t get our demography balance between our births and immigration of foreign workers, then we will be in a very tight spot like the Japanese are. If you take a 50-year timeframe, then the most important thing is the sense of national identity, because before you can make any policies and get people to say “I want to do this or the other,” people must feel that we are Singaporeans and we want to be together and we are different from others and we are special. Keeping that sense of unity and specialness over the long term is critical.

What do you mean by the next economic level?

We are at 30% students going through our universities and we are going to push that up to 40%. A lot of people go to university outside of our state system — they may do part-time courses, they go to Australia or Britain, all kinds of degrees. When they come back they expect to have PMET jobs — Professional, Managers, Executives, Technical. [We need] an economy that can generate that quality of jobs and uplift those who didn’t go to university so you don’t have a wide gap between the tertiary-educated and the rest, which has happened in America where a college degree now makes a big difference compared to a high-school leaver. You cannot do that without growth and you cannot get growth just by expansion with bodies because I don’t have that many more bodies and I can’t bring in a lot more bodies without bursting at the seams. So I need qualitatively different jobs, qualitatively a more efficient overall economy. My infrastructure must run brilliantly. My whole system must be different from what you can get anywhere else in Asia. The others are catching up. So even as the others step into where we are, we have to be at the next level.

People overseas talk a lot about the Singapore model of development…

I don’t think there is a model but there is an approach that we have applied in Singapore. A government that is pragmatic—it looks for solutions that work, rather than starting out from any ideological presumptions. It depends to a considerable degree on the free market because markets make economies efficient. But at the same time, the government is not shy to play a very active role — in public housing, education, healthcare, infrastructure. You are talking about a society and a political system where we are trying to work toward a middle ground rather than division between economic interest groups or racial groups or rich and poor or left- and right-wing. Basically most people benefit from the system and uphold the system … We have come these 50 years and we have kept our mission substantially intact. That’s quite an achievement.

Can this Singapore approach be emulated by other countries?

What we can do in Singapore may not be doable elsewhere. Some things you know you need, you want efficient government, you want clean government, you want to do away with corruption, you must educate your people. You want to get housing and so on. All these are not such secrets, not so special to Singapore. But how you can do it is very difficult and very different. For example, we have worked very hard to bring together our government, our unions and our employers. We call it a tripartite relationship. It’s a bit of an ungainly term, but it means something valuable to us. We bargain, we discuss, in the end there is a significant amount of give-and-take and mutual confidence and trust built up over many bargainings and many experiences shared — ups and downs. And so, we have the trust to move forward.

Moving forward, the Singapore approach naturally will evolve. How do you see that change happening?

When we started out, backs were to the wall. Today, our backs are not to the wall, so it does not appear to be a life-and-death matter and yet, in fact, it continues to be an act of will to be where we are. The tactics we were able to use in the 1960s, 1970s — let’s have a campaign, mobilize everybody and, therefore, social pressure — stop littering, or stop spitting, or be courteous to one another: I am not sure that kind of approach will work anymore. Secondly, there are more interests and preoccupations. If you look at the young people today, they are passionate about all kinds of courses. We have dog-lovers, nature-lovers, those who are pursuing arts, we have quite many who are involved in religious activities through their church. Even the Buddhist groups are active. So there is a much more variegated society and to find that common ground to stand together and make unity in diversity more than a slogan; that’s quite a challenge. The conventional wisdom in the West is that you let a hundred flowers bloom and everything will be happiness and sweetness and light. We don’t quite believe that. You have to tend the garden to make it flower and the challenge will be how we can do that while having a greater degree of free play and yet not have things end up in a bad outcome.

You have said that the politics will change. But the government has also been criticized for being paternalistic, for stressing society and family over the individual…

That’s the standard liberal line.

It is. You say you are aware of the changing needs and aspirations particularly of the youth. At the same time, very recently, the courts have convicted a 16-year-old for a video and a blogger for a post. How do you reconcile this?

There is always a balance between freedom and the rule of law; freedom is never totally unlimited. It operates within certain constraints. In our society, which is multiracial and multi-religious, giving offense to another religious or ethnic group, race, language or religion, is always a very serious matter. In this case, he’s a 16-year-old, so you have to deal with it appropriately because he’s of a young age. But even in the recent couple of years, we have seen many cases where one Internet post injudiciously can overnight cause a humongous row, everybody gets offended because they said something bad about Christians, said something about the Buddhists, some Chinese said something about the Malays. It can be a very big problem. So we have to take this seriously. With the Internet, it’s harder because it’s easier to give offense and easier to take offense and if we get agitated every time somebody gives offense, then we’ll spend our lives very agitated. And yet, it is necessary with the Internet to be more restrained and to learn where the limits are.

On the other case of defamation, you have freedom of speech, you can criticize the government as much as you like on policy, on substance, on competence. But if you make a defamatory allegation that the Prime Minister is guilty of criminal misappropriation of pension funds of Singaporeans, that’s a very serious matter. If it’s true, the Prime Minister should be charged and jailed. If it’s not true, the matter must be clarified and the best way to do that is by settling in court. If it’s untrue, it will be shown so. If it’s true, the Prime Minster will be destroyed. Somebody says very bad things about me, I don’t clear my name — do I deserve to be here or not? In an Asian society, particularly, if the leader can’t maintain his standing, he doesn’t deserve to be there. He will soon be gone.

You’ve got a big immigrant population that has helped the economy, that has probably enriched society, but that has also created resentment. How do you strike a balance between the local and immigrant population? What are the pitfalls of too much immigration?

It’s a big challenge, it’s very difficult to do. Ideally, no, not only ideally, but essentially, we must have a Singapore core in the society because if you don’t have that Singapore core, you can top up the numbers, but you are no longer Singapore. It doesn’t feel Singapore, it isn’t Singapore. So you really need a solid core of Singaporeans with quite deep roots here, born here or spent many years here and you need enough children born from Singaporeans here, Singaporean-born so that in the next generation it can continue and people know the society, do National Service here, school, work and so on. And then we can top up with immigrants in a controlled number. We can complement it with foreign workers who are not immigrants but come here, they work, their job is done, they go home.

Yet you have been quite successful in forging a national identity…

It is not so simple. If you are Japanese, there’s no doubt that you’re Japanese, you speak Japanese, you speak English with an accent most of the time and you will feel most comfortable in Japan. If you’ve grown up elsewhere as a Japanese, you go home, it doesn’t fit. Many Japanese diplomats have that problem with their children … In Singapore, we have race, language and religion to add to the mix. Language may be less, although the language identity of the Malays, or for that matter, of the Indians, will still be there and of a significant proportion of the Chinese population, that they want to keep that part of them even if their working language is English. The religion is a stronger motivator than ever before. It’s not just in Singapore, but all over the word, Christians, Buddhists, Muslims, people take their religions very, very seriously. You can have other divisions. It can be values — LGBT issues can become a divisive issue. It can be based on ethnic and external relations. We are mostly Chinese, China becomes a great power, what is the impact on our people’s thinking and perspectives on the world and how does that impact on the Malays and the Indians who are non-Chinese? How will they feel if you find yourself tilted toward China? Will that not cause tensions at least? Divisions, we hope not. You cannot assume that people will automatically say “I am a Singaporean” and there’s no further sub-division or sub-classification that matters.

Could a non-Chinese be Prime Minister?

It could be, it depends on the person. You must have the right person — you must have the politics worked out, you must be able to connect both with the Chinese as well as the non-Chinese population. With the new generation, the chances are better. With the present generation, even today, if you go to the constituencies and you talk on the ground, you mingle, most of the time you would be speaking some Chinese. Even with the younger ones, a significant proportion of them would be more comfortable speaking in Mandarin because that’s their home conversational language. I have young people who write to me in Chinese. I am quite surprised, but they still exist. So, on the ground, if you cannot communicate in Mandarin and if they feel you cannot communicate in Mandarin, that’s a minus. That’s the ground reality.

You mentioned the increase in religiosity not just in Singapore but also in the rest of the world. What are the ramifications?

You could say it’s because of the stresses of modern living. You could also say it’s because these are global trends that have grown elsewhere and our people are influenced by that. If you look at our Christian churches, the Protestants particularly, they have very close links with Protestant churches elsewhere in America, even in Africa. And if you look at the Muslims, that’s worldwide. Maybe it’s Saudi Arabia, maybe it’s Iran, maybe it’s the madrassahs in Pakistan, but it’s worldwide, it’s a very, very strong Muslim revival.

Overall, religion is a good thing. If we were a godless society, we would have many other problems. Religion is a good thing provided we are able to bridge the differences between our different faiths, provided there’s give-and-take, provided we are able to get along together and not offend one another by aggressive proselytization, by denigrating other faiths, by being separate and, therefore, having suspicions of one another, which can easily happen. So you have to make an extra effort to develop that trust and to work together, which we have been doing.

Islam — you have an extra dimension because of the…

Because of the jihadist problem.

There’s a growing militancy in the Middle East and many of your neighbors are either Muslim-majority or have sizable Muslim populations. There have been cases of Indonesians, also Malaysians, going to fight for ISIS…

Singaporeans too.

So do you worry about a jihadist foothold in Southeast Asia?

We are very concerned about the jihadist terrorist threat. We had to take it very, very seriously since around 9/11 when we first discovered the Jemaah Islamiyah [JI] group here, which was intending to set off six or seven truck bombs and had got quite far advanced before we intervened and broke them up. The problem is endemic in the region. The Malaysians are having people getting converted and going and they’ve just arrested another couple of people. The Indonesians have hundreds who have gone and they are not just fighters going but families migrating to live under an ideal Islamic caliphate and they come back and when they come back, they are a problem. The ISIS objective is to set up a wilayat — a province of the worldwide Islamic caliphate — in Southeast Asia. I think that’s ridiculous. But there are a lot of corners of Southeast Asia where the government doesn’t run very strongly — in southern Thailand, southern Philippines, corners of Indonesia — and it’s not so far-fetched if they establish a foothold in one of these areas, as JI had a foothold in the southern Philippines. And if they have a little base there, you have a training camp there and then you claim that you are master of some territory and then people start to make their way there — that’s a different level of threat.

You can control within your own borders. But are you satisfied with the efforts made by neighboring governments to combat this potential threat?

We can control within our borders as long as we know we have information. We cooperate with our neighbors, we cooperate with other governments and security agencies, they share their information with us and us with them, and it’s very helpful. But when somebody radicalizes himself, we may not know because there is no network, there’s no trail. It’s between him and his computer and some video on the other end, or perhaps a contact he has established on the other end. If we are lucky, we may find out. If we are not lucky, well, he can get quite far. That’s a problem. Our neighbors have a much harder problem because they are much bigger countries. One police chief of one of my neighbors came to visit Singapore and we had a conference and he said to me, our difficulty is that 90% of our population is Muslim. And, therefore, it is very difficult for them to act against the terrorists without antagonizing the 90% who are Muslims. Not that the 90% of Muslims are terrorists, but how do you winkle this part out without causing collateral damage and political difficulty?

Lee Kuan Yew once told us that what China’s leaders called their nation’s “peaceful rise” was a contradiction in terms. Since then, China has become even more powerful and influential. Is the Chinese leadership overreaching? Is it, through its growing power, growing might, alienating its neighbors? Is it forfeiting its goodwill?

Every year the Chinese Premier attends the ASEAN Leaders’ Meeting. He comes with a very carefully thought-out set of things which he wants to do with ASEAN and he makes sure that there’s a little Christmas present for everybody and everybody sees that this is a relationship from which they can benefit. So the Chinese want their neighbors to be their friends. At the same time, on something like the South China Sea, they want their interests to prevail. [But] if they push too hard, there’ll be a pushback and even if you can’t resist the pressure because one country is big and the other is small, over the long term dominance based on just overwhelming power is not really an adequate basis for influence, much less soft power.

In the case of South China Sea, you do not have a claim…

We don’t have a claim, but we have an interest in seeing it managed and settled peacefully and in accordance to international law and UNCLOS [United Nations Convention on the Law of the Sea]; we also have an interest in freedom of navigation and overflight.

So what are you telling the Chinese?

We’re telling the Chinese that you have your rights, you are entitled to assert your rights, but at the same time, you have to look at the broader relationship and calculate that how you handle the South China Sea issue will be seen as one marker of how a powerful China will assert its place in the world.

Do they get it?

I do not know, but I’ve said that to them … There’s some internal dynamics involved. The PLA [People’s Liberation Army] will have a harder line; it is influential in their deliberations. I don’t know where in their system a soft line will come, but I think the Chinese population, if you ask them instinctively, I don’t think their instincts would be to say “let’s take a gentle approach because this will help us be seen as a benign panda.” I think that’s the mood in China now because the country has done well, it has prospered, it’s stronger, it has got an aircraft carrier. They think it’s time to stand up and assert their rights. They have been humiliated for too long.

The building, the expansion of reefs into full-fledged islands — what does that do to the delicate balance?

It’s creating facts on the ground.

You have spoken in Beijing about the need not to underestimate the U.S, not to overestimate the U.S. decline. Does China understand that?

The Chinese understand that it would be very many years before they can catch up to the Americans in terms of level of technology or science or defense. But they may think that with American elections coming and the administration approaching its last phase, that there’s a window of opportunity when the Americans are distracted elsewhere, that they will have greater freedom of maneuver. These are tactical calculations.

And what advice are you giving the Americans about what they should be doing in Asia and how committed they should be?

You have a lot of friends here, you have a lot of investments here, you have a lot of interests here and it’s foolish of you not to look to them. When you make decisions, you have to think about that, and not just your congressional district.

Do you get heat from Beijing that Singapore is too pro-U.S. or reflects too much the American point of view?

Every country would like their friends to stand closer to them on policies and issues, but I think they understand the reason why we take the stand we do. As a small country, we have to have our own independent stand, otherwise nobody will take us seriously.

You’ve talked a lot about the philosophy and character of Singapore. So much of that was shaped by Lee Kuan Yew. How much of your own thinking on politics, culture, world affairs, life itself, is influenced by him?

A great deal. I mean, he’s my father, I grew up learning from him, I worked under him when he was Prime Minister, with him in the Cabinet these last 30 years until he died. So it’s bound to be a very deep influence. Yet at the same time, it’s a different world and he knew that and he was very good at preparing for Singapore to move on and not be stuck in the Lee Kuan Yew mode. Only very rarely did he assert a strong view and asked us to please rethink something. But otherwise, he allowed an evolution to take place so that Singapore would carry on beyond him. And if you watch what happened when he died, we had an enormous outpouring of sorrow, but Singapore carried on. The stock market didn’t crash, investors didn’t panic, confidence was maintained.

Were you a rebellious teenager?

In my generation we didn’t think in those terms. You don’t always agree with your parents, but I never had long hair or wore bell-bottoms.

Besides Lee Kuan Yew, when you look at the pantheon of world leaders, both current and past, who are the other great men and women whom you admired?

Lula [Luiz Inácio Lula da Silva] in Brazil was remarkable — very little education, left-wing firebrand, mobilized a nation, became President and was able to not only to get people to support him, but actually pursue very sensible policies that promoted growth and development and improve people’s lives. He was able to make that transition from being a firebrand and a revolutionary to somebody who can cause growth and development. I thought it was remarkable. I met him and I was very impressed. Then you look at Angela Merkel; she’s a very careful politician. She’s got many constraints, but she’s well-established in her home base and deeply respected outside of Germany and not only in Europe. And if you talk to her, I mean, she’s not somebody aloof and overbearing. Very personable frau, but a very capable and steady woman. She will not cause a revolution, but she knows what she needs to do as Bundeskanzler [Chancellor of Germany].

You’ve mentioned two leaders from liberal democratic nations.

I only met King Abdullah of Saudi Arabia once and he was already in his late 80s. I was quite impressed because you think of this as a society where people scrape and bow and I’ve seen some other Arab monarchs where people literally scrape and bow and prostate themselves. But I called on him and he had his ministers in attendance and we had a conversation, him with me and then he brought the ministers into the conversation. I watched them, and the ministers addressed him, at most primus inter pares. It was a very easy, confident, relaxed relationship. There’s a conversation, there’s a respectful response. He made reforms within what’s possible in the society. To do that at the age of 80-something, that’s not easy.

What is your sense of Xi Jinping?

I have met him quite a number of times. I have chatted with him before he became President and then even after, called on him, just talked to him sometimes over dinner. He masters his brief, he knows what he wants, and he will discuss many things with you. When people think of a Communist country with a leader, you will think of somebody like Brezhnev or Tito. [Xi] is not like that. He’s not a pushover at all. He knows what he wants, and there is a curiosity about the world.

READ MORE: Singapore’s Next Story

TIME China

China’s Tanking Stock Market Plunges Even Further

Beijing's intervention has not arrested a precipitous slide

In China, red is a lucky color. So instead of the normal crimson, the nation’s stock market uses green to denote shares that are down. As the Shanghai and Shenzhen indexes opened for trading on July 8, a forest of neon green settled across electronic stock boards nationwide. At one point, shares on the benchmark Shanghai Composite index had dropped 8.2%, before ending the day down 5.9%.

Wednesday’s rout, just the latest in a weeks-long collapse of a once frothy stock market, came even after around half of listings on the Shanghai and Shenzhen exchanges had suspended trading. If these companies hadn’t voluntarily sidelined themselves or been forced to do so by regulators, the drop-off would no doubt be more precipitous.

The latest tumult in the world’s second largest stock market comes despite Beijing unveiling an unprecedented array of incentives to coax shares back on a positive track. Since mid-June, more than $3 trillion in share value has evaporated. On Monday, China’s state media had vowed that a government action plan, including a forced pause in initial public offerings and a scheme by which top brokerages would spend nearly $20 billion to shore up the market, would reverse “fragile market sentiment.” Beijing’s unprecedented intervention dwarfed even the U.S. government’s TARP financial rescue plan. But by Wednesday, the nation’s security regulator was warning of “panic” by spooked investors. Beijing’s involvement didn’t seem to be working.

The percentage of total Chinese wealth tied up in the stock market is still relatively small. And even if Chinese bourses have lost around 30% of their value since mid-June, they’re still higher than a year ago. Nevertheless, confidence has taken a drubbing. For massive state-owned enterprises, the bourses had proven useful to offload debt. For tens of millions of ordinary Chinese, particularly retirees without enough savings to buy property, playing the stock market allowed them to augment meager state pensions that cannot keep up with today’s living costs. Many people borrowed money to invest in shares, magnifying the losses. Unlike in many other stock markets, the Chinese exchanges primarily attract amateur individual punters, not larger investors.

For one such punter, a 24-year-old state-owned bank employee from Nanjing who goes by the English name of Ted, 2015 has proved calamitous. He began investing in January, putting around 1 million yuan (roughly $160,000) in the market. Now he has less than $100,000 left and pulled out of the market completely on July 7. Ted estimates that around 70% of his friends had bought shares. “Now that this bull market has collapsed,” he says, “wealth has been redistributed and the middle class is annihilated.”

At the market’s peak on June 12, shares had more than doubled within a single year. Yet the relentless climb of Chinese shares, even as other economic indicators such as GDP growth and electricity usage sagged, led doubters to worry about a bubble. Now, the Chinese government has tied part of its legitimacy to shoring up the stock market — risky given this week’s volatility. Such intervention also goes against Chinese President Xi Jinping’s vow in 2013 to let market forces play a “decisive role,” as part of a larger reform initiative, prompting fears that his administration isn’t as committed to liberalizing the state-dominated economy as many had hoped.

On Wednesday, President Xi, along with central banker Zhou Xiaochuan, headed to Russia to attend a BRICS summit of emerging economic powers. Canceling their trip would presumably have further spooked China’s jittery investors. But the contagion may have already spread beyond mainland China. Hong Kong’s Hang Seng Index ended trading down 5.8%, Japan’s Nikkei 225 dropped 3.1% and the Taiwan Weighted fell 2.9%. For some Asian investors, the Greek drama playing out in Europe paled to the tragedy nearer to home.

With reporting by Gu Yongqiang / Beijing

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