The Winter of Kondratiev

‘Wins he who, after getting prepared, waits to take the enemy by surprise’
Sun Zi, The Art of War, 5th Century B.C.

Beijing, Ministry of Information Technology
September 1

The Order had been published. And? – Nothing. The world had not spun off its axis. It continued its smooth orbital path as ever before. Calm prevailed, from Tokyo to New York, from Shanghai to Rio, from Stockholm to Sydney.
Had Tang Jinghua been worrying over nothing? He, the historian, frustrated at being just a pawn in a founding Act. Had he, who imagined having triggered off telluric forces, hurricanes, tornadoes and tsunamis, got it wrong? While he was brooding over the idea that ousting Microsoft from the Chinese market was not going to rock the international scene after all, his eyes stayed riveted on his secretary’s door, as if that Order had been Yaping’s death warrant.
‘She died all through me’. These words kept ringing in his mind. He felt desperately lonesome. No more tea, no more bright smile. Life seemed to have stopped at the threshold of that small office where the forever-cheerful Yapping typed his reports with her nimble hands. There lay the tragedy, a body lying under a large white sheet, strangled, all because of a writ.

Beijing, Ministry of Information Technology

The next day

‘How is his Excellency?’
‘All the better for seeing you, Minister!’
As a commercial attaché, Stenton had been keen to accompany his ambassador to his meeting that afternoon with Shan Yunli, the Minister of Information Industries. As both men knew full well, that visit was merely the tip of the iceberg.
For some days, now, there had been unequivocal pressure on the government of the People’s Republic of China, prompted by the State Department and the rumbustious Edwin Nimoy.
They had explored every single possibility, including the entire palette of punitive measures: freeze on investments, hiking customs duties to 200% on Chinese products, a downright import ban on a whole series of articles…
But the situation was complex and the commercial or economic weapons at hand were proving rather unwieldy. Firstly, a significant proportion of imports came from US companies implanted in China; and there lay the real dilemma. Secondly, it was now all too painfully true that China had become ‘The World’s factory’, as the popular cliché would have it. That was not just hype, but the cold reflection of the real situation. For instance, China was producing 70% of the toys sold on the planet, 60% of all digital cameras, 40% of TVs in the world… And that was just the beginning.
The United States had become highly dependent on China’s industrial output for its consumer goods, from electronics to shoes, from household electrical appliances to clothes, not mention toys.
To slam the door shut on these Chinese suppliers and their low prices would be a sure-fire way of importing inflation to the US, reducing spending power and bringing about the collapse in consumer spending. The Federal Reserve simply would not have it.
Any bold move now to re-source by relocating factories to Mexico, South America, Morocco or South-East Asia would be impossible in such a short time frame.
And then there was the debt factor – the abyssal debt created by years of budget deficits, now valued at 10 trillion dollars. Almost 40% of the public debt was to foreign creditors. How much of that debt was in Chinese hands? And at least the same amount of debt was spread amongst the Asian dragons, and possibly three times as much over Japanese creditors.
The only thing that prevented the US economy from flying apart was confidence! Confidence in the US dollar, confidence in the US economy, and confidence in its ability to repay.
The Federal Reserve had put the dollar printing press into overdrive to produce much-needed liquidities as the Federal government dug the deficit deeper by raising the defence budget while reducing taxes. All this in a bid to sustain consumer spending. And the Americans did indeed spend, but on cheap products imported from China and other Asian countries which, in turn, accumulated trade surpluses in the form of dollar reserves eagerly converted into US Treasury Bonds, so pumping fuel back into the machine. The loop was thus completed to form a self-perpetuating cycle.
Who would now want to upset this fragile financial equilibrium?
The situation hardly left much room for manoeuvre and there were hardly any levers for responding with effects in the immediate term. There was the rub: the United States had to retaliate right away – and vigorously at that – to an attack of an economic nature. Naturally, it had to restore its prestige and rank; that was a question of self respect. But it also had to avoid the risk contamination to all the other high-technology sectors and, ultimately, to the whole economy.
It could always rely on military and other tough options: turning off the oil supply taps to asphyxiate the Chinese economy, sending the US Navy along their coasts…

The Chinese Minister invited them to sit down in a small parlour adjoining his office.
The two American visitors wasted little time on the customary small talk according to diplomatic protocol and moved quickly to the core of their concerns.
‘Minister, your administration last week adopted a measure that I would qualify as radical, not to say brutal. I am referring, of course, to the Order concerning the deployment of your national computer operating system.’
The Minister was a round character with an impenetrable smile. He put on an expression of concern.
‘Yes, I understand. But I do want to assure you that we didn’t make this decision lightly. It was the fruit of much soul searching and debate. Believe me, the sheer logistics of this operation gives me insomnia! In fact, strictly between you and me, I still don’t know how we are going to manage to implement all these measures!’
He was putting on a good act. His facial expression, sweeping hand gestures and even his sighing voice conveyed the air of a man crumbling under an impossible task.
‘I’ll be perfectly frank with you, your Excellency. I would much rather have been assigned the responsibility of building the Three Gorges Dam, or given charge of the Chinese Space and Inhabited Flight program. I don’t think they would have given me the sleepless nights I’m enduring right now. I’m very pessimistic about all this. Do you realise that we’ll need to manage something like 100 to 150 million computers!
This time, the challenge is far too great for us. To tell you the truth, I wouldn’t be really surprised if we were to give up the whole scheme after a few months…’
‘I sympathise with you, Minister. But, beyond these practicalities, have you given serious consideration to the legality of this move? You see, you are closing the market to a company, namely Microsoft. In my view, this is in complete violation of the fundamental rules of free competition. We had always been led to believe that your county committed itself to open up its markets when it joined the World Trade Organisation.’
The Minister was now settled deep in his armchair, hand resting on his knees. A soothing smile exuded from his placid face.
‘With all due respect for your point of view, you Excellency, I must say that the perspective on this matter depends on which side of the observer is sitting. It has never been our intention to close our doors to the computing market! Quite on the contrary, your Excellency, our markets in this sector are more open than they ever were.
‘I’d be curious to know in what way…’
‘Well, our CNOS computer operating system will constitute the common platform on which all software editors and applications developers will be able to work under fair and equal terms.’
‘The market has already decided on this issue, Minister. It elected the best product years ago, namely Microsoft Windows. That is the law of the free market. The very same law by which millions of Americans buy goods made in China.’
‘But we are in no way excluding your Microsoft from the Chinese markets, your Excellency. In particular, we have provisionally excluded servers and mainframes from the scope of Order, precisely because we consider that large firms must be free to choose the computer system that is best adapted to their specific needs. Now this exclusion doesn’t apply to personal and office computers. The reason is purely a question of security. It is our security that is at stake, you Excellency. We simply cannot leave it in the hands of others, even if they are our friends!’
‘But you seem to forget that Microsoft has opened up all of its source code; it was ready to integrate into its operating system security routines developed here in China, by Chinese laboratories! Now, if that isn’t a mark of confidence!’
‘Your Excellency, even the Americans no longer believe Windows is capable of guaranteeing their own security! They too are banking on Linux to improve the security of their computer systems. Look at the initiative taken by your National Security Agency, the NSA. Even they are turning to SELinux, the security-enhance version of Linux. You see, even the States’ most competent authority in the matter doesn’t trust Windows! So how can you expect China to use Windows when the NSA is recommending an enhanced version of Linux instead?’
The Chinese minister was gaining the upper hand. The Ambassador was not aware of that initiative by the NSA.
‘Your decision boils down to putting the entire computing market into the hands of Chinese companies. This runs counter to WTO regulations and could have serious repercussions!’
The Minister remained a picture of serenity and self-assurance.
‘Your Excellency, our CNOS does not go beyond the computer operating system. It comes entirely free. Any IT firm in the world is free to use it. Just as with Linux, which is also free and used with considerable commercial success in China by US firms, such as IBM and Sun. If your Microsoft is willing to make the effort to adapt to open-source software, I’m certain it will succeed. Its future here is in its own hands. Moreover, I draw your attention to the fact that the software applications market remains open to competition, and likewise for that of the graphics interface. This means your Microsoft is quite free to continue to sell its Windows graphics interface as well as its popular applications, such as Word, Excel and other office applications you probably know better than I do.

The Minister clearly had some pluck. The Ambassador replied, a bit too hastily:
‘And how do you expect Microsoft to continue selling Word or Excel when it can no longer have the Windows platform, now your administration’s banned it?’
The Minister strained his eyes and let out a grin that was all but diplomatic.
‘Correct me if I’m wrong, your Excellency, but wasn’t it precisely for this reason that your Department of Justice took Microsoft to court, leading to that epic case for abuse of dominant position?’
An uncomfortable silence set in.
The Minister continued.
‘You can see for yourself that China is fostering an environment for healthy competition, in conformity with US court decisions…’
The Ambassador was struggling to formulate a response commensurate with diplomatic language. Stenton came to the rescue.
‘It is indeed quite appropriate that you bring up this episode, Minister. The United States of America operates in a legal framework with laws to effectively protect competition, and there are courts to make sure they are enforced. I don’t doubt for a moment the same is also true in the People’s Republic of China, all the more so now it’s become a member of the WTO.’
‘You can rest assured, Sir, that the fundamental rules of trade are recognized and enforced in our country. You may recall that with our notion of Yin and Yang, China in fact invented the binary system 5000 years ago, well before its introduction in Europe by Leibniz in the 17th century… not to mention the abacus, which dates back to the same period…’
‘And yet, Minister, like you, I am sometimes overcome by pessimism when I gauge the difficulties that stand in our path and block the actions of men of good faith, however strong and pure their intentions may be. And then I say to myself that, if such is the way things are, then the situation could escape our control, yours as well as mine, and drift catastrophically into something of an altogether different nature.’
The thinly veiled threat was all too real, even though the Minister of Information Industries may not have been the most appropriate person on whom to apply such pressure. Be that as it may, the two American visitors had obtained what they wanted to know. China would not go back on its decision and there was no point in insisting. They were heading straight for a confrontation, and there would be no escaping from it.
‘Your Excellency I’ve no doubt you’ve seen some of our people do Tai Chi Chuan? It’s derived from traditional martial arts. There is an exercise called ‘push hands’. Each participant develops sensitivity to its partner’s life energy, and understands the way he reacts. The members are respectively Yin or Yang, depending on whether they push back their partner’s hands or, on the contrary, receive and bypass the other’s forces.’
‘We’ll take inspiration from this ancient wisdom. When two partners know each other and respect their mutual interests, they can move together without throwing the other to the ground…’
There was nothing more to add.

Cambridge, Massachusetts.
MIT, Macroeconomics Study Center

September 3

The whole of nature is known to hold its breath well before an earthquake actually occurs. Animals seem to have a sixth sense, warning them of the imminent catastrophe. Birds cease to sing, rabbits lie crouched deep inside their burrows; everything is at a standstill; nothing breathes. Other creatures, by contrast, become agitated, like a goldfish in its bowl, a horse whinnying in its stable, beating a hoof against the box door.
David Ferman’s sole task at his Macroeconomic Research Center was to pick up the early warning signals that announced large-scale economic movements. In this respect, he was very much like a seismologist of economic activity.
He had devised a whole raft of indicators that allowed him to monitor the world markets. Over the past few days, he had been scrutinising the figures going haywire. The Microsoft stock had been blinking red since the beginning of the week. Monday, a drop of over 2%; Tuesday and Wednesday, the plunge was even steeper. The share value had lost 18% in three days. The traders had been quick to act to the closure of the Chinese market.
And yet the analysts did not seem to agree on the consequences of this measure. The most pessimistic forecasted the end of the Redmond firm and the expansion of the free software market. Others counter-argued that this was over estimating the importance of the Chinese market, as that the vast majority of computers out there used pirated versions of Windows. Accordingly, the fall in revenue resulting from Microsoft’s eviction from the Chinese market was of little concern for its profit margin. In a way, it was very much a non-event. And in fact, this was the view that seemed to gain consensus.
Between Thursday and Friday, after three consecutive days of fall, the Microsoft share was now on the rise. But the Dow Jones index had nonetheless lost 7% over the week, while the NASDAQ composite slid by almost 10%, more than Microsoft itself.
As for himself, David Ferman had a very clear idea of the short, medium and long-term consequences of China’s boycott of Microsoft. He was sketching curves on a sheet of graph paper when his gaze crossed that of Leroy Adams, an iconoclastic economist he liked for his openness of mind. Adams moved up to him in an untypical state of agitation.
‘Hi there Ray what can I do for you?’ asked Ferman in a jovial tone. ‘You have this knack of popping up whenever I’m into Fibonacci ratios and Elliot waves.’
‘You’re talking about Microsoft?’
‘Yup, it’s awesome… somebody’s supporting its stock value, but how long for? The deteriorating situation is now contaminating the entire sector and will spread all along the coast.’
Ray, who had always advanced alarmist views, seemed almost to be rejoicing at the idea that the turn of events was now proving him right.
‘So, here it is, the big day! And I suppose you’re now going to tell me about Kondratiev,’ quipped Ferman.
‘He had got it all right, you know. Look at the way he segmented the evolution of the economy since the 18th century: in cycles each lasting 60 years on average. Each cycle comprises four phases. The first two, primary expansion and recession, are marked by inflation. The last two, the plateau and deep recession, by disinflation and a transition to inflation. We entered the end of that last cycle at the turn of this new century. We’re now entering ‘winter of Kondratiev’!
‘D’you really believe in all this, Roy?’
‘Of course I do, it all fits perfectly! The period stretching from 2000-2010-2015 matches the one from 1929 to 1945!’
‘So, you’re a harbinger of wars to come…. Jeez, don’t you have a more cheerful topic of conversation?’
‘These are just natural economic cycles, Dave. I’m not gazing into to tea leaves, I’m deciphering the economic news!’
‘And I suppose all the economic indicators point in the same direction, is that it? Is that what you’re trying to tell me?’
‘Right! Even the Elliot waves! Listen, the markets were at the peak of a supercycle back in 1929. And what did we have in 2000…?’
‘Since then, we’ve gone into rampant deflation. Like in the 30s. You can see deflation as a drying up of money and credit. And I’m not teaching you anything when I say it’s not simply a matter of falling prices. The Federal Reserve did have a go at stemming this by opening wide the credit floodgates. But it’s run out of steam’
Ferman put down his pen. He was listening to his friend with more interest.
‘Take the price of PCs. It’s been falling constantly over the last 20 years, even though the economy is in full bloom.’
‘That’s true.’
‘New technologies intrinsically have a destructive effect on values. For the last 20 years, the constant fall in price of computer equipment has been compensated by the exceptional growth in the rate of purchase of equipment by households and business. But now we’ve come to the end of the cycle; the two trends have reached their crossover point.’
Roy leaned over the sketches Ferman had scribbled on a sheet.
‘So, if I get your drift, the Microsoft/Intel tandem has in a way protected us from inflation in the 1990s?’
‘You got it, Dave. Microsoft developed software that was always more power hungry without any real technical justification for it. Intel, on the other hand, offered ever-more powerful processors whose reason for being was simply to run Microsoft’s latest systems. The ‘Wintel’ duo had thus artificially kept the average price of PCs at a more-or-less constant level, whereas Moore’s Law should have applied.’
‘You’re referring to that law which claims the number of transistors on a chip doubles every 18 months, right? That does indeed sound very much like a deflationist law!’
‘Fortunately for them, the Microsoft/Intel duo always managed to convince its customers they needed more computing power and that their needs were endless. The bottom line of it? Each new version of Windows ran slower than the previous one if you kept the same PC. Whereas Linux gives you equivalent performance when run on a 10-year-old PC. All they had to do was to convince the user to change his PC that had instantly become obsolete. Constantly updating software and hardware had become essential for sustaining growth.’
‘So, while preserving its own interests, Microsoft was in effect acting for the national interest.’
In saying those words, David Ferman drew a faint smile tinged with irony.
‘You could indeed call it a form of good citizenship. The company’s monopolistic position and commercial strategy saved the market from the deflationary effects of information technology,’ confirmed Roy.
‘So it’s quite fitting Microsoft should set off a deflationary phase!’
‘Right. There is some logic and consistency in all this.’

Jin hung up. Her face darkened, eclipsing for the first time the smile that had not left her since Tom had definitely recovered. The young man who was watching her from the corner of his eyes sat down in the narrow courtyard of the pavilion. He leant over to her, gently placing his hand on her delicate nape.
‘Bad news?’
Jin remained silent for a while. Tom’s warm voice was enough to make her forget all the threats weighing on their relationship.
‘All the police forces in the country are looking for us. I’m accused of high treason. And as for you, my dear Tom, you’re charged with spying. I’m waiting for orders but, for the time being, it would be madness to consider leaving this place.’
Tom gathered that she had just spoken to Colonel Zhou, the only man to know where Jin was hiding. She had admitted everything to Tom: the double-crossing she got involved in, her secret activities… shattered by their meeting and the kindling of her feelings towards him. The sight of Jin’s lifeless body swinging at the end of a rope flashed through his mind in an instant. He cared little about his own fate. He cradled up against Jin to feel her heart beat, the warmth of her body, her scent.
‘Tom, you must get yourself exfiltrated back into the hands of the US authorities.’ She spoke against her feelings… It’ll be safer for you.
Tom interrupted her with a kiss, fearing she would say more. Then he looked deep into her eyes, delicately pressing a finger against the young woman’s lips so that she would say no more that could upset their love.
‘Jin, I’m going nowhere without you! I didn’t pull you away from these two savages only to get myself ‘exfiltrated’ like a criminal! You seem to be forgetting something: I’m the only one who can get you off the hook. From now on, our fates are in each other’s hands!’

Back at Langley after her calamitous stay in Beijing where she had failed to stop the inevitable; Lorna Green was fuming in her office. ‘What’s the use of having those giant receiving aerials, these constellations of satellites snooping in all over the globe if we cannot trace the most important man in China, i.e. Tom Bailey?’ she kept thinking.

Tom Bailey had to be found, cost what may. His presence in China from now on constituted a continuing threat to America. If he fell into the wrong hands, if ever he were to put his extraordinary abilities and knowledge at the service of the enemy… Lorna did not even dare imagine such a possibility. They just had to find Tom whatever it would take.
The piercing tone of the telephone interrupted her thoughts. Stanton was trying to contact her. She took the call, more impatient than ever.
‘Still no success?’
‘Complete radio silence. If our satellites had picked him up, you’d have known it before me. As for our men out there on the field, they’ve nothing to go on. Tom Bailey has vanished into thin air, gone. The counterespionage service the girl belongs to is adopting a low profile at the moment. They’re not in a position to defend these two. All the police forces of the People’s Republic are at their heels. It’s a complete mystery.’
‘Stanton, Tom Bailey’s got to be found. That’s an order,’ Lorna added just before hanging up.
It was now two weeks since China had imposed its own operating system. The pen plotter on the David Freeman’s economic seismograph was beginning to show signs of jitters. Yet the week had begun relatively calm. The traders and financial markets did their utmost to disguise the truth. According to them, this Microsoft business amounted to nothing more than a patch of turbulence in the Redmond firm’s otherwise smooth flight path. Now was the time to be steely nerved.
But the illusion of a provisional and controlled crisis lasted only three days. On Thursday, the stock exchange went into a tailspin. It began with an article in the Wall Street Journal expressing serious doubts on the business prospects of the Windows firm. The key words in the article were ‘the domino effect’. For, after China’s decision, the question was how to avoid the proliferation of similar national initiatives regarding computer operating systems. Would the other countries around the world sit with their arms crossed watching China benefiting all alone from a privileged situation, namely no longer having to pay royalties to Microsoft? Especially at a moment when the firm decided a few months earlier to pay out dividends to its shareholders – the first time in its history – changing its status from a growth stock to one of financial returns. This was widely interpreted as a tax levied by a private American company on the computer sector worldwide. It was as if Microsoft had granted itself the sovereign privilege of States to raise a new tax. And the tens of billions of dollars – lifted out of the pockets of users in the rest of the world – were being redistributed to bolster the pensions of the American babyboomers.
The doubts over Microsoft’s fate had thus become the backdrop for deeper fears of a conflict, and now the spectre of military confrontation began loom. Because China was the powerhouse of world growth.
From a purely monetary aspect, there was an objective alliance that linked the United States to the Empire of the Middle. China was financing the US debt by buying US treasury bonds with its trade surplus. America was using this money to buy Chinese industrial products on credit. To break the system – to upset its fragile balance – would be to plunge the world economy into a deep systemic crisis.
Propagation once again.
The American press, clearly not lacking inspiration, never ceased to find parallels between the Windows publisher and its competitors. The first one brought in to this little exercise was Intel, the world leader in microprocessors, and one of the 30 reference companies of the prestigious Dow Jones industrial average. Intel owed its expansion to the geometrical growth in microchip integration density set out by Moore’s law. But the latter had reached its limits. An operating system such as Linux only required relatively modest processing power compared to those called for by the products of Intel’s accomplice, Microsoft.
The downfall of the semiconductor manufacturer took in its wake the entire semiconductor industry, likewise judged too vulnerable in the face of Chinese competition. And IBM, another Dow value, was also sucked into the maelstrom, followed by PC vendors such as Dell, Apple, HP, etc., soon to be joined by Sun, Oracle …
Then the pundits began to seek out the firms which, like Microsoft, benefited from privileged revenues. And thus they came down upon equipment makers in the networks and telecoms sectors, starting with Cisco. How would these firms fare against their counterparts in Shanghai, Shenzhen or Wuhan?
The verdict of the analysts was a cruel one. Like when the Internet bubble burst between 2000 and 2003, they were now putting at the pillory those values they had only just before a venerated.
-20%. That was the NASDAQ’s performance for the week. The indexes had smashed a number of technical safeguards. They had jumped out of their channels that paved out the long-term trends and were heading south towards the abyss.
But, even more worrying to David Ferman was the real estate property index that was beginning to dive, both for new and used houses. American households had got themselves bogged down in debt over the previous years, taking advantage of historically low interest rates to buy new dwellings. But the financial edifice itself only held together because of the continuing rise of the property market, creating a wealth effect and scaling down the weight of the national debt. If, by misfortune, property prices were to stumble, the Americans would jump into the market to sell their property and escape from personal bankruptcy, so amplifying the downward trend that was already accelerating.
Consumer spending, as well as spending in the property and military sectors, had put the US economy back on track after two years of recession, but the upturn was artificial and short lived. By contrast, the other side of the Pacific owed its break from the recession solely to being exposed to the Chinese market. It was a short-term policy by which the Japanese transferred their know-how to the Chinese, who would soon become awesome competitors. In these times of crisis, truth was sometimes stranger than fiction.

The White House, Oval office

‘So you’re telling me that this Chinese Order thing is buggering up our stock exchange?’
The US president was incensed. Nick Brown, the trade secretary, volunteered an explanation.

‘Mr President, this Godamn Order is nothing less than a boycott of Windows by China. Next year, if we want to sell a PC in China, we’ll be obliged to install on it their own brand of Linux, a free operating system. If Microsoft can no longer export to China, it will be barred from a colossal market. But it won’t be the only one to suffer. Our own PC constructors and microprocessor manufacturers will also be severely handicapped in the face of Chinese industry, which would inevitably take the lead. It’s our entire computer industry which risks sliding down over the edge. The financial markets have just begun to grasp this.’
State secretary Ed Nimoy, never one to lose an occasion to dramatise a situation, added:
‘It’s a cataclysm, Mr President, as if our industry had been nuked!’
Nick Brown cared little for Nimoy’s hyperboles, but thought better of moderating his colleague. Let alone contradicting him. The ex-director of the NSA, who was now secretary of state, was feared by all. Not least because he had the backing of the ultraconservatives in Congress. This put him in a position to impose his own version of events to serve his hawkish plans. President Jim Walker, while seen as more moderate, nevertheless seemed in the grips of his secretary of state.
‘It’s an act of war OK, it’s an act of war,’ repeated the president, sinking deeper into his armchair.
The members of the Inner Cabinet formed by the president nodded their heads in silence. Edwin Nimoy, Nicholas Brown and Robert Larson, the extremely powerful national security adviser and another Hawk in the administration, exchanged gazes, conscious of what was at stake within those walls. The present was waiting for their advice for organising retaliatory measures.
Nick Brown was the first to break the heavy silence that was setting in:
‘Mr President, it would be difficult to present this measure as an act of war. China has already justified its decision by invoking national safety considerations which, on the face of it, are quite legitimate.
Annoyed by Nick Brown’s pussyfooting, Larson moved up to the president’s desk and placed his heavy fists on the table. He let the word out:
‘It’s a bomb. B-O-M-B!’
Larson spelt out each letter to drive the message into the president and his entourage.
‘This bomb is ticking away… all the measures Microsoft took to reassure China were in vain. They had already started the countdown timer. I repeat, Mr President, there isn’t the slightest shadow of a doubt. We must strike back…’
‘We could consider legal proceedings before the WTO, followed by commercial and financial reprisal actions…’ Nick Brown did not have the time to finish his attempt at moderation.
The present shot him with his eyes.
‘Bob Larsson is correct, Mr Brown.’
The president waved the CIA file that indicated how, right to the end, the Chinese had only pretended to want to collaborate with Microsoft.
‘You don’t seem to understand, Sir; it’s not a mere economic dispute, but a war.’ He continued, emphasising each of his words while brandishing the CIA report.
‘We have the proof. China deliberately and knowingly committed an act of aggression against the United States of America. China could not ignore its effects and consequences. And yet it decided to strike. It covered its cards, hid its weapons, and then struck. Like a traitor. It’s an egregious act of war.’
‘A new Pearl Harbor, Mr President,’ interjected Larson, who seemed to take pleasure in defying a downbeaten Nick Brown. Thirty seconds went by without anyone uttering a single word… Nick Brown had clammed up for good, realising that the president had long since sided with Larson. Then Jim Walker got up slowly and began in a solemn tone:
‘We have just a few weeks to show the American people, to show our markets, and finally to show the world, that we are launching a swift and powerful retaliation against China. A retaliation of the same nature as its attack. A war strike.’
Turning towards his secretary of state, he added:
‘Ed, would you mind making sure we have the unfailing support of all our allies. And I do mean all our allies. We must avoid all risk of contagion.’
‘Yes, Mr President. We have already summoned the ambassadors of Latin America, the European Union and Russia. India must also be considered extremely important, its population is approaching that of China and it’s the second IT power in the world. With the help we gave that country in their dispute with Pakistan and our aid for modernising their armaments, we should expect their good relations with us to guarantee their support. I made a personal call to the Indian Prime Minister, and likewise to the premiers of Brazil, Mexico, Australia, Japan and South Korea. It’s also crucial we have the complete backing of all the Asian countries in the present context. China’s decision is not only an act of aggression toward the United States, but also against the free world as a whole. China is showing its ambition to dominate the computer sector, to dominate Asia and overtake India. It’s a threat to the entire region and we can be sure the nations within that zone will side with us. The Russian government is not in a position to refuse us anything.’
‘What about the Europeans?’
‘The Eastern bloc countries are with us. But the old Europe likes to wallow in endless debates. I doubt in the end whether it’ll take any position. It’ll opt for neutrality.’
‘Mr state secretary, no-one is to follow in China’s footsteps. No-one! Our allies must issue a firm and unequivocal condemnation of the aggression to which we fell victim! Gentlemen, we are in a state of war…’

Tom spent the morning fighting with his iPod music player. It had stopped working since his motorcycle accident. With the help of the young Yandong who was watching the American admiringly, Tom undertook to take the delicate housing apart.
At noon, a loud voice ripped through the courtyard. It was Tom hailing victory. He put on an earplug and handed over the other to his companion who hadn’t left him since his arrival.

Beijing, CIA bureau

Song made another attempt. Despite having the world’s most advanced technology, dozens of low-earth-orbit satellites, he still couldn’t find trace of the computer scientists two weeks after they had slipped away from him. Nothing, not the slightest blink of a signal from the skies. Tom and the Chinese spy had vanished into thin air. And then, suddenly, at 4 p.m., a red spot appeared on his PC screen.
Song darted to the office next door.
‘Stenton, we got him. We’ve just picked up his transponder signal!’
‘About time! Where is he?’ he asked, beginning to follow Song back to his office.
‘35 kilometres from Beijing. According to our maps, he’s hiding in a forest.’
Song zoomed in on the zone concerned.
‘That’s no forest, it’s a military zone…’
‘A military zone! D’you mean a military prison camp?’
Song consulted a CIA register that recorded all of China’s military installations.
‘No! It’s a training zone for their commandos…’
‘You mean their special services?’
‘Most likely, Stenton.’
‘That means Tom and the girl have placed themselves under the protection of the army’s intelligence services, what d’you think?’
Stenton thought for a moment.
‘You still have contacts in the secret police, haven’t you?’
Song pulled a wide grin.
‘Of course!’
‘Is the police also looking for them?’
‘I believe so.’
‘And apparently they don’t know where they’re hiding. Song, it’s time we contacted the police. We should be able to find some grounds for cooperation… ask central command for a satellite trajectory over that zone…’

Song’s big Volkswagen turned into the avenue. Only a few Street lights preserved the deserted pavements from total darkness. He turned off the engine and got out of the car. He had come alone, in accordance with the instructions sent to him by the chief of the secret police. He pressed the central locking button on his key fob, breaking the stillness with a shrill bleep and two flashes from all four of the Volkswagen’s turn indicators.’
His eyes darted around to check out the perimeter. There were two or three cars parked nearby and, in one, he could make out the dark form of a figure sitting behind the wheel. The perfect setting for a trap. But it was too late to go back. Song had taken a risky gamble, being totally ignorant of his opponent’s positions. If Guo’s secret police knew where Tom Bailey and Lao Jin were hiding, the game was over and Song would fall into their snare.
On the other hand, if the two scientists were still on the run, as he and Stenton suspected, then he would have a deal to offer to the police. He had passed on the message to Guo via one of his shady informers who acted as a go-between for the two sides. He wanted to meet Guo, and discretion was the operative word.
The door of the premises was dimly lit by an overhanging red Chinese lantern. It could have been anything: a brothel, a private bar, a gambling den, whatever. There was one thing for sure: he was not stepping inside a Burger King. He knocked on the door and was greeted a moment later by a mamasan clad in a traditional robe. He made his way through the haze of cigarette smoke and sensed the suspicious looks turned on him. He tried to discern from among the figures dispersed in the semi darkness one which could plausibly be his contact. He was venturing to sit at the bar when he felt a hand suddenly grip his shoulder. Immediately after, he felt the jab of a gun pressed hard against his lower back. Two men – one on each side – forced him along to the end of the room. As soon as they were out of sight, the men frisked him. They quickly discovered he had come without a gun. They drew aside a draped curtain and made him step inside a tiny room with one other access at the opposite end. Song noticed a square table on which a game of Mah-Jong was going on, lit by the bare light of a bulb dangling from the ceiling.
Waving the barrel of his gun, one of the men indicated a chair and signalled Song to sit down. He could hardly distinguish the face of the man seated before him, but could nevertheless make out two other silhouetted figures standing in the background.
‘Who are you?’ came the voice.
‘Santana Song, from the American Chamber of Commerce in Beijing.’
The man flashed a torch on the Eurasian’s face, clearly trying to identify him.
‘You’re from Macao, aren’t you?’
They were obviously well-informed. The Chinese speaker uttered those few words with just the right amount of intonation to express all his innate contempt for that old Portuguese enclave.
‘I was born in Macao, but I didn’t come here to talk to you about my mum,’ retorted Song, showing he was not intimidated.
The two men in the shadows moved up to the table and came under the halo of light.
‘Am I right in thinking that you’ve lost one of your computer scientists!’
‘He’s an absent-minded guy; he easily gets lost…’
‘Our country is so vast… but our population is very friendly; we’re always eager to help a stranger on his way. I’m convinced your friend’s in good hands.’
It must have been Guo, the chief of the secret police. He was a man of medium height, ordinary looking, with unkempt hair that did not often come into contact with shampoo. Was he trying to convey that they had found Tom? It was all bluff. Song was sure of that. In any case, he hoped so, because otherwise it meant he had just stepped into the enemy’s hands and would be lucky to see another day!
‘You know these computer bods… no sense of direction. I reckon he’s still trying to find his way – him and the girl serving as his guide.’
Song had just put down a trump card there. The Chinese character remained silent for a few moments. This was the moment of truth.
‘It’s possible,’ he finally uttered. ‘But how are we to find him?’
He was holding out a cue.
‘We know him well. I think we should be able to locate him. But China is a country that holds many mysteries for us. We would need your help…’
Song had now revealed his game. He just had to hope he had got it right. Guo remained stonefaced. Finally he let out:
‘I suppose this computer scientist is very valuable to you?’
‘Well, you see, it’s his family… they’re impatient to get him back.’
‘And what about the girl acting as his guide?’
‘I don’t think much of her sense of direction either. But that’s quite a common fault with women. She’ll have some explaining to do with her travel agents…’
The deal was taking shape.
‘And you can locate her with what precision?’
‘Very high precision…’
There was no need to add more. The Chinese agent must have surmised that they had been located on a satellite positioning system.
Guo paused to reflect. Lao Jin and the computer scientist could not be protected by counterespionage. That would be far too dangerous, even for secret services which were already being accused of having given shelter to a traitor. But Zhou, her chief, despite his weakened position, would never drop her. The girl must therefore be hiding in a quiet place that was inaccessible to the Americans…Guo would dearly have loved to solve that puzzle. However, he needed to catch that girl and hardly had any options… He asked Song:
‘What do you have to offer?’
‘We take the kid, you keep the girl…’
Guo thought for a moment. He scrutinised Song with his small dark eyes. After all, it was quite conceivable that the CIA needed him.
‘I’d say it’s a fair deal.’
From his pocket he drew a business card on which he wrote a cell phone number.
‘Call me back tomorrow at that number. Ask for the person whose name figures on this card.’
The deal was clinched.
The Chinese negotiator made a sign with his head to the two guards on either side of Song.
The interview was over. They marched him to the exit through the same path.
He had got it right.
Tomorrow, he was going to supply Guo with the GPS coordinates of the military base where the two fugitives were hiding. It was now up to the police to convince the army to hand them over. And then he would be able to recover Tom Bailey.

‘Jin, the situation’s getting complicated…’
It was Zhou. He was calling her two or three times a week. He too was in difficulty. His efforts to let his team off the hook were slow to bring results. For, in the diplomatic game of chess engaged between China and the United States, Tom Bailey and his companion had become more than mere pawns.
China was accusing the CIA of setting up an intelligence campaign by taking advantage of the GSP mission to gain the confidence it had been shown. It contended that Microsoft’s apparent willingness to reveal the innards of Windows – and notably its entire source code and crucial knowhow – was nothing more than a pretext to spy on China and glean information on its own computer security policy.
There was one step from there to state that the decision to oust Microsoft from China found full justification on the grounds of this espionage attempt. But China did not make that step. It was clear to all that China had sealed its decision well before the dramatic events of that fateful day of August 26.
It was most probable that the Chinese authorities would give credit to Zhou’s version of the events only after all this affair had outlived its usefulness. And that was not yet the case.
‘Jin, the army’s just learnt that you’re hiding with that American inside the base. I don’t know how they managed to… the colonel in charge of the zone is one of our friends. He gave me four hours – not one more – for you to leave the premises. He’s got the order to arrest you and hand you over to the police. Jin, you must leave immediately without any trace whatsoever.’
‘Where can we go?’
‘Do you remember our contact at Beijing Central Station?’
‘He’ll pass you the instructions. Be there at 1500 hrs this afternoon.’
They gathered all their belongings and took the motorbike out of the shed. Jin checked that it was still in working order. Then, after a farewell hug to Suyen, her husband and the young Yandong, they left by the same hidden path that they had used for their arrival.

Twenty minutes later, they were in the midst of hundreds of Chinese travellers, laden with bags and luggage, arriving from the provinces in search of work. Some were sleeping on the floor, waiting for a train that would take them back home, their hopes of employment dashed.
Simply clad, Jin and Tom mixed with the crowd. They looked like two students. Jin reappeared with two train tickets, handed over to her by a drinks stall holder at the east corner of the huge station.
Xi’an. They were going to Xi’an by sleeper carriage. The train was to leave Beijing at 4 p.m. They had just a short time left to board. As they were making their way along the platform crowded with goods and people, Jin praised Zhou’s resourcefulness. What better way to hide when travelling with an American scientist sought by all the country’s police forces and the US special services, than to make off for the city of the first Emperor, Qin Shi Huangdi? The tourists were so numerous there that it would be easy to escape notice.
As the train painfully pulled away from the station, it seemed to dislocate throughout its interminable length. Tom slammed shut the door of the compartment they shared with a modest Chinese couple, bringing the tumult from the corridor down to a whisper. However, both Jin and he refrained from engaging into conversation with their companions, who were eyeing them as though they were curious creatures.

A few hours later, they made their way to the restaurant car where wealthy travellers – mostly Westerners – savoured the slow pace of the train that gave them all the time to view China’s scenery under the rapidly fading sunlight.
The train was now chiselling its way through the night, and the occasional scattered lights from passing villages produced a moving backdrop behind the window as they were comfortably seated, sampling some Chinese dishes around a bowl of white rice. The train was crossing street-lit villages, the lamps revealing a series of cameos of everyday life in the world on the other side of the window: busy stores, evening markets with customers pushing stacks of coloured clothes, open-air bars and restaurants with men and women clustered as they downed litres of Chinese beer…
Above the couple’s table, the glow of a wall lamp distilled a soft light that invited intimacy.
Tom had laid his hand on Jin’s, who was responding with a tender smile. For a moment, they had become two carefree tourists, two lovers like millions. They forgot they were fugitives, hunted by the country’s police, accused of dozens of crimes. Thus they remained for over an hour, watching the world flow by.
They returned to their compartment at 10 p.m. Jin slid the door open and entered first. The compartment was spared from total darkness by a blue nightlight on the ceiling. The Chinese couple must be asleep. Instinctively, she cast a look on the lower bunk. The woman’s was empty, but the man appeared asleep, his face turned towards the compartment wall. And yet something triggered an alarm signal in Jin’s mind, always on the alert. Despite the near darkness, she had spotted the well-cut clothes of the occupier, nothing like those she saw a few hours earlier. And why had he kept his shoes on to sleep…
She immediately sensed the danger. She turned towards Tom who was about to follow her in.
‘Tom, get away. Quick!’
But it was too late. The young man was raising his arms, threatened by a gun aimed at his back by an accomplice who had followed them in the corridor. The passenger in the bunk immediately sprang up, pointing a gun at the couple. They were caught. Their time on the run was up.
The man in the compartment got out some rope. He spoke out to Jin:
‘Listen carefully now. We are instructed to shoot the American at the first wrong move. You got that?’
He shoved Jin’s hands behind her back and tied together her wrists, then her feet. The stranger seemed to be particularly wary of her and did not want to take any risks.
Jin made no attempt to resist. Tom was under the threat of a gun held by the second accomplice. It was far too dangerous.
It was now Tom’s turn. The two computer scientists were quickly attached to a stanchion rising from the lower bunk, gagged, powerless and overcome. They looked at each other. Tom seemed desperately sad. It was all over…


A book by JF SUSBIELLE   – Translation by Dominic KING

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