1. First up, a farewell piece from Evan Osnos, China correspondent of the New Yorker. All about his poet bin-man friend.
Archive for the ‘China’ Category
Weekend reading and viewing
July 13, 2013China comes to my home
July 9, 2013We are having a Chinese primary school teacher to stay. She and a bunch of other Chinese teachers are supervising 40 Shanghainese kids on an English language immersion trip to Cambridge. Since our teacher (the senior one) doesn’t speak much English, I figured it would be good for our kids to have a week practising their Chinese.
It turns out that our kids also get a cultural lesson thrown in for free.
The Chinese teachers and schoolchildren have been billeted with Cambridge families around town. So far so good. But in order to consolidate them in the morning so as to get everyone to school, they are not using one of the regular Cambridge taxi firms. Instead they are using a Chinese taxi firm I have never seen before. It’s a guanxi thing, you see.
Sure enough the driver gets to our house already half an hour late having gotten lost. Being Chinese, he doubtless also left half an hour spare in case of mistakes, so the group has likely already wasted an hour this morning going to wrong places. Plus, of course, the actual origin to destination driving time.
Finally the car pulls up outside our house and disgorges two panic-stricken occupants, both teachers. Spotting Senior Teacher Zhang, who is staying with us, they head for our front door. ‘We need the toilet!’ they exclaim, pushing into the house and straight past me in the corridor. ‘Hello!’ says one, as he locates the downstairs toilet under the stairs and heads in. A female teacher, beaten to the downstairs toilet, scoots straight off upstairs in search of another one, quickly locating it.
I wander into the street with my espresso to take in the scene.
After a couple of minutes the toilet-seeking teachers reappear becalmed and join Senior Teacher Zhang and the others in the taxi.
‘Sank you!’ says one.
And with that the people who are taking over the world are off.
Chinese structural adjustment (once more)
July 5, 2013I am posting two articles from the China Economic Quarterly in 2001, by Tom Rawski and myself, that discussed China’s macro-economic performance during the last ‘structural adjustment’ period, when Zhu Rongji laid off 30 million+ state workers.
The point is that there is a big ‘hard landing’ debate going on just now, as we enter a new structural adjustment period. Rawski showed fairly convincingly in his article that in 98-99 real (as opposed to reported) GDP growth dipped as low as 2-3%. With the benefit of hindsight, this did not, however, lead to economic calamity. Indeed the low growth facilitated structural change as Beijing forced the provinces to adjust local economies to be less wasteful.
No two scenarios are ever the same. However, in discussing what is happening in China today, I think it is useful to look back on that late 90s period before the credit cycle that kicked off in 2002.
Let me know if this link does not work:
Rawski 1998-2000 China data issue
More:
FT (sub needed) today has a story on shipbuilder Rongsheng running out of cash. And how they are begging government for money. It reminds how credit starvation is the key weapon in the central government’s arsenal.
On the road
June 17, 2013The longest trip I ever made away from the family. Three-and-a-half weeks including Astana.
From there I arrived in Beijing. Domingo Cavallo sitting in the seat next door except I didn’t recognise him. We shared a cab into town and had a nice chat.
Various talks in Beijing, but also desperately trying not to stop to smell the rose(s) and get on with my research. The revelation of this trip was Line 6, newly opened, of the Beijing Underground. What a line. It connects, on a straight, east-west route, the greedy gweilos of Chaoyang district and the paranoid, pipe-hitting, nationalistic politicians and bureaucrats in the Beihai North and Chegongzhuang areas. Plus it ends up in IT-land Haidian. It’s the golden line of money and power, with the fastest trains to match. Well built.
Tianjin was easy on the 300kmh train. Back in the day I was pulled over on the expressway doing 160kmh. You are the fastest today, said the policeman. ??, I replied. He popped the fine in a briefcase, heaving with cash. Still took 2 hours door to door. The train is 30 mins. Then an interesting factory manager. Minimum wage in Tianjin this year is Rmb1,800. Ouch.
Then 5 hours on the high-speed to Shanghai. I never liked the place, but this time, for the first time, they charmed me. The urban planning is just better than Beijing. The people are calmer, less bullshitty than they were. Beautiful dinner with friends. Small dogs. I am still obsessed with where all the dog shit goes. They say no owner cleans up after the pooches. It’s the waidi ren, the peasant slave labour, that just picks up the shit early in the morning while Shanghai is dozing.
No high-speed to Guangdong yet, so took the sleeper. Beers in the dining carriage with a businessman who told a story you just could not make up. It’s like they just want to write the next book for you, take the weight… We trade numbers. A Burmese-Chinese returnee who can’t speak Chinese and a Shanghainese too.
In Guangdong I have to go to Zhongshan, near Zhuhai, to see a rather smart company. Seems to me a lovely place, not visited in 15 years. Taxi driver says street crime is on the rise. But I think the people are great, open, smiling at the gweilo.
Then across the border for a weekend on Coloane, at Pousada de Coloane. Sunday lunch at Fernando’s, my favourite anywhere. You never could book. However they have introduced a piece of paper on which you write your name after 12.30, when restaurant already full, and they use this to determine who at the bar is next. Even Portugal is making progress. I lament the changed shape of the Vinho Verde bottle.
Hong Kong is a whirr of money pigs and talks. In the midst I am drinking ??in the FCC when a svelte young colonial strides in. It is Hemlock. I hardly know him. Convex chest, unhunched shoulders, a smile… He tells me, apologetically, that he has ‘a girlfriend, almost half my age…’ Wonders will never frickin’ cease. Of course he still shoves a plate of noodles in his face at 11am. But Thus Spake Zarathustra just came to a movie theatre near you.
All in all, a lovely trip. Problem is that in the whole month only Bowring tries to really nail me, with a question at the FCC. God bless. It is one of the points that Charlie Munger lists in his guide to gentle informational murder. They just don’t challenge you. And yet without the struggle, we cannot progress.
Finally, I get home. And the wife tells me to stop swearing so much. Gravity, at last.
Some media stuff:
Pilling on Indian IT after a chat
Marginal Revolution likes the book. And is probably right that neither beach reader nor academic reader will be happy.
Tom Holland on the book.
Jake Van der Kamp responds to Tom Holland in the SCMP, except without reading the book. This is staggeringly lazy. File under Howard Davies. And I have often quite liked Van der Kamp’s stuff. But this thin, indolent drivel is a pretty good guide to why so many millions remain poor. How can anyone serious pass judgement on something they have not read? It is a book about stages, that takes in your view, Mr Van der Kamp, and the other one. Separately, and somewhat pedantically, ‘fulsome’ does not mean ‘full of’. It means ‘insincere’.
And now Holland responds. His main point is valid. I said at the beginning (and end) of How Asia Works that this is a book about economic development. Real development is also about social and political development. But I was not willing or capable to try to put the other parts of the equation in the same book. It would be too complex. And people would not absorb the basic message about economics. The next book will deal with the institutional stuff.
RTHK on the book. I had to download a plug-in to run this, but assume the average reader is more tech savvy than I. Trick is to do all this and then hit the play button to start the show. But first go to ‘Select segr’ and choose the 11.05 slot. With Phil Whelan. That is where the interview is. Very clunky stuff. But listenable if you get there. ACTUALLY… just did this again a slightly different way. Went here. Then just scrolled down the page and hit the button next to ‘Joe Studwell — How Asia Works’. Took a couple of secs to load up, but then fine.
Podcast interview by the Economist Intelligence Unit in Hong Kong. It was the end of the day. I am more tired than at RTHK, but still a decent chat.
Amcham in Beijing. The podcast should be here.
More to come when I remember what it was.
Weekend reading
May 18, 2013Just three items.
Elanah Uretsky has a very nice piece in The National Interest on yingchou (??), the merry-go-round of Chinese male bonding culture involving smoking, drinking and sex, and the health and family consequences.
Mohammed Hanif does a reasonable job of explaining the recent Pakistan election featuring Imran Khan (very rich) and Nawaz Sharif (much richer) contesting leadership of their very poor homeland.
And the FT has a nice graphic with click throughs showing the biggest real estate developments in central London.
Oh, the land…
April 15, 2013Here is a link to a piece I wrote recently for the China Economic Quarterly about the agricultural underpinnings of development. It is something of a taster for a key theme of How Asia Works.
How Asia Works
April 5, 2013I was just sent a link to a first review of my new book, carried in the FT. If you want to see other reviews (assuming there are any), check www.howasiaworks.com. This one I will paste in here since it gives a pretty good synopsis of what the books is about (and, let’s be honest, isn’t entirely negative either).
Reap what you sow
Review by David Pilling
Why are the northeast Asian states of Japan, South Korea and Taiwan rich, while the southeast Asian ones of Thailand, the Philippines and Indonesia are relatively poor? Is the failure of the latter because of their geography or climate, or is it because their leaders chose wrong-headed policies?
One of the many virtues of the pithy, well-written and intellectually vigorous How Asia Works is that Joe Studwell does not equivocate. South-east Asian nations have ended up on what he calls the “rubbish heap of industrialisation” because they failed to learn the lessons of history. Instead of taking what he presents as relatively simple steps to technological advancement, leaders were captured by their ruling elites or took bad advice from international institutions such as the World Bank. The latter pushed neo-liberal policies – including no protection for fledgling industries – that Studwell considers wholly inappropriate for countries trying to get on the first rung of the developmental ladder. His recommendation to poor nations is to emulate Park Chung-hee, the South Korean strongman who oversaw what became known as the miracle on the Han river: “make public pronouncements about the importance of free markets, and then go quietly about your dirigiste business.”
The measures taken by Japan, then South Korea, Taiwan and, after 30 years of Maoist missteps, communist China were, argues Studwell, threefold. They involved land redistribution, the development of an export-oriented manufacturing policy, and the formation of a closely controlled finance system. The three important development insights, he argues, are that “a country’s agricultural potential is most quickly released when its farming is transformed into large-scale gardening supported by agricultural extension services; that the technological upgrading of manufacturing is the natural vehicle for swift economic transformation … and that finance must be harnessed to both these ends”. Only the small city-states of Hong Kong and Singapore have successfully taken a different path.
Maximising yields serves several broader development goals: farmers earn money to spend on local manufactures; higher food production means the state doesn’t have to waste precious foreign exchange on imports; and farmers’ savings can be recycled through the banking system into industry. Both the indulgent leaders of the Philippines, who left vast haciendas in the hands of absentee landlords, and Maoist ideologues, who collectivised land into unproductive large-scale co-operatives, ignored the basic insight on what he calls “the triumph of gardening”.
The sections on industrial policy and finance are more familiar, though the ideas remain controversial among free-market economists who argue that governments can’t “pick winners”. Such economists, says Studwell, misunderstand what Japan, and later South Korea, actually did. The key was to force manufacturers, whether of steel or cars, to export and thus compete on international markets. Those that couldn’t hack it were killed off. Korea, for example, had three putative car champions in 1973 at a time when local auto sales were only 30,000 cars a year. In the early years, the market leader was the now-forgotten Shinjin. Only later did Hyundai emerge as the last car company standing. “The economics of development requires nurture, protection and competition,” he writes. The alternative to such hard-headed, nationally driven policies, he says contemptuously of the Philippines, is “an authentic, technology-less Third World state with poverty rates to match”.
Studwell’s thesis is bold, his arguments persuasive, and his style pugnacious. It adds up to a highly readable and important book that should make people rethink the glib equation of free-market policies with economic success. He also writes with disdain for those who would peddle the “fairy tale” that poor countries can become rich by skipping industrialisation. Of India’s attempt to build wealth through IT services, which employ only a few million people, he says: “Punditry that likens India’s economic development to that of the more northerly countries is fatuous.” |
The implication of Studwell’s analysis is that talk of globally converging living standards is overdone. Those countries that do not begin with comprehensive land reform or bully their entrepreneurs into nation-building – as opposed to rent-seeking – are bound to fail. Even the relatively successful ones won’t get further than Malaysia, he says, a country whose botched efforts at industrialisation he likens to attending school but not paying much attention.
That leaves China, which in many ways has emulated the successful northeastern model, through post-1978 land reform and the creation of state champions financed through policy banks. China’s biggest companies, he argues, are closing in on international standards in heavy industry. But consumer businesses are not. As demographics worsen and as vested interests worry more about personal gain than national development goals, he wonders whether China will get stuck.
Studwell’s book is a warning to those who believe that developing countries in Asia, Latin America and now Africa have cracked the secret of growth and will inevitably catch up with rich ones. Only those nations with good policies will make it, he argues. And good policies are out of fashion.
David Pilling is the FT’s Asia editor
The full Johnson, No.1
February 16, 2013Who else but Ian Johnson to go see this character up a tower block in Chengdu. Want to feel better about your life? Find out how to send Huang Qi some money, and send some.
Preferably ask no questions
January 25, 2012The annual Reporters Without Borders index of press freedom is out.
The UK is 28. Behind Jamaica, which reminds us that press freedom can’t solve every problem.
Italy is 61. The lowest rank of any major developed country.
China is 174. Out of 179. But still ahead of Iran, Syria, Turkmenistan, North Korea, and Eritrea.
We like dull
November 8, 2011Three recent articles make me think how dull and conservative good industrial policy in developing countries needs to be. And how China is proving the point.
The first piece reveals that only 106 plug-in electric cars were bought in the UK in the third quarter of the year. The second indicates that after biding its time, General Electric is making a move into the solar industry (FT sub needed) — but not into the poly-silicon technology that has dominated thus far, instead into the thin film approach that grew out of the US semiconductor business. The third article concerns GE’s third quarter results (FT sub needed), which were none too bad but which were not helped by falling wind turbine prices, a business where GE is already very active.
China has designs on all these green energy businesses. It also has large domestic firms in each sector which are screaming for subsidies. The government could have thrown its money at the most exciting technology — electric vehicles — or at the one where Chinese scientists lead the world — poly-silicon solar. But instead it chose to place its big bets on wind turbines, where the technological path is most established and the cost of green energy lowest, throwing billions of dollars at the construction of Chinese wind farms. It was the boring choice, but it looks like having been the right one — hands down.
As recent press shows, the market for electric vehicles remains tiny. If China had gotten too far ahead of the demand curve, the country could have wasted vast sums on e-vehicle technologies that fizzle. In the solar business, where private Chinese companies dominate global production of poly-silicon cells, there is a real risk that poly-silicon is not going to be the winning long-run technology.
The shape of the evolving wind turbine market, by contrast, is easier to see. It is largely a matter of making the same turbines bigger. In this context, China has created some of the world’s largest wind turbine producers in the space of a few years and there is little chance going forward that they will be ‘technologically disrupted’. They are competing first on price — hence the pressure mentioned by GE in its third quarter results — capturing market share, over-running the entire production value chain so as to ‘own’ the technology, and they will then start to compete on quality and service later.
Sensible industrial policy in a developing country involves plucking low hanging technological fruit. Then you bring cheap capital — human and financial — to bear.