Archive for the ‘China’ Category

Weekend reading and viewing

July 13, 2013

1. First up, a farewell piece from Evan Osnos, China correspondent of the New Yorker. All about his poet bin-man friend.

A BILLION STORIES

POSTED BY EVAN OSNOS
Osnos-qi-290.jpg
In my neighborhood, near the Lama Temple, the men and women in fluorescent orange jumpsuits work for the district sanitation department. Many are migrant workers from the countryside; they sweep the alleys, clean the public restrooms, and collect the trash. Some wear straw farmers’ hats that cast a shadow across their faces, and, I admit, the matching uniforms make it difficult for me to keep them straight. I don’t know if there are three of them or thirty.
One afternoon not long ago, I was chatting with my next-door neighbor, a retiree named Huang Wenyi—a proud Beijinger, born and raised—when one of the sweepers in an orange jumpsuit wandered by. He had tousled hair, sun wrinkles around his eyes, and a smile of jumbled teeth. He approached and pointed to a gray flagstone at our feet. “Can you see the emperor on that rock?” the sweeper asked.
I thought I’d misheard. He said, “I can see an image of the emperor right there on that rock.”
Huang and I looked at the rock and back at the sweeper. Huang was not interested. “What are you bullshitting about?” he asked. “You have no idea what you’re talking about.”
The sweeper smiled and asked, “Are you saying you think I’m not a cultured man?”
“What I’m saying,” Huang said, “is that you’re not making sense.”
The sweeper gave him a look, and turned, instead, to face me. “I can look at anything, and pull the essence from it,” he said. “It doesn’t matter how ordinary something is; in my eyes, it becomes a treasure. Do you believe me?”
Huang was irritated: “Old man, I’m trying to have a chat with our foreign friend here. Can you not disturb us, and go back to your work?”
The sweeper kept talking—faster now, about ancient Chinese poetry, and the great modern writer Lu Xun—some of it too fast, and the references too obscure, for me to understand. He sounded somewhere between interesting and bonkers. Huang had had enough, and he poked fun at the man’s countryside accent. “Come back after you’ve learned to speak Beijing dialect,” he said.
Under his breath, the sweeper said, “As long as it’s a dialect of human beings, it’s legitimate.” But Huang didn’t hear him. He’d waved him away and wandered into his house.
I introduced myself. The sweeper’s name was Qi Xiangfu. He was from Jiangsu Province, and he said he had come to Beijing three months ago. Why did you come, I asked.
“To explore the realm of culture,” he said grandly.
“What kind of culture?”
“Poetry, mainly. Ancient Chinese poetry. During the Tang Dynasty, when poetry was the best, every poet wanted to come to Chang’an,” he said, invoking the name of the ancient capital, the predecessor to Beijing. “I wanted a bigger stage,” he said. “It doesn’t matter whether I succeed or fail. I’m here. That’s what matters.”
It was getting late; before I went inside, Qi said he had competed in poetry competitions. “I won the title of ‘Super King of Chinese Couplets.’?” In his spare time, he had taken to hosting an online forum about modern Chinese poetry. “You can go online and read about me,” he said.
That night, I typed his name into the Web, and there he was: Qi Xiangfu, the Super King of Chinese Couplets. In the photo, he was handsomely dressed in a bow tie and a jacket; he looked young and confident. Chinese poems are hard for me to understand, and many of his, especially, were impenetrably weird. But I appreciated some moments of grace: “Earth knows the lightness of our feet,” he wrote. “We meet each other there?/?Between heaven and earth.”
To my surprise, the more I searched about Qi Xiangfu, the more I found of a life lived partly online. He once wrote a short memoir, in which he described himself in the third person, with the formality usually reserved for China’s most famous writers. He wrote that his father died young, and Qi was raised by his uncle. He wrote, of himself, “The first time Qi read Mao’s poem ‘The Long March,’ he resolved that Mao would be the teacher to show him the way. Later, he studied the poetry of Li Bai, Du Fu, Su Dongpu, Lu You, and others, and he made a promise to himself: Become a master of literature.”
He described the first time he ever presented one of his poems to a large group—it was played on a speaker at a construction site—and he described a bus trip in which he met, as he put it, “a girl who sympathized.” They married and it “ended his life of vagrancy.” There were hints of trouble in his life—at one point, he wrote a plea for donations, saying, “Alas, Comrade Qi is having a difficult time”—but something in the spirit of his online persona captivated me.
So much of it was impossible just a few years ago: the journey to the city, the online identity, the interior life so at odds with the image he projected to the world. When I first studied in China, seventeen years ago, the Internet was only a distant rumor. It had reached China two years earlier, but hardly anyone had access. When I brought a modem from the U.S., and tried to plug it into my dorm-room wall in Beijing, the machine emitted a sickly popping sound and never stirred again.
When I moved to Beijing, in 2005, to write, I was accustomed to hearing the story of China’s transformation told in vast, sweeping strokes—involving one fifth of humanity, and great pivots of politics and economics. But, over the next eight years, some of the deepest changes in the lives around me have been intimate and perceptual, buried in daily rhythms that are easy to overlook. A generation ago, foreigners writing about China marvelled most at the sameness of it all. Chairman Mao was the “Emperor of the Blue Ants,” as a memorable book title had it. But in my years in China, I have been seized most of all by the sense that the national narrative, once an ensemble performance, is splintering into a billion stories.
Living in China at this moment, the stories bombard you with such fantastical vividness that you can’t help but write them down and hope to make sense of them later. Writing about China, in The New Yorker, for the past five years, I’ve tried to capture something of this age, to grab a few of these stories out of the air before they slip by. The complexities of individual lives blunt the impulse to impose a neat logic on them, and nobody who stays here for some time remains certain about too much for too long. To impose order on the changes, we seek refuge, of a kind, in statistics. In my years here, the number of airline passengers nationwide doubled; sales of personal computers and cell phones tripled. The length of the Beijing subway quadrupled. But the longer I stayed, the less those impressed me than the dramas that I could never quantify at all.
On Sunday, my wife, Sarabeth, and I are flying out. I’ll be on leave for the next couple of months, wrapping up a book about a few individuals I’ve come to know in China. It will be published next spring, and I’ll be saying more about that later. I’ll resume writing for the magazine this fall, based in Washington, D.C. China is not leaving my blood stream; I’ll be back to write pieces, and, in between, I’ll be writing at Daily Comment and elsewhere about how China looks from afar.
Since we launched this blog, in January of 2009, I’ve written about five hundred posts. This will be the last for a while, and I want to thank you for visiting over the years. There will be much more to come on China on this site, and in the magazine, so I won’t pretend to sum things up. For now, I’ll mention only the fact that returns to me more often, perhaps, than any other: never in modern history has China been more prosperous and functional and connected with the world—and yet, it is the only country in the world with a winner of the Nobel Peace Prize in prison. Contradictions like that have been the essence of this moment.
After I met the street sweeper Qi Xiangfu, I started bumping into him frequently. We swapped phone numbers, and he would send me a poem, now and then, by text message. He typed out the characters on his phone, with the help of a magnifying glass to aid his eyes. Many of his poems were heavy with Communist fervor; others were oracular and strange. But I sympathize with anyone trying to make sense of this place in writing, and I admired his persistence. “I’ve experienced every kind of coldness and indifference from people,” he told me once, “but I’ve also given myself knowledge, all the way up to the university level. I don’t have a diploma. People look down on me when they see me.”
A few weeks ago, Qi told me he had been reassigned to the sanitation department in another part of town; he said he would come back when he could. The last time I saw him, he wasn’t wearing his uniform; he was in street clothes—a crisp white shirt and a black jacket—on his way to see his daughter who worked at a restaurant nearby. He had a book under his arm: “Ten Contemporary Authors of Prose.” For the first time, I saw the two personae, online and real-world, in one. What inspires you, I once asked him.
“When I write,” he said, “anything becomes material. In life, I must be practical, but when I write, it is up to me.”
Photograph, of Evan Osnos and Qi Xiangfu, courtesy of Osnos.
2. Next, a bit of Australian fun. A Kath and Kim movie came out last year. It got terrible reviews, so don’t go see it. However this appearance on Sunrise is pretty funny. Seems like good background to the Ashes series. [youtube=http://www.youtube.com/watch?v=cH_DfTVN1Vo]
3. Next: Oh. Bama! Just to keep piling pressure on the liberal president, here is a Guardian piece about the sale of ambassadorial positions. Sort of Lloyd George goes to Washington. You might want to watch Lou Reed talking about Snowden and Obama again, (if only to watch the put-down of the obsequious female journalist at the end).
4. Now something serious. Christopher Wood, one of the best (perhaps the best) equity analyst in east Asia, doesn’t like his weekly missive reposted. So I am just going to quote a couple of bullets about the income distribution effects of the QE approach to stabilising the global financial crisis. I was banging on about the same thing soon after the crisis hit in 2010 and the QE started:
<The practical way unconventional monetary policies work is to lead to ever more extreme wealth distribution. Wealth distribution would have become much less extreme as a consequence of the 2008 crisis if losses had been imposed on creditors to bust financial institutions in line with capitalist principles, as opposed to the favoured ‘bailout’ approach pursued for the most part by Washington. The ‘great reckoning’ has been deferred to another day as the speculative classes have continued to game the system by resort to carry trades actively encouraged by the Fed and other central bankers. The leverage taken on in such trades is highly risky because of the underlying deflationary trend.>
5. More serious and interesting stuff is Philip Stephens in the FT (sub needed) parsing the Anglo Saxon-created disaster story that is the Middle East.
6. Looking at the Stephens’ canon, I see a piece from June (sub needed) making the case for shutting down the UK Treasury. It would save money and get rid of dangerous incompetents whose follies we, the taxpayers, must finance. I would just add that in shutting the Treasury to save money, government could also shut the Foreign Office, another black hole of self-regarding incompetence. George Osborne is right that we should not waste money. Mainly on people he went to school and university with.
7. Finally, this looks like something useful to do if any UK university students read this blog:
Hi there, My name’s Jonathan Goggs – I’m from an organisation called Team Up, who are establishing a student committee at Cambridge for 2013/14. I would very much appreciate it if you, or one of your colleagues, could circulate the following blurb into an email to all students in the business school, including the enclosed attachments as well. Do let me know if there are any questions from students by responding to this email, or copying me in. “Team Up is passionate about improving social mobility and transforming the prospects of bright young people and we are looking for outstanding university students from Cambridge to join one of our accredited leadership programmes next year. You will be trained in the highly sought-after professional skills to make a genuine difference and empower young people in your community to academic excellence. We believe in developing our university students to foster the skills they need to tackle the UK’s biggest social problem (social mobility) and secure exceptional careers. That’s why, once we’ve processed your application and conducted a short interview, we’ll be running master classes and networking opportunities, in partnership with leading businesses and charities, to give you the tools to lead, inspire and excel. The programme runs for 20 weeks, alongside your degree, and an overview of the year is attached, together with descriptions of the roles you can apply for. Last year our programme partners were Teach First and Bank of America Merrill Lynch and next year we will be partnering with even more organisations in management consultancy, education, social enterprise and finance. Places are competitive, so early applications are encouraged. Over the past two years we’ve received over 2,000 applications and some incredible student feedback – 9 out of 10 students said they enjoyed the programme. At Team Up, we think it’s a tragedy that so many young people are still disqualified from leading universities like Cambridge and fulfilling careers, because they come from low-income, socially disadvantaged backgrounds. If you think the way we do, we’d love to hear from you. To apply, click here.” Kind regards, — Jonathan Goggs Programme Officer | Team Up 18 Victoria Park Square, Bethnal Green, LONDON | E2 9PF E: [email protected] | W: www.teamup.org.uk

China comes to my home

July 9, 2013

We 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, 2013

I 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, 2013

The 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.

Beijing subway

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, 2013

Just 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, 2013

Here 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.

CEQ Q1 2013 Land Policy

How Asia Works

April 5, 2013

I 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

David PillingReview by David Pilling

How Asia Works: Success and Failure in the World’s Most Dynamic Region, by Joe Studwell, Profile, RRP£14.99, 288 pages
A woman plants rice seedlings in a flooded paddy field, Taiwan©GettyA woman plants rice seedlings in a flooded paddy field, Taiwan

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.

The most original part of the book deals with farming. Studwell, whose Asian Godfathers (2007) dissected the failures of crony capitalism, argues convincingly that successful Asian nations were built on radical land reform. Japan began parcelling out land after the Meiji Restoration of 1868, a policy continued after the war when the US occupation oversaw a seemingly un-American exercise in land confiscation and redistribution. South Korea and Taiwan followed suit. Large farms are often considered more efficient because they can be highly mechanised to produce higher yields per farmer or per unit of investment. In other words, they are more profitable. But in poor, labour-abundant countries, Studwell contends, that is not the point. The goal should be to use available labour to maximise yield per hectare, something achieved on smaller, intensively farmed plots.

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, 2013

Who 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, 2012

The 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, 2011

Three 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.