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Philippines back on track?

May 10, 2016

 

It is pretty much clear that Dirty Harry Duterte has won the Philippines’ presidential election.

Thank goodness. Six years of Noynoy, with relatively clean government and improved growth threatened the Philippines’ status as the most dysfunctional polity in mainstream east Asia. The Thais were catching up. Fast.

Dirty Harry has the chance to put his country back on its pedestal by returning to the basics of machismo, nepotism, greed and ignorance. I’m not absolutely certain he will seize the chance because, like Donald Trump, he expresses contradictory positions on almost every issue. Which is more important to Duterte: LGBT rights or rape? He’s expressed support for the first and condoned the second. I guess that only time will tell.

Do we blame the poverty of Filipinos for this presidential choice? Or the poverty of choice of candidates? My personal grudge is against Noynoy, for endorsing Mar Roxas, from one of the great robber baron political dynasties, as his successor. Roxas stood aside in 2010 to give Noynoy a clear run, so it seems that Noynoy decided he had to return the favour. It may yet be 100 million Filipinos who pay the price for this bit of political business as usual.

 

Dirty Duterte / Donald Trump quiz:

The Guardian today offers the following quotations. Which ones are from Duterte, and which are from Trump? Answers at the end.

On crime and punishment:

On crime and punishment

A: “Forget the laws on human rights… You drug pushers, hold-up men and do-nothings, you better go out. Because I’d kill you.”

B: “They’re sending people that have lots of problems, and they’re bringing those problems with us. They’re bringing drugs. They’re bringing crime. They’re rapists.”

On sex and other things

A: “I was separated from my wife. I’m not impotent. What am I supposed to do? Let this hang forever? When I take Viagra, it stands up.”

B: “My fingers are long and beautiful, as, it has been well documented, are various other parts of my body.”

On modesty

A: “I do not have brilliance, wit or smartness. What I have is common sense. It is what our country needs!”

B: “My IQ is one of the highest — and you all know it! Please don’t feel so stupid or insecure; it’s not your fault.”

On negotiation

A: “Do not fuck with my team.”

B: “Sometimes you need conflict in order to come up with a solution. Through weakness, oftentimes, you can’t make the right sort of settlement, so I’m aggressive, but I also get things done, and in the end, everybody likes me.”

On the political system

A: “The trouble with us in government is that we talk too much, we act too slow, and do too little.”

B: “One of they key problems today is that politics is such a disgrace. Good people don’t go into government.”

On the future

A: “We, the People, recognise that we have responsibilities as well as rights; that our destinies are bound together; that a freedom which only asks what’s in it for me, a freedom without a commitment to others, a freedom without love or charity or duty or patriotism, is unworthy of our founding ideals, and those who died in their defence.”

B: “We need to steer clear of this poverty of ambition, where people want to drive fancy cars and wear nice clothes and live in nice apartments but don’t want to work hard to accomplish these things. Everyone should try to realise their full potential.”

Answers: All As are Rodrigo Duterte and all Bs are Donald Trump. EXCEPT the last one – both are Barack Obama.

 

More:

Here is the first of three articles in the Huffington Post on the background to the Philippine elections. The first article links to the other two.

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Posted in Philippines, South-east Asia | 2 Comments »

Choose your poison – but not Italian poison

April 30, 2016

Good news for the Eurozone in data released today. The area grew 0.6 percent in the first quarter, faster than either the US or UK, and finally surpassed the level of GDP achieved before the global financial crisis (the US and UK did this 2-3 years ago).

Perhaps the most striking performance came from France, whose national data show quarterly year-on-year growth of 0.5 percent. This made me think. France may have sclerotic labour laws and a self-serving bureaucratic elite. But it is still a relatively grown-up country. France’s productivity record is way better than the UK’s. Its people at least live on the same planet as the Utopian economic dream by which they live. Unemployment remains grotesquely high, but growth has returned and Hollande can hold his head higher as he drives around Paris on his union-built scooter.

In Spain, too, growth has returned, despite even more grotesque unemployment following the country’s presumably acid-induced foray into the Anglo-Saxon never-never land of post-industrial, debt-fuelled, realestate driven, marginalist economic voodoo.

In sensible Germany, of course, with its revised labour laws, continued commitment to equitable growth, and its serious leader, life inevitably goes on in the sort of steady-state fashion that Anglo-Saxon economists fantasise about. Largely, I suppose, because they don’t have any Anglo-Saxon economists.

One can quite reasonably choose between any of these poisons. However, one poison is to be avoided. The Italian one. Not Anglo-Saxon-Spanish. Not Utopian French. Not sensible German. Instead, directionless decay. This, I suspect, is the price to be paid for not believing in principles. Or indeed, anything.

Here are current GDP levels of the different countries rebased to 100 in  Q1 of 2008.

United States: 111

United Kingdom: 107

Germany: 106

France: 103

Spain: 97

Italy: 92

 

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Easter viewing

March 25, 2016

I have meant for some time to recommend Joshua Oppenheimer’s two documentaries about the deaths of more than 1 million people in Indonesia in 1965-6, at the time when Suharto came to power. It wasn’t a genocide, I think, because lots of different racial groups were targeted (though ethnic Chinese suffered greatly). Rather, it was a ‘politicide’, if such a word exists, an attack on all those deemed to be enemies of the new regime, including anyone deemed to be a communist.

If you have not seen these films, you should. They can be rented cheaply from Amazon. Here is the download from Amazon.co.uk for the first documentary (£3.49 to rent), The Act of Killing, and here is the download from Amazon.co.uk for the second documentary, The Look of Silence.

The Act of Killing received rave reviews partly because of Oppenheimer’s extraordinary methodology. He showed up in Sumatra saying he was interested in learning about the 1965-6 killings, and a bunch of semi-retired preman (gang members/thugs) said: ‘Hey, that’s us. How can we help?’ He then convinced them to act out their memories of murder for his movie. This makes for some very weird and utterly compelling footage.

https://www.youtube.com/watch?v=tQhIRBxbchU

 

Personally, however, I like The Look of Silence more. In this second documentary, Oppenheimer follows one of the victim families, as a surviving brother gently begins to confront the murderers who butchered his sibling and chucked his body in the local river. The Look of Silence gets much closer to the political and social story underlying the politicide. It is not so visually freakish, but it makes you think more. I note that on Amazon, individual viewers rank it higher than The Act of Killing, so other people may have had the same reaction as me. Really, tho, you need to watch both docs.

 

Finally, here are Werner Herzog and Errol Morris talking about The Act of Killing, just in case the trailer hasn’t convinced you to watch it:

 

 

 

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Posted in Indonesia, South-east Asia | Comments Off on Easter viewing

Joined-up economics

August 17, 2015

Here is a rare thing. A dynamic theory from an economist — whereby the solution to today’s problem may not be the solution to tomorrow’s problem. It’s David Dollar, former World Bank country chief for China talking about the role of institutions in development…

 

What institutions do Asian countries need to keep growing?

31 May 2015

Author: David Dollar, Brookings Institution

The notion of a ‘middle-income trap’ has entered the lexicon of policymakers in emerging markets in Asia and elsewhere. Many leaders of countries that have experienced fast growth — such as Chinese Premier Li Keqiang — worry that economic growth will come off the boil as their countries reach middle-income status.

Chinese workers construct residential buildings of a government-funded housing project in Tiemenguan city, China, 2 May 2015. (Photo: AAP).

Growth for virtually all advanced economies was slower in the 2000s than in the 1990s; meanwhile growth rates in poor and middle-income countries accelerated. But there is a lot of variation in these broad trends, especially for the middle-income countries. Some of the latter have seen very impressive growth spurts, while others have stagnated.

What explains why some countries grow fast and others languish? There is a strong empirical relationship between the quality of institutions (as measured by the World Governance Indicators’ Rule of Law index) and economic growth. But institutional quality does not change very much from year to year or sometimes even from decade to decade, which makes it hard to explain why countries have periods of high growth followed by low growth (or vice versa).

Institutions which are well-suited to one phase of economic development may be ill-suited to another. One way to resolve the paradox of persistence of institutions and non-persistence of growth rates is to focus on the quality of institutions relative to the level of development. It turns out this can help explain why China and Vietnam, for instance, have seen such high growth in recent times: they have relatively low institutional quality in an absolute sense, but they have above-average quality institutions given their stage of development, which might, for instance, help to attract foreign investment to China or Vietnam rather than other Asian countries with similarly low wage levels but weaker institutions.

Another question is whether authoritarian institutions are better for economic growth than democratic ones. It may depend on the stage of a country’s development. When we look at the historical experience, in countries that have a per capita income below US$8,000, authoritarian institutions seem more conducive to growth. But at higher levels of income, democratic countries are likely to see higher growth than authoritarian ones. Why might this be so?

One explanation might be that at low levels of income, the economic priority of government should be to establish basic law and order and an environment in which private investment, including foreign investment, can operate. This is a catch-up stage, in which innovation is not yet particularly relevant. But the usual economic strategy for authoritarian governments relies on capital accumulation, which becomes less effective as countries get richer. When an economy reaches the point where acquiring more and more capital is no longer sufficient for rapid growth, the need for political and economic institutions that promote competition, innovation and productivity growth becomes paramount.

Interestingly, it is about at the US$8,000 per capita GDP mark that two of East Asia’s great developmental success stories, Taiwan and South Korea, were also becoming free and open polities. By the early 1980s for Taiwan and the mid-1980s for South Korea, a move had been made away from authoritarian institutions, which continued until both reached fully democratic status as measured by Freedom House’s civil liberties metric.

Of the countries that have witnessed rapid growth in Asia recently, Vietnam has shown some steps towards political liberalisation, with its civil liberties score moving to five, which is slightly better than either South Korea or Taiwan at the same stage of development. But Vietnam is entering the stage of development where the line of thinking presented above implies a need for further political reform. Greater freedom will be necessary to strengthen property rights and the rule of law in order to bring about an environment for innovation and productivity growth.

China, on the other hand, has largely eschewed political reform. Although he has placed a lot of emphasis on the idea of implementing the ‘rule of law’ in China, President Xi Jinping has made it abundantly clear that he wants to pursue economic reform without political liberalisation; some observers even point to backsliding in recent years on the question of freedom of ideas and debate. The historical evidence would suggest that this will weigh on the growth of the Chinese economy in the future. At the stage of development at which China now finds itself, South Korea and Taiwan were on the way to becoming more or less free societies.

Of course, just because no authoritarian country (apart from oil producers and, depending on how you classify it, Singapore) has reached more than 35 per cent of US GDP per capita does not mean that it will be impossible for China to do so. But the historical evidence should caution Chinese policymakers against thinking that the kind of political institutions that have facilitated China’s astonishing growth up to now will be sufficient or optimal for the next stage of its development.

David Dollar is Senior Fellow, John L. Thornton China Center, Brookings Institution. He was the former World Bank Country Director for China and Mongolia in the East Asia and Pacific Region.

This article summarises a paper prepared for the Pacific Trade and Development Conference in Singapore this week.

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New year’s resolutions wanted

December 30, 2014

Two articles pasted below remind us how far China has to go before it can be deemed a ‘developed’ country.

First, from the 29 December Washington Post, the well-known Chinese lawyer Teng Biao says that China under Xi Jinping has no serious commitment to rule of and by law.

Second, from Caixin, Sheila Melvin recounts the story of Hu Feng, a writer and Party member whose belief in the rights of the individual within a socialist state brought him into head-on collision with Mao Zedong and the doctrines set out in Mao’s Yan’an Talks. It is the utilitarian logic of the state as representative of the ‘mass line’ that continues to make rule of law impossible in today’s China.

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China’s empty promise of rule by law

By Teng Biao December 28 at 6:52 PM
Teng Biao is a human rights lawyer and a visiting fellow at Harvard Law School.
During the year that is drawing to a close this week, much has been made of the Communist Party of China’s new emphasis on “governing the country according to law.” But those who imagine that fundamental reforms will flow from this rhetoric would do well to remember the warning that Foreign Ministry spokeswoman Jiang Yu gave in response to questions about the legal justification for a 2011 incident of press mistreatment: “Don’t use the law as a shield.” I don’t understand why some are so willing to believe what the party says while disregarding what it does.

This is hardly the first time the Communists have raised the banner of “rule of law.” Even before they seized power and established totalitarian rule, they promised liberty and constitutional democracy. In 1997, the idea was written into the report delivered at the party’s 15th Congress, and in 1999 it was written into the Constitution. But that same year saw the savage repression of the Falun Gong. Since President Xi Jinping came to power, hundreds of rights defenders and intellectuals have been thrown into prison for political reasons. Properties have been expropriated or demolished, free speech has been restricted, religion has been suppressed, women have been forced to have abortions, and torture has multiplied. In Xinjiang and Tibet, the authorities have carried out one shocking human rights catastrophe after another. The abuses have never stopped.

To the Chinese Communist Party, “governing the country according to law” does not mean rule of law as you and I understand it. The essential element required for rule of law — using the law to limit the power of the government — stands in ideological opposition to the purpose of the party. In reality, the rule of law that the party talks about is “Lenin plus Emperor Qin Shi Huang” — modern totalitarianism combined with pre-modern Chinese “legalism.” It is nothing more than a tool to further control society. Rule of law is always superseded by the rule of the party, and there is not a shred of doubt about this.

The legislative organs controlled by the Communist Party have promulgated volumes of statutes. The judicial organs, also controlled by the party, are busy with cases. The legal professions have been developed. But is the law at the center of the governing order?

As University of Hong Kong law professor Fu Hualing has pointed out, many extra-legal processes — and extra extra-legal processes — stand above and apart from the law. These include shuanggui (an extralegal detention and interrogation system used to enforce discipline within the party), media restrictions, house arrest, secret police, “black jails,” chengguan (a para-police force that works with police across the country to enforce minor city rules and regulations), spying on citizens, torture, disappearances and Internet police. Without such tools, how long could the Communist Party continue to rule?

This year’s “governing the country according to law” is just another attempt by the party to address its crisis of legitimacy. Such slogans may help the party fool people within China and the international community. But legitimacy can come only via recognition given through free elections, and here the party is stuck. Clinging to one-party rule, it completely rejects general elections, even in Hong Kong. True rule of law would mean the end of the one-party system. This is the limitation on the legalization process that cannot be overcome.

Over the past 10 years, I and other human rights defenders have consistently sought to use Chinese laws to carry out our human rights work, and occasionally we’ve had success. But the limitations are obvious. Whenever the authorities begin to feel a threat from civil society, they move to suppress it. I have had my lawyer’s license revoked, been expelled from my university and been kidnapped several times. When the security police were torturing me, they shouted: “Don’t talk about any of this law stuff with us.”

In enumerating the progress being made in China, some observers have pointed out the falling number of death sentences, a new criminal procedure law, the abolishment of re-education through labor, reform of the local courts, the government’s willingness to release more information and the ongoing anti-corruption campaign. But it is questionable whether this represents progress. And even if it does, the major driving force for these changes has been not the party but the people — each change a result of pressure by rights lawyers, democracy activists and countless Chinese on the lower rungs of society.

Xi Jinping once talked about locking up power in a cage, but this is not much different than a magician wrapping an iron chain around himself. In reality, what party officials would like to do, and are doing, is to lock the people in a cage. Sycophants are able to imagine a “spring” for rule of law that doesn’t exist only by ignoring human rights disasters suffered by Ilham Tohti, Xu Zhiyong, Cao Shunli, Gao Zhisheng, Uighurs, Tibetans, petitioners, Falun Gong adherents and house churches.

This kind of selective blindness has prevented Western readers and politicians from understanding the reality in today’s China. It’s no surprise that this type of seemingly even-handed wishful thinking has become the excuse for Western governments to adopt short-sighted policies of appeasement in dealing with autocratic regimes and for favoring trade over human rights.

…

 

In praise of Hu Feng

By Sheila Melvin

Hu Feng (1902-85) is a name that most students of PRC history have undoubtedly encountered at one time or another. I remember reading it for the first time years ago in Jonathan Spence’s “The Search for Modern China.” It stuck in my mind because back then I found it incredible that a nationwide campaign could have been launched against a lone writer who was himself a loyal member of the Communist Party, his only “crime,” in essence, to suggest that China’s creators and consumers of culture needed a little space in which to breathe.

Later, I heard Hu’s name in a more personal way from my friend and teacher Gui Biqing, because her beloved younger brother, Wang Yuanhua, had been an associate of Hu’s, both men active leftist writer/critics from Hubei working with the League of Left-Wing Writers in pre-liberation Shanghai. One day in 1955, Shanghai’s chief of police asked Wang to admit that Hu was a counter-revolutionary – warning Wang that if he did not, the consequences would be “severe.” Wang spent a long sleepless night in detention and the next day told the police chief that he did not consider Hu a counter-revolutionary. He was thus declared a member of the “Hu Feng counter-revolutionary clique” and jailed for the prime of his life; his wife was punished, too, and later, in the Cultural Revolution, even his sister, my teacher, was locked-up for eight months.

But, beyond the bare bones of his case and my teacher’s stories, I knew little about Hu Feng and always felt that I should learn more. The opportunity recently presented itself when I came across Gregor Benton’s 2013 English translation of “F: Hu Feng’s Prison Years,” a 1989 memoir by Mei Zhi – Hu’s wife, an established writer in her own right – that recounts in gripping, heartrending detail the Kafkaesque detentions, disappearances, and arrests to which her husband was subjected by a Communist Party so intent on crushing those who refused to tow its line that it ate its own, destroying the best and brightest intellectuals of an era.

Hu Feng was a product of the May Fourth Movement and a disciple of Lu Xun, a committed leftist who believed that literature should inspire social transformation and reflect reality, but who also insisted on the role of the individual in the creative process. In the lingo of the era, he supported “subjectivism” and argued that artists and writers should not be dictated to and controlled by political bureaucrats – instead, they should be granted some autonomy so they could actually be creative.

This stance earned him enemies early on – well before 1949 – but he refused to back down, instead warning that a blind insistence on obedience to Party dictates would turn China into a “cultural desert” and founding several literary journals – like “July” and “Hope” – in which he promoted the works of like-minded young writers (among them the poet Ai Qing, the father of Ai Weiwei). Hu’s beliefs became increasingly problematic after Chairman Mao gave his speech at the Yanan Forum on Arts and Literature, in which he decreed that “There is no such thing as art for art’s sake, art that stands above classes, art that is detached from or independent of politics” and after which the Party began exerting ever tighter control over writers, artists – and the individual in general.

Nonetheless, Hu survived the transition to the PRC and was appointed to the editorial boards of the prominent journal People’s Literature and the Chinese Writer’s Union. He used these positions to promote professionalism, criticize the nation’s stagnating intellectual life, and decry the idea that writers could only focus on the lives of workers, peasants and soldiers – didn’t other people’s lives matter, too? In March of 1954, he drafted a 300,000 word “Report on the Real Situation in Literature and Art Since Liberation” and submitted it to Xi Zhongxun – the father of current president Xi Jinping, who then supervised cultural policies for the Party – who reportedly welcomed it. For good measure, Hu appended a long letter to the Politburo complaining that he had been ostracized and deprived of his right to work, and asking them to intercede.

Chairman Mao did not respond well. On the contrary, he personally helped launch a campaign against “Hu Fengism,” which was rolled out nationwide to drill home the dictate that every individual must subsume his will to that of the Party and the State. Members of Hu’s “clique” – most of whom he had never met – were rounded up and arrested. Hu and his wife were taken away in the middle of the night while their three young children slept – she was imprisoned for 70 months and he for 10 and a half years. Mei Zhi’s account opens at this point, in 1965, when she has heard nothing from her husband for a decade and fears he may be dead – but he isn’t.

Out of the blue, she is informed that she can visit him at Qincheng Prison. “Ten years without ever seeing someone dear to you. What will he be like? Will he be the man of my dreams? Will I recognize him?” They talk about family and, inevitably, politics, since she is under intense pressure to make him confess and repent, even though she knows he won’t – “Hu Feng didn’t know how to play it safe and always ended up saying what he thought, so he became the victim of an unprecedented onslaught.” Hu bemoans all the people who were implicated and suffered because of him but steadfastly maintains his innocence. “I was always being told to confess but I had nothing to confess,” he tells her at one point, at another, “I have not lost faith in the Party.”

The visits continue – she brings food, but he wants books, so she lugs him a Japanese edition of the complete works of Marx and Engels – and finally he is released. He sees his children, now grown, they celebrate Chinese New Year and plan to rebuild their lives. The reader sees the Cultural Revolution coming like an impending train wreck, but they do not. They are sent to Sichuan – for their own safety – and live in exile, carving out a life together even as they are sent to ever more remote areas. Then, in 1967, Hu is arrested again and Mei Zhi is left to fend for herself in a mountain prison camp. When Hu is returned to her five years later, he is a man broken in body and spirit, afraid even to eat a tangerine: “If I eat that, they’ll denounce me.” He leaps to attention in the middle of the night, calls himself a murderer, spy and traitor and becomes increasingly paranoid. “I would restore him,” Mei Zhi vows. She makes progress, but after the death of Zhou Enlai, which leaves him sobbing, he worsens, hearing voices talking to him through the air and threatening her with a kitchen knife while imagining he is trying to save Chairman Mao. She begs him to recover: “If you can survive, we will have won. You must live.”

He does live, he is freed, he is exonerated. And then his body betrays him, just as his Party had, cancerous cells devouring his heart. “How he longed to stay alive!” Mei Zhi, ever faithful to the man for whom she has sacrificed so much, promises him, posthumously, to “spend the rest of my life washing the remnants of dirt from your face and showing your true features to the world!”

Mei Zhi is gone, but her mission remains important – Hu Feng still matters and his case is well worth our study. Artistic and literary expression still sometimes get writers and artists detained, and jailed – and, in the worst cases, innocent spouses suffer too, just like Mei Zhi. Hu’s ideas also remain critically important. Debates between those who advocate the May Fourth Spirit and those who prefer something closer to Mao’s Yanan vision remain very much alive – and Yanan, in recent years, is gaining ground. President Xi has called for “innovation, innovation, innovation” and the Chinese government has done much to promote the creative arts. But history has proven that Hu was correct – real innovation and creativity can happen only when artists and innovators are given the space and the freedom to test their own ideas, express their own creativity, and make their own mistakes, without fear of punishment. We should all continue to support Mei Zhi’s quest, and learn from Hu Feng.

 

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Latest thoughts on the Chinese economy / the ‘new normal’

December 16, 2014

China held its Central Economic Work Conference last week, chaired by president Xi Jinping, so here are a few thoughts on the current state of the Chinese economy and a few links to an article I have written, and talks I have given, recently about the Chinese economy.

First up, the slogan du jour is definitely ‘new normal’ (???). Xi Jinping has been using this for about six months, but now he is really using it. Xinhua’s short, official report on the conference has ‘new normal’ in the headline and ‘new normal’ six times in the text. See here for the English version.

What does it mean? It means that local politicians, state firms, and everybody else should dial back their expectations about credit and growth. The increase in both is slowing and that is the way it is going to be as China undertakes a deleveraging process in the banking and corporate sectors. There is not going to be the kind of collapse in growth that many have predicted. The government has plenty of room to fine tune the slow-down, Chinese exports remain competitive, and the global economic environment, while not great, is not a disaster from the perspective of China’s needs. Look out for reported GDP growth in 2015 between 6-7 percent.

Against this background reforms will continue to increase the extent to which the market prices credit in China’s economy. There has already been a big shift in favour of lending to the private sector since the global financial crisis (see my review of Nicholas Lardy’s new book, below), and this is one aspect of an ongoing financial liberalisation process. To my mind, this explains the recent strong performance of the Chinese stock market much better than claims it is down to an interest rate cut (which wasn’t really a cut at all given falling inflation). Previous run-ups in the Chinese market have coincided with periods of financial sector deregulation. The difference this time I suspect is that the bull market will last longer.

All in all the outlook is a not unattractive one: slower growth, better credit rationing hence higher quality growth, and a rising share for consumption in the economy at the expense of slowing investment. The main risk — as was the case during Zhu Rongji’s long period of ‘structural adjustment’ in the 1990s — is that the central government listens to local politicians who say they cannot maintain ‘social stability’ without more credit and growth. Zhu didn’t listen to such imprecations, and we have to hope Xi won’t either. As the slogan says, China needs and is getting a new normal. Otherwise the books really cannot be balanced and financial system risk will become unmanageable.

Later re. the new normal: Damian Ma has written an excellent piece for the new issue of Foreign Policy around the theme of the ‘new normal’. Well worth a read, with a lot more detail than I can offer here.

 

Links:

Below is a link to download the review of Nick Lardy’s latest book, Markets Over Mao, that I wrote for the latest China Economic Quarterly. The book makes an important contribution to the optimists’ case that China will overcome its current slough of non-performing loans in the banking system.

2014 CEQ Q4 final Markets Over Mao review

 

This next link is to a download of a synopsis of a talk I gave at the Madariaga College of Europe in Brussels (an EU think-tank) a couple of weeks ago. It is about how China’s development model is similar and dissimilar to those of Japan, Korea and Taiwan. The theme will be familiar to anyone who has read How Asia Works, but there are some additional, up-to-date thoughts about China as well as responses to questions raised by the Brussels nomenklatura. The precise topic I was asked to speak on is ‘What can east Asian countries learn from China’s economic policies?’

2014-Dec-01 – Madariaga – CN lessons to East Asia_final

 

The Youtube video below is a speech I gave at the National University of Singapore in October (blog entry about that trip here) on the subject of ‘When will governance matter to China’s growth?’ (governance here meaning institutions like a free and fair and prompt judiciary). Roger Cohen of the New York Times speaks first about the role of the US in east Asia. Then I speak at roughly the 25-minute mark. Then there is a joint Q&A.

 

 

And here is another Youtube video where I spoke separately about How Asia Works at the National University of Singapore. There is quite a long Q&A in which lots of questions about development from a more Singaporean perspective are addressed.

http://https://www.youtube.com/watch?v=k8RBt3B3E9I

 

 

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Posted in China, North-east Asia, Uploads / Downloads | 3 Comments »

Possibly one of those days that the world changed (for the better)

November 12, 2014

This looks like very big news.

Obama and Xi Jinping have reached an understanding (no written agreement, mainly — I am guessing — because of the difficulty of ratifying one in a Republican-dominated congress) on curbing carbon energy emissions.

I am just pasting the New York Times coverage below. You can also click through to a supporting opinion piece by John Kerry.

Some immediate thoughts:

  1. China is promising that its carbon emissions will peak, at the latest, in 2030. Cynics will say the Chinese have not said what the peak will be, or limited it. However China’s carbon emissions per unit of GDP are already officially targeted to fall 40-45% 2020 vs 2005. And China has set and met/is meeting targets to cut energy consumption per unit of GDP 19% in 2005-10 and 16% in 2010-15. These targets were in the last two five-year plans and it would be hard to move away from what is now a 10-year trajectory line in cutting energy intensity in forthcoming five-year plans. In sum, I think the emissions peak by 2030 is a very meaningful target that will not be rendered meaningless by political jiggery-pokery.
  2. China also promised to make renewables 20% of total energy production by 2030. Last year was the first one in which Chinese installation of renewables’ generating capacity exceeded that of carbon electricity generating capacity. A cursory reflection on the numbers suggests to me that installation of power generation capacity going forward will, in just a few years, be almost all renewable in order to achieve the 2030 target. (If your ‘investment advisor’ has not already shorted the stock of Harbin Electric and Dongfang Electric, the two most exposed coal turbine and boiler makers, sack him/her. You probably don’t want to own Shanghai Electric either.)
  3. The US has promised huge cuts versus trend line carbon emissions, too. More cerebrally-challenged Republicans are already doing their nuts.
  4. Obama is back. He’s done healthcare. Now he might go down as the President who saved the planet. So much for playing too much golf…
  5. Xi Jinping’s domestic position goes from strength to strength. But it is a little frightening when one guy commands so much popular support in a society with too few checks and balances on executive power.
  6. Here’s a speculative thought. If the delivery of this understanding turns out to be as good as what appears to be written on the tin, the Nobel Committee will have to think very seriously about giving Obama and Xi a joint Peace Prize. At first blush that might seem a tough choice for the committee, given China’s human rights record and the anti-dissent crackdown under Xi. But should a prize be given, it would be even tougher on President Xi. How could he accept after Liu Xiaobo already got the prize in 2010? This is very premature, but I throw out the thought.

Meanwhile, make a note of where you were when you heard this potentially historic news. I was in the library.

…

U.S. and China Reach Deal on Climate Change in Secret Talks

By

NOV. 11, 2014

President Obama and President Xi Jinping of China were greeted by children during a ceremony inside the Great Hall of the People in Beijing on Wednesday. Credit Feng Li/Getty Images

BEIJING — China and the United States made common cause on Wednesday against the threat of climate change, staking out an ambitious joint plan to curb carbon emissions as a way to spur nations around the world to make their own cuts in greenhouse gases.

The landmark agreement, jointly announced here by President Obama and President Xi Jinping, includes new targets for carbon emissions reductions by the United States and a first-ever commitment by China to stop its emissions from growing by 2030.

Administration officials said the agreement, which was worked out secretly between the United States and China over nine months and included a letter from Mr. Obama to Mr. Xi proposing a joint approach, could galvanize efforts to negotiate a new global climate agreement by 2015.

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  • Op-Ed Contributor: John Kerry: Our Historic Agreement With China on Climate ChangeNOV. 11, 2014

It was the signature achievement of an unexpectedly productive two days of meetings between the leaders. Mr. Obama and Mr. Xi also agreed to a military accord designed to avert clashes between Chinese and American planes and warships in the tense waters off the Chinese coast, as well as an understanding to cut tariffs for technology products.

A climate deal between China and the United States, the world’s No. 1 and No. 2 carbon polluters, is viewed as essential to concluding a new global accord. Unless Beijing and Washington can resolve their differences, climate experts say, few other countries will agree to mandatory cuts in emissions, and any meaningful worldwide pact will be likely to founder.

“The United States and China have often been seen as antagonists,” said a senior official, speaking in advance of Mr. Obama’s remarks. “We hope that this announcement can usher in a new day in which China and the U.S. can act much more as partners.”

As part of the agreement, Mr. Obama announced that the United States would emit 26 percent to 28 percent less carbon in 2025 than it did in 2005. That is double the pace of reduction it targeted for the period from 2005 to 2020.

China’s pledge to reach peak carbon emissions by 2030, if not sooner, is even more remarkable. To reach that goal, Mr. Xi pledged that so-called clean energy sources, like solar power and windmills, would account for 20 percent of China’s total energy production by 2030.

Administration officials acknowledged that Mr. Obama could face opposition to his plans from a Republican-controlled Congress. While the agreement with China needs no congressional ratification, lawmakers could try to roll back Mr. Obama’s initiatives, undermining the United States’ ability to meet the new reduction targets.

Still, Mr. Obama’s visit, which came days after a setback in the midterm elections, allowed him to reclaim some of the momentum he lost at home. As the campaign was turning against the Democrats last month, Mr. Obama quietly dispatched John Podesta, a senior adviser who oversees climate policy, to Beijing to try to finalize a deal.

For all the talk of collaboration, the United States and China also displayed why they are still fierce rivals for global economic primacy, promoting competing free-trade blocs for the Asian region even as they reached climate and security deals.

The maneuvering came during a conference of Pacific Rim economies held in Beijing that has showcased China’s growing dominance in Asia, but also the determination of the United States, riding a resurgent economy, to reclaim its historical role as a Pacific power.

Adding to the historic nature of the visit, Mr. Obama and Mr. Xi were scheduled to give a joint news conference on Wednesday that will include questions from reporters — a rare concession by the Chinese leader to a visiting American president.

On Tuesday evening, Mr. Xi invited Mr. Obama to dinner at his official residence, telling his guest he hoped they had laid the foundation for a collaborative relationship — or, as he more metaphorically put it, “A pool begins with many drops of water.”

Greeting Mr. Obama at the gate of the walled leadership compound next to the Forbidden City, Mr. Xi squired him across a brightly lighted stone bridge and into the residence. Mr. Obama told the Chinese president that he wanted to take the relationship “to a new level.”

“When the U.S. and China are able to work together effectively,” he added, “the whole world benefits.”

But as the world witnessed this week, it is more complicated than that. Mr. Xi won approval Tuesday from the 21 countries of the Asia-Pacific Economic Cooperation forum to study the creation of a China-led free-trade zone that would be an alternative to Mr. Obama’s Trans-Pacific Partnership, a 12-nation trading bloc that excludes China.

On Monday, Mr. Obama met with members of that group here and claimed progress in negotiating the partnership, a centerpiece of his strategic shift to Asia.

Negotiations for the Trans-Pacific Partnership are much further along than those for the nascent Chinese plan, known as the Free Trade Area of Asia Pacific, and some analysts said the approval by the Pacific Rim nations of a two-year study was mainly a gesture to the Chinese hosts to give them something to announce at the meeting.

For all the jockeying, the biggest trade headline was a breakthrough in negotiations with China to eliminate tariffs on information technology products, from video-game consoles and computer software to medical equipment and semiconductors.

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Targeted consumer boycotts

October 8, 2014

Here is a very interesting article from Foreign Policy about possible future strategies in the Hong Kong protests. It is written by academic researchers of successful non-violent protest movements around the world.

Following my FT oped, the idea of targeted consumer boycotts is what jumps out…

In addition… there were lots of comments on the FT article. As with this blog, I don’t think that comments which do not add substance, or challenge substance, in what is being said are useful. But several people did say things on the FT site that seem to me interesting enough to re-post. I was struck by the comparison with Singapore. Is it possible the Harry and the PAP are more responsive on the question of social equity and competition than the Hong Kong government? I think the full answer would be more nuanced than the commenter suggests, but it is an interesting idea.

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Great article.  So true.  We Chinese generally don’t take to the streets unless our bellies are empty.  Usually too busy working and making money!

Singapore has a supermarket chain run by the National Trade Union Congress, which was put in place to keep prices competitive.  Its produce is often superior to the so-called upmarket chains.  I remember as a child the beginning of this chain and how it put the lid on the supermarket chains left behind by the British.  In fact, one of those chains, Fitzpatrick ended up going out of business!

As for food, there are many hawker centres where hawker stalls are rented out at ridiculously low rents to stallholders who “inherited” these stalls from their parents or other relatives.  As a result, you get delicious food (from secret recipes passed down generation to generation) at super-low prices.  I just had a “home-cooked” type meal of rice and dishes (1 veg, 1 meat and 1 toufu) for a total of S$3, in the Central Business District.  And it gets cheaper in the “heartlands”.

At the last General Elections, the PAP lost seven seats to the opposition.  It is now implementing even more social transfers in response to popular sentiment.

I think that’s what ordinary Hongkongers want.  Someone to listen to their woes and take action.

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I came across the following stats at Bloomberg to quantify the hurt inflicted on so many living in HK as a result of money and power being in the hands of so few.

Hong Kong’s Gini coefficient, a measure of income inequality, rose to 0.537 in 2011 from 0.525 in 2001, the government said last June. The score, a high for the city since records began in 1971, is above the 0.4 level used by analysts as a gauge of the potential for social unrest.

The average gross household income of the poorest 10 percent of the population fell 16 percent to HK$2,170 a month in 2011, from 10 years earlier, according to a government report. The comparable income for the richest 10 percent jumped to HK$137,480 a month, a 12 percent increase.

Not good for creating social harmony.

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Studwell’s refocus on economic questions is correct, and would be very good for Hong Kong, but it would never receive the kind of universal support that the Western press has given the democracy movement. In fact, the West is proposing the opposite of Studwell’s economic fairness: to break the current Chinese social structure and open the gates for multinational business, a kind of Yeltsin years for China. Every Western journalist knows that democracy without campaign finance will lead to the election of money – i.e., the election of a tycoon or someone backed by one (CY Leung was an anti-tycoon candidate compared to Henry Tang, and look where he is now).  Studwell seems concerned with actually improving Hong Kong, but that is not what the press coverage of the democracy movement is about, otherwise they would have used real facts rather than cinderella stories. Nevertheless, the FT should be commended for printing this piece, as well as for keeping comment board open.

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There is no questions that HK is run by monopolies, duopoly and oligopolies and things are more expensive than it could have been.

However, the author who learn much by looking in the back yards, especially the VAT inclusive prices here..  For example, one can run a price comparision between watsons.com.hk and boots.com, Johnson baby shampoo 500ml cost £3.35/£0.67 per 100ml at boots and cost HKD56.9/£4.60 for the 800ml version -> £0.575 per 100ml.

Toyrus HK : Nerf CS18 : HKD399.9 / £32.07,  ToysrUS UK : £39.99
HK Electricty prices : Max HKD186.4 or £0.1495 per kwh
http://www.hkelectric.com/web/DomesticServices/BillingPaymentAndElectricityTariff/TariffTable/Index_en.htm

UK Electricity prices: British gas £0.1535 per kwh.

Looks like we all have our own ‘monopolies’ problem to deal with (for us, including the one at Brussels).

…

It is encouraging to read an FT an article which says it like it is regarding Hong Kong and much of Asia, perhaps best summarised as ‘Winner takes all, loser hard luck’. Consider the Gini coefficients of wealth inequality and you’ll find Hong Kong and Singapore, two of the ‘wealthiest’ places on the planet with the worst ‘developed nation’ Gini coefficients, these being on a par with some of the poorest African nations. It’s long been apparent that the propertly developers, Government, ‘managed land releases and sales’ operate in a manner beneficial to the few and disenfranchising the majority. Arguments that this is a hang over from the past don’t quite stack up, as the present leaders have all the powers they need to do something about it. One has to ask why not, with the answer perhaps reducing to such tolerance of vast inequalities being an inherent part of the region’s social fabric and culture. Surprising that the majority have tolerated this for so long but then this too, fortitude in the face of injustice, even from within, is a regional trait. Perhaps, with modern dissemination of information, so that it is clearer to all as to what is going on, the majority will start to exercise their influence. Without this, nothing is likely to change.

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10 seconds of unprovoked HK police brutality

October 3, 2014

See here. HK policeman swings around a middle-aged, passive protester so he can spray pepper spray directly into his face and eyes.

Anti-protest thugs have been attacking the Occupy movement in Causeway Bay (HK island) and Mong Kok (Kowloon) today. Police not responding to/unable to cope with this. Looks like Beijing United Front / state security people up to no good. Old-fashioned Italian-style ‘Strategy of Tension’ that allows government to sell itself as the good guys riding to the rescue amid civil chaos. Except that in Italy the protesters included terrorists who were killing people. In Hong Kong it is just kids who clean up after themselves. People on the ground in Hong Kong say students so far not reacting, moving away. Student leaders have called on those in Mong Kok to leave and come to the government offices area in Admiralty where international press is concentrated and numbers are larger.

Key link:

Here is the livestream feed from HK. Not looking good UK 1330/HK 2030.

More:

This video purports to show Hong Kong police handing out blue, anti-protest ribbons to anti-protesters in a police station. Pretty appalling if true.

Hemlock is singing a similar tune to me re. the tycoons. The point he quotes from Nicholas Bequelin is brilliantly incisive.

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Rubber bullets can and do kill

October 2, 2014

rubber bullets arrive

This is a picture of rubber bullets being prepared on Hong Kong island today, 2 October 2014.

It looks like protesters are ready to attempt to break into government buildings to occupy them and that police, after first using tear gas (not yet done so, but will), may be ready to shoot.

I maintain that the protesters would be better to refocus on a strategy of blockading the Tycoons’ Towers, most obviously the car parks, thereby forcing them to use the main door like everybody else when Hong Kong goes back to work. At such a point there might be an opportunity to confront KS Li, Lee Shau-kee, Robert Kuok and the rest. CY Leung won’t meet the people, so what about the tycoons? They are the ‘prefects’ of this system.

The other good target would be to stake out these guys’ homes, including on Deepwater Bay Road, the tycoon alley where many of them live. Then there is the golf club, where they play in the early morning.  But the most obvious target is the Towers.

The point is to refocus the protest on Hong Kong, the backward nature of government, the monopolies and oligopolies that lead to far higher real estate, utility, supermarket, bus fare and other costs than should be the case. This is why Hong Kong needs genuine universal suffrage.

A move on government offices will be deemed in Beijing to be an attack on the state. This may be very hard to reverse back from to a position where an accommodation can be reached, something I believe is entirely possible. Plus people are quite possibly going to get maimed or killed.

A move on the tycoons, by contrast, is something that everyone can live with. They’ll be absolutely livid, but they are big boys and can deal with it. Start with K.S. and Cheung Kong Tower. He’s the smartest of the gang. Greedy but affable and, let’s remember, the son of a teacher.

CY Leung will hold a press conference at 11.30pm tonight, Hong Kong time (very soon). More in a bit.

 

Update (midnight in Hong Kong):

CY Leung said at the presser that he has asked a senior civil servant to ‘hold talks’ with protesters.

Here is livestream that collates 4 different live TV sources in HK and contains some English notes for those of us who can’t do Cantonese. You’ll get a couple of ads before it runs.

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