Chinese "American Idol" Not as Popular with the Government as the Public

The Chinese talent show "Super Girl", somewhat like American Idol, was recently cancelled by the Chinese government on the grounds that each 3 hour long episode exceeded the official one and a half hour limit. But the government has been letting the time issue slide for a while now, so many news critics are wondering what actually tipped their decision to pull the plug. Was it the display of "unethical antics", its gradual drift towards becoming the Chinese American Idol, or the fact that the government had no grip on such an influential show? The result of the show's success was that whichever girl rose to the top had vast influence and attention. The Chinese government might have gotten upset over not having a hand in picking who got such a renowned title. Also, there's the fact that the show represents and empowerment to women, which the government vowed to remedy by replacing the shows content with "practical information about housework".

However, once the Chinese government had plugged up one hole in their censorship regime, another one appeared. Fans of the show immediately turned to the internet to express the discontent. While the PRC can block thousands of sites from being accessed, it's hard for them to control what people say on the websites that aren't banned. In the past few years, the internet has become the primary place for the Chinese masses to gather anonymously and frustrate the government's censorship agencies.

Sneaky Tactics Take Two Bites out of Apple

A while before the iPad had even been conceived by the guys at Apple, the name had been trademarked by Chinese electronics company Weiguan in anticipation that Apple would want to use it. The technology giant, with its numerous resources, purchased the international trademark for the iPad name from Weiguan for a measly 35,000 pounds. However, in 2010, the Shenzhen filed an accusation of trademark violation, arguing that their branch had not verified the sale of the iPad name, and that the international trademark did not extend to China. The result of this was that Apple sued Shenzhen Weiguan, only to be ruled against by the court. According to the judge, the agreement that Apple had reached with Weiguan was only with the latter's Tiwan branch, not the Shenzhen branch. Because of this, Apple must appeal to the Chinese Supreme Court if they want to sell the iPad in China.

This isn't the first roadblock Apple has come across in China; counterfeiters and fake Apple stores have hurt the company's sales there. Frankly speaking, it wouldn't be surprising if Weiguan had hoped for Apple to overlook this technicality so they could take a nice, big double-dip in the international gadgetry giant. But who would've thought that the international trademark did not extend to China? If Weiguan had a couple more international branches, would they have expected Apple to reach a deal with each and every one of them?

The "Anything" Stock Exchange

Most people are familiar with the New York Stock Exchange, where people can buy and sell stocks in major companies. The concept of stocks is well known and has been around for a long time. If a company is doing good, their stock price will go up and everyone who owns stocks in that company will make money.

More recently, a new type of exchange place has arisen in China where people also buy and sell stocks, but not company stocks. In any one of the nine stock exchanges of this kind, you can buy and sell stocks in virtually anything, from valuable works of art to land to carbon emission permits. The underlying concept is the same as company stocks; if land becomes more scarce, the price of land will go up and land stocks gain value.

As one would expect, all the key aspects of regular company stocks were mirrored in these new stock exchanges. People have already begun to speculate and short "anything" stocks. However, the main thing that separates the "anything" stock market and the company stock market is that the former has no regulations as of today.

Is this a good idea? Well, China certainly has taken advantage of this new concept to produce a large amount of wealth, but any cultural authority would be opposed to the manipulation of artwork for financial gain. Certainly, a priceless work of art belongs in the gallery of an esteemed collector, rather than in a secure vault and "owned" by hundreds of different people.

Inner Mongolia has too much Power!

In Inner Mongolia (the northern part of China that borders Mongolia), whenever strong winds blow by, wind energy farms have to shut down. It's not that they can't handle the winds, but especially strong winds generate so much electricity that the power grid, which distributes the energy generated by the mills to local towns and farms, overloads. As a result, regulators have to temporarily turn off the turbines and watch their profits get blown away.

The wind farms in Inner Mongolia are the most productive in China. In March, 2011, they generated an estimated 11.4 million kilowatts, accounting for 30% of wind power in China. However, such an abundance of electricity is way more than the locals need. The logical solution would be to distribute this surplus electricity to the rest of China, where demand is heavy. However, the power network in China is shoddy and weak because they are managed by state-owned enterprises. As a result, the wind farms are simply shut off half the time, resulting in a huge waste of money.

The large number of wind farms in Inner Mongolia resulted from a surge of investment that sought to take advantage of the region's openness and high winds. Only after the wind farms were built did people realize they had forgotten to invest in better power grids and distribution lines.

As with the Wenzhou train accident, this is a striking example of a country in over its head. China's economy is growing alarmingly fast in the manufacturing and technology sectors, but its social and political systems were not so fast to evolve. Many experts think that China needs to slow down or run the risk of tripping head over heels. The Chinese government recognizes this, but in their point of view, such rapid growth is a necessity. They have predicted that anything less and an 8% annual GDP growth would result in a serious economic slowdown for China. However, as a great man once said, sometimes, in order to move forwards, you need to take a step back.

Learn to Marry Rich

One of my classmates asked my economics professor once, "Is there a clear-cut way to get rich quick and easy in the stock market?" My professor replied, "In the stock market? No. In life? Marry rich."

In the modern world, people like to think that if you work hard, you'll be rewarded accordingly. So the new question is, how to get rich without working hard? In China especially, there are many stories of rich young men who step down from their high pedestal to search for the perfect girl among the poor (for its romantic appeal). Obviously, there are only so many rich guys to go around, so young women queue up in hopes of meeting such a Prince Charming.

It wasn't long before someone got the bright idea to turn this universal dream into a business. That someone was Shao Tong, founder of the Beijing Moral Education Center. For a price, the Moral Education Center will teach young women how to attract rich men, the proper etiquette of the rich, and how to spot "fake" rich people (ironic, right?). The Center will even offer referral services to rich young men. According to their statistics, the Moral Education Center has created 30 pairs of successful marriages.

Despite being a little ridiculous, the Beijing Moral Education Center offers some valuable insight into the lives of the average Chinese. The unparalleled desire to marry rich in China reflects the poor class mobility there, and also represents some traditional Chinese values. As per many countries, in the past, Chinese girls were not expected to make anything of themselves, but to simply marry into the best family possible. In some ways, this dependency still exists today in China, and may call for some social reform in the future.

Foreign Officials' Modesty Awes Chinese

Chinese government officials do not have a good rep, especially among the Chinese citizens. From the most recent Red Cross Society of China corruption speculation, to the infamous "My Father is Li Gang" incident back in 2010. The Chinese public has gotten used to seeing even lowly town chiefs using taxpayer money to be driven around in black Audis, secluded from and out of touch with the general public. So much so that when a photo of U.S. Ambassador to China Gary Locke buying his own coffee emerged, the Chinese were struck speechless. Mr. Locke was even carrying his own luggage.

This is not the first time China has been impressed by U.S. modesty. In November 2009, President Obama's first arrival in China was marked by a rainy day. He surprised onlookers when he stepped out of his airplane carrying an umbrella. You can read more about Locke buying coffee and President Obama's first visit here.

Lesser known about is the photos of President Ma Yingjiu giving a speech at a rally on a raining day wearing a poncho and a paddy hat. The mainland Chinese were literally salivating for a public official as humble as Ma looked in those photos.

Even more interestingly, on President Ma's Facebook page, almost all comments are from mainland Chinese, begging him to "come liberate China from the Communist Party" (not seriously, of course). Even though such comments are merely wishful thinking, they show how unhappy the Chinese people are with their standard of living, and how tired they are of their government's antics.

Trust Crisis for Red Cross Society of China

The Chinese branch of Red Cross, the Red Cross Society of China, is facing a potential PR scandal. The trouble started when an internet blogger posted an article with a picture of Guo MeiMei, the commercial general manager of the Red Cross Chamber of Commerce, showing off designer handbags and luxury sports cars. The article went on to bring up the question, "are RCSC executives abusing donations?"

This incident is now widely known about, especially in China, so if you want, you can find plenty more information yourself or read more about it here. The important thing is, RCSC is facing a crisis of trust. More and more people are wondering if they should be donating to an organization who's "commercial general manager" drives more than one Maserati. This sentiment reflects the global and constant suspicion of charity organizations and where donations actually go. This is why Bill Gates has his own charity organization to manage his plentiful donations.

Naturally, this could spell long-term problems for RCSC, and it's already taking measures to save face. RCSC announced on July 1st that they would be hiring outside accounting firms to audit their finances and see if there was any foul play by executives. But discontent with the RCSC among Chinese citizens goes way back. Many of them are unhappy with the longstanding "forced donation" when you apply for your driver's license (an extra fee is added to the license that goes directly to the Red Cross, or as many netizens are beginning to suspect, into Guo MeiMei's pocket). A recent poll showed that 77% of people have zero faith in the RCSC.

"Guo MeiMei Baby" (that's what the Netizens are calling her) tried to distance herself from the RCSC in the days after the photos appeared. Eventually, she claimed that her position as "commercial general manager" was entirely fabricated, and that she had never worked for the Red Cross.

Wen Jiabao on Democacy

Premier Wen Jiabao recently gave a speech at Britain's Royal Society, in London, on July 27th. In that speech, he stressed the importance of democracy, saying, "Tomorrow's China will be a country that fully achieves democracy, the rule of law, fairness and justice."

While some parts of his speech may seem shocking coming from the Premier of the People's Republic of China, Wen Jiabao has a long track record of moderate-liberal and pro-democratic sentiments. He believes "without political reform, China may lose what it has already achieved through economic restructuring". Wen has long pushed for democratic socialism, equality, and freedom of speech in China. However, as one man among a Party of many, he can take little action to reform China's political system. Many of his pro-democratic speeches are even censored in China.

Wen Jiabao also believes that the people should be allowed to criticize the government. He is an opponent of the Communist Party's suppression of dissent. Because of his political views, Wen has gained a lot of attention in the western world. He was featured on the cover of Time Magazine with the title "Wen's World" and was named "Man of the People" by Newsweek.

Wen Jiabao might be a liberal in a government of Communists, but his powerful political position and unwavering resolve could potentially modernize China's outdated political system and turn it into a democracy.

Red Songs

Back in the days of Chairman Mao, the Communist Party reigned supreme. Mao had two main goals: to become the most powerful man in China (which he did) and to make China superpower to rival the U.S. To achieve the latter, he had each town and province set unrealistic minimum production requirements so that the GDP of China could overtake the U.S. As China was dirt poor at the time, nobody, even Mao himself, expected anyone to meet these requirements, but at least they looked good on paper.

To gain personal power, Mao made himself an object of worship within China. He invented so called "Red Songs" to spread the Communist spirit and erected statues of himself in many public places. His two goals, production and self-empowerment, were often intertwined. For instance, pig farmers would report raising 300 pound pigs in order to meet their quotas. When asked how they managed to raise their pigs that big, the farmers said they sang Red Songs while feeding them. Red Songs have even been reported to cure illness. Obviously none of this is true, but people back then, under the threat of execution, would say anything to appease Chairman Mao.

As July marks the 90th anniversary of the founding of the Communist Party of China, many people, such as Bo Xilai encouraged the fellow citizens to sing Red Songs on the streets. This idea was not warmly received by everyone. Many elderly Chinese have memories of being forced at gunpoint to sing Red Songs during such turbulent periods as the Cultural Revolution. Bo Xilai was joined by some in song but given the cold-shoulder by many others. Nowadays, the young generation of China has been spoon-fed communist propaganda their entire lives. None of them have experienced, or were even taught the horrors of the Great Leap Forwards or the Cultural Revolution.

The Changing Political Atmosphere

Recently, the New York Times published an article on the politics in rural Thailand. Because of the fast-growing technologies and inter-connectedness of the world, the simple, rural life of the farmer that existed only a few decades ago is now nonexistent. Farmers and villagers in the more remote parts of Thailand have the internet and the global media to inform them of global news and current circumstances. These tools have made farmers more aware of their situation, and has given them a bigger voice in current politics.

According the the NYT article, in the previous years, the concentration of power meant that all of the major decisions were made in Bangkok, and it was expected that the rural farmers simply go with the flow. Now, the vast number of farmers, combined with the fact that they are growing more and more educated and informed, means that the rural inhabitants outside of Bangkok and the major cities now have an increasingly powerful hand in the politics of their country. In order to maintain stability, the country's leaders have to recognize the shift of power and make more conscientious decisions.

The situation is not so different in China. As in Thailand, all of the country's resources go to Shanghai and Beijing. However, with the growing power of the internet and the media, coming in from outlets such as Hong Kong, Shanghai, and Taiwan, the Chinese population has become much more self-aware. They recognize that there are certain rights which they should have, but are being denied.

Not only that, but the government is finding it harder and harder to control the people. It's become increasingly difficult for officials to cover up certain scandals, mistakes, and conspiracies from the public eye. For instance in the recent Wenzhou train collision, the government, rather than admit their mistake and initiate an investigation, thought they could just sweep the incident under the carpet (literally; they tried to bury the train parts) and people would forget about it. Instead, local and national news reporters were on the scene within hours, and news of the government's failure and mishandling of the accident reached every ear across the nation and the world.

The rapidly modernizing media, information, and political climate in east-Asian countries has become incompatible with political systems that date back to the Cultural Revolution. As people are educating themselves and becoming more aware, it is my opinion that the existing governments must recognize this situation in order to keep up with the new balance of power.

Start Copyrighting your Town

One of China's latest ideas is to build an exact replica of the old Austrian village Hallstatt. In April, employees from Minmetals Land Ltd., a Chinese real estate company, visited Hallstatt posing as tourists. Their true intent was to gather historical, logistical, and architectural information so that they could duplicate the town in Guangdong, China.

As far as intellectual property rights go, copying whole villages is a grey area. Obviously, the proprietors of the hotels, restaurants, and shops in the real Hallstatt are less than pleased, but in a poll directed towards Austria as a whole, 51% of Austrians approved, or at least didn't object to, China's decision to copy their village. One Hallstatt resident said, "We should be proud of our history, the Chinese copying our village, in fact, gave us some good publicity; many Chinese people will definitely want to come to see the original village."

What will this mean for the 800,000 tourists that Hallstatt attracts annually? It seems as if the Chinese replica is aimed at attracting Chinese tourists, but if the Chinese can produce the same "product" at a cheaper price, perhaps some vacationers will make a change in their travel plans. Although it would be difficult for Hallstatt or Austrian officials to take legal action to prevent China from doing this, Austrian legal offices say that if the residents of Hallstatt have their businesses hurt by the Chinese copy, they can sue individually.

English article

Chinese article

Corrupt Chinese Officials Seek Refuge in U.S.

Corrupt Chinese officials have a new destination to send their money: the U.S. In China, corruption is a major problem, but corrupt officials who leave their funds in Chinese banks increase their risk of being caught. As a result, these officials often come up with creative means to get their funds out of China and into places with more lax regulations.

These methods range from sending their family members abroad with tons of cash to converting their cash into goods of value, such as diamonds, and then carrying them personally to the U.S.

For instance, former Ministry of Finance official transferred $1 million to the bank account of his son studying in the U.S. Zhang Jian, a former Communist Party chief of Haimen in Jiangsu province, put his 18 million yuan into casinos in Macau.

Obviously, cross-boarder money laundering from China to western countries has caused international tensions. The Chinese central bank says it looks to cooperate with foreign authorities to prevent such transfer of funds abroad.

At the same time, during the U.S. debt talks, many politicians are pushing to end "construction and development" funding to China. This policy of funding, created over a decade ago, is clearly outdated, as China is currently the biggest creditor of U.S. debt. However, that didn't stop Chinese newspapers to report the incident as "U.S. senators roar for the end of funding to China".

Money Can't Buy Happiness

In Asia, the life of the rich is a far cry from the life of parties, mansions, and gourmet meals that the western rich enjoy. In 2003, statistics showed that out of the 72 billionaires in China, 15 died of homicide, 17 of suicide, 7 in accidents, 14 were sentenced to death, and 19 died of disease, with the average lifespan being less than 50 years. Clearly, in China, being rich is bad for your health.

Many of these wealthy people ran companies and large businesses. Problems arose when capital flow slowed under their management, creating a lot of stress for these people and, in the most drastic cases, causing them to commit suicide.

Furthermore, behind each of the 15 homicides is a bloody story. The Vice Chairman of the National Chamber of Commerce was shot dead in his office. Zhou Zubao, Chairman of a company that manufactures leopard fur accessories, was hacked to death by a business associate after a dispute. Another chairman was kidnapped and buried alive.

Fourteen billionaires were sentenced to death mostly because of crimes related to the mob.

This isn't to say the money will definitely corrupt, but especially in China, the way that these billionaires got their money (through coercion, crime, and overwork) is the perfect recipe for creating stress and enemies.

Chinese Students Applying to American Colleges

Record number of foreign students are applying to learn at American colleges. China holds the greatest number of U.S. college applicants. Unfortunately, the current Chinese education system doesn't breed their students to learn at U.S. schools. A while ago I brought up the case of a young man from China, Mr. Li, who scored highest on the College Entrance Exam, was class president, and had numerous other achievements under his belt. Feeling confident, he applied to several of the top U.S. schools but was rejected by all of them.

Something similar happened to Ms. Lu Jingyu, a top student in Shenzhen. However, rather than back down, she enlisted the help of a college admission consulting company called ThinkTank to help her revise her application. The company's successful intervention allowed Ms. Lu to enter UPenn. Her story is mirrored among hundreds of other students who get outside help in order to enter whichever college they desire.

College consultation is in especially high demand in China because firstly, students there are almost completely unfamiliar with U.S. college application procedures, and secondly, Chinese high schools lack guidance counselors and special classes available in the U.S. that can prepare you for the administration process. Additionally, some sectors of the Chinese education system are incompatible with their U.S. counterparts. The Chinese system focuses on rigorous academic study, test scores, rankings, and long hours of hard work. That leaves little time for the extracurricular activities that most U.S. colleges desire in a student.

College administration is a carefully designed system that picks out promising and desirable students for education. ThinkTank founder Steven Ma says his company aims to "crack that system". Do companies such as ThinkTank undermine the concept of selective admission? On one hand, many accuse such outside help of being borderline plagiarism. Not only that, but college consulting companies can sometimes charge up to $15,000 for successful admissions (you pay nothing if you're not admitted). This further adds a barrier to the already very exclusive college administration process: people with more money now have an even better chance of being admitted. On the other hand, enlisting the help of a consulting company shows you have determination, resourcefulness, and money. Also, companies like ThinkTank prevents perfectly capable and acceptable students from being hindered by the sometimes arbitrary administration process.

Power Struggle Over Disneyland

For kids, Disneyland is a place of fun and excitement, but for the Shanghai government and The Walt Disney Company, it’s a setting for a power struggle. The Shanghai government swore never make the same mistake as the Hong Kong government did with Disney. According to Hong Kong Wenhui Post, the largest shareholder of Hong Kong Disneyland is the Hong Kong government, which holds 53% of shares, while Disney holds 47%. Although the Hong Kong government is the major shareholder, it does not have any decision-making power over Hong Kong Disneyland’s operation. All operation decisions are made by a management company whose shares are 100% owned by Disney. The Hong Kong government and Disney negotiated over Hong Kong Disneyland’s operation during the post-SARS period. The Hong Kong government was in great need of capital to stimulate Hong Kong’s economy. Disney discovered the Hong Kong government’s bad situation and made an aggressive move. The result was that the Hong Kong government invested 90% of Hong Kong Disneyland but got only 57% of the shares, and the government had no say in the management of Hong Kong Disneyland. The Hong Kong government can only receive profit sharing over ticket sales; all profit from peripheral products belongs to Disney.

The Shanghai government is determined not to make the same mistake. The government holds 57% of Shanghai Disneyland shares and the rest belong to Disney. The government also owns 30% of shares in the management company. That means Shanghai government has decision-making power in the daily operations of Shanghai Disneyland and also receives revenue from all sources of income.

Facebook and RenRen

At the moment Facebook has an estimated value of about $100 billion. Its primary asset is its ability allow advertisers to reach millions of Americans and Europeans that use Facebook everyday.

However, in China, the void of a vast social networking site has yet to be filled. In the rush to reach 1.3 billion potential consumers, a few social networking sites have established themselves as the leading competitors. One of them, RenRen.com, closed at $18.01 at the NYSE on its opening day, up 28.6%. The immense success of Facebook has driven the value of other social networking sites up as well. If Facebook were to go IPO, which many people think it soon will, the social networking stock market will experience an unprecedented boom.

However, the social networking market is not without uncertainties. On April 27th, RenRen's IPO application documents stated that its daily visitors totaled 500 million users, instead of the 700 million reported the day previously. This revelation affected its performance on its opening day, and also led financial investigators to open inquiries on other Chinese social networking sites such as Baidu.com and Sina.com.

Chinese Government Buries Train

The Chinese government has lost a lot of credibility due to the recent train crash.

The recent high-speed rail accident in which more than 100 people died shows that the bureaucracy in China has not changed in spite of its fast economic development and modernization.

In a civilized country, if such an accident occurred, the accident site would be roped off and a careful and detailed investigation performed. The Chinese government did something different. They cleared the area right after the accident and then dug a big hole to bury the train pieces in. The Department of Central Media, the State Council limited news reports. The department asked the media to report this news based on the principle of “in the face of tragedy, there is great love.” It asked media “not to question, not to investigate, not to conjecture.” All news items should be in line with the reports from the government. The State Department of Railroads is now negotiating with victims’ families. According to the department’s rule, compensation is limited to US$140K (only just recently increased from a mere US$80K).

Part of the reason the Chinese government did not want too much information on the crash to get out was that they were afraid of losing investment in future railway expansion. However, as the demand for quick transportation is so great, and with Japanese railway systems as the only alternative, high-speed rail construction will likely continue at full speed.

Problems with Chinese Growth

In the past two years, China has risen quickly in the world. Its economy overtook Germany and became the third largest in the world in 2009 according to data released in early 2010 by IMF. In 2010, China became the second largest, overtaking Japan. With China’s fast growth, many people are wondering if China will overtake the US.

However, many economists inside China feel uneasy about China’s “on-paper” improvement. The Chinese government, recognizing the fast growth of the country, has always maintained long-term economic goals. To achieve these goals, the Chinese government sets minimum production requirements for all cities, provinces, and towns. Many local governments try to achieve these goals through any means. For example, after the 2008 financial crisis, the central government commanded local governments to spend money and increase the GDP. Some city governments spent money on road maintenance by destroying the roads and then paving the roads again. Since all land is owned by government, some local governments made multiple transactions on one piece of land to increase GDP.

According to Chinese economists, the government cannot expect their economy to keep rising as the world’s economy suffers since the Chinese economy relies heavily on foreign consumption. Also, even though China has become the second largest economy, its GDP per capita is still one tenth of Japan’s. Lastly, China’s large GDP growth is matched by heavy sacrifices in other areas. Pollution, corruption, and unfair competition by SOE’s (state-owned enterprise) have become grave. The Beijing think-tank has advised the government that China’s economy is on the verge of falling into the “middle-income trap.” The argument says that because China was already a lower-middle-income country last year, with a GDP per person of around $4,400, it might go through the same stagnation and turbulence as Latin American economies did in the 1980s and 1990s. The think-tank also argues that China follows extensive-growth, which is based on the expansion of the quantity of inputs in order to increase the quantity of outputs. Without innovation and technology, the extensive-growth in China is likely to experience diminishing returns and eventually reach stagnation.

However, even if the government wants to slow down, it needs to be done carefully. Due to the extensive-growth pattern, if the Chinese government decides to slow production, all economic activities, driven by investment, will also slow down. Additionally, the social conflict, especially the conflict between people and government, has been getting more and more serious. If economic development slows down, employment and social security problems will become even more severe, potentially causing social turmoil.

A Crisis of Trust

Recently, many companies were forced to take their stocks off the market because of credibility problems. Since March, five Chinese companies were dismissed from the U.S. stock market, and 15 companies were asked to stop transactions.

Because of the credibility concerns, some stock trading companies have already prohibited using loans to buy more than 130 stocks. The U.S. listed Chinese companies are facing a trust crisis. Many companies are under suspicion for faking financial statements. Also, the SEC said they are investigating the financial statements of the Chinese companies listed on the U.S. stock market who have entered by merging with U.S. companies.

Since this year, it’s become a trend in the U.S. to question listed Chinese companies. These companies may be questionable because they withhold some information, don’t abide by transaction rules, or are in questionable financial condition.

Among those companies who were asked to stop transactions, one of them was asked less than two months after the company went IPO.

Because lots of Chinese companies are in trouble, many stock trading companies have already begun shorting those companies. Two of them are Muddy Waters Research and Citron Research. Interestingly enough, these two research institutes investigate fraudulent companies and also short stocks at the same time. It is no surprise that they are doing quite well.

Fraud in China is not limited to corporations. Not long ago, investigation by the National Statistics Bureau revealed a large number of plagiarized research papers among Chinese scholars. In the patent industry, inventors in China will often divide up a single invention into dozens of patents for each part in order to get tax exemptions and to appear more innovative. Chinese banks in the past have also distorted their financial reports to make themselves seem profitable.

Clearly, a decade ago, it was the trend to question the quality of Chinese manufactured goods. Now that China has entered the financial sector, their companies are also coming under suspicion.

http://www.worldjournal.com/view/aFinancenews/13987696/article-%E7%BE%8E130%E6%94%AF%E4%B8%AD%E6%A6%82%E8%82%A1-%E5%88%97%E7%A6%81%E8%B2%B7%E5%90%8D%E5%96%AE?instance=fn_bull

The Chinese are Coming!

China Merchants Bank and Bain and Co. released a report titled "Private Banking Report of 2011" which shows that there are half a million people who's wealth exceeds 10 million RMB. Among them, 60% are considering immigrating out of China, and 28% have already done so. The number of people with over 10 million RMB increased by 100% from 2008-2010. In the meantime, Chinese immigrants to the U.S. increased 73% in the past 5 years. Most people immigrate to Hong Kong, U.S., Canada, and Australia and buy real estate over there.

Why are so many people leaving China? Some of them cite better education, better business opportunities, cleaner food, and safer food. A lot of it could also be that wealthy Chinese entrepreneurs are afraid their fortunes might be threatened by the government. Regardless, the U.S., along with many other countries, are welcoming these new immigrants because of their wealth and valuable skills.

Another One of China's Problems

According to a recent article in a Chinese publication, research publication in China is #1 in quantity but well past #100 in quality. This has drawn the attention of National Statistics Bureau (NSB). According to the former chief of the NSB, China has two #1's, one is the R&D staff (up to 2009 there were 3184000) and the other is quantity of papers.

Two major problems with the current publication system are falsifying data and plagiarism. The scholars say that because China uses something called "Science Citation Index" to measure performance, scholars want to publish as many Science Citation papers as possible without caring about the quality. Of the submissions to the Journal of Zhejiang University, 31% are plagiarized.

Publication trading is also a major problem. Some scholars even ask others to write their papers for them. For example, some MBA or PHD students will pay others to write their theses. According to research by Wuhan University, 72% of a sample of papers were completely plagiarized, and 24% were partially plagiarized. Writing papers for others has become an industry in China. A scholar said, "We cannot prove we are making effort by sheer number of publications and imitation cellphones, so there is a need for originality and the plagiarism industry has to be stopped." However, this system is already so ingrained in China's system that it will be hard, if not impossible to reform. Much like the issue with the patents, many scholars depend on their Science Citation Index rating for promotions and bonuses.

China's Economy May Have Some Problems

A while ago, Carl E. Walter coauthored a book titled “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise” about how China's economy, while strong, has some serious problems that could have negative effects in the future. According to Walter, China's major problems include a state-run economy, closed financial system, and inflation.

One point Walter makes is on China's government controlled banks. This system, he says, puts a lot of risk onto the banks for the decisions the government makes. He also criticized the banks for distorting the value of their assets to make themselves seem profitable while not actually bringing in that much capital to the economy. This is similar to what happened with China's patents, where a massive spike in patent applications, in response to a tax credit incentive, made China seem much more innovative than it actually was.

Another problem Walter mentions is that China never fully completed its reforms to the financial system in the 1990's and early 2000's. One related issue that came up later was that huge corporations now control a vast portion of China's wealth while the majority of the population remains poor.

To conclude, one solution Walter offered was to "significantly open its financial system to foreign participation". This would effectively take much of the risk off banks and also open up many financial sectors to competition.

The New Ambassador to Beijing

On March 9, 2011, Gary Locke was nominated by President Obama to become the next ambassador to Beijing, replacing Jon M. Huntsman Jr.

I, along with many others, think that this is a smart move by Obama because of Locke's good relations with both the Obama administration and China. He is well recognized by the Chinese people and respected by the government. From China's perspective, this new development represents another opportunity to gain some influence abroad. Despite the number of Chinese living around the world, many of them still consider themselves of the Chinese people. The Chinese government also likes to regularly remind these abroad Chinese to "not forget the Motherland". From Beijing’s point of view, sending Locke means the Obama administration will focus on economy and trade with China instead of geopolitical relationships. Locke always has extensive contact with Chinese economic and financial officials such as Prime Minister Wen Jia Bao and Deputy PM Wang Qishan and Minister of Commerce Chen Deming. He also understands the problems with American enterprises in China, making him valuable to both economies. China expert Ken Lieberthal believes choosing Locke shows that Obama really puts emphasis on economic relationships with China. Clearly, Locke is well-tipped to be the next ambassador to Beijing, and his experience and knowledge will definitely prove helpful in the developing Sino-American relations.

Will there be Academic Freedom in China?

New York University has plans to open a new liberal arts campus in Shanghai. Recruitment for students begins in September, 2013, and NYU is already prepping some professors to go teach there. However, some of these professors have expressed concern over China's censorship and academic freedom policies. In response, the Shanghai campus guaranteed academic freedom in the professor's research. On the surface, this looks seems like a big step towards obtaining freedom of speech and academic freedom in China. In reality, it's hard to say how this will work out.

The idea of academic freedom in China has a number of off-putting precedents. For example, a while ago, Google wanted China to lift its search restrictions so that the Chinese could search for whatever they wanted. In response, China temporarily shut down Google in China. Also, at Beijing University, the head of the Communist Party club (every university in China has one) gave a speech praising the CCP and urging students to be loyal and supportive to communism. At the same time, many universities in China are implementing a new counseling system. While student counseling seems like a good thing in America, it works quite differently in China. Students are deemed in need of "counseling" if they fall into certain categories such as: psychologically weak, living independently, poor performance in school, and out-of-norm thinking. Not only does this new counseling system almost serve as a Communist Party correctional tool, but being called in for counseling means being labelled as an outcast for the rest of your academic career, similar to the Five Blacks system during the Cultural Revolution. Even though the students object to these kinds of things, the opinions of the school officials and educators in China are clear.

So while the NYU campus in Shanghai claims it will be a haven for academic freedom in China, it's unlikely that such a thing will be possible in the present educational climate.

Ethiopia's Dam Problem

Tekeze Dam in Ethiopia was completed in 2009, one year behind schedule, by Chinese National Water Resources and Hydropower Engineering Corporation. The project was both a financial and environmental disaster and a potential embarrassment for the parties involved. Not only was the damn completed behind schedule, but problems during construction forced the Chinese companies and the country of Ethiopia to pay $136 million over the projected budget. While the loss is heavy, it is not yet clear who it has affected. Some people say the Corporation payed for it, while others believe that the Chinese Export-Import Bank funded the project. Meanwhile, the Ethiopian government says they financed the dam entirely and are pressing China for compensation. Despite the large costs, the Ethiopian government has plans to build several more dams to generate more electric power and possibly export that power to neighboring countries. While this might not make sense from an economic point of view, the motivation for this decision is mostly political. Even if building dams makes the Ethiopian government more popular, it will still cost taxpayers, whether Chinese or Ethiopian, hundreds of millions of dollars more.

BRICS Opposes USD Dominance

Even before the name of G7 was coined, the organization had led the world economy up until the 2008 financial crisis for over 200 years. But, the situation may change. The four emerging economies – Brazil, Russia, India, and China, are a global investment portfolio termed as BRIC by Goldman Sachs economist O’Neill , and also strategic alliance. They added South Africa and formed BRICS, and the leaders of these nations officially held a meeting in San’ya, Hai’nan Province, China on April 14, 2011 to discuss the problems that the depreciated USD had caused. Most foreign reserves of these countries are US dollars or US bonds. Thus, when the US is printing dollar bills, the value of the USD and US bonds are worth less, causing these countries’ foreign reserve values reduce. Their goal is to have their problems noticed before G20. Meanwhile, a G7 meeting was held in Washington D.C.

This year is the third annual meeting of BRICS. There are two significant differences from the last two meetings: first, South Africa was not invited previously. Second, there was no clear agenda before. The combined populations of these countries constitute 40% of the world’s people, land area: 30%, trade volume: 18%. They contributed 45% of last year’s global GDP growth while all of the world’s emerging markets made up 56%.

The meeting was concluded by 32 announcements and 3 action plans. Most importantly, they challenged the dominance of the USD. The US leadership at IMF and the dominance of its currency was affirmed in 1944 during the Bretton Wood Conference. BRICS argued that this had reflected the world’s economic situation back then but that today’s situation has changed. They recalled that the US has veto power at IMF, and has the final approval of the IMF currency portfolio. They accused the IMF of being incapable of resolving today’s financial troubles and called for its reorganization. BRICS went on to criticize the devaluation of US dollar which resulted in the inflation of crop and oil prices, severely threatening these nations’ economic recovery. They also requested IMF to set a timetable to incorporate more currencies into SDR (Special Drawing Right). SDR is used as the currency reserve of IMF, which is composed of a portfolio of different currencies. But in reality, the US dollar is dominant at SDR. This creates demand for US dollars and supports the US dollar’s dominance in the world.

BRICS admitted that they could not shake the US dominance at IMF, but they reached a consensus to conduct currency swap among themselves. That means they can makes loans to one another and use their own currencies for international trade settlement.

These nations were not previously in accordance, but the Quantitative Expansion of the US and its currency devaluation united them. Russia and China are having disagreement with oil prices, and India and China have been foes for decades, but the current situation with the USD has, at least in some aspects, united them.

China Aims to Stimulate Kashgar’s Economic Potential

One of China’s latest goals is to turn its westernmost city, Kashgar, into a valuable economic center. In an earlier entry I talked about China’s growing interest in Central Asia and how it was beginning to rival Russia and the U.S. as interested parties in that area. In May 2010 Kashgar was designated a Special Economic Zone and government subsidies are currently being used to tear down age-old residential areas and to fund large renovations and construction projects. On one hand this could be seen as a perfect example of big business and enterprise intruding on the tranquility that the native people have enjoyed for so many years. On the other hand, this is a big step in redistributing the ridiculously unbalanced wealth from urban powerhouses to rural cities with potential for development. What does the government hope to get out of this massive investment of resources? As Newsweek puts it, they want to turn Kashgar into “China’s Los Angeles”. In other words, China wants to make Kashgar its outlet into Central Asia. Despite being China’s westernmost city, Kashgar is almost perfectly situated in the center of the entire Asian continent.

Another interesting fact to note is that the local government of Kashgar is not directly in charge of its development. That title falls to the planners of Shenzhen, the first planned Special Economic Zone city in China, who turned that city into an economic powerhouse 30 years ago.

During the Han Dynasty, traders and merchants sometimes passed by this settlement on their journey down the Silk Road. Even though today it is still geographically a part of China, its people and culture are dominated by Muslim Uyghurs while Han people are more of a minority. A quick look around the city will provide evidence of a strong Muslim historical influence with Chinese political presence and a little bit of Buddhist history. The various tombs and mosques contrast with the stone statue of Mao in the city center. Hopefully, if the Chinese government’s plans are successful, Kashgar could become a continental economic center but still remain a monumental preservation of Muslim heritage.

http://www.newsweek.com/2010/09/25/china-s-hottest-cities-and-kashgar.html

Kashgar: Oasis City on China's Old Silk Road

My Father is Li Gang!

A lot of my recent posts have been about the censorship in China. Back in October 2010, another incident occurred which the Chinese government tried to hush up. Twenty-two year-old Li Qiming was driving under the influence when he struck two girls with his car. One of the girls died, the other had her leg fractured. When finally apprehended by police, Li Qiming defiantly told them, “Go ahead, sue me if you dare. My father is Li Gang!” Li Gang is the deputy director of the local police security bureau. This incident garnered much attention from the online community both because of the outrage and also the phrase Li Qiming uttered upon his arrest. However, in the following weeks, the Chinese government did their best to hush up the commotion surrounding Li Gang and his son. It was another perfect example of the old story of an innocent commoner being wronged by a government official whose influence protects him from unwanted attention.

Regardless of the government’s efforts, the damage had already been done. “My father is Li Gang” had already become a well-known catchphrase used to dodge responsibilities and punishment around the household. Hundreds of internet bloggers had already spread the word so that everyone with a computer in China knew about the incident. This just goes to show that the Chinese government is losing its long-held hold on the media. Because of Web 2.0, people are constantly finding new ways to distribute information that the government is helpless to stop. Clearly, things are changing, but will the Chinese government ease up on its censorship? Or will it simply find new and more advanced ways of keeping knowledge out of the common people’s hands?

http://en.wikipedia.org/wiki/Li_Gang_incident

http://www.nytimes.com/2010/11/18/world/asia/18li.html

Global Education and PISA

Lately there has been talk going on about PISA scores and education systems and whatnot. The word on the street is that the U.S. is losing its grip on the world: they scored 23^rd and 24^th in most PISA subjects. For those of you who don’t know, the PISA test is an international test system aimed at gauging and comparing the student intellect and education systems of numerous countries around the world. Shanghai scored first in all subjects, while Hong Kong finished at about 3^rd place. American students on the other hand scored below average in the math section of the test. According to other studies, the only area in which the U.S. placed first was “self-confidence”. These results have generated a reaction that been merited a description of being similar to “a second Sputnik”.

Everyone is worrying about how the U.S.’s education system is so far behind other countries’. Despite this, most Chinese actually consider their education system faulty and take no hesitation in criticizing it. The truth is, U.S. education was never number one, and yet, they’ve still maintained such economic and political leadership throughout the years. That’s probably due to the fact that the top students in every foreign country choose to come to America to work. You could even go as far as saying that the U.S. is benefiting from all of this; they get the world’s most skilled workers and they don’t have to spend a penny educating them! My view on this is similar to the one I expressed in my post about patents: even though it looks like China is outperforming the U.S. on paper and in numbers, in actuality, I think the U.S. is a long ways away from having to worry about falling to number 2.

http://kristof.blogs.nytimes.com/2011/01/15/chinas-education-system/

http://www.nytimes.com/2010/12/07/education/07education.html?pagewanted=2&_r=2&ref=education

http://www.nytimes.com/2011/01/16/opinion/16kristof.html?ref=nicholasdkristof

http://www.china-daily.org/China-News/Survey-of-21-countries-last-place-in-China-in-the-imagination-of-primary-school-students/

China is Hoping to Expand into Central Asia

Recently, The New York Times covered the growing trade between China and Tajikistan. Chinese economic expansion has not only been going on in Tajikistan, but over much of Central Asia. While the U.S.’s relationship with this region is strained to say the least, China has a history of strong friendship with its westward neighbors. While trade in Central Asia is bringing much prosperity to China, it is the cause of some concern for America. Unsurprisingly, China’s growing interest in this territory has caused some tension with the U.S. which has military bases dotted all around this area. More detailed coverage of the conflicts between the two nations can be found at the NYT article, but mostly, it’s nothing we haven’t seen before. Accusations, suspicions, and denials are characteristic of the relationship between China and America.

Oil trade is one of the more important transactions conducted between China and Central Asia. A lot of the trade and good relations between these two regions is owed to the Shanghai Cooperation Organization which includes China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan. The Organization conducts anti-terrorist activities, economic cooperation, and more recently, military exercises and intelligence sharing and the like. For example, jet fighters flying from China to Turkey require an aerial refuel right over Central Asian countries. This is only possible because of the Shanghai Cooperation Organization and is an example of the good relations between China and Central Asia.

http://www.nytimes.com/2011/01/03/world/asia/03china.html?pagewanted=all

Chinese Mothers

There’s a new article out there called “Why Chinese Mothers are Superior” and it’s been the subject of much discussion and debate. Before reading on, check out the article here. Some people praise the author, Amy Chua, for her deep insight and eye-opening explanations, while others say she’s too bold in differentiating Asian from Western parents. Personally, my mother, a Chinese mother, doesn’t freak out if I get an A-, nor does she forbid me from being in school plays. Also, I know that a few Western parents that can be pretty strict as well.

Even though it’s not all black and white, Ms. Chua brings up some interesting and true points. Chinese parents are definitely blunter and more “verbally abusive” than Western parents, and it’s true that Chinese parents feel as if their children owe them big time. Although Ms. Chua doesn’t go into why this is, this state of mind originated thousands of years ago. Back then, life was pretty uncertain and there definitely wasn’t such a thing as social security payments (see my other blog on social security in China). As a result, everyone’s main method for ensuring that they would be taken care of when they got old was their children. Because of this, it was drilled into kids’ heads early on that they had to repay their parents for raising them later on.

Anyways, as Ms. Chua says it’s not that Chinese parents are oppressive and inconsiderate tyrants who don’t care about whether their children are happy or not, all parents around the world want what’s best for their children, it’s just that some of them think they know what’s best better than their children do and structure their children’s lives so that they follow a strict, set path. I personally don’t really agree with this method because people should pursue lives that make them happy rather than make them money.

China's Role in Myanmar

China and the U.S. have a long history of political tension. In most cases regarding a 3^rd country, they take stands on opposite sides. Recently, however, China and America have been working on the same side of the Myanmar question to back Daw Aung Sung Suu Kyi and her democratic party in replacing the dictatorship of Myanmar’s current leader, Than Shwe. Leaked cables between China and the U.S. show that while China may not agree with the U.S.’s ideas on government, it does acknowledge that the current junta isn’t doing a good enough job of handling its nation.

China’s relationships with its bordering neighbors are strained, to say the least. Japan, Russia, and South Korea all lean towards the U.S. side of things; while the Sino-Vietnam war happened only a generation ago (the Chinese take pretty long to get over things; they’re still iffy with Japan even today), and the Sino-Indian relations have only recently gone from boarder disputes and skirmishes to a steady economic and military alliance. That being said, only Pakistan and Myanmar remain as potential powerful allies for China. That’s probably why China has taken such a vested interest in Myanmar’s government. The Chinese government actually asked the Myanmar government to release Ms. Aung Sung Suu Kyi from house arrest, and they did.

Clearly, although the U.S. and China may never see eye to eye, their handling of the Myanmar situation has proven that the two countries can work together to solve international political questions. The Commander of the US Seventh Fleet, Vice Admiral Scott Van Buskirk, stationed in Eastern Asia waters, says that America does not and should not consider China a threat and doing so would be largely counterproductive.

http://www.rthk.org.hk/rthk/news/englishnews/20110221/news_20110221_56_735432.htm

http://www.nytimes.com/2010/12/11/world/asia/11myanmar.html?pagewanted=1&_r=2&ref=asia

The Social Security Question in China

Recently there has been talk about the Chinese government proposing a law that would require children to visit their parents on penalty of being sued. Seemingly an odd idea on the surface, this idea is actually intended to replace the nonexistent social security system in China with filial piety (respect for one’s parents). The nation doesn’t have social security, so the government is hoping that they could put this responsibility on the latest working generation. Certain cities, such as Shanghai, have their own social security systems, but they are losing a lot of money. Clearly, the Chinese government has not been living up to its responsibilities. China had social security in the past, but because it was a communist system, and nobody had any motivation to work, the government never really had enough money in the social security pool for it to be called a legitimate, working system. In 1976 the economic reform turned things around 180 degrees: before, nobody worked because everyone was paid the same, after the reform, only government employees received social security.

Due to the vast economic growth in China in the past 20 or so years, people had hoped that if they kept working hard, social security would eventually come. However, more recently, corruption, inflation, and the difficulty of making money have discouraged people and social security is a doubtful question to them. For example, the average college graduate in Shanghai starts off earning 2000-3000 RMB a month and eventually settles at 5000 RMB a month (that’s about the same as my grandmother’s monthly social security payments). They’d have to work for some 50 years before they could afford their own apartment. Luckily, many young people can live in with their parents, who bought their houses back when they were cheap. Unfortunately, some parents don’t have houses, and because they aren’t paid for by the government, they have to rely on their children for support, but their children can’t even make enough money to support themselves. The goal of this new law is to replace government responsibility with citizen morality, but unfortunately, most adults in China struggle to make ends meet for themselves, let alone support their parents. Clearly, if this law is passed, it would only serve to dig the population into a larger hole than they are in right now.

Although, if working adults were really in such a financial pickle, I doubt their parents would sue them over a measly missed visit.

http://www.nytimes.com/2011/01/30/world/asia/30beijing.html?_r=1

My Thoughts on Amy Chua

The article “Why Chinese Mothers are Superior”, by Amy Chua, is now the most read on WSJ. There are opinions being thrown back and forth, and readers’ views on the subject are polarized. Some people have gone far as to threaten Chua’s life.

Chua was a star student from an early age, being super competitive; she always needed to be number one. She went to MIT and was the 2^nd ranked graduate from Harvard School of Economics 1984. She third best student from Harvard Law JD. During her school years she was the executive editor of Harvard Law Review. This title has only been held by students that exhibit model behavior and hold excellent grade, students like Obama himself. In 2001, Chua went to Yale Law School. She now holds the title John M. Duff Chair Professor. Her professional expertise includes international business trade, law and development, racial conflict, globalization and law. Chua’s publishing in US are well known, she has published 2 well known books. One is about the reasons behind the rise and fall of historical empires such as the Persian, Roman, Tang and Yuan Dynasties of China, Holland. The name of the book is Day of Empire: How Superpowers Rise to Global Dominance – and Why They Fall. Her other book is World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability.

Regarding “Tiger Mother” she admitted never thinking that she would strong reaction from readers regarding her memories and reviews about the way she raised her daughters. For example, she forced her daughters to practice piano until midnight without going to the bathroom or drinking water. At age 4 she made her daughters read the French existentialism of Sartra. Chua’s point is that not only Chinese mothers can be “Chinese mothers”. Western mothers can have that title as well, but must abandon the deep-rooted concepts of respect and self-esteem.

In recent years, the performance of American students in education has been gradually declining. This has drawn concern from many American educators. The rise of China has made the media place their attention on Chinese education. Some of these media reporters suggest that Chua’s parenting style is the solution for the American education problem. However, Nicholas Kristof, who is very familiar with China (his wife is Chinese-American), believes that the higher education in China is third rate.