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.
Saturday, May 28, 2011
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.
Friday, May 27, 2011
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.
Thursday, May 26, 2011
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.
Wednesday, May 25, 2011
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
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?
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 23rd and 24th 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 3rd 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
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.
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