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.