Entries Tagged as 'Politics'

Xi vs the Pope

President Xi and the Pope both arrived in the US this week.  Landing on opposite sides of the country, their arrivals couldn’t have been more different.  The Pope, great by President Obama with a bow and hand-kiss at the airport, was welcomed with all the pomp and circumstance usually reserved for, well, Presidents and Kings.  President Xi on the other hand, arrived in Seattle and was met with both supports and protestors, but no White House level dignitaries.

President Xi’s people released a tentative schedule of his actives, while the Pope’s “historic” visit has it’s own “Pope Tracker;” an app that follows his movements and allows you to upload your personal stories of meeting with the Pontiff.

So, if you’re the Pope or President Xi, you don’t come to the US at the same time on accident.  So what’s the message?  What’s the agenda of this timing?  The two of them are “almost” going to meet in DC on Wednesday or Thursday—at least one of them obviously nixed the opportunity to do so. Hmmm….which one?

The Chinese press have made a living out of interpreting slights, perceived or real, in the visits and surrounding reception of Chinese dignitaries overseas.  So you’d think that this week would an absolutely orgasmic occasion for them—a religious leader (one whom they do not allow to lead or select leaders for the Catholic church in China) is getting the full-blow red carpet treatment and Xi isn’t.  This should offend the sensibilities of all Chinese on both sides of the straight, right?

But what if President Xi planned it like this? He meets with business leaders in Seattle first; placing economics over politics is a veiled shot at the US political agenda.  (And here’s a great wrap up of how you force the hand of the US AND the int’l business community at that same time–attend or face sanctions in China.)And with all the press focusing on the Pope has relatively protest free (at least press-coverage of protests free) visit for the first week of his trip to the US.  The Chinese press gets all the comparative fodder they need to trash the US for receiving feudal superstitious splittists with more respect than the leader of the 2nd largest econ in the world.

Why risk the image of the Pope getting top-shelf attention in the Chinese press by condescending to a meeting or even a handshake?  No doubt completely unnecessary, from Xi’s perspective. China is not all the harmonious right now and one of the groups feeling the pressure to get inline are the Chinese catholics among other religious groups.

Xi’s goal with this visit is two fold. First, look strong—take a more leading role in world affairs (or at least appear to do so for the folks back home) and take a stand against the running capitalist dogs in the US.  And second, try to convince the US and China’s Eastern Pacific neighbors that while it’s strong, it’s not that strong.

Cyber security and the South China Sea are the big issues, but neither are likely to be resolved, over even preliminarily agreed upon during this visit.  China is playing the victim card in the cyber arena but considering that the US is considering sanctions against China for cyber espionage, offering to work together on cyber security is a gamble that likely won’t go over well with the US congress.  And China’s hardline position on the SCS means that it’s a non-starter as well.

This trip has been planned for months, if not years. No accidents, no mistakes.  The only frustrations for Xi’s people being the freedoms enjoyed by protesters living in the US—something that the the Pope’s visit and rock-start like press following will more than likely overshadow.  Mission accomplished.

Is China a Threat? Part 20457948571-048571

Last month I was given a copy of an email from the local head of a national political party in the US with an all too common sentiment—China is a threat!  We need to limit our international exposure via govt fiat ASAP.  I won’t share the source or all the back and forth, but I’ll say this: In my opinion, anyone, political or otherwise, that suggests isolationism in any form is not only deluding themselves but is ignorant as well.  Shutting the US off from the rest of the world will never bring prosperity nor keep the US “safe.”  It hasn’t in the past and won’t now.

Having said that, in my mind, this is the real China Threat: The chilling effect on world business/news/politics as the Chinese giant starts to flex it’s (economic) muscles.

But here are some of the issues and my responses from the original email.

Q. Should the US be worried about the acquisition of assets by China?  For example, Smithfield food (the largest pork producer and processer in the world), AMC Entertainment and other buildings, land and houses.

A. There are really only three issues here.  1. That the US should not sell domestic assets to any company/individual that is not a US citizen.  2.  That the US should not sell assets to any individual/company from any country that is anything but dyed in the wool capitalist/democratic.  3. That the US should not sell to Chinese.

The British are the foreigners with the largest amount of US asset ownership.

The EU is second.   Isn’t the current fear in the US that “we’re turning into a copy of socialist Western European states?  Why is there no outrage at the British?  The Auzzies?  The French, Germans, Russians, etc? A Russian just bought the Brooklin Nets of the NBA—what’s more American than Basketball?!  Putin is “safer” than Xi?

Q.  But what about investments in the “beachhead” industries in the US like copper in Alabama, the Triple H Coal Company in Tennessee and the “auto industry” in Detroit?  The Chinese will export everything and take over the local economies!

A. Ever hear of Rio Tinto?  Look up their mining interests in Utah (and the world).

As for coal, was there a problem when the Tennesseans themselves were mining and selling the coal to the Chinese?  No.  Then why the concern now?  Who even uses coal anymore anyway?  Sure, many places in the US and other countries still use a bit, but it’s actively being phased out in the developed world.  It’s dirty and expensive and dangerous (even if you don’t agree with environmentalism).  If the US and the EU aren’t buying coal then who else is going to buy all the coal that those hard-working Tennesseans are mining?  Of the top 10 coal using/buying countries China uses more than 3x as much as country #2 (the US) and more than all the next 9 countries in the world COMBINED!!  China is also building more NEW coal plants EVERY YEAR than the US has total.  If we sell coal, we must sell it to China–there is no other market.

And finally, have you been to Detroit recently?  Thank God someone is investing there.

Q.  But this is really a question of strategic assets, not one specific mine.  (OK, that’s not a question, I know.)

A. How much is the US dependent on foreign Oil?  How much are we mining and going to war for in the Middle East?  Are the isolationists mad when Tennesseans and Utahans themselves were blowing up their own mountains and selling their own coal and copper to the Chinese?  Nope.  Hypocrisy.  Racism.

And one more thing about physical assets, especially things like mines, land and buildings—CHINA CAN’T TAKE THEM OUT OF THE US.  If push comes to shove, we just nationalize them.   Hell, we just did that with 1/5 of the US economy with no concern for the consequences or even how it was actually supposed to work.

Q. Well, what about all of the leverage that China has over us from buying up all our debt?

A. Most people probably think that China own most of the US debt; but that’s not true.  Not even close.  China is only 15th on the list of largest owners of US debt most of the top 14 are actually Western European countries.

Are you getting the picture?  China is the straw man for every reactionary that can’t handle the fact that China is likely going to pass up the US and become the biggest ____________ (fill in the blank) on the planet.  But you know what?  China should be the biggest!  They should be, they have 5x our population.  And if you’re really concerned about strategic defense, in all likelihood it’s safer for the planet if 1.5B people have enough to eat and options for growth.

Here’s a few other issues that were listed as “problems” with China.

China is now the number one trading nation on the entire planet.

Smart!  This is how Britain and US grew their economies in the past.  The US is still the biggest economy (by almost 4x), so why can’t we capitalize on this—oh, wait we do.  Not only do we have super cheap goods but those cheap goods have saved the US 2-3 percentage points in inflation over the past couple of decades.

Overall, the U.S. has run a trade deficit with China over the past decade that comes to more than 2.3 trillion dollars.

And all this while Chinese consumers are clambering for foreign goods.  The problem isn’t trade policy per se, which is actually horrible on both sides, but the fact that the EU and other Asian countries have consistently beaten out the US in the Chinese markets.  Yes, there are limitations, but to pretend that there are none here in the US is, again, delusional.

China has more foreign currency reserves than anyone else on the planet.

How is this something that the US can control or be responsible for?

China now has the largest new car market in the entire world.  China now produces more than twice as many automobiles as the United States does.

After being bailed out by U.S. taxpayers, GM is involved in 11 joint ventures with Chinese companies.  1. They should be the largest, they have the largest population.  But the US has more cars per person than China does.  2. China probably produces, with the help of US companies, more of just about everyTHING than the US does.   Anything that GM does to actually make money should be seen as a positive.  Investing in the largest and fastest growing market on the planet is smart!

China is the number one gold producer in the world.  The uniforms for the U.S. Olympic team were made in China. 85% of all artificial Christmas trees the world over are made in China. The new World Trade Center tower in New York is going to include glass imported from China.

These are just emotional hooks to engage stupid people in the “China threat” mantra.  “Christmas trees?!  How dare the Commies buy up Baby Jesus’s birthday!”  Next they’ll be buying up NASCAR.  Give me a break.  And with this logic, the Temple of Solomon should never have used the Cedars of Lebanon and we should give back the Statue of Liberty too (made in France).

China now consumes more energy than the United States does.

Um, it have 5x the people—how can it not?  Not to mention all the manufacturing that is, by the way, massively energy inefficient.  They’re wasting money buying more energy than they should if they were more efficient.  They’re giving money to us unnecessarily!  Damn those Commies!!!  Being frustrated at that is like Global Warmists not being happy that we’ve got record cold this year—there is an agenda behind the histrionics.

China uses more cement than the rest of the world combined.

More roads, more buildings, etc… get used to it.

China is now the number one producer of wind and solar power on the entire globe.

So…does this mean that they aren’t as smart as we thought?  What’s the point here?

China produces more than 90 percent of the global supply of rare earth elements.

Yes, they do.   But as noted in the coal example above, a HUGE percentage of those are produced in mines in OTHER COUNTRIES!  I agree that this could be an issue, if China pushed for exclusive sales and/or tarrifs.  But again, can’t countries just nationalize these mines if there are real issues?  And if China is a threat, why are countries so eager to sell these precious assets to the Chinese in the first place?  And isn’t the sale a domestic problem more than something to blame on China?  Maybe we need to clean house before we throw stones (Caution: mixed metaphor!)

In published scientific research articles China is expected to become number one in the world very shortly.

Being published and being respected are two different things.  China has 2 universities ranked in the top 200 on the planet (the US has more than 50 of the top 100!).  Besides, journals the world over are questioning Chinese scholarship due to rampant plagiarism.

The more things change…

…the more they stay the same.

Shocker: Official and unofficial numbers for China 2012 economy are not the same!!!  And, hold your breath…..the official numbers not only aren’t accurate they’ve erred on the side of making last year’s downturn less dramatic and the upturn more impressive.  Amazing how it always seems to happen that way for the govt. fighting for social stability.

All irony aside, the numbers show that growth, while slightly better is not at the 7.5-8% levels that just 5 years ago Beijing was claiming MUST be maintained at all costs to keep employment where is needed to be (one of the arguments for not floating the currency).  Growth at 5.5% this next year without significant reforms for the 400 million still not urbanized and poor job prospects for the recent college grads will mean continuing frustrations for the CCP (especially as housing prices start to tick back up again).

New Business Insight: Don’t transfer Western business practices to China directly without some cultural/market specific adaptations.  Do MBA’s learn anything other than numbers in grad school?  Surely they have to take a couple of OB or corporate culture classes, right?  I’m no accountant, I’ll be the first to admit.  But if I needed one, I’d hire one rather than think that I could do it myself.  Why don’t accountants (not picking on accountants specifically, just making a point) hire Chinese consultants before moving to China?

Amazing Thailand: A Buddhist country steeped in centuries of political corruption and a face-conscious culture chooses the middle ground to keep the economy going and wait out the end of the King’s reign.

“Don’t ever be famous person in China”

23/02/2011 UPDATE:

Full text of article that I wrote about Alibaba-Gate for Global Sources can be read here.  Excerpts from my article and others’ articles about the issue are here.

And another piece by my friend and partner at CSIC, Mike Bellamy can be seen here and here.


Some very interesting new stories over the weekend.

First, The firing and investigation of China’s Railway Minister for corruption here and here (subscription required). Fraud, gambling, corruption, contracts for favors, faked safety standards it’s all there.  (And how about the money quote from the Japanese engineer?!  Paraphase: The Chinese copied our technology, built it with inferior components and are running it (too) faster with fewer safety measures.)  The longer I’m in China the more I think that the biggest threat to China is China itself.  Sure it’s getting richer and we even saw Chinese shoes and refrigerators during the NBA all-star game this weekend, but until Chinese people learn to care about other Chinese “strangers” it’s never going to get past melamine-in-the-milk like situations and become a great power.  The out-pouring of charity during the Sichuan quake was a great leap forward, but how many steps back has China taken since then?

Second, after reading about Alibaba today, I was torn between entitling this post: “Alibaba and the 40 thieves” or “Elvis has left the building.”  No doubt a google search for either one will lead you to the same stories.  Here are two.  More on this below.

At their request, I wrote a piece for another site yesterday and will link to that when it goes up (or just post the entire thing here if they don’t use it).

Third, in case you, like I, still imagined that econ growth was going to be bring democracy to China some time soon, I offer up this gem from the WSJ:

The only sign of protest came from a young Chinese man who was detained by police after laying some jasmine flowers outside the McDonald’s and trying to take a photograph of them on his mobile phone, witnesses said.

The lackluster popular response, however, demonstrates how much harder it would be to organize a sustained protest movement in a country with a well-funded and organized police force, and with the world’s most sophisticated Internet censorship system.

So much for Engagement Theory (of which I have considered myself to be a strong believer for a long time now).

As always you can read the news in China in multiple ways.  You can say about the train story, “See! Look how serious China is taking corruption–they even fire people that are high up.”  You can read the Alibaba story and say, “How responsible of the CEO.  He quit even though the company line is that he had nothing to do with it.”  And you can read the protest story and say, “See how happy the Chinese are?  Even when foreign trouble makes try to stir the pot, nothing really happens.”

Or you can read with the more jaded I’ve-been-in-Asia-for-20-years perspective.  When I read some additional articles I find a few things that made me question the reality of the harmonious society.

1. The debt of the railway ministry is more than the govt can afford.  To have a leader rack up this much debt and put other leaders and entire sections of the economy in trouble at the same time as the new trains are not being used as much as expected (too expensive) and you have more than enough excuse to sack the official and change the previously announced (grandiose) plans to more than double the total length of high-speed rails in China.  Look for less, not more, railworks from China next year.

2. The “resignation” of the Alibaba CEO for 1100 fraudulent tractions the value of which was less than $1200 each is as ridiculous as Alibaba’s claim that they stand for values and “honesty online.”  Anyone that has worked with Alibaba knows a couple of things: 1. Unless you visit the factory yourself, you have no idea with whom you are really dealing with–there is no way to know outside of Alibaba’s own “gold supplier” status since you can’t get complete supplier info without paying for it (or ordering).  2. If you are a supplier, you can BUY gold status as well as “factory” status even if you are just a trading company.  3. The membership fees payed by the fraudulent companies were worth more than 3 times what the fraud receipts totaled.  So we can assume a) both Alibaba and others are making a ton of money off of these types of companies, b) it’s a safe bet that it’s happening a lot more than these 1100 transactions, c) the employee that caught these “problems” is probably scared for this life right about now.

Full Disclosure–A few years back I was asked by Alibaba to spend 6 hours a week to be a third party moderator in an online buyer forum on Alibaba.  They asked me to work with buyers that had had problems with suppliers but were still interested in getting the problems resolved and completing their orders (as opposed to filing a formal complaint with Alibaba and/or suing the supplier).  I got online once and was immediately overwhelmed with complaints from buyers that had been ripped off in some way.  Not only did they all want some sort of immediate resolution but they assumed that I was part of Alibaba and expected me to both commit to getting their money back but also to censure the supplier in some way.  I had no power to give them what they wanted, most of the buyers were furious at the lack of help from Alibaba (and me) and quickly removed my name from the list of moderators.  That was 4 years ago and I still get emails from people that want my help with their Alibaba-introduced supplier problems.

3. The lack of protesters for this specific event doesn’t negate the reality that 2010 saw a huge increase in urban protests all across China for the same reasons called for at this time, namely: rapidly increasing food prices, inflated housing costs, under-employment for college grads and corruption by government officials and the nuvo-riche.  Again, China raised the number of college spots available (good) but not the number of jobs for college grads (bad).  Throw in the world recession and you’ve got millions of underemployed smart people.  I’m very afraid that this won’t end well.

Talking about all of these stories with some Chinese friends over lunch on Monday elicited this observation:  “Don’t ever be  famous person in China.”  Hearty agreement from the other Chinese present included these pearls:  Money makes you a target.  Success makes others jealous.  Being famous can hurt your family and business.

Then and Now, a China Watcher’s Tale, John Pomfret.

These are my notes from a speech by John Pomfret today.  I got just a moment afterwards to talk…so many more questions that I wanted to ask.  It was a nice talk but I wanted more on his book and more on his personal experiences in China.  I tried to ask questions that were directed toward practical business issues (rather than academic/political leaning questions).

I  hope that you can follow the note structure.  There are a couple of highlights that I’ve highlighted.

John Pomfret

I’ve tweaked the outline today to include Why Things like Egypt haven’t happen in China.  There are a number of reasons that what’s happening in Egypt have not happened in China.  Yet.

First economic reforms.

1980-2011 has seen HUGE changes in the lives of average Chinese.

1989– When China had it’s “Egypt” moment and subsequent crackdown, Deng and the other leaders in his camp gave three options to China’s elite:

1. They could remain involved in politics (Basically they could go to jail.)

2. They could go abroad, leave China and live elsewhere.

3. They could stay and keep quiet and get rich; but their future is their own responsibility from their on out.

This “self responsibility” option was a serous mental change for many.

Also, at this time was the opening for FDI which China realized that it had to have.  And this led to the employing of the lower classes (which Egypt has not done).

Second, housing reforms.

1990s was start of housing reform and now about 60% of urbanites own their own home and car.  This is linked to #3 as well.  In the past people couldn’t divorce because they couldn’t move out!  NO houses for rent or sale, so one slept on the couch and one in the bedroom.  Of course, now the divorce rate is much higher than it used to be.

Third, personal freedoms.

It’s gone from 1980’s and all having assigned jobs to today, personal choice, freedom from bosses/teachers etc.  Jobs are easier to get (and lose).  Passports are not as tightly controlled.  Of course that’s let to other social ills such as: mistresses, fake contracts, divorces, overpriced rental units, polluting cars, etc…

Fourth, Expansive Educational opportunities.

In the last 30 years there has been a quadrupling of educated Chinese. You’ve now have the first college graduated generations who are making much higher salaries than their parents or grandparents ever dreamed of.  Of course they all have had serious “Patriotic Education” via the CCP’s post ’89 campaign.  After ’89 all were considered “too western.”  Since then the govt has actively taught that the West is NOT China’s friend and that only the CCP is the answer.  Partly this is justified through the growth of the past 3 decades but it’s also partly a manufactured political tool.

Fifth, the Security Bureau in China is as tough and more of a significant presence now than it’s ever been!  NO political dissent is tolerated at all. Religious and media repression are worse than the 80’s.  The “Golden Age” of Chinese media was 15 years ago, and getting worse.  The major misconception about China is that it’s getting freer as well as richer. The reality is that it is NOT becoming freer politically.  Economic growth has not equated to political development.

SO…..Can China avoid what’s going on in Egypt?

Medium term, it’s unclear–there are some serous problems coming up. Demographic issues–fastest aging poorest country in the world. They are old and not yet rich and have no health care system to speak of.

They face HUGE environmental problems, like lower crop yields, lack of water (dust bowl concerns), major pollution.  Yes, they are investing in green tech, but they are not solving their current problems fast enough.

There is no moral compass in China. Tradition was destroyed in the 1950-1976.  Then Deng told them to forgot communist ideology and thought reform and they went straight into making money.  This back and forth tradition-money-values now (confucian tradition  now) has served to disenfranchise generations of Chinese and now people are tired of being told what to think.


Gender imbalance?

Military is shrinking in size and increasing crime and cross boarder wife stealing/sales is a very worrisome trend.

How does the new freedoms and the political controls work together?  Where’s the line?  Are business cases different than criminal and political cases? (my question)

I think that independence of the Chinese legal system is a dream of western lawyers and its clearly NOT a priority of the party.  All decisions are, to a degree, political.  So the party monitors everything.  And fewer and fewer Chinese want to be defense lawyers because they can be arrested at the desecration of the prosecuting attorney!

Yes, indeed, foreigners are using business law to a larger degree than Chinese are.  And whither they like to admit it or not, the business decisions are still political decisions and are tracked and later used for political purposes by the government with the US embassy or others–like having a “chit” that you can toss into the ring and ask someone to pay up or to help us out later.

What’s the health status in China?

Heart disease is rising quickly, cancer is growing and lung cancer is HUGE.  Tobacco is a source of major state revenue so stop-smoking policies have been half hearted, at best.

Also there are major pollution problems.  They’ve made huge efforts to clean up in BJ, for example.  But now auto is replacing coal as the major pollutant.  We’ve all heard that 17 of the 20 most polluted cities in the world are in China.  It’s becoming a priority for local govts and even the national govt.  But still not as important as growth.

There is still a get-rich-quick mentality and a State with a serious lack of resources and that means that China is VERY UNSAFE.

What about income disparity? As bad as in the US?  The economic disparity is MUCH wider now than in the 80’s and now even greater than the US and just getting wider.  They’ve lowered taxes in the countrysides and have starting to set up medical systems–but it’s still slow and mainly urban.  Inflation is HUGE now too.

What is the view of Tiananmen?

Teens won’t even know anything about it.  BJU students had never seen the “tank man” photo before.  People that know and tell are fired from jobs and/or imprisoned so a whole generation does not know.

People that know and are rich are very cynical (too much skin in the game to be radical anymore), they say: “Chinese morals are so week that we can’t have political change now in China.”  If you have  money you’re less revolutionary.  People today mostly say: “Maybe in the future.  ’89 was bad, but less bad than chaos.”

What people forget is that the reality is that the CCP is the SOURCE of the instability, not the cure.  People weren’t crazy and then the Cultural Revolution started–the CCP lost control and allowed it to happen.

Do you see a change coming in moral freedoms?

Historically, there were not a lot of real christians in China.  Pre-49 not many christians at all.  But in the 80-90s there was a christian explosion!  Other sects too (falungong) and the traditional Chinese religions too–it’s obvious that people are looking for something to believe in.  Estimates are that there are 60 million Christians in China now.  And they are not really rice-bowl christians anymore either but rather something homegrown, a Chinese version of Christianity.

But the Party is very schitzo about religion.  A few years ago they thought that you could believe in God and the Party.  Jiang Zemin had a much mellower view of religion.  But now with a weaker leader they are backing off of this; the party is trying to mollify this change with a return to confucian ideology (of course, respect the State is the #1 value).  How this will work will be difficult, to say the least.

Most important thing to remember is that China is not static.  CHINA IS RAPIDLY TRANSITIONING and it’s hard to tell where it’s going.

Why Mao still so revered?

Well, the constant state sponsored propaganda is the main reason but also he was successful in unifying the country.  There is a ton of really good scholarship coming out of HK right now–better than the research into Mao that’s being done in the US.

Explain about the China’s foreign policy, specifically with Brazil but also with others.

Brazil exports the most Soy, iron ore, and a few other things to China;  their largest suppliers in the world.  10 years ago B and C were high on their relationship, China wanted to bring money and workers–B said no to the workers plan (“not another Africa”).  So then China hired away all the mid managers from shoe companies in B and gutted their industry.  But they C is buying iron-ore and soy, and those are  billion dollar deals so the relationship is strained.  Also, in manufacturing, C is not B’s partner, rather their competition.  C is taking over B’s relationships in Africa too.

B now sees C as both a competitor and partner–this is the same as with other developing countries.  African poorer countries with experience with C they are not as hot on China as they were in the past.  Both corruption and development of the economics will all hurt China’s relationships–New Colonialism.

How is the freedom within arts and film industry.  Are they a source of morality teaching?  How tight are the controls?

First, there is still massive censoring going on. But in some areas (kissing) there is more freedom.

Second, in the 70‘s and 80’s dissident painters were big in China and they also became popular in the West–so much of Chinese dissent was commodified.  Now it’s reached art-house movies and visual art too.  For example, Fengxiaogang has a new movie, Let the bullets fly, it’s a coeh brothers-esque movie and it pushing the boundries.  Fortunately for him, humor allows him to get away with it.  He’s still relatively independent.  But Zhangyimo is now a totally co opted “state” filmmaker.  Chinese culture is the most retarded in terms of development.  Culture is still viewed as a tool of the CCP.

The CCP, flexible to survive and able to prosper–how do you explain the ability of the CCP to be effective and reexamine itself?

First, yes, in 1989 they killed a lot of people, but then the USSR collapsed and those two things were a GREAT negative example. So they printed up a study guide and EVERYONE could read all 12 volumes of the study–and they all did, for years.

Second, since then they’ve also looked at other color revolutions (and Egypt now for sure too).  They’ve adapted their strategy according to the mistakes of others.  The fall of the USSR was fundamental to their development, Deng switched instantly in the mid 90’s from the Stalinism of the ’89 reactions and went for econ development–that probably saved them.  They bought off the business elite and academic elite too.  ALSO 1000’s of Chinese have studied in the US, more than 1mil total and about 20% have gone back to China and are in the govt.  They brought western tech and management skills.

What is the status and restrictions of foreign correspondents?

You can go to events and places but they control the info tightly.  They bug apartments and phones still.  They don’t directly threaten foreigners any more, instead they threaten your assistants and friends (Chinese).  They’ll take out the Chinese friends to “tea.”  Friends pay the price for foreign press “mistakes.”

What’s the future of Tech coming from China?

They are pouring massive amount of money into this.  Uof Biotech (sp?) is the only Uni not controlled by CCP.  But the question is, will it spark innovation?  UofSD is studying the rise of innovation.  China is a 2nd level and moving to the 3rd level of innovation now.  They are not at the 4th level where it the US has been for decades.  But UofSD thinks that they will be there soon.  I DON’T THINK SO.  The system structure is still top down and so controls resources.  For example, the State mandated the development of 40 marketable pharma products in 5 years–you just can’t do that.  China’s only had 1 in the last 60 years!  So it’s still a top down system–but that said, there is desire to focus on tech.  They do NOT wan to be a low cost labor country any more.

I had more questions that I didn’t get to ask.

1.  How does the Hukou system still limit housing/bennefits etc?  Will it ever be abolished?

2. Is there a housing bubble?  All the excess building–will there be a crash like ’97 in Thailand and South Korea?

3. Investment and increased education has lead to both increase in corruption and scholarship?  How is this affecting the rest of the world?

4. How is business being changed by China?  Or is China being changed by western business standards?

5. Does the combination of corruption, pollution, the lack of brides, the age demographic and lack of health care and a slowing of growth result in “Egypt” in China in the future?