15/09/2014

India’s Economy Looks a Lot Like China’s — In 2001 – India Real Time – WSJ

India today doesn’t look quite like the economic dynamo that, just a few years ago, some predicted would overtake China as emerging-markets champion.

But the race looks a lot closer if you account for one key fact: China got a 13-year head start on India in opening its economy and giving companies greater freedom to invest and produce. In exports, capital spending and foreign investment, India today is remarkably similar to China circa 2001.

That should both console and concern India as it gets back on its feet after three years of weak growth and high inflation. Console, since it suggests the country’s economy could remain on a China-like trajectory for years to come. But concern, because India’s delay could mean that the country has missed out on some big advantages that catalyzed China’s boom.

The latter point is especially worth considering given how assiduously India’s recently elected prime minister, Narendra Modi, is working to follow the blueprint for China’s export- and investment-driven success.

When Chinese President Xi Jinping visits the Indian capital this week he will encounter a recipe for economic revival that ought to look very familiar. Delhi is aiming to boost exports and raise India’s share in world trade by 50% over the next five years. “Sell anywhere,” Mr. Modi said in an Independence Day exhortation to global business last month. “But manufacture here.”

via India’s Economy Looks a Lot Like China’s — In 2001 – India Real Time – WSJ.

15/09/2014

Chinese City Launches Special Lane for Cellphone Addicts – China Real Time Report – WSJ

If you’re tired of walking behind someone who’s trudging along as they text, has this Chinese city got the sidewalk for you.

Last week, the city of Chongqing unveiled a lane specially designated for people who want to walk as they use their cellphones. “Cellphones, walk in this lane at your own risk” is printed in the lane in white lettering. The adjoining lane reads “No cellphones.”

On Monday, Weibo users reacted to the news with a mixture of amusement and scorn. “It’s such a lazy design. Shouldn’t the cellphone lane be placed [farther from the road]? It is not practical at all,” wrote one user.

Another dismissed the innovation, writing, “It’s just another imitation of foreign inventions,” the user wrote, referring to a similar experiment launched in Washington, D.C., earlier this year. “Besides, it seems only to be serving as a tourist attraction,” the user wrote of the road, which is located in a Chongqing tourist area called “Foreign Street Park.”

Still another wondered whether the road would make anything safer. “Is the goal here to encourage still more people to use their cellphones while walking?”

via Chinese City Launches Special Lane for Cellphone Addicts – China Real Time Report – WSJ.

15/09/2014

China on track to develop Indian railways as Xi heads to South Asia | Reuters

China will pledge to invest billions of dollars in India’s rail network during a visit by President Xi Jinping this week, bringing more than diplomatic nicety to the neighbors’ first summit since Narendra Modi became prime minister in May.

China's President Xi Jinping attends a meeting with Venezuela's President Nicolas Maduro at Miraflores Palace in Caracas in this July 20, 2014 file photo. REUTERS/Jorge Silva/Files

The leaders of Asia’s three biggest economies – China, India and Japan – have crisscrossed the region this month, lobbying for strategic influence, building defense ties, and seeking new business opportunities.

Beijing’s bid to ramp up commercial ties in India comes despite a territorial dispute that has flared anew in recent years, raising concerns in New Delhi, where memories of a humiliating border war defeat in 1962 run deep.

It follows a pledge by Japan to invest $35 billion in India over the next five years – including the introduction of bullet trains – and a drive to deepen security ties during talks earlier this month between Modi and Prime Minister Shinzo Abe in Tokyo.

India and China are expected to sign a pact that will open the way for Chinese participation in new rail tracks, automated signaling for faster trains and modern stations that India’s British-built rail system desperately needs, having barely added 11,000 km of track in the 67 years since independence.

China, which added 14,000 km of track in the five years to 2011, is also pushing for a share of the lucrative high-speed train market in India, which it says would be cheaper than Japanese proposals.

“India has a strong, real desire to increase its cooperation with China and other countries to perfect and develop its rail system, and has concrete cooperation ideas,” Assistant Chinese Foreign Minister Liu Jianchao told reporters ahead of Xi’s trip.

“India is considering building high-speed railways, and China has a positive attitude towards this.”

China’s consul general in Mumbai, Liu Youfa, told the Times of India last week that Chinese investment in the modernization of India’s railways could eventually touch $50 billion.

Beijing is looking to invest another $50 billion in building India’s ports, roads and a project to link rivers, part of an infrastructure push that Modi has said is his top priority to crank up economic growth.

Chinese investment will also help narrow a trade deficit with India that hit $31 billion in 2013.

via China on track to develop Indian railways as Xi heads to South Asia | Reuters.

15/09/2014

With eye on China, Modi’s India to develop disputed border region | Reuters

India has eased restrictions on building roads and military facilities along its disputed border with China, as the new government seeks to close the gap on its neighbor’s superior transport network and take a stronger stance on Beijing.

Indian environment minister Prakash Javadekar told Reuters he had relaxed environmental rules within 100 km (62 miles) of the contested border in remote Arunachal Pradesh in order to speed up construction of some 6,000 km of roads.

The move, which also allows for the construction of army stations, arms depots, schools and hospitals in the sparsely populated Himalayan region, was announced days before Chinese President Xi Jinping visits India on Sept. 17-18.

“This is about defense preparedness,” said Javadekar. “On the Chinese side of the border, not only have they built good roads, they are building up their railway network. Our army faces problems because of the bad quality of roads,” he added.

Work on the roads will start in the coming months.

via With eye on China, Modi’s India to develop disputed border region | Reuters.

12/09/2014

Soft power: Confucius says | The Economist

“HARMONY is the most valuable of all things,” said the Chinese philosopher Confucius two and a half millennia ago. There is little of it in evidence in the frosty relationship between the woman who was the founding director of the Confucius Institute at the University of Oregon, Bryna Goodman, and her fellow historian, Glenn May. Their offices are separated by a ten-second walk, but the scholars do not exchange visits. Their palpable ill feeling reflects growing discord among Western scholars about a decade-old push by China to open government-funded cultural centres in schools and universities abroad. Intended to boost China’s “soft power”, the centres take the name of the peace-espousing sage. They tap into growing global demand for Chinese-language teaching. But they are also fuelling anxiety about academic freedom.

In America the Confucius programme has been widely welcomed by universities and school districts, which often do not have enough money to provide Chinese-language teachers for all who need them. But critics like Mr May believe China’s funding comes at a price: that Confucius Institutes (as those established on university campuses are known) and school-based Confucius Classrooms restrain freedom of speech by steering discussion of China away from sensitive subjects.

In June the American Association of University Professors called for universities to end or revise their contracts with Confucius Institutes (America has 100 of them) because they “function as an arm of the Chinese state and are allowed to ignore academic freedom”. Mr May has been asking the University of Oregon to close its institute, to no avail. Ms Goodman (who is no longer the institute’s director) says that in funding its interests China is like any other donor to American universities. She says that the institutes have become lodestones of what she calls a “China fear”.

When China opened its first Confucius Institute in 2004 in Seoul, it hoped the new effort would prove as uncontroversial as cultural-outreach programmes sponsored by Western governments, such as the British Council, the Alliance Française and Germany’s Goethe-Institut. The idea was to counter fears of China’s rise by raising awareness of a culture that is often described by Chinese as steeped in traditions of peace.

Through the Hanban, a government entity, China provides the centres with paid-for instructors and sponsors cultural events at them. Its spending is considerable, and growing rapidly. In 2013 it was $278m, more than six times as much as in 2006. China’s funding for Confucius Institutes amounts to about $100,000-200,000 a year on many campuses, and sometimes more (Oregon received nearly $188,000 in the last academic year). By the end of 2013 China had established 440 institutes and 646 classrooms serving 850,000 registered students. They are scattered across more than 100 countries, with America hosting more than 40% of the combined total. There are plans for another 60 institutes and 350 classrooms to be opened worldwide by the end of 2015.

Chinese officials express satisfaction. In June Liu Yunshan, who is in charge of the Communist Party’s vast propaganda apparatus, said Confucius Institutes had “emerged at the right moment”. He described them as a “spiritual high-speed rail”, promoting friendship by connecting Chinese dreams with those of the rest of the world.

Others are less sanguine, however. In America criticism has recently grown stronger. Earlier this year more than 100 members of the faculty at the University of Chicago complained that Confucius Institutes were compromising academic integrity. In an article published in 2013 by Nation magazine, one of the university’s academics, Marshall Sahlins, listed cases in several countries involving what appeared to be deference to the political sensitivities of Confucius Institutes. These included a couple of occasions when universities had invited the Dalai Lama to speak and then either cancelled the invitation or received him off-campus.

In one case, at North Carolina State University in 2009, the provost said after the cancellation of a Dalai Lama visit that the Confucius Institute had indicated the exiled Tibetan’s presence could cause problems with China. This year Steven Levine, an honorary professor at the University of Montana, wrote to hundreds of Confucius Institutes around the world asking them to mark the 25th anniversary in June of the violent suppression of the Tiananmen Square protests. None of them agreed. Global Times, a Beijing newspaper, recently called the protests of foreign academics “a continuation of McCarthyism”.

Ms Goodman argues that the study of China needs all the funding it can get, even if that means taking money from countries with vital interests at stake—whether China, Taiwan, or the United States. She says that if China were ever to meddle politically in Oregon’s institute, the Confucius programme would be quickly shut down.

Such assurances do not address a big concern of critics—that the political influence of Confucius programmes is often subtle and slow-acting. If the critics are right, it is very subtle indeed. Surveys suggest that in many countries China’s image has not markedly improved over the past decade. The Pew Research Centre, an American polling organisation, says 42% of Americans viewed China favourably in 2007. Last year only 37% did. The political dividends of China’s soft-power spending are far from obvious.

via Soft power: Confucius says | The Economist.

12/09/2014

Schumpeter: The China wave | The Economist

MANAGEMENT thinkers have paid surprisingly little attention to how Chinese firms are run. They routinely ascribe those firms’ rapid growth in recent years to their copious supply of cheap labour, or to generous financial backing from the state, rather than inventiveness. They have much more time for India, particularly its knack for frugal innovation, with all those colourful stories of banks putting cash machines on bikes and taking them into the countryside, and companies building water purifiers out of coconut husks.

However, it seems unlikely that China’s companies have come as far as they have just by applying lots of labour and capital. It is also hard to imagine that the huge expansion of China’s education system and its technology industries is not producing fresh management thinking. Western companies knew little about Japan’s system of lean production until its carmakers gobbled up their markets. The danger is that the same will happen with Chinese management ideas.

There are, however, signs that these are now getting the attention they deserve. The MIT Sloan Management Review devotes much of its current issue to examining innovation and management lessons from China. Peter Williamson and Eden Yin of Cambridge University’s Judge Business School contribute a fascinating essay on “Accelerated Innovation: the New Challenge from China”. The latest issue of the Harvard Business Review has a piece on “A Chinese Approach to Management” by Thomas Hout of the Monterey Institute of International Studies and David Michael of the Boston Consulting Group.

The first article suggests that the Chinese, like the post-war Japanese, have been doing a great deal of innovation under the radar. The second demonstrates that they are becoming more creative as they seek to solve the problems of a rapidly advancing consumer economy.

Messrs Williamson and Yin focus on the way that many Chinese companies are using mass-production techniques to speed up not just the manufacture but also the development of products. They break up the innovation process into a large number of small steps and then assign (often sizeable) teams to work on each step. For example, WuXiAppTec, a drug company, divided the search for a new treatment for chronic hepatitis C into eight steps, assigning dozens of people to each. The firm also adapted German software that was designed for managing assembly lines to co-ordinate the innovation process. Whereas a Western software firm typically releases an early “beta” version of a product only to a select group of guinea-pigs, Chinese firms are more likely to launch theirs straight into the market: they use consumers as co-creators, seeking their feedback and then rapidly adjusting their products.

This sort of accelerated innovation may not generate stunning breakthroughs. But that is not what it is for. China’s success has depended on its ability to be a “fast follower”, copying foreign ideas and turning them into mass-market products. Messrs Williamson and Yin argue that the Chinese can now apply accelerated innovation in lots of areas; and that the technique helps them make better use of one of the country’s most important resources—a pool of competent but unexceptional technicians.

Messrs Hout and Michael are also struck by Chinese companies’ emphasis on speed, and their willingness to throw things at the market. Goodbaby, which makes prams and car seats, introduces about 100 new products each quarter. Broad Group, a construction firm, puts up buildings rapidly by breaking them up into modules, fabricating those modules in factories, pre-loaded with utilities, and then plugging them together: an idea long talked about in the rich world but not much implemented.

However, their paper’s focus is broader—on how Chinese entrepreneurs are coping with the speed at which technology-related industries are changing. They note that even big companies delegate lots of authority to preserve flexibility: Haier, a home-appliances giant, consists of thousands of mini-companies, each of which reports directly to the chairman. That is an interesting contrast with Japanese firms’ obsession with seniority and consensus-building.

Messrs Hout and Michael also highlight the creativity of some Chinese companies when faced with the need to build entire ecosystems out of thin air, from supply chains to labour pools. Hai Di Lao, a hotpot restaurant chain, deals with one of its biggest problems—recruiting and retaining young people to train as branch managers—by offering them housing, schooling for their children and trips abroad. This sort of imaginative thinking on how to attract good workers will increasingly be needed now that China has used up most of its surplus rural labour.

via Schumpeter: The China wave | The Economist.

12/09/2014

China’s Xi Enlists Party Recruiters in Anticorruption Effort – Businessweek

Zeng Fanyue is a 24-year-old political science graduate student at Shanghai’s Fudan University. Politically speaking, she’s redder than red. “As a Communist Party member, I have additional social responsibilities. I should help people and do things for others,” she says, telling how she choked up with emotion during a ceremony in which she renewed her oath of loyalty to the party.

The government of President Xi Jinping, who’s also chairman of the Communist Party of China (CPC), says it wants more true believers like Zeng. At the same time, it wants to weed out the party’s corrupt members. Last year the number of Chinese joining the party dropped 25 percent as young people saw little to gain from joining an organization in convulsions over the prosecutions of party notables such as ex-Chongqing boss Bo Xilai and former Security Minister Zhou Yongkang. In just the first five months of this year, authorities investigated 26,523 officials, including seven at the ministerial level, for crimes related to their jobs, reported the official Xinhua News Agency on July 3. The CPC—now 87 million strong—is facing “severe dangers,” particularly from corruption, Xi warned in a June 30 speech.

Three weeks before Xi’s speech, the party had issued new recruitment rules, the first major revision in 24 years, that aim to further slow the growth of the world’s largest political organization. Only people likely to be so dedicated to party doctrine that they won’t succumb to the temptations of graft will be welcomed.

Ding Xueliang, professor of social science at the Hong Kong University of Science & Technology, says Xi and other top leaders became convinced China needed a smaller, purer party after close study of the collapse of Communist rule in the former Soviet Union. “The major problem they identified about the Soviet Communist Party was: No. 1, the senior cadres didn’t believe in party principles, didn’t believe in communism or socialism, and only believed in their own self-interest,” Ding says. “No. 2, within the cadre system—amongst the higher- and middle-level officials—there were extensive networks of corruption.”

via China’s Xi Enlists Party Recruiters in Anticorruption Effort – Businessweek.

12/09/2014

When China Cleans Its Air, Health-Care Costs Plummet – Businessweek

Beijing residents checking the hourly air-quality index online and strapping air-pollution facemasks on their children may miss the halcyon days just before the 2008 Olympics, when the city temporarily cleaned up its skies (at least, relatively speaking). But not every city in China has seen the air grow darker over the past half decade.

Unidentified emissions from a coal-fired power plant in Taiyuan, Shanxi, China, in 2007

The northern city of Taiyuan, capital of coal-rich Shanxi province, has launched several measures to reduce coal burning and emissions. Although its skies are hardly clear, they are clearer. And that has made a noticeable difference in health outcomes and health-care costs, according to a new study published in the journal Environmental Health.

Over the past decade, Taiyuan has closed several large coal-burning power plants and increased environmental monitoring of its other factories—effectively lowering the average concentration of PM 10 (particulate matter 10 micrometers in diameter or less). As a result, average PM 10 concentrations dropped more than 50 percent from 2001 to 2010.

The economic costs associated with pollution—including health-care expenses, loss of labor productivity, and premature death—correspondingly dropped more than 50 percent, according to estimates by the researchers. Specifically, the researchers correlated reduced air pollution over the course of a decade with 141,457 fewer hospital or doctor visits, 31,810 fewer hospital stays, 969 fewer trips to the emergency room, 951 fewer cases of bronchitis, and 2,810 fewer premature deaths.

via When China Cleans Its Air, Health-Care Costs Plummet – Businessweek.

11/09/2014

India and China in wary dance as Xi Jinping prepares for South Asia trip | South China Morning Post

Xi Jinping will start his first South Asia tour with a visit to Beijing’s latest investment in Sri Lanka, a US$1.4-billion port city development to include a marina and a Formula One track – all just 250km from India’s coast.

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The president’s trip to the site, next to a major Chinese-funded commercial port, will provide a vivid reminder of Beijing’s growing economic clout in India’s backyard ahead of his maiden visit to New Delhi next week.

Despite his hardline nationalist reputation, India’s Prime Minister Narendra Modi moved quickly to engage with traditional rival China after taking office in May, inviting Xi to India.

But he has also sought to stop India’s neighbours falling further into China’s embrace, choosing Bhutan and Nepal for his first foreign trips as prime minister and extending an olive branch of peace to arch-rival Pakistan.

That may not worry China too much. Modi’s close relationship with Tokyo, on the other hand, is likely to raise alarm bells in Beijing that analysts say he may be able to use to his advantage.

Indian Prime Minister Narendra Modi pictured in New Delhi earlier this month. Photo: EPA

Modi enjoys a particularly warm friendship with his Japanese counterpart Shinzo Abe, who welcomed him even as he was shunned by Western powers over claims he failed to stop deadly religious riots in Gujarat, the state he used to run.

Both India and Japan are wary of what many see as Beijing’s growing territorial assertiveness, and Washington is eager for them to step up their cooperation by way of counterweight to China.

“China is looking at India under Modi as a serious and credible partner as well as potential adversary.” POLITICAL ANALYST SHYAM SARAN

“China is concerned that we would get closer to Japan and to the US under Modi. They don’t want that to happen,” said Jayadeva Ranade, president of the Centre for China Analysis and Strategy in New Delhi.

via India and China in wary dance as Xi Jinping prepares for South Asia trip | South China Morning Post.

11/09/2014

Can Jack Ma’s Alibaba Fortune Jump-Start Chinese Philanthropy? – Businessweek

Harvard just announced its largest-ever donation: a $350 million unrestricted gift to its School of Public Health. The donor is Hong Kong-based Morningside Foundation, led by two brothers who earned their fortunes in real estate, private equity, and venture capital. One brother, Gerald Chan, earned a graduate degree from Harvard. The school will be renamed in honor of their late father as the Harvard T.H. Chan School of Public Health.

Jack Ma on July 15

Greater China is home to 358 billionaires (including 64 Hong Kong billionaires), according to the 2014 Hurun Global Rich List. Yet with a few exceptions—including the Harvard gift and Chinese tech titans’ recent fondness for the ice bucket challenge—a culture of domestic philanthropy has been relatively slow to take root. Bill Gates and Warren Buffet hosted a lavish 2010 dinner in Beijing intended to encourage the Chinese elite to embrace philanthropy, but several tycoons snubbed the Americans’ invitations and declined to open their wallets.

Now, at last, China has a powerful homegrown evangelist for philanthropy: Jack Ma. As co-founder and executive chairman of Alibaba Group, which filed paperwork last week to raise as much as  $21.2 billion in an initial public offering on the New York Stock Exchange, he is one of China’s most respected and closely watched tycoons—and he’s publicly embracing a culture of giving.

Ma joined Alibaba co-founder Joe Tsai earlier this year in establishing a personal philanthropic trust to be “funded by share options granted by Alibaba … for approximately two percent (2%) of Alibaba’s equity,” according to a statement. The trust will focus on the “environment, medicine, education, and culture.” In Ma’s words, “Alibaba was founded 15 years ago with a mission ‘to make it easy to do business anywhere’ and a set of principles and values that emphasize our responsibility to society. Giving back to society is deeply embedded in Alibaba’s culture.”

The total value of the fund will depend on the performance of Alibaba’s upcoming IPO. If the company is valued at $120 billion, or more, the charitable trust will be worth at least $2.4 billion.

via Can Jack Ma’s Alibaba Fortune Jump-Start Chinese Philanthropy? – Businessweek.

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