One person’s flower is another person’s weed; or vice versa!
09/12/2013
Guest post: Senkaku – accelerating the China relocation trade? | beyondbrics
The debate continues on the motivations and risks of China’s decision on November 23 to announce an East China Sea Air Defence Identification Zone (ADIZ) which critically includes the disputed Senkaku Islands (know in China as Daioyu). There is little dispute that the standoff between China, Japan and the US has the capacity to escalate into something much more dangerous unless US Vice-President Joe Biden’s recent Asia trip is effective in ratcheting down tensions.
Has China miscalculated in terms of the rapid US response of B52 bomber sorties over the disputed Islands or prospective US naval deployment build-up in the region? Or is this the preliminary phase of a much longer-term slow creep by China in fulfilling its ambitions in establishing a more dominant regional role? Vietnam, the Philippines, Taiwan, Malaysia and Brunei (all US allies) are – like Japan – enmeshed in arguments with Beijing over relatively minor but potentially strategic bits of maritime real estate. Does the US administration have the willingness to back its allies on all fronts
Others have argued that the new Chinese leadership under President Xi Jinping are using nationalist sentiment to distract the Chinese public from the growth slowdown as well as solidify support among the Chinese military. Meanwhile Japan has been busily building up mutual defence and security ties across southeast Asia, and with Australia and India, as a hedge against Beijing. The state visit of the Japanese Emperor to India to has taken on even more significance.
While the geopolitical dynamics remain fluid and uncertain, a more definite consequence of the dispute may well be to accelerate the China relocation macro theme with major implications for FDI flows in the rest of the region. Up until now the primary motivation for foreign companies with large scale manufacturing operations to relocate from China has been the rapid rise in Chinese labour costs and the growing signs of worker shortages. The case was made most effectively by former World Bank Chief Economist Justin Yifu Lin (see Chandra, Lin and Wang (2012)) who suggested that:
industrial upgrading has increased wages and is causing China to graduate from labor-intensive to more capital-and technology-intensive industries. These industries will shed labor and create a huge opportunity for lower wage countries to start a phase of labor-intensive industrialization.
This process, which they called the Leading Dragon Phenomenon, offers an unprecedented opportunity to low-income countries where the industrial sector is underdeveloped and investment capital and entrepreneurial skills are leading constraints to manufacturing. They also note that low income countries such can seize the opportunity and resolve the constraints by attracting some of the FDI flowing currently from China, India and Brazil into the manufacturing sectors of other developing countries.
So the relocation of factories as a result of China economic rebalancing is a multi-year structural trend that is likely to be the dominant macro theme for developing economies for the next decade and beyond. But it is becoming more apparent that political risk mitigation in the face of resurgent Chinese regional territorial ambitions and aggressiveness will re-inforce the macroeconomic justification for diversifying away from China. Japanese outward FDI has increased for two years in succession, with 2012 the second highest increase in history ($122.4bn, an increase of 12.5 per cent over the previous year). Japan’s total outward FDI stock exceeded $1tn. However what is more interesting, as illustrated in the diagram below, is that Japan’s FDI flow to ASEAN has grown relative to that towards China.
Even if it’s a remote scenario, what if accidental engagement between Japanese and Chinese fighters in the newly announced ADIZ rapidly escalated into a more serious conflict or even declaration of war? The hundreds of billions of dollars of Japanese investment into factories in China would appear at risk. Even if we exclude the expropriation of factories directly, at the very minimum, the experience of Chinese nationalist protests over the Yasukune shrine visits by Japanese politicians or in the more distant past the US bombing of the Chinese embassy in Belgrade are clearly risks that policy makers and boards of Japanese multinationals must be increasingly worried about. And, unlike Chinese holdings of US treasuries that could be liquidated reasonably quickly, albeit potentially at the risk of self-destructively causing a meltdown in global financial markets, FDI in factory assets is, by its very nature, immobile. Moreover Japanese managers and workers in China would also be vulnerable. One might argue that there is a risk of a similar level of concern developing in Seoul or Taipei or perhaps even Washington.
via Guest post: Senkaku – accelerating the China relocation trade? | beyondbrics.
Ifty Islam is the managing partner of AT Capital in Dhaka, Bangladesh. Ifty.islam@ at-capital.com
09/12/2013
BBC News – India’s BJP set to form government in key states
India\’s main opposition BJP is set to form a government in three key states after winning an absolute majority in assembly elections.
The Hindu nationalist party has won 162 assembly seats in the northern state of Rajasthan, leaving the ruling Congress with just 21 seats.
The BJP also retained power in the central states of Chhattisgarh and Madhya Pradesh.
It won 165 seats against the Congress\’ 58 in Madhya Pradesh.
But the contest was much closer in Chhattisgarh where the BJP won 49 seats – just three more than the majority needed to form a government – and the Congress finished its tally at 39.
The Congress party also lost control of Delhi\’s 70-seat assembly.
With 31 seats, the BJP fell four short of a majority to form a government in the capital after a surprise strong showing by a new anti-corruption Aam Admi Party (AAP) or Common Man\’s Party.
via BBC News – India’s BJP set to form government in key states.
09/12/2013
Mao Zedong: Merry Mao-mas! | The Economist
THE village of Shaoshan in the green hills of Hunan province in east-central China is gearing up for a big party on December 26th: the 120th birthday of its most famous son, Mao Zedong. Debate rages in China over Mao’s historical role. Some call him a tyrant for the violence he put at the heart of his rule, causing the deaths of tens of millions of people. Others worship him almost as a god. In Shaoshan he is a money-spinner, with the farmhouse where he was born attracting millions of Chinese tourists every year.
For President Xi Jinping evaluating Mao’s legacy is especially tricky. On the anniversary he must tread a careful line. Since he took over as Communist Party chief a year ago Mr Xi has shown a fondness for Maoist rhetoric. He calls, for instance, for a “mass line” campaign to restore the party’s traditional values and a “rectification” movement to purge it of corruption. Mr Xi’s willingness to show off his grip on power suggests a leadership style more evocative of the Mao era than of the grey consensus of recent years. Earlier this year he is reported to have told Vladimir Putin, the Russian president, that “you and I have very similar characters”.
Yet in ideological terms, Mr Xi is no Maoist. This month’s anniversary is probably a headache he could do without. In November, at a landmark plenum, the party’s central committee adopted a resolution which, in economic terms, aims to shift China even further from Maoism than the late reformer, Deng Xiaoping, attempted. Market forces, it ruled, would henceforth play a “decisive role” in the economy.
Still, Mao continues to exert a powerful influence over the party and public opinion. Mr Xi dares not play down Mao’s “contributions” for fear that outright de-Maoification could fatally weaken the party’s grip. A recent article in the party’s mouthpiece, the People’s Daily, said that a big reason for the collapse of the Soviet Union—an unadulterated tragedy, it was naturally understood—was the “negation of Lenin and other [historical] leaders”. As Communist China’s founder as well as the leader most noted for brutal excess, Mao is Lenin and Stalin rolled into one.
At December’s birthday celebrations, some sense an opportunity. At one end of the political spectrum are liberals who want Mr Xi and China’s new generation of leaders to repudiate Mao as a prelude to far-reaching political reform. At the other end are diehard or born-again Maoists who revere the late chairman as an embodiment of anti-Western nationalism. They want Mao to be, in effect, sanctified, with December 26th declared a national holiday. In recent months, both ends of the spectrum have been trying to push their cases. They will be paying close attention to what Mr Xi has to say.
09/12/2013
Could China lead the race to develop world’s first invisibility cloak? | South China Morning Post
Scientists on the mainland say they are increasingly confident of developing the world’s first practical invisibility cloak, using technology to hide objects from view and make them “disappear’’.
At least 40 research teams have been funded by the central government over the past three years to develop the idea, which in recent decades has largely been the stuff of science fiction and fantasy novels like the Harry Potter series than science fact.
The technology would have obvious military uses, such as developing stealth aircraft, but Beijing believes the research could lead to wider technological breakthroughs with broader uses, scientists involved in the research said.
The teams involved include researchers at Tsinghua University and the Chinese Academy of Sciences.
China\’\’s J-20 stealth fighter jet. The invisibility technology would have obvious military uses, such as developing stealth aircraft. Photo: SCMP Pictures
The main approaches are developing materials that guide light away from an object; creating electromagnetic fields to bend light away from what you are trying to hide, plus copying nature to make high-tech camouflage materials.
A team led by professor Chen Hongsheng at Zhejiang University released a video earlier this month demonstrating a device that made fish invisible. The same technology also made a cat “disappear’’.
The device was made of a hexagonal array of glass panels, which bends light around the object, making it disappear from view.
Other teams on the mainland have made similar breakthroughs during their research. Professor Ma Yungui, an optical engineering scientist who also works at Zhejiang University, said his team would soon announce their latest finding: a device that stops objects being detected by heat sensors or metal detectors.
via Could China lead the race to develop world’s first invisibility cloak? | South China Morning Post.
08/12/2013
China sees renewed enthusiasm for Confucius – Xinhua | English.news.cn
The Chinese President\’s recent remarks on reviving the country\’s traditional culture have refocused attention on Confucius and sparked vibrant discussions about how the ancient sage can inspire modern China.
Confucius (Photo credit: JayPLee)
During his visit to Confucius\’ hometown of Qufu in east China\’s Shandong Province in late November, Xi Jinping said scholars should follow the rules of \”making the past serve the present\” and \”keeping the essential while discarding the dross\” when researching ethics passed on from the nation\’s forefathers.
Xi called for the promotion of morality across society and \”a pursuit of a beautiful and lofty moral realm from generation to generation.\” He also stressed the importance of cultural prosperity while talking with experts at the Confucius Research Institute during his stay in Qufu.
His comments have helped draw a wider readership for the country\’s ancient philosophical classics, which have seen brisk sales in recent days, leading publishing houses to hastily print additional copies.
A bookseller with TMall, a large Chinese e-commerce platform, told Xinhua that some previously less-known works that interpret Confucian teachings have sold out, \”but orders have continued to flood in.\”
Xi\’s positive remarks indicate there has been a \”consensus\” on the value of traditional Chinese culture, characterized by Confucianism, with a history of about 2,500 years, according to Yang Chaoming, head of the Confucius Research Institute.
Yang Yitang, another Confucian researcher in Shandong, believed that the leader\’s emphasis on traditional culture showcases the confidence and pride of the Chinese nation. \”In the country\’s rich ancient culture, the 90-year-old Communist Party of China (CPC) has found its DNA and the nourishment to grow,\” he said.
Preaching moral righteousness, harmony and peace, in addition to hierarchy and order, Confucian doctrines were generally worshipped by ancient monarchs, but denounced a century ago by some intellectuals who blamed Confucian thought for China\’s decline at the time. The anti-Confucius sentiment later climaxed during the Cultural Revolution.
However, the official endorsement of the ancient thinker has become increasingly clear. In September, the State Council released a draft plan to move the present Teachers\’ Day, Sept 10, to what is believed to be the birthday of Confucius (551-479 BC) on Sept. 28.
In another sign, a communique issued following a key CPC meeting that concluded last month highlighted the need to build a socialist culture, enhance the country\’s cultural soft power and improve education in traditional culture.
The doctrines of the much-revered thinker have been spread worldwide with the establishment of more than 420 Confucius Institutes in over 100 countries to teach Chinese language and culture.
via Xinhua Insight: China sees renewed enthusiasm for Confucius – Xinhua | English.news.cn.
08/12/2013
BJP takes massive lead in Rajasthan – The Hindu
The Bharatiya Janata Party (BJP) was heading for a landslide victory in Rajasthan on Sunday with the trends showing it in a comfortable position to form the next government after five years of Congress rule. The party was leading in 83 out of the 199 seats which went to polls, while its candidates won in 73 constituencies in the results declared by Sunday afternoon.
State BJP president Vasundhara Raje was declared winner in Jhalrapatan, while Leader of Opposition Gulab Chand Kataria registered a decisive victory in Udaipur.
Chief Minister Ashok Gehlot was leading in his home constituency Sardarpura in Jodhpur, even as his government was decimated.
The BJP’s strong return in the State and the defeat of Congress was beyond the expectation of political observers and defied all political calculations. Congress was ahead in 15 constituencies and had won nine seats in the results available by the afternoon.
Prominent among the Congress leaders who were trounced in the polls were Ministers Shanti Dhariwal (Kota North), Hemaram Chaudhary (Gudhamalani), Aimduddin Ahmed Khan (Tijara), Bina Kak (Sumerpur) and Naseem Akhtar Insaaf (Pushkar), while Finance Commission Chairman B. D. Kalla lost the Bikaner seat.
The National People’s Party brought to the State by Dausa MP Kirorilal Meena also depicted a lead in five constituencies, which included Lalsot, where Mr. Meena himself is contesting, and Mahuwa, where her wife and former Minister in the Ashok Gehlot government Golma Devi is the party candidate.
Bahujan Samaj Party was leading at three seats.
With the results in the party’s favour coming in, BJP activists started celebrations at the State headquarters and burst firecrackers. The Pradesh Congress Committee headquarter, on the other hand, wore a forlorn look.
08/12/2013
South Korea expands air defense zone to partially overlap China’s | Reuters
China two weeks ago that has sharply raised regional tensions.
Beijing\’s declaration of an air defense identification zone in an area that includes islands at the heart of a territorial dispute with Japan has triggered protests from the United States and its close allies Japan and South Korea.
Announcing the expansion of its own zone to include two territorial islands to the south and a submerged rock also claimed by China, South Korea\’s Defence Ministry said the move would not infringe on neighboring countries\’ sovereignty.
\”We believe this will not significantly impact our relationships with China and with Japan as we try to work for peace and cooperation in Northeast Asia,\” defence ministry head of policy Jang Hyuk told a briefing.
\”We have explained our position to related countries and overall they are in agreement that this move complies with international regulations and is not an excessive measure,\” he said, adding the ministry\’s top priority was to work with neighboring countries to prevent military confrontation.
via South Korea expands air defense zone to partially overlap China’s | Reuters.
07/12/2013
Commentary: China must find unique way to build ecological civilization – Xinhua | English.news.cn
China must find a way different from the industrialization in the West to build ecological civilization and realize sustainable development, which concerns the future of both the nation and the world.
After solving the food and clothing problems of its 1.3 billion people, the world\’s second-largest economy has encountered a bottleneck as its fast growth has led to adverse side effects for the ecological environment.
How to curb environmental pollution is a totally new issue for China, as it has no precedents to follow.
China cannot copy the industrialization in Western countries, who did not turn to environment management until they became rich and transferred their highly polluting sectors to developing countries.
The environmental problems faced by China happened over a short period of 30 years, while it took industrialized countries more than two centuries to resolve the issue.
\”China cannot be like developed countries, whose peak carbon emissions appeared when gross domestic product (GDP) per capita hit 40,000 U.S. dollars,\” said Xie Zhenhua, vice chairman of China\’s National Development and Reform Commission.
He said China started to adopt measures to reduce carbon dioxide emissions when its GDP per capita reached 3,000 dollars.
Besides, factors such as the international division of labor led to China receiving many polluting industries from developed countries. Few chances remain for China to transfer these sectors abroad.
With the coexistence of insufficient development and accompanying side effects, tackling pollution in China and many other developing countries requires more determination and courage than required of developed countries.
In China, building ecological civilization has been elevated to a high level of state will and strategy.
At the 17th National Congress of the Communist Party of China (CPC) in 2007, then Chinese President Hu Jintao advocated ecological progress for the first time in his report.
The 18th CPC National Congress in 2012 incorporated building ecological civilization into the overall development plan, while the just-concluded Third Plenary Session of the 18th CPC Central Committee made clear arrangements for deepening the institutional reform of ecological civilization.
via Commentary: China must find unique way to build ecological civilization – Xinhua | English.news.cn.
CHINDIA ALERT: You'll be living in their world, very soon 
China state media under fire for arguing benefits of smog | Reuters
Commentaries by two of China\’s most influential news outlets suggesting that the country\’s air pollution crisis was not without a silver lining drew a withering reaction on Tuesday from internet users and other media.
In online commentaries on Monday, state broadcaster CCTV and the widely read tabloid the Global Times, published by the Communist Party\’s official People\’s Daily, both tried to put a positive spin on China\’s smog problem.
The Global Times said smog could be useful in military situations, as it could hinder the use of guided missiles, while CCTV listed five \”unforeseen rewards\” for smog, including helping Chinese people\’s sense of humor.
via China state media under fire for arguing benefits of smog | Reuters.
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