Posts tagged ‘South Korea’

09/05/2014

Wheat vs. Rice: How China’s North-South Culinary Divide Shapes Personality – China Real Time Report – WSJ

In China, as in many countries, the north-south divide runs deep. People from the north are seen as hale and hearty, while southerners are often portrayed as cunning, cultured traders. Northerners are taller than southerners. The north eats noodles, while the south eats rice—and according to new research, when it comes to personality, that difference has meant everything.

A study published Friday by a group of psychologists in the journal Science finds that China’s noodle-slurping northerners are more individualistic, show more “analytic thought” and divorce more frequently. By contrast, the authors write, rice-eating southerners show more hallmarks traditionally associated with East Asian culture, including more “holistic thought” and lower divorce rates.

The reason? Cultivating rice, the authors say, is a lot harder. Picture a rice paddy, its delicate seedlings tucked in a bed of water. They require careful tending and many hours of labor—by some estimates, twice as much as wheat—as well as reliance on irrigation systems that require neighborly cooperation. As the authors write, for southerners growing rice, “strict self-reliance might have meant starvation.”

Growing wheat, by contrast, the north’s staple grain, is much simpler. One Chinese farming guide from the 1600s quoted in the study advised aspiring farmers that “if one is short of labor power, it is best to grow wheat.”

To produce their findings, the authors evaluated the attitudes of 1,162 Han Chinese students in Beijing and Liaoning in the north and in Fujian, Guangdong, Yunnan and Sichuan in the south. To control for other factors that distinguish the north and south—such as climate, dialect and contact with herding cultures—the authors also analyzed differences between various neighboring counties in five central provinces along China’s rice-wheat border.

According to the authors, the influence of rice cultivation can help explain East Asia’s “strangely persistent interdependence.” For example, they say South Korea and Japan have remained less individualistic than Western countries, even as they’ve grown more wealthy.

The authors aren’t alone in observing the influence various crops have on shaping culture. Malcolm Gladwell in his 2008 book “Outliers” also drew connections between a hard-working ethic (measured by a willingness to fill out long, tedious questionnaires) to a historical tradition of rice cultivation in places such as South Korea, Taiwan and Japan, given that the farming of such crops is arguably an equally tedious chore.

But what will happen to such differences after people move away from tending such crops, as is now happening across China? The study cites findings that U.S. regions settled by Scottish and Irish herders show more violence even long after most herders’ descendants have found other lines of work as evidence that cultural traits stubbornly resist change, even over time. (Herders, psychologists theorize, are ready to put their lives on the line to protect their animals against thieves or attack.)

“In the case of China,” the authors conclude, “only time will tell.”

via Wheat vs. Rice: How China’s North-South Culinary Divide Shapes Personality – China Real Time Report – WSJ.

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01/04/2014

The economy: On cloud nine trillion | The Economist

SOME economic journalists are like stormbirds: they come alive when financial clouds gather and the thunder rolls. Your correspondent’s career has been different. He has migrated away from trouble, escaping crisis-struck Britain for booming India in 2007, then leaving that country before it sank into its sad, stagflationary funk. This will be his last week covering China’s economy—which is just as well, given the whiff of ozone in the air.

This month China’s corporate-bond market suffered its first default since it began in its present form, a widely watched manufacturing index fell for the fifth month in a row, and officials in one eastern county rushed to placate worried depositors lining up to withdraw money from two small banks. It would seem a good time for a fair-weather bird to fly away.

But China remains a resilient economy. It still has substantial room for error and a lot of room to grow. Although it is already a very big economy (its $9 trillion GDP is bigger than 154 other economies combined) it is not yet a very rich one. Its income per head (at market exchange rates) is only 13% of America’s and ranks below that of more than 80 other economies.

Because China is already the world’s second-biggest economy, it attracts scrutiny that smaller economies escaped when they were at a similar stage of maturity. Observers expect it to pass financial thresholds that other catch-up economies did not cross until much later in their development. This month’s bond default, for example, represents a painful but necessary step towards maturity for China’s capital markets. Most commentators saw it as a woefully belated coming-of-age. But Japan did not record its first bond default until the late 1990s, when its standard of living was 3.7 times China’s today. Likewise back when South Korea had the same income per person as China enjoys now, foreigners paid little attention to its monthly manufacturing wobbles.

The heft of China’s GDP combined with the modesty of its GDP per person is one of the curiosities of China’s economy. But it is not the only one (see box). Another example is China’s “financial repression”. Its central bank caps the interest rate that banks can pay depositors, imposing an implicit tax on their savings. But in China, unlike other countries, this repression does not discourage saving. In fact, it appears to do the opposite. The country’s households are “target savers”: they squirrel away money to meet a fixed financial goal, such as the down-payment on a home. If their thrift is poorly rewarded, they simply do more to reach their target.

China’s financial repression has therefore proved surprisingly sustainable (although restless depositors have sought higher returns from online funds and wealth-management products). It has contributed to China’s remarkably high rate of saving, which reached over 50% of GDP in 2012. This is more than China can invest at home, obliging it to export some of its saving (typically 2-3% of GDP) abroad. This incurs the wrath of its trading partners. But therein lies a paradox. Even as China is frequently lambasted for excess saving, the same critics also accuse it of excess borrowing. Worrywarts point out that credit in China has increased from about 100% of GDP five years ago to about 135% of GDP today. The central bank’s broader measure of financing (which includes the bond market and some bits of shadow banking among other items) is 180%.

How can an economy suffer from both excess saving and excess borrowing? This riddle is best answered with a textbook parable. Consider a one-farm economy, which yields a GDP of 100 ears of corn. The farmer gives half to a fieldhand as wages and keeps the rest for himself. The fieldhand eats half of his wages and lends the remainder (25 ears) to the farmer. The farmer now has 75 ears of corn. He eats 25 of them, ploughs 48 back into the field as seed corn for next year’s harvest and lends two to a neighbouring farm.

To an economist, saving means anything not consumed. Therefore this economy, like China’s, has a remarkably high saving rate (the 50% of corn not eaten). But this high saving is combined with heavy domestic borrowing: the farmer has added 25% of GDP to outstanding debt. If, instead of lending corn to the farmer, the fieldhand ate it, saving would fall (because more corn is now being consumed) and so would borrowing (because the farmhand is now consuming his own earnings, rather than lending half of them out).

China’s economy last year harvested over $9 trillion worth of goods and services. Almost half of that output consisted of new capital goods (infrastructure, housing, factories and machinery). This investment rate of about 48% of GDP is among the highest ever recorded. Some of this frantic accumulation has been wasteful: building cities without citizens, and bridges without destinations. It is as if the farmer scattered some seed corn on stony ground, where it failed to take root.

This “malinvestment” is a pity but it is not enough to undermine China’s economic future. The country, as its critics suggest, should have consumed these resources rather than squandering them on ill-conceived ventures. If it had done so, its people would be happier. But, it is important to realise, they would not be any wealthier. Consumption, like malinvestment, leaves no useful assets behind. If the farmhand had eaten the wheat his boss scattered on stony ground, he would be better fed but next year’s harvest would be no bigger.

via The economy: On cloud nine trillion | The Economist.

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19/02/2014

Is China at Risk of a Debt Crisis? Not Really,Bank Says – China Real Time Report – WSJ

Compare this somewhat optimistic view with Robert Peston’s BBC2 programme – “How China fooled the world.” – http://www.bbc.co.uk/news/business-26225205

Is China headed for a debt crisis? That has emerged as a pressing question over the past year as the country’s overall debt level rises quickly and the recent specter of defaults in the shadow banking system rattles financial markets in China and abroad.

For economists at the Royal Bank of Scotland, the answer is “no” – at least not imminently. Comparing China to countries that have suffered recent debt crises – including the United States, United Kingdom and Spain in 2007, and South Korea and Thailand in 1997 – RBS finds that on two key metrics, the world’s second-largest economy is on safer footing.

For one thing, China’s loan-to-deposit ratio, which reflects the banking system’s resilience to a sudden drop in asset prices, is the lowest for all the countries tracked — half of Korea’s level and 43% of Thailand’s level when those economies melted down in the late 1990s.

Then there’s the current account, which reflects a country’s sensitivity to foreign investment. A current-account deficit can leave developing economies acutely vulnerable to a sudden exit of capital, as India, Indonesia and some other emerging-market stars found out last year.

Unlike nearly all the countries RBS examined, China runs a current-account surplus — a reflection both of its export dominance and, critics would say, its related determination to keep its currency undervalued. There’s also the fact that China’s capital controls make it difficult for investors to pull their money out of the country, even if they wanted to.

“It’s legitimate for people to worry about different kinds of financial risk in China,” Louis Kuijs, RBS’ chief economist for greater China, told reporters in Hong Kong this week. “But I still don’t really see a lot of room for the kind of macro meltdown or the type of serious financial crisis that we typically associate with emerging markets.”

That being said, Mr. Kuijs said investors can expect to see more defaults or near-defaults — like the one that rocked markets in January until the trust product in question was bailed out in fairly opaque circumstances.

“Policy makers are interested in changing people’s expectations and changing the moral hazard question, but they’re so careful and so risk averse still that it will take a while before they will just let these defaults happen without doing anything,” he said.

So if China isn’t prone to the type of debt-driven meltdown that has befallen other emerging-market economies, could it share the fate of Japan – the other current account-surplus country in the RBS study — which ran up so much debt during its boom years that it has bogged down the economy for the better part of two decades?

That’s also unlikely, Mr. Kuijs said.

“Japan had finished catch-up growth in the late 1980s, so it was much harder to grow out of the crisis,” he said. “China is more like Japan in the 1960s,” with years of strong growth still ahead of it.

via Is China at Risk of a Debt Crisis? Not Really,Bank Says – China Real Time Report – WSJ.

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13/02/2014

Iran asks India for $1.5 bln in oil payments under nuclear deal -sources | Reuters

Iran has asked India for $1.5 billion in back oil payments under the nuclear deal that provides Tehran some relief from Western sanctions, Indian sources with direct knowledge of the matter said on Thursday.

If the payments are approved, this could make India the third of Iran’s major buyers, after Japan and South Korea, to start processing frozen back payments. The payments are contingent on Iran holding to its agreement to start curbing its nuclear programme.

Indian refiners are holding about $3 billion in payments due the Middle Eastern crude producer, one of the sources said.

Other funds owed to Tehran are held in a rupee-denominated account at India’s UCO Bank.

Under the Nov. 24 agreement with six major powers, Iran won access to $4.2 billion of its oil revenues frozen abroad. The fund will be paid out in eight money transfers on a schedule that started with a $550 million payment by Japan on Feb. 1.

via Iran asks India for $1.5 bln in oil payments under nuclear deal -sources | Reuters.

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25/01/2014

* Shinzo Abe’s visit a signal to China, others – The Times of India

English: Japanese Prime Minister Shinzo Abe at...

With economics as the bedrock of a growing partnership, India and Japan are ready to move to the next level. When Japanese Premier Shinzo Abe meets Prime Minister Manmohan Singh on Saturday, the two sides are likely to kick off a top-level political-security dialogue between the two national security advisers, Shivshankar Menon and Shotaro Yachi.

Coming on the heels of the visit of the Japanese Emperor and Empress in December, the Abe visit will send a whole new set of signals to many in Asia and beyond – particularly the elephant in the room, China. Abe will not only be the first Japanese prime minister to be India\’s Republic Day chief guest, his presence at India\’s annual civil-military parade, an integral part of Indian life, will signal that the a pacifist Japan can be comfortable with a show of military strength.

The two sides are expected to announce more maritime exercises even though there will be no agreement on civil nuclear energy. Discussions on that have been stuck on non-proliferation commitments, finding a happy medium between the Japanese and Indian positions. India and Japan have started negotiations for the purchase of Japan\’s amphibian aircraft, US-2, which Japan plans to sell to India as a civilian aircraft, though it has military uses as well. The first set of discussions took place in the end of December, a second meeting is scheduled in the coming weeks.

The stepping up of defence and security cooperation between India and Japan has increased even as Japan\’s relationship with China and South Korea has plummeted in recent months. In what is being seen as an unprecedented war of words, Chinese and Japanese envoys around the world are waging a battle on the op-ed columns of newspapers regarding bilateral tensions on the Senkaku/Diaoyu islands.

via Shinzo Abe’s visit a signal to China, others – The Times of India.

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11/01/2014

Posco plant in India gets environment clearance – Businessweek

India\’s environment ministry has cleared South Korean steel giant Posco\’s planned $13 billion steel plant in eastern India but has asked the company to spend more on social welfare, an official said Friday.

The clearance was given a few days ago and will allow Posco to go ahead with the massive plant in Odisha state, the official said on condition of anonymity because he was not authorized to speak to the media. He did not give further details.

The clearance comes days before South Korean President Park Geun-hye is to begin a four-day visit to India on Jan. 15.

The Odisha steel plant would be the largest-ever foreign investment in India. The country has been embroiled in fierce debates over how to protect its environment while lifting hundreds of millions of people out of poverty through investment and infrastructure development.

via Posco plant in India gets environment clearance – Businessweek.

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15/12/2013

BBC News – North Korea ‘summons business people from China’

North Korean business people are being recalled from China following the execution of top official, Chang Song-thaek, says a South Korean report.

Kim Jong-un (North Korean leader) – centre, black coat; Hwang Pyong-so (Vice-departmental director of Party Central Committee) - far left, civilian clothes; Choe Ryong-hae, (Vice-marshal of the armed forces) - third from left, holding little green book; Jang Jong-nam (New defence minister) - 4th from left, holding big notes

Leader Kim Jong-un may be purging associates of Mr Chang, who was in charge of economic ties with China.

Mr Kim has been pictured by state media for the first time since the execution of Mr Chang, his uncle.

The South Korean government believes Kim Jong-un is trying to consolidate his power through a reign of terror.

The execution of the leader\’s uncle on Friday raised international concern about the stability of the nuclear-armed state.

North Korea has summoned back business people working out of the north-eastern Chinese cities of Shenyang and Dandong, sources told the South Korean news agency Yonhap.

They are in China to enhance bilateral trade and investment.

Another source told the agency Pyongyang planned to bring all officials and staff home from China in stages.

It appeared to be a crackdown on those perceived as loyal to Mr Chang, Yonhap said.

It could also be another sign that Mr Chang\’s downfall reflected discomfort at his enthusiasm for Chinese-style economic reform.

There have been other reports over recent days about officials being recalled to North Korea from abroad.

via BBC News – North Korea ‘summons business people from China’.

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.

01/12/2013

U.S. airlines give China flight plans for defense zone | Reuters

U.S. airlines United, American and Delta, have notified Chinese authorities of flight plans when traveling through an air defense zone Beijing has declared over the East China Sea, following U.S. government advice.

A group of disputed islands, Uotsuri island (top), Minamikojima (bottom) and Kitakojima, known as Senkaku in Japan and Diaoyu in China is seen in the East China Sea, in this photo taken by Kyodo September 2012. REUTERS/Kyodo

The zone has raised tensions, particularly with Japan and South Korea, and is likely to dominate the agenda of a visit to Asia this week of U.S. Vice President Joe Biden. He will travel to Japan, China, and South Korea and try to ease tensions, senior American officials said.

However, China\’s declaration of the zone also represents a historic challenge by the emerging world power to the United States, which has dominated the region for decades.

China published co-ordinates for the zone last weekend. The area, about two-thirds the size of the United Kingdom, covers most of the East China Sea and the skies over a group of uninhabited islands at the center of a bitter territorial dispute between Beijing and Tokyo.

Beijing wants all foreign aircraft passing through the zone, including passenger planes, to identify themselves to Chinese authorities.

On Friday, the United States said it expected U.S. carriers to operate in line with so-called notices to airmen issued by foreign countries, although it added that the decision did \”not indicate U.S. government acceptance of China\’s requirements.

A spokesman for Delta Airlines said it had been complying with the Chinese requests for flight plans for the past week. American and United said separately that they were complying, but did not say for how long they had been doing so.

Airline industry officials said the U.S. government generally expected U.S. carriers operating internationally to comply with notices issued by foreign countries.

In contrast, Japanese carriers ANA Holdings and Japan Airlines have flown through the zone without informing China, under an agreement with the Tokyo government. Neither airline has experienced problems.

The airlines said they were sticking with the policy even after Washington\’s advice to its carriers.

Any sign that the United States was even tacitly giving a nod to China\’s air defense zone would disturb Tokyo, which is hoping for a display of solidarity when Biden visits Japan starting on Monday.

via U.S. airlines give China flight plans for defense zone | Reuters.

01/12/2013

China, Japan and America: Face-off | The Economist

China’s new air-defence zone suggests a worrying new approach in the region

THE announcement by a Chinese military spokesman on November 23rd sounded bureaucratic: any aircraft flying through the newly designated Air Defence Identification Zone (ADIZ) in the East China Sea must notify Chinese authorities in advance and follow instructions from its air-traffic controllers. America’s response was rapid. On November 26th Barack Obama sent two B-52 bombers to fly through the new zone without notifying China (see article). This face-off marks the most worrying strategic escalation between the two countries since 1996, when China’s then president, Jiang Zemin, ordered a number of exclusion zones for missile tests in the Taiwan Strait, leading America to send two aircraft-carriers there.

Plenty of countries establish zones in which they require aircraft to identify themselves, but they tend not to be over other countries’ territory. The Chinese ADIZ overlaps with Japan’s own air-defence zone (see map). It also includes some specks of rock that Japan administers and calls the Senkaku islands (and which China claims and calls the Diaoyus), as well as a South Korean reef, known as Ieodo. The move is clearly designed to bolster China’s claims (see article). On November 28th Japan and South Korea sent aircraft into the zone.

Teenage testosterone

Growing economic power is bound to go hand-in-hand with growing regional assertiveness. That is fine, so long as the behaviour of the rising power remains within international norms. In this case, however, China’s does not; and America, which has guaranteed free navigation of the seas and skies of East Asia for 60 years, is right to make that clear.

How worrying China’s move is depends partly on the thinking behind it. It may be that, like a teenager on a growth spurt who doesn’t know his own strength, China has underestimated the impact of its actions. The claim that America’s bombers had skirted the edge of the ADIZ was gawkily embarrassing. But teenagers who do not realise the consequences of their actions often cause trouble: China has set up a casus belli with its neighbours and America for generations to come.

It would thus be much more worrying if the provocation was deliberate. The “Chinese dream” of Xi Jinping, the new president, is a mixture of economic reform and strident nationalism. The announcement of the ADIZ came shortly after a party plenum at which Mr Xi announced a string of commendably radical domestic reforms. The new zone will appeal to the nationalist camp, which wields huge power, particularly in the armed forces. It also helps defend Mr Xi against any suggestions that he is a westernising liberal.

If this is Mr Xi’s game, it is a dangerous one. East Asia has never before had a strong China and a strong Japan at the same time. China dominated the region from the mists of history until the 1850s, when the West’s arrival spurred Japan to modernise while China tried to resist the foreigners’ influence. China is eager to re-establish dominance over the region. Bitterness at the memory of the barbaric Japanese occupation in the second world war sharpens this desire. It is this possibility of a clash between a rising and an established power that lies behind the oft-used parallel between contemporary East Asia and early 20th-century Europe, in which the Senkakus play the role of Sarajevo.

via China, Japan and America: Face-off | The Economist.

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