Tuesday, October 26, 2010

Ying Jiang: Anti-Three-Vulgarities Movement

It is rare (and fun) when cultural matters at home in China get caught on by the Western media. The quality of interpretations vary, but many are rather accurate. This August, there was an article in the Economist alliteratively entitled "Functionaries vs Fun: Party Poopers". It described Hu Jintao's resolve earlier to eradicate the "Three Vulgarities" from popular entertainment - "低俗、庸俗、媚俗". Before I start to attempt the impossible translation to distinguish the three, I thought it's greatly illuminating to state that the word "俗" could take the neutral meaning of traditional or/ie popular culture, or a negative connotation when prefixed with the words above: 低 = low; 庸 = mundane; 媚 = fawning/populist. In its fierce and compact style, the Economist rolled its eyes at the act of party functionaries infiltrating popular TV variety shows, presenting "politically correct entertainment". Eg, a match-making show was forbidden to talk about money being a criteria for spouse selection. (The wide contrast between the communist ideal of material minimalism and the materialistic reality of the Chinese society makes an entirely different discussion.) It's a story about censorship. What caught my attention was a brief mention of the CCTV condemnation of the crosstalk artist Guo Degang, in which incident culminated the irony of the Anti-Three Vulgarities - might I say? - Movement.

Guo Degang is known for his popular gigs, in the form of crosstalk - a fast vanishing or politicizing traditional comedic form, that are relevant to social reality and at the same time fairly funny. Those two qualities, to the understanding of most of the Chinese masses, are related - the latter results from the former; a comedian needs to be grounded in real-life materials. In early August, Guo "defended the actions of one of his pupils who beat a television reporter for arriving uninvited at Mr Guo’s home". In the official press, he was branded as being "vulgar", choosing a "江湖" (another impossible phrase: a society outside of official governance, a world where actions and interactions are more immediate, mainly a result of personal/emotional/short-term decisions) styled attitude. Among the netizens, sympathy almost entirely lies with Guo. Here're some of their comments with regards to the "branding":

"I think CCTV as a media body should not carry such serious bias towards the public opinion [it's trying to create]. This'll cause misunderstanding to people who don't know the truth."

"Old Mr Guo, now you taste defeat. Want to fight with CCTV? Even real estate companies can't. You thought you could??" (sarcasm implied)

Furthermore, comparison in the degree of "vulgarity" has once been drawn between Guo and Xiao Shenyang in a pretty decent Chinese article (which since I haven't been able to find again on the internet). Xiao Shenyang has a feminine stage persona, dresses in drag and constantly tells jokes with sexual connotations - performances that more than a few would describe as being truly vulgar. However, he has appeared on the official Chinese New Year televised show for two years now, garnering obvious official support, allegedly due to his steering clear of politically sensitive contents. This is not to say he doesn't enjoy popular support. After all, "俗" could be popular or vulgar. The line, as many others in China, could be rather arbitrary.

Incidentally, the Newsweek feature of Xiao Shenyang drew comments defending the comedian, mainly out of against-Western-media anger. What do the Chinese people really think? Who's really vulgar? Who should we "anti" (反)?

Thursday, October 21, 2010

Surprise surprise! China raises interest rate in unexpected times

Contributed by Qihan Li

Sources: VOA news, FT, WSJ

China’s decision to raise the interest rates of its central bank by 0.25 percentage points has caught the world by surprise.  The raise brings China’s one-year lending rate to 5.56% and one-year deposit rate to 2.5%. It comes at a time of heated discussions regarding RMB’s exchange rate, and the state of the Chinese economy. While China’s recent GDP figures will make any developed nation jealous, (10.3% for the second quarter, 9.5% projected for the third quarter) many scholars in China are still concerned with low domestic demand.  Within the blogosphere and major publications, economists disagree on the ultimate effects of the hike, but most agree on its intentions: to combat domestic inflation and market bubbles.

The year-to-year CPI figure stands at 3.5% in August so the hike in interest rate is interpreted to prevent rises in prices.  Despite the uncertainties regarding consumers’ reactions, what is certain is that small businesses that have taken recent loans will be directly affected, as they will need to pay more in interest.  This may particularly hurt export-oriented companies because the evaluation of RMB has already reduced their competitiveness in foreign markets. On the other hand, state-own enterprises will largely be unaffected since most of them have good capital flows. The effects on the overall economy will be much more difficult to evaluate.  While fewer individuals will borrow money to invest in commodities or real estate, it may not prohibit wealthy private or corporate investors to continue to invest in real estate as a hedge to high inflation.  Earlier policies to cool off the real estate market have somewhat worked but have not changed the general speculation. The effectiveness of this move is to be seen.

On the issue of exchange rate, as Ian previously mentioned, a drastic evaluation will dramatically hurt China’s export industry.  There have been concerns regarding the inflow of hot money due to this hike, pressuring the RMB to appreciate. However, because the RMB is controlled by the People’s Bank of China, the correlation between a higher interest rate and RMB’s exchange rate may be relatively low. This is nonetheless an important aspect to look out for in the upcoming months.

Thursday, October 14, 2010

China’s Currency Dilemma

Contributed by Ian Chan

The International Monetary Fund’s Managing Director Dominic Strauss-Kahn remarked on October 8th that a currency war “is not a solution” to the world’s economic woes and committed the Fund to resolving trade imbalances. Mr. Strauss-Kahn’s remarks followed a bill passed by the United States House of Representatives expanded the President’s authority to impose tariffs on virtually all Chinese imports to the United States. China responded promptly with a stern statement and threatened to bring the issue up with the World Trade Organization. Less than three weeks from the mid-term elections, and given the gloomy domestic picture, it is not surprising that the House has tried to direct voters’ anger toward a foreign country. Nobel Laureate Paul Krugman has written extensively in the New York Times that the United States needs to act swiftly, harshly, and broadly in order to press the Chinese to revalue its currency. However, these populist and protectionist measures will not help the U.S. or global economy, and must be avoided at all costs.

First one should look at a brief history of the currency issue. China’s currency, known as the Renminbi, was once loosely pegged to a basket of currencies including the U.S. dollar and the Euro in the run-up to the financial crisis. When the financial tsunami hit, China promptly re-pegged its currency strictly to the Dollar and it has stayed at that level since then. Most economists reckon that if the Renminbi was traded at market value, as the Dollar is, the Renminbi would be 25-40% above its current rate. In conventional international economics, an undervalued domestic currency means that goods and services are much cheaper as exports whereas imports are much more expensive, because the purchasing power of each Renminbi would be less than it should be. By making goods and services from foreign countries more expensive, China was able to keep its export industry going strong throughout the crisis.

Some have attributed this artificial undervaluation to China’s huge trade surplus, but it is not the only contributing factor. High savings rates and a culture of thrift also contribute to low consumption.  Although allowing the Renminbi to appreciate will help lower savings rate, the effects will not make a real difference until the long run and China needs to make decisions that minimizes shocks to the global economy in the short run. There are a few serious harms to revaluation. First, a slow and steady revaluation will prompt foreign investors to pour funds into the country’s financial markets as investors anticipate ever-increasing Renminbi rates and start gambling with the currency. This flow of hot cash would cause runaway inflation, which in a country such as China where price levels are not as flexible and financial markets are underdeveloped, would cause a crisis that would reverberate all around the global economy. Moreover, whether or not the world likes it, China is reliant on its export industry to employ its massive workforce and drive growth. A quick revaluation would drive a lot of these export companies into bankruptcy and cause huge layoffs. The consequences of having large amounts of unemployed youth roaming the streets are too grave for any Western politician to imagine. Furthermore, provoking a global trade war now by introducing protectionist measure would cause a global slowdown right when the recovery is in its early stages. If countries close their borders and shut out money flows, the mightily feared double-dip recession will hit the industrialized world, and with most industrialized grappling with sovereign-debt crises, there will be less room for expansionary measures. Is it unfair that China artificially undervalues its currency? Yes. Would it be better for the world’s rebalancing if China appreciates the Renminbi? Yes. But is this the right moment to do it, and is the U.S. pursuing the right path by introducing protectionist measures? Absolutely not. Let’s hope cooler heads prevail in the Senate and in the Administration.

Saturday, October 9, 2010

Hu Shuli on reasons for China's boom

Every Chinese knows real estate in China is a fiasco. And then it's uncomfortably tied to the sustainability, and therefore almost the legitimacy, of China's economy growth. Watching the recent video interview with Hu Shuli, the editor of Caijin magazine, makes it easier to explain why that tie exists. (For more on Hu Shuli and the Caijin magazine, please refer to New Yorker's Jul 2009 article on the journalist)

According to Miss Hu, the housing privatization in 1989 created craves for home-owning (not just an American dream after all). With China's main economic model being manufacturing and production, the newly created demand was then naturally supported by the productivity of the building-related industries.

Which are the now notoriously polluting and energy-demanding steel, glass and aluminum factories. If the heavy industries had started out nicely obeying internal demands, something almost laudable by the believers of the market, excess production of building materials, spurred on by speculative property trading, is now wasting resources (tearing down and re-building of condos at breakneck speed), stuffing export and destroying the environment. What a pity that the Chinese has a tendency to take a good thing too far (but that's a different topic).

Friday, October 8, 2010

CB Editorial: From 6/4/89 to 10/8/10

Contributed by Ying Jiang
Source: The Times, Washington Street Journal, wikipedia

Two decades of "long and non-violent struggle for fundamental human rights in China" was the rationale for awarding the 2010 Nobel Peace Prize to Liu Xiaobo, a Chinese writer and political dissident still jailed in Shenyang for "煽动颠覆国家政权罪" ("instigating the subversion of the national political regime"), starting early this year. In 1989, Liu Xiaobo, together with three other scholars, attempted to render a rational voice to the students in the Tiananmen Square Student Democracy Movement. They were known as the "Four Gentlemen of the Square", who've pursued different paths since. While the others have settled down as scholars of various disciplines in political science and philosophy, Liu Xiaobo has maintained a actively critical stance towards China's administration. In 2008, he helped to draft a reformist manifesto, the "Charter 08", styled after Vaclav Haval's 1977 document for human rights in Czechoslovakia. It was this document that landed him his current jail sentence.

No matter what your interpretations of the Nobel Peace Prize are, it has certainly diverged from the initial, rather literal meaning: awarding those who prevented war and created peace (often in the process of trying to, unlike the physical sciences awards which are certainly meant for concluded accomplishments). As the world morphs into modern geopolitical and economic situations, awarding the prize to political dissidents against authoritarian regimes, who speak up for human rights and free society, is getting popular. One can perhaps think in this way: freeing up a society and the people's lives and mind, less oppression, would probably create a happier, more balanced national psyche - the inner peace of a nation, almost. On the other hand, there are people who think the Norwegian committee has been exercising its own political agenda, infuriating the Chinese government, which, after all, isn't sending soldiers to wars, to curry favor with Euro-American global interest.

In any case, the Chinese government has had its share of "humiliation" these months, with what was perceived a forced appreciation of its currency and now almost the most direct insult to its political legitimacy in history. (Bush has escalated the Taiwan sovereignty issue in 2002 and made the Chinese very mad, but Bush is Bush.) While human rights issues were never completely off the radar, they more served as co-news of the generally positively reviewed Olympic festival, and were pretty much replaced with economic priorities recently in the Western nations' agenda towards China. With what it seems to be a re-harshening of stance, where would China and US relationship go next? The leadership of today in both the East and the West are different from before. While a solution is not easy, more sophisticated thinking is in order.

Wednesday, October 6, 2010

Has China outgrown its one-child policy?

Contributed by Ying Jiang
Source: Science (DOI: 10.1126/science.329.5998.1458)

This article discusses a brief history and the known harms of the one-child policy. Following the Cultural Revolution baby-boom era, birth control and planning was introduced and then made strictly one-child in the 80s. Known economic and human rights infringement issues include aging population, diminishing workforce, sex-selective abortions and outrageous fines on offenders.

The author then reports efforts that attempt to gather evidence for a need to lift the one-child policy (where a chief obstacle has been bureaucratic inertia of the family-planning official organizations). The question whether China has outgrown the one-child policy was approached by testing the hypothesis of whether China's fertility rate has fallen so low anyway, that a compulsory policy is no longer needed.

Through demographic surveys and analysis, the answer is pretty much a yes. The decline in average fertility rate is tied with trends in modernized and urbanized states, and is linked to high costs of education. In fact, in one of the interviews, the percentage of women eligible for a second child who intend to have that second child was a minority of 45%. The actual percentage of women who followed through with their intentions, as studies years later reported, was even lower. Therefore scholars have concluded that lifting the one-child policy is reasonable. With these studies made known to the officials, one can start to hope for a slow process of transitioning.

Monday, October 4, 2010

US-China relationship to face test with pending Sudan referendum

Contributed by Ying Jiang
Source: www.voanews.com

First of all, a little history of Sudan. Sudan is the largest African country with a conflict between its Northern government (National Congress Party, NCP) and Southern militants (Sudanese People's Liberation Army, SPLA). There will be a referendum in 2011, ie a decision (to be made by the people nominally) whether the South Sudanese want to split and become a more independent political entity.

What has happened these days is that the US congress is intensifying diplomatic actions in this respect by introducing legislature to keep the referendum on schedule. The new bill, having bipartisan support, is expected to pass into law rapidly (before 2011, obviously).

Now China figures greatly in the relationship of Sudan to the world. It is known that China buys 10% of its oil from Sudan, and supplies NCP with firearms and diplomatic support. It's a source of frustration to US diplomats and humanitarian efforts. This results in US-China diplomatic tensions, a manifestation of which being the branding of Beijing's 2008 Olympics as genocidal, a reference to conflicts Darfur then.

What US scholars and humanitarian groups speculate as of now is a mixture of optimism and wariness. While some think that US-China competition over resources/diplomatic high ground is manifest, others opined that its a good opportunity for China and the US to work together in the promotion of Africa peace, and that China would less likely hinder the progress of South Sudan independence for fear of a war destroying its economic interests in that country.

From Sustainability to Innovation: Thomas Friedman to Qi Lu

Contributed by Cathy Zhu

Stanford, CA (Oct 04, 2010)– Just this past week, two international conferences were hosted here in the Bay Area.  Wednesday saw the conclusion of Stanford’s Global Climate and Energy Project 2010 Research Symposium (“Creating a Sustainable Energy System for the 21st Century and Beyond”), as well as the launching of HYSTA (Hua Yuan Science and Technology Association)’s “Drivers for Growth and Innovation”, their annual conference focusing on IT and entrepreneurship across both sides of the pacific.

Despite their difference on technical focuses, the two conferences shared a common theme: the idea that ensuring sustainability is the challenge of our time and that innovation is the key solution. As noted by the two keynote speakers Thomas Friedman and Yinyi Qian, it is an idea accompanied by a sense of immediacy and urgency; it is an idea that simultaneously brings empowerment and responsibility; it is an idea that defines and shapes international relations today, especially those of US and China. It is one that perhaps will continue to do so throughout the coming years.

The GCEP conference focused on the need for sustainable development. Keynote speaker and New York Times columnist Thomas Friedman aptly captured the way we are currently treating our markets and our mother nature in three phrases: we are “under-pricing risk, privatizing gains, and socializing losses.”  This is not only a concise summary of the financial crisis, but also an accurate picture of our environmental situation. Climate change is becoming a globally recognized threat to our survival, but our governments have yet to put a price tag on carbon emissions.  Friedman describes “the American model” of living as one continuous cycle of buying and selling ever-increasing numbers of consumer products, produced by ever-increasing numbers of factories in China, powered by ever-increasing numbers of coal-fired power plants, that result in an ever-increasing trade imbalance, which encourages ever-increasing American consumption on credit, bringing us back to the beginning of the cycle. Each link in the chain is driven by short-term pursuit of privatized profit, which comes at a societal cost of long-term environmental degradation. In an increasingly “hot, flat, and crowded world”, Americans must change the “way of living” example they are setting for the rest of the world, because the world was not created to sustain an entire world population living on such extravagancy and waste.

So how do we act and how do we act now? HYSTA gave an excellent illustration by showcasing how businessmen and entrepreneurs are now changing China’s economic model. The answer given by Qi Lu, Microsoft President of Online Services, is in one word: innovation. There are three drivers of economic growth, says Lu, labor, capital, and productivity, and only one of them is sustainable: increasing labor and capital productivity.  Thus, the daylong conference saw high-level executives of Baidu and Tencent come and talk about unleashing young Chinese minds from the rigid thinking of China’s test-based education system, teaching them to take risks, break rules, and think outside the box. Entrepreneurs shared case studies of business success before a panel on the challenges and benefits of “Return to China”. The business model for cross-pacific ventures is rapidly evolving from one that merely combines America’s talents and technology with China’s vast capital reserves and untapped markets. Increasingly, Chinese R&D is yielding ideas and technology that are beginning to enter the US. The rapidity of innovation, growth of new successful ventures, the progress towards cleaner technology, all tell us one thing: we are addressing our sustainability issue and we are doing it right here, right now.

So where does this leave us, at the beginning of the school year and nearing the beginning of a new decade? Here at FACES, we firmly believe in the importance and relevance of our mission: building the US-China bridge by developing and connecting the leaders of tomorrow. Whether it is facing common challenges or finding common solutions, mutual understanding, exchange, and collaboration between USA and China is more important than ever today.