What if the gap consumes the core?

Joseph Wang believes there may be tremendous lack of imagination for us to not visualizing the scenario of gap consuming the core in the Barnett theory. The wisdom of asking this question is not about preparing us for the worst case scenario, but about how we anticipate the challenges and discover a pragmatic solution to prevent it from happening. He started with this

• "The one thing that bin-Laden understands that unfortunately most people don't is the central nature of the economic front on the war on terror. Put simply, if we get to 2100, and most of the world is living in decent middle class conditions, then bin-Laden will lose. If we get to 2100, and most of the world isn't living in decent middle class condition, then bin-Laden or someone like him will win. This will be the case no matter what actions are taken in the short term."
  

Will Texas degenerate into Lagos one day, as depicted in science fiction? Is this so hard to imagine?

• Read history books on the fall of Roman Empire and the Han Empire circa 150-350AD
• Rent an old James Bond movie, compare Rio de Janeiro today with Rio in 1960s
• Go visit (read about it if you cannot afford the time to go) the Angkor Wat
• More recently, the collapse of SE Asian economy is 1997/98 if these countries were left alone to fall (i.e. if it is the OECD countries like in 1929)

In other words, in analogy to the language of physics, it is much cheaper to increase the entropy of a system than to decrease it. In layman's terms, it is much easier to shuffle a deck of card than to arrange them 1 to 52. It is much cheaper to pollute than to clean, to waste than to recycle, to fall the WTC than to build it.

It follows that if we are following the same approach of the disruptors (terrorists), we may not win even if we have a much larger set of resources to command and brains to use. This is an assymetric war. Therefore, one needs to step back and think in bigger pictures, and approach the problem from a different dimension. I am therefore also pretty pessimistic about Dubya's tic-for-tac ans passive tactics interwined with multiple distraction driven by various selfish interest groups.

Barnett's approach offers us one grand framework using the concept of core and gap. It is not the only framework. But great minds think alike, there must be anaology or correspondence if there is another sensible framework. In mathematics, if you can solve a problem in two different ways, it is very likely that you could find a "mapping" of the logically steps of these two solutions. Unfortunately, real world problem involves much more variables than problems in physics and mathematics.

We are not certain that Barnett's approach will solve the problem once and for all. But one thing certain is that it is a better approach than the non-solution US adopted today. But one principle will be common in any solution we find in the future, in Joseph's words

• "Remove the economic stresses and the petri dish disappears, and the agents of Satan are revealed for who they are."

It requires political and economic measures, military measure at best should be supplementary.

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The alternative Blueprint for action

Categories:

• world
• pol

The Chopstick case, tariff, and currency

Trade balance has been a hot topic in the US, especially among the protectionists. Some blamed the RMB currency peg, others blame WTO and call for tariff. In one extreme we have the now obsolete Schumer-Graham Act, asking for a 27.5% tariff to 'equate' the effect of an allegedly mis-pegged Yuan.

The interventionists believe they are the gods, who are more powerful than the market. Perhaps they want to make themselves more powerful than the market, like Stalin and Mao once were able to do so. What they have missed is that every merchandise has its own cost structure and every factory in each country has its own competitive advantage. Imposing indiscriminate tariff or 'manipulating' currency does disservice to the consumers and discourages efficiency in the suppliers.

With fair and transparent macro-environment, each product will find its own price based on supply and demand, just like raindrops find their way to the puddles on the ground. To tilt the ground is a task not only difficult, but also impossible to accomplish.

Here is a good example of how the price of chopsticks (waribashi) find its own 'equilibrium point'.

• "In a move that has cheered environmentalists but worried restaurant owners, China has slapped a 5 percent tax on the chopsticks over concerns of deforestation. (The tax could be think of a better reflection in of the cost, i.e. environmental cost, see elaboration in the comments)
  
• Chinese chopstick exporters have responded to the tax increase and a rise in other costs by slapping a 30 percent hike on chopstick prices with a planned additional 20 percent increase pending.
• A pair of waribashi that used to cost a little over 1 yen less than 1 cent now goes for 1.5 to 1.7 yen. The rising costs of raw wood and transportation because of higher oil prices have also contributed to the rise, industry officials said.
• To minimize the impact, Japanese importers now buy more bamboo chopsticks and are considering new suppliers, including Vietnam, Indonesia and Russia, said Fukuoka.
• An Osaka-based restaurant chain operator, Marche Corp., switched to reusable plastic chopsticks in February at its 760 outlets after testing various materials over six months, said company spokesman Michihiro Ajioka.
• A pair of plastic chopsticks costs about $1.17 and can be reused some 130 times a cost-per-use that matches a pair of waribashi, Ajioka said.

This is a lesson for both the trade bureaucrats and the environmentalists. It shows how one can achieve the objectives without getting all the bureacratic inefficiency, while benefiting human beings overall in the long run.

Prices will adjust by themselves, as no factory can sell at a lost in the long run. What you need to do is to deal with the price levers, instead of relying on the lazy solution of tariff or currency. If Senator Schumer is a little less lazy, he could try not to manipulate currency in his own way. Instead, he could work on much more effective measures to achieve his objectives, such as pulling the environmental or labor policy lever in the factories. He will win support from everybody, including workers and people inside China.

Categories:

• biz
• econ
• china
• japan
• us

Visitor geographic profile in past 7 weeks

Why chose these 7 weeks (from Apr 6 to May 23)? I started google analytics in the second week of April.
---

Country	% visit	% pageview
US	40.1%	38.8%
Hong Kong	10.1%	9.9%
UKm	6.1%	5.7%
Canada	6.0%	8.8%
Australia	5.3%	4.6%
Singapore	5.2%	4.6%
Japan	3.7%	3.6%
Taiwan	3.7%	4.2%
Malaysia	1.8%	1.5%
Germany	1.7%	2.9%
Netherlands	1.3%	1.2%
India	1.3%	1.0%
Korea	1.2%	1.5%
New Zealand	1.1%	0.8%
France	1.0%	1.1%
Sweden	0.7%	0.6%
Italy	0.7%	0.5%
China	0.6%	0.4%

---
China ranked low because of the Great Fire Wall (Also because I chose to write this in English. I write better in Chinese but it is just too hard to type Chinese in an English Window PC). I suppose quite some of the US originated traffic may represent proxy view from China. (Some in China may be viewing my mirror site but I suspect the popularity of it)

• An estimate of mainland China visitors can be done by comparing language system of the operating system. Because virtually only users inside China use simplified Chinese OS.
• Simplified Chinese/Traditional Chinese(HK&TW)=64%. so Mainland originated visits is around (10.1+3.7)x64%=8.8%. This will be the lower bound as quite some visitors (esp ex-pats) use English OS in China
• If I use Japan as a reference, simplified Chinese/Japanese=164%. So lower bound of mainland visits is 1.64x3.7%=6.1%. Using Korea as reference on gets 7.0%. I guess this gives us some flavor of China originated traffic.
  

Returning visitors = 23.33% (anyoneone who have visited at least twice since Apr 6 is defined as a returning visitors)

Total number of countries/domains: 90 (see the list below for how this is defined. e.g., Guam, Macau, Taiwan, "satellite ISP", "not set")

Other countries in order:

• Thailand

  Philippines

  Brazil

  Belgium

  Switzerland

  Spain

  Russian Federation

  Macau

  Austria

  Turkey

  Indonesia

  Denmark

  Ukraine

  Egypt

  United Arab Emirates

  Poland

  South Africa

  Chile

  Israel

  Greece

  Satellite Provider !

  Portugal

  Norway

  Mexico

  Finland

  Romania

  (not set) - yes this is how it is defined

  Saudi Arabia

  Ireland

  Mongolia

  Czech Republic

  Hungary

  Peru

  Estonia

Countries with 3 visits:

• Ghana

  Iran

  Solomon Is

  Argentina

  Venezuela

Countries with 2 visits:

• Jordan

  Malta

  Bangladesh

  Lebanon

  Qatar

  Vietnam

  Latvia

  Croatia

  Slovakia

  Yugoslavia

Countries with 1 visit:

• Guam

  Afghanistan

  Ethiopia

  Macedonia

  Puerto Rico

  Sri Lanka

  Myanmar

  Oman

  Syrian Arabia Republic

  Uruguay

  Kenya

  Europe

  Cayman Islands

  Liechtenstein

  Trinidad and Tobago

  Colombia

  Tunisia

  Sudan

  Nigeria

  Iceland

  Brunei Darussalam

  Lithuania

  Morocco

Finally the map overlay of the last 500 visits (google does not show more than 500) is here

Categories:

• tech
• stats

China's trade "surplus"

via Asiapundit

• Standard Chartered economist Stephen Green, one of the best China hands at any investment bank, offers a rather frightening essay in Businessweek suggesting that the majority of China’s 2005 trade surplus was, essentially, hot money.:

  The export of fake goods out of China is commonplace whether you are talking about designer bags, blockbuster movie DVDs, or “Mont Blanc” pens. Many European and U.S. holidaymakers take these knock-offs home with them — some of them knowing they’re counterfeit; others are unaware. Underground Chinese firms spirit such goods out of the mainland on a much larger scale.

  Now we may we have identified another fake: the supposedly gargantuan global trade surplus China enjoys with the rest of the world. Much of China’s trade surplus in 2005 was not trade at all, we think, but rather capital inflows (perhaps as much as $67 billion) disguised as trade. If so, this has major implications for China’s trade policies, the yuan, and the way the U.S. deals with China.

• Stephen Green also talk about other factors such as transfer price (booking more profit in lower tax jurisdiction such as HK) which distorted the trade figures. One major area he did not discuss is the tax incentive China has given to FDI manufacturing facilities. i.e these factories will typically receive 2 years of tax-exemption and another 3 years of half tax (i.e. 16.5%), counting from the first year of cumulative breakeven. So for factories in Year 1 and 2 it makes more sense to book the profit in China than in HK. In year 3-5 there is no real difference. Now that RMB is expected to appreciate, even MNC are trying to book the profit inside China and keep them as RMB in year 1-5 ! And a lot of the factories are in year -2 to 5.
  

Do read the Businessweek article (may require free registration), Stephen Green actually did the maths and quantified his reasoning. Green, Jen, Roach, why all these good economists tend to call themselves Stephen?

There are actually more explanation, even to the pre-2000 numbers. Remember the VAT rebate for export? In China, the factory receives a rebate of the 17% VAT (i.e. the value added portion, = revenue - raw material cost) if the goods is exported, but not so if sold domestically. The factory owners would then ‘export’ the goods and smuggle them back for domestic consumption.

This policy is being phased out now, but it serves as one example for how one should look at China's trade numbers (or any number). It is not that the statistics are rigged, rather the businessmen are cunningly greedy and officials corruptedly co-operative. Here is how it works,

• A factory (buyer) needs a container of copper wire (or cotton thread). It intends to purchase it from a domestic factory (supplier).
• The two factories then make an arrangement that the copper is to be exported to HK. (Yes, HKSAR of PRC is considered a "foreign" destination under WTO or PRC custom)
• Upon arrival at the port (e.g. Shantou, Shenzhen, Xiamen, etc). The export certificate is issued. The supplier gets the 17% rebate using the certificate, and then rebate the discount to the buyer.
• How does the buyer get the goods?
  
• case 1: the container never really leaves the port, instead, it was leaves the fence and was sent directly to the buyer. The customer officers was bribed.
• case 2: the ship make a detour back to the port (or another port), the 20 ton container was over-filled to 30 tons (30 full tons in the export certificate for rebate), but the custom officer only record 10 ton when it is imported. Saving in tax? as much as 17% -(1/3) x import tariff, which is often less than 10% for these goods (though theoretically there is saving as long as tariff is small than 50% if Value-added = full value in the case of commodity) for this scheme to work.
• Result, China records a trade surplus to HK. US thought it had a trade deficit. But who the hell in US would import copper wire from China?
  

Categories:

• china
• us
• biz

Hostile offensive from the right

It has been 60 years since WWII ended in Asia. Not many people in China, especially the younger generation, remember or care about the old wound, if not for continuous provocation from the right wing in Japan. In fact, Japanese products, both merchandise and cultural (sushi, TV drama), have gain wide acceptance in China before 2003. It could have been a great era between the two great people in East Asia, if not for the hostile maneuvers.

Now the right wing Sankei Sinbum is trying to stir up the pool again (bad translation in English)

• The 10th envoy of SDF to Iraq chartered an airplane from HK based Cathay Pacific Airways to go to Iraq
• The flight was cancelled 2 days prior to scheduled departure date
• Sankei blames pressure from PRC on Cathay Pacific
• JSDF ended up chartered a Qatar Airline and disguised themselves as civilians
  

It is a possible explanation. Though it is also possible that Cathay Pacific did this itself, as we all know it is trying very hard to gain rights to fly into the mainland.

What Sankei failed to report and ask is

• Why did Japan choose Cathay Pacific, instead of Japan's own air carriers, such as JAL or ANA?
• Why they tried to board the Cathay flight on uniform, while the Qatar flight in disguise?

The Chinese media offered an explanation

• JAL, ANA refuse to carry the soldiers, because many Japanese (and those in the airline trade unions) do not support the invasion of Iraq or Japan's involvement. (Many Japanese people are peace loving, or do not want to get themselves into any trouble)
• In addition JAL, ANA do not want to become target of terrorist retaliation. It is very likely that Cathay decided to forgo this business for that particular reason (or "pressured" by insurance company?)
  
• In the previous 9 envoys, the JSDF have used government flights (the "Airforce One" equivalent) or civil airlines in Japan, because JSDF's own plane does not have the range of the 747. It is a mystery why they chose Cathay this time, another mystery why the US does not offer help in this case.
• It was reported that Cathay's explanation is that it was declined passage into the airspace of a few countries. The use of airspace by civil airlines has very specific restrictions, e.g. armed personnel, custom officers are not included in the air freedom negotiation. Therefore, Cathay needs special application for such chartered flights.
• In fact, the final solution on Qatar Airline is also cheating on the Airline, and the countries where that the plane passes their airspace. Because an army carrying guns on plane has used the airspace, violating the agreement Qatar Airline signed with the respective countries

The event could have a very easy solution. Charter an American airline, or get help from US navy. There is no need spray salt on the wounds of the Sino-Japanese relationship. Can't we just get along and make money, or love?

Categories:

• china
• japan
• pol

Light viewing: Al Gore the president

If only Al Gore caught that train into its Sliding Door before Dubya...

Categories:

• us
• ent

DPRK Karaoke "Defend the People's Motherland"

If the American imperialistic paper tiger dares attack our motherland......
right click here to download

Hat tip Asiapundit/Boing Boing, complete with English subtitiles.

These gems are like endangered animals. We may not be able to see them next year, or tomorrow.

Some interesting similarity in Hanja pronounciations, very similar to Chinese, esp Minnan/Chaozhou.
InminKun=Renminjun: people's army
Yong Kam=Yong Gang: Brave
Inmine Joguk=Renminde Zuguo: People's motherland

---
See discussion here and download another song in mp3, "Our answer to american agressors will be crushing". And this site has all the great revolutionary songs from various countries/languages in mp3 for download.

Finally (via KFA) this great video clip from Arirang Festival 2002. Enjoy the dancing peninsula at 7:40.

Categories:

• korea
• ent
• cul

Short comment in Chinese (on some Chinese essays)

点击进入.看清楚,那眼镜下的确有眼.(此图偷自连岳的第八大洲)

(Warning: Below is in Chinese and should be interesting to people in HK only)
鹿马蜃楼论

香江财子,名阿瞒之胜,又名中国之杰.才高八斗,学富五车.

初,财子获果报以千金致,意气风发,一时无两. 愈时,果报渐知本益难以相当,乃广开版面,务使财子日行数文,以馈其本.自是政治经济商业文化娱乐地理旅游,无一不晓,虽博而不精,俨然杂家之首矣.

财子不胜所负,甚忧文质每下.乃迭进奇文,以掩黔穷. 惜其不擅逻辑,幸尚能精借题发挥,极尽谩骂之事.与京师太学前太师"西木示"者,堪称果报两绝. 有文为证.现试举一二.

1. 中梵之权争,诚利益权力之角逐耳.财子喜无限上纲,扯之甚远,乃至南海之所罗门岛. 财子曰,"此岛之乱,源由北京".财子非赵高再世乎?曲直鹿马,登峰造极,虽赵高亦必自叹不如也.
2. 继而妄论经济,谓梵庭地仅数亩,人渺百十,乌有商业,非觊觎中华之市场者也.实欲教化其愚味之国民.其知其一而不知其二也.中国信众,不下千万.若从梵庭之法,十一税缴,人贡一万,则年贡不下千亿矣.非台海彼岸可比也.

异史士曰,"果报财子,忠于主义,身体力行,其志可嘉. 然以赵高之术,拒李斯之政,不亦捨本逐末,何以自异于暴君小人乎?正人君子不屑为之也."

Categories:

• chinese
• hk

Japanese Air-Defence Identification Zone (Map)

Japan is making a big fuss about Chinese planes entering its "Air defence Indentification Zone". Meanwhile, China retorts that Japanese planes crossed into the disputed areas.

So what really is happening? Before we form our judgment based on Japanese press and pro-Japan blog reports, let's understand where the Identification Zones are.


Above is the map for the ADIZ, looks quite normal, isn't it? The deep blue area is Japanese Airspace, which is 12 nautical miles from its shoreline. The light blue area is the "Air Defence Identification Zone", it is defined by Japan's SDF alone. There is no international law governing such definition. After all, anyone has the right to define how oneself should be "alerted".

• e.g. US has the total right to alert itself into Red sign if bin Laden flips his body in a cave in Afghanistan. This is strictly the internal affair of the US.

But there is something unusual. Japan re-defined and expanded its "ID Zone" just a few years ago. The map does not exactly overlap its claimed EEZ


This is the overlay of EEZ claimed by Japan (disputed by China) and Japan's Air-defence ID Zone. The dotted lines represents the EEZ claimed by Japan (for a full map see here). The Red line is the ID Zone.

• The line starts from from Japan/Korea boundary (the line on the map above should start right south of Teuju Island) along 125E longitude to 30N latitude
• Then it turns SW toward 25N120E, until it reaches 122.4E, the line turns south again from there
  

The ID Zone encloses a large portion of China's undisputed EEZ, to as far as 130km (not nautical mile) from China's coastline.

Now one cannot help but ask the question, why does the ID Zone extend over to the China EEZ (the portion undisputed by Japan). Sure Japan has the right to alert its own fighters in any way they want, they are free to do so even if a China plane takes off at Urumqi. But misleading the press that this is an invasion of Japanese Air Space? Why? They think we are all idiots?

Special thanks to woshizhongguoren at FYJS

Categories:

• japan
• china
• pol
• geo

How to get from Taipei to Montevideo

Oops. It is Asuncion, not Montevideo. I got the wrong "turtle" ("Guay"). Thanks to Roland's for his correction in the comment below.

I keep the same old WRONG title, because,
1) Blogger will change the permalink/etc if I change the title. This is a punishment for my careless mistake, a major mistake for someone who claim to be a map lover, so everyone knows that i made such a silly mistake.
2) I am no less guilty than CSB and Taiwan media, as Lin Cho-Shui correctly pointed out (do a search on 過境 on yahoo news Taiwan, less than 10% mention the name of destinaion country. most just said "2 conutries in C&S America". I know that should not be my excuse), in neglecting CSB's designated mission in this trip.

(As David noted in the comment below, ASU is 78 miles from the anti-pole of TPE, which makes the additional mileage in detours less dramatic than that of MVD. You can replace ASU with MVD in the "paths box" of the great circle links, you will see the difference in mileages are much bigger.)

---
(Warning: this is really a map/geography post, not a political post. The author takes Ah Bian "Astray Diplomacy 迷航外交" as an excuse to blog on geography.)


The shortest route from Taipei to Montevido(Uraguay) Asuncion Paraguay is to fly over South Africa (12367 miles). However, the longest a commerical flight (Boeing 747) can fly is around 8000 miles (e.g. the direct (polar) flights from HKG to JFK(NYC) on Cathay Pacific, 8072 miles).

Therefore, a fueling station is needed. CSB wanted to refuel at NYC, SFO or LAX. But these paths do not make much sense, said DPP legislator Lin Cho-Shui. Lin contends that the purpose of the trip is to visit Montevideo, not big cities in USA.

• 林濁水表示，就算是高層出訪過境美國一百次，每次美方都多提供一點點接待規格，臺灣與美國的關係也沒有正常化...他痛批，政府的心態是把過境當成外交的主軸，爭取到一點表面的規格就洋洋得意，完全是荒唐，不要把國家資源浪費在沒意義的過境爭取上。
• "the government has made transit the core axis of diplomacy, and flatters itself when it receives every insignificant gesture [from USA]. This is totally ridiculous. Do not waste resources on meaningless transit diplomacy....even if Taiwan received elevated treatment every time for 100 times, there is no impact on the normalization of Taiwan-US relationship."
  

Chiang III said JNB (South Africa) is a better refuel station. I usually do not believe in politicians, esp someone from the Chiang family. So I did some research on the economics of the paths. Here is what I got

• TPE-JNB-ASU: 12368 (miles)
  
• TPE-JFK-ASU: 12459
• TPE-ANC-ASU: 12485
• TPE-SFO-ASU: 12502
• TPE-LAX-ASU: 12503

So Lin is correct. JFK is not the best path, nor is SFO/LAX. Chiang III is actually totally right (my apologies). JNB is the best alternative, only 1 mile off the ideal path.

P.S. US also suggested the best path for Taipei-San Jose(Costa Rica), CSB obliged. CSB also chose ANC over HNL as transit point to ASU, due to better path and logistics.

• TPE-SJO (great circle): 9478
• TPE-ANC-SJO: 9496
• TPE-SFO-SJO: 9508
• TPE-HNL-SJO: 10001
• TPE-JFK-SJO: 10012
  

Unrelated post (but more interesting): Jujuflop on DPP's Karl Rove, who is repsonsible for almost every single victory of DPP and CSB, and doing it again.

Update:
Latest rumour: CSB is making a 'protest transit' at Tripoli or Beirut.
TPE-BEY-ASU=12381; TPE-BEY-ASU=12385
Better choices than ANC.

New update (May 4):
Ooops it is Abu Dhabi! Lebanon rejected the request.
A small problem: TPE-AUH-ASU=4139+8234=12373 miles, although an overall shorter distance, it is not a mid-point refuel. i.e. the second segment AUH-ASU is 8234 miles, 747 can handle this with no problem, but for safety, it might need a "forced" re-fuel if encounters headwind. Let's pray for the wind.

New update (May 5):
According to the "Foreign Minister" Huang, the Aquafresh plane will have to refuel at Dominican Republic again. Pretty big detour this time.
New mileage: TPE-AUH-SDQ-ASU=4139+7671+3111=14911, what a mileage run! Is CSB trying to earn more miles for his children? Given the recent controversial of family member tag-along to AUH.
(update):
Of course, there is a latest twist. Because the ground temperature in AUH is too high, 47 degrees Celsius. The plane could not refuel fully (avoid high pressure in gas tank). The plane could not even reach Santo Domingo, it stopped at Amsterdam. TPE-AUH-AMS-ASU=13891.

Refueling stop for the return trip is another game to play. "Guerilla diplomacy", some say. Perhaps not Anchorage.

Categories:

• taiwan
• pol
• geo