How to "pin" Taiwan? (& Taoist wisdom in Crouching Tiger Hidden Dragon)

Taoist Wisdom

"Hold your fist tight, you grasp nothing inside. Open your hand, you will have the sky on you palm." (把手握紧，里面什么也没有，把手放开，你将拥有一切)

- Li Mu-bai to Yu Shu-lien in the movie Crouching Tiger Hidden Dragon (*), quoting from his teacher Jiang-nan-he (江南鹤).

I think this line bears strong connection to the Taoist view of philosophy (Li Mubai is a Taoist), and probably the Buddhist view as well. One of the concepts in Taoism is to "use tenderness to defeat the hard and strong" (以柔克刚), which has later become the core concept for a branch of Kung Fu called Tai Chi Chuan (太极拳), as you might have seen in the exercise between Beatrice Kiddo and Pai-mei in Kill Bill 2. An analogy is "to wear away rock with water", though I think a better metaphor will be "to dissolve a crystal with water".

• "What is in the end to be shrunk must first be stretched. Whatever is to be weakened must begin by being made strong. What is to be overthrown must begin by being set up. He who would be a taker must begin as a giver. This is called “dimming” one's light. It is thus that the soft overcomes the hard. And the weak, the strong.“It is best to leave the fish down in his pool; Best to leave the State's sharpest weapons where none can see them.” - Dao De Jing, Lao Zi, Chapter 36
• "将欲歙之，必固张之;将欲弱之，必固强之;将俗废之，必固兴之;将欲夺之，必固与之。是谓徵明。柔弱胜刚强。鱼不可脱于渊，国之利器不可以示人." - 《老子》第三十六章
• "Nothing under heaven is softer or more yielding than water; but when it attacks things hard and resistant there is not one of them that can prevail. For they can find no way of altering it.That the yielding conquers the resistant and the soft conquers the hard is a fact known by all men, yet utilized by none."- Dao De Jing, Lao Zi, Chapter 78
• "天下莫柔弱于水，而攻坚强者莫之能胜，以其无以易之。弱之胜强，柔之胜刚，天下莫不知，莫能行" - 《老子》第七十八章

Taoism emphasizes comparative strength (and unconvention thinking), as demonstrated in the circular superiority of the Five Elements (Hang), where water quels fire, fire melts metal, metal chops plant, plant holds mud, mud stops water (水克火，火克金，金克木，木克土，土克水). This is consistent with Sun Zi's general view of tactics and strategy.

Chess Game

Curzon provided a great analogy for the Taiwan situation, using the concept of a pinned chess piece. While I do not fully agree with how he applied it, our difference is not fundamental.

In my view, in order to be "pinned" you have to have the choice to act and not to act, and the default ('pinned' situation) is the situation you are currently at (not to act). Because US' unconditional defense for Taiwan is not the position it has put itself at, from 1979 to today, it cannot consider itself to be pinned.

Instead, Taiwan has the choice of moving to either direction. But there are many ways to pin Taiwan into the status quo. The Anti-secession Law (ASL), as discussed in the prequel of this post, is a perfect example for the bishop in the chessboard, pinning Taiwan's knight form moving toward independence. Any side-stepping of the knight automatically trigger the destruction of its king.

For the US, it can insert a piece in the path between the bishop and king. But it has to ready itself for considerable sacrifice, as Thomas Barnett correctly pointed out. However, US has another option. It can send out a "pawn" as in the illustration, so that it is more difficult for the bishop to take the knight (Taiwan will also have to move the king to d7 to guard its knight). This is, in fact, today's situation, except that it is left with some ambiguity.

The only problem/risk today, is the ambiguity of the ASL and TRA, which were created to give China and US more flexibility. Such ambiguity contributes to destabilizing the pinned situation, by allowing for free interpretation of the 'knight', as I discussed before.

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Great move from CCP. But is this the best move? Not neccessarily, because in reality the chessboard is not static. China, Taiwan and US are all undergoing tremendous change. In particular, in Taiwan, DPP's support has increased from below 20% 15 years to over 40% today. Time is not on the side of pan-blue (or CCP), as those who are emotionally tied to the mainland are quickly replaced by younger generation who are not. The only favorable development to CCP is the Taiwanese businessmen who had spent time in the mainland, but these experiences may not neccessarily lead to the support of re-unification.

Many observers outside Taiwan, including those in the mainland, failed to understand the fundamental reasons for the separatism trend(see note **). Strategist and politicians in Beijing have been equally ignorant, after failing to think through the rationale and ramification for unification vs division(***), they further adopted a hard-line approach to alienate their "compatriots". Such misunderstanding leads to a childish game of diplomatic bribery to micro-states and became a vicious circle, among other fiascos.

Therefore, ASL is only a ad hoc solution, provided pinning Taiwan is the objective and that this situation is sustainable. Then what should be the objective?

The objectives

Let's first examine the often discussed rationales or myths for unification

1. Unification good, division bad (myth: see note*** below)
2. Division and hostility among different parts of China will provide opportunity to foreign (hostile) powers to divide and conquer China, and even leverage one faction to fight against another, or for Taiwan to harm the interest of China
3. A divided China is weak, because each part can be defeated and conquered separately
4. "Taiwanese compatriots are our brothers and sisters sharing our blood" (see poster to the right and caption), there should be cooperation, communication, and intimate friendship.
5. Taiwan has been part of China historically (at least according to what PRC inherits from the two preceding governments: ROC between 1945-1949, and most years of Qing Dynasty prior to 1895), losing Taiwan means humiliation (like the Qing) and damage to the legitimacy and reputation of the current PRC government

In summary, the ultimate goal is to prevent sustained war, align the interests together (also hug our compatriot - see poster on the right), hence acting as a bigger entity with larger scale (in terms of market and also soft and hard power), while saving face and defending honor during the process.

What has CCP achieved today? Other than some partial economic integration, CCP has managed to push Taiwan further away and defeated objectives 2 and 3 totally. With the current spat, it is very unlikely that Taiwanese people will side with the mainland in a conflict with Japan. In fact, today we even have certain Taiwanese who support the ultra-right militarist faction in Japan.

There is a better way to "pin" Taiwan

The best way to pin Taiwan is, counter-intuitively, to encourage Taiwan to hold a referendum, and do it when the friendly KMT led by Ma Ying-jeou comes to power in 2008. The package should contain incentive for choosing the 'desirable results'

• A frozen period of [30] years where no further referendum regarding unification/independence should be held
• Options will be (A) Unification under conferation; vs (B) Independence, and (C) status quo. indecisive result (less than 50% turnout or less than 67% for any option) will be interpreted as (C) -- PLA will remove its missiles and even promise peace in return
• Under the unification option (A),
• Taiwan will be supported for a UN seat, like Ukraine under USSR.
• Taiwan will have full autonomy like Deng Xiaoping has promised, including maintaining its army, currency, and democracy
• Establish a Senate system for the federation, where Taiwan (also HK, Macau) will be represented.
• The Federation will support Taiwan to defend disputed areas in Spratly and Diaoyu.
• The most delicate issue is diplomatic right of Taiwan, which both sides have been persistent. But it is not impossible to work out a compromise, where Taiwan yields partial right to the federation
• Others minor issues already widely discusses in the last 20 years (will be linked to later when I find them)
• Option (C) after the referendum could include mainland's support for Taiwan to in Diaoyu and South China Sea as well

The concept of federation is not new. What is new is the timing of the referendum. From mainland's perspective, further waiting is only going to further severe the tie. While a vote today presents extremly low risk for a support for (B).

The objective of such a referendum is to force both sides to recongize a stalemate (option C: which is the most likely case), and hence to guarantee the status quo for another [30] years. The difference between a status quo after a referendum and the status quo of today is important

• risk of 'independence declaration" will be greatly reduced (analogy: Quebec referendum)
• the possibility of failing objectives 2&3, as it already is today, will be greatly reduced and most likely reversed
• the hostility between the strait will end and closer economic and cultural ties will flourish. Taiwanese people's vote will drift toward (A) in the next 30 years as a result
• less waste on arms race for both sides
• less squandering of money in luring micro-states in diplomacy

The upside/bonus is, objectives 1-5 will all be achieved if (A) is chosen.

President Hu Jintao, if you hold your fist tight, you grasp nothing inside; open your hand, you will have the sky on you palm. DPP asks for a referendum, give them the referendum. There is nothing to lose. Treat our Taiwanese compatriots like how we treat our brothers and sisters, you will win their hearts.

The downside of obstructing such a referendum is, you will continue to lose votes to (B). If, when China changes to a democracy, or if there are other unexpected event in the world or in China, Taiwan will grab the opportunity to hold its own referendum. The vote then would be much less favorable as a result of the prolonged hostility. You will lose you sister and she will become your enemy. This will make you "One Sinner in A Thousand Years" (千古罪人).

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Notes

(*) About the movie

• I have never been a fan of martial art movies. I think Jet Li is good, but Jackie Chan is very shallow. Crouching Tiger Hidden Dragon is just a better quality Kung Fu flick solely a result of bigger budget and a more serious director. I prefer Zhang Yimou, Wong Kar-wai, and - yes - Stephen Chow is great.
• One evidence to support my view on CTHD is the movie's unprofessional English translation, which is as lame as those you could rent in Chinatown in the 1980s. "there is nothing we can hold on to in this world. Only by letting go can we truly possess what is real." Do you think such translation serves justice to the metaphor in the quote above?

(**) Factors that drive Taiwan toward separatism

• Total disappointment of being ruled by mainland official, based on the performance of KMT and CCP from 1945-1978. Especially deep contrast of Chen Yi/CKS regime in 1945 vs the milder Japanese colonist governor
• Wary of mainland chauvanism and oppression, exploitation
• Further alienation due to diplomatic war, which led to extreme inconvience for Taiwanese travelling and doing business abroad, and hurts pride
• Taiwanese identity, while most spoken about, is a very new concept and not popular 20 years ago

(***) Unification is not the objective. It is only a means to reach peace and proposerity.

• Throughout the history of China there have been numerous periods of division interlacing unification. As Luo Guanzhong's started his classic Romance of the Three Kingdoms, "The trends of the world under heaven, after a long period of division, tends to unite; after a long period of union, tends to divide. This has been so since antiquity. (话说天下大势，分久必合，合久必分)" According Luo, such trends are not to be stopped by human intervention and not neccessarily harmful.
• Historical cycle (Unified [division]): Xia/Shang, [spring-autumn, warring states], Qin/Han [3 Kingdoms, Jin/16 states, North/South], Sui/Tang, [5+10, Song/Liao/Jin], Yuan/Ming/Qing, [Warlord, ROC/PRC]
• 夏一统，商周继之，春秋战国乱之；秦一统，两汉继之，三国魏晋南北朝乱之；隋一统，大唐继之，五代十国宋辽金乱之；元一统，明清继之，民国乱之
• The common myth in China is: Division leads to war, that is not good. The most often hailed merit of Qin Shi Huangdi (秦始皇帝) is that his unification of China stopped the thousand year war of the Eastern Zhou Dynasty (Spring-autumn and Warring States). Qin Shi Huangdi launched a 12 year campaign and ended the the 500 year war. The situation today is different, there is no 500 year war, and to launch a war to unify a country is defeating the purpose to eliminate war.

Pretty girls are more fertile!

So now we can explain how evolution helped us to define 'beauty', and this is [many of the criteria are] universal. From Spiegel

• "... Now a new study could shed some light on this phenomenon. Researchers at St Andrews University in Scotland measured the oestrogen levels of 56 female students and found that "female facial appearance holds detectable clues, to reproductive health, that are considered attractive in other people." In other words the women with the prettier faces -- those who had bigger eyes and lips, and a smaller jaw -- were also more fertile. However, there's only one problem -- the signals only really work without makeup, never mind cosmetic surgery. So what's the average bloke to do? He's out there on a Saturday night trying his best to propagate the species, but his whole radar is being put severely out of whack by all that mascara, lip gloss, botox and collagen, allowing those less fertile ladies to jump the queue in the search for Mr Right. "
• Who is more attractive? (click picture to see the answer)

Sorry, how do I justify blogging this?

1. Evolution is great science, with application to every branch of study in this world, including business strategy and economics
2. This discovery supports evolutionary selection as a 'cause' to our definition of 'beauty', hence also that such definition transcend cultures
3. Try to make it to Boing Boing?

Update: New Scientists

Map: No more border dispute between China and Central Asian ex-USSR countries

(via Wenxuecity and Feiyang Junshi)

According to newly published map in China, the border between Xinjiang AR and the Central Asian Stans have been quietly changed, reflecting results of recent negotiation to settle borders.

This is part of China's effort to "peaceful development", i.e., to make sure China can steer away from the distraction of border dispute or conflict and focus on economic development.

If the negotiation with India goes well as expected, China would be able settle all land border disputes with its neighbors. This would serve to prove that China has no intention of aggression, today or in the future, and dispel the myth of "China threat". Because if China plans to be aggressive, it would rather save some of the disputed areas as future excuses. It would also be silly to settle them in such haste because as we see below, in almost every case, China conceded most the territories it has claimed.

FYJS's site has some anecdotes about how China dealt with the disputes in thw 1960s and 1980s. Most of the disputed terriroties were under Soviet control. Soviet Army were a lot strong than China's. China did not want to escalate the conflicts.

However, the disputed areas were grazing zone for the nomads who lives on Chinese side (nomads migrates to where the grass is greener over the seasons), which is one of the main evidence for China's claim. When USSR and China were friendly in the 1950s, the nomads can cross the border to graze with no problem. But the Soviet started to harrass the nomads since the 1960s, even though there was an agreement to allow them there in particular seasons.

So every year, China needs to encourage the nomads to drive their herds to the Soviet controlled side, to keep the territory claim valid. Many were discouraged by the Soviet harrassment and would prefer not to go for such trouble. So sometimes China send some soldiers to disguise as nomad, to help them with the jobs, and to survey the landscape. These were high danger jobs so each trip was taken with a lot of sweat. FYJS's site has some memoirs of the trips made by these soldiers/officers.

Fig. Border with Kakhzastan. (left 2002 map, right 2005 map)

Red circle: border change

Click figures to enlarge




Fig. Border with Kirghistan

• This is the largest disputed area. It concerns mainly how to divide the Wuzhongtushi river source area: 2844 sq. km
• The lower (green, topographic) map is an enlargement of the area
• Red dots the new negotiated boundary, yellow dots the disputed area
• China claimed the boundary should be the Wuzhongtushi watershed, Russia claimed Tianshan South as the watershed

China obtained about 30% of the disputed area as a result of negotiation, Kirghistan 70%



Border with Tajikstan (left 2002 map, right 2005 map)

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A related note: China and Vietnam settled the dispute on land border, border marks will be erected by 2008. Sea border in Tonkin Bay is also settled and the area will be patrol jointly by the 2 navies. Remaining dispute on South Sea Islands (Paracels and Spratly) will be set aside, the area will be jointly developed.

Tamiflu, Star Anise(八角), Licorice(甘草), and SARS

Facts:

1. Tamiflu, a not-so-effective drug to treat virus infection, is now the front line drug to treat H5N1 bird flu. It was also used by the FDA to treat SARS back in 2003.
2. Tamiflu has very similar chemcial structure to shikimic acid, which is abundant in the Chinese spice star anise (八角, picture on the right), in its natural form. Tamiflu is manufactured through a 10 step chemical process from shikimic acid.
3. On a separate note, in July 2003, German scientists have shown that glycyrrhizin, the chemical that provides the sweetening flavor for Licorice, kills SARS virus in the test-tubes

Now, there is an interesting piece of fact: Star anise, is said to possess a "pungent, licorice-like flavor", according to Patent Baristas. I have eaten both, but I never noticed the connection. Star anise is widely used in beef soup and lamb stews in China. Licorice can be chewed like mint. Guangxi produces 80% of the world's star anise (rest from Yunnan, Vietnam neighborhood). Licorice grows in NE China and Inner Mongolia AR. (The root is usually used, sliced dried root in the figure, lower photo is the plant on top)

Perhaps we do have a chemical to fight bird flu, which can even serve as a wide-spectrum anti-viral drug, including AIDS (HIV). It is not Tamiflu, but could it be somewhere in the connection between licorice and star anise?

Now rush out to buy licorice tablet. It costs about RMB5 per bottle in Chinese Pharmacies and you can taste it like Polo mint candy. I had had a few when I boarded planes during the SARS terror era.

Update: WSJ reports on star anise as well. For temporary archive see here.

Strategy to fight virus (H5N1 avian / bird flu): buy time to immunize our population

Sun Zi said,

• "It is the rule in war, if our forces are ten to the enemy's one, to surround him; if five to one, to attack him; if twice as numerous, to divide our army into two.
• If equally matched, we can offer battle; if slightly inferior in numbers, we can avoid the enemy; if quite unequal in every way, we can flee from him.
• Hence, though an obstinate fight may be made by a small force, in the end it must be captured by the larger force" - Sun Zi Chapter 3 Attack by strategem
• "故用兵之法，十则围之，五则攻之，倍则分之，敌则能战之，少则能逃之，不若则能避之。故小敌之坚，大敌之擒也。" - 孙子兵法.谋攻.三

Lesson in military strategy: If you have 100 soldiers, and you send 1 out each time to take over a castle guarded by 10 soldiers, you will fail.

Lesson in marketing strategy: If you have 1M in marketing budget, and you spend 10k each day on different street or buy one ad spot each at random time, you cannot build a brand. You need to concentrate the exposure in a short period of time focusing on your target customers.

Such insights can be applied to our fighting against bird flu, and contagious diseases in general.

A) The debate on treating the birds

There has been a blame (via TPD) and defense game about who is responsible for the strains of virus which developed resistance to the anti-viral drug amantadine in SE Asia.

• Some researcher in US speculated that the application of amantadine in chicken farms in China led to the development of drug resistance
• "Experts there reported last month that bird flu strains in East Asia, particularly in China, had become more resistant to amantadine during recent years. They also said the mutations in China did not appear to be random, adding they could be the result of treating chickens with the drug to prevent bird flu." -Washington Post
• Jia Youling of China's Agriculture Ministry said it is unfair to blame China for the resistance of the virus strains. (fig=vaccine shot in china; note amantadine is given orally, mixed in its food, and daily)
• 'The Chinese government has denied that it urged farmers to use amantadine to suppress bird flu outbreaks. But Jia said some Chinese poultry farmers have used the drug in the past on the advice of the Merck Veterinary Manual, a leading guide for the veterinary profession around the world. The manual's online edition lists amantadine under the prevention and treatment section of its entry on influenza. It says the drug "reduces the severity of influenza in some avian species, but amantadine-resistant virus frequently emerges." '
• "Jia said "only very limited samples" of the bird flu virus tested in China last year and none of the samples tested this year had mutated and become resistant to amantadine. By contrast, he said, the vast majority of bird flu virus samples tested in Southeast Asia had become resistant." -WaPo
• He also said the economical cost of using amantadine is more expensive than that of vaccine in China, because vaccine is cheap and one shot is good for 6 months.

Personally I think the blame game is childish and does not help our war on H5N1. The blame/avoid-blame mentality had served to amplify the crisis of SARS in 2003, when some international media blamed China for the new virus species and the idiot Zhang Wenkang spent more time drawing the 'analogy' of US and Africa as the source of AIDS (HIV) than telling the Chinese people of the truth.

Suppressing truth is a crime (as in SARS) as it reduces our vigilance and helps the virus to spread. However, suppressing the outbreak in farm fowls may not be. In fact, buying time by suppressing and delaying the outbreak is perhaps one of our best defense against virus. Let me explain this below.

B) Technical Backgrounds

Before going into the strategy to fight a virus, some background knowledge on virus and on H5N1

• Virus is as different from bacteria as plant vs animal. Virus is basically a set of nucleic acid, RNA or DNA, but not both. Virus does not even have cell membrane. All other organisms (bacteria, plant, animal) have cell membrane and both types of nucleic acids.
• H5N1 is a newly discovered (1997) strain of bird flu. Other flu virus are classified as HaNb, where a/b are numbers. Most of the flu outbreaks in human history are believed to be related to (or started from) birds.
• Human beings have had great success against bacteria infection (e.g., cholera, TB) since the discovery of penicillin. But we still do not know how to treat virus effectively. That is why SARS, AIDS are so difficult to treat
• There are not many anti-viral drugs at our disposal today, so far we only have 3 plausible drugs to treat flu, Roche's Tamiflu (aka oseltamivir), and its relative Relenza, aka zanamivir); and the older drug amantadine and its relative.
• Most people (and bird) heal from virus infection (including flu) without medical treatment, due to our own immunological response (our body can produce antibodies that target the specific invader ourselves). A strong body, less stress, lot of rest helps. The reason I said drugs like Tamiflu are not very effective is because there are perhaps as many (or more) people who heal without using Tamiflu than those who used. (But even if the effecacy is 20%, it is still worth trying. That is why many hospitals are using it)
• Abuse in anti-biotic leads to resistance in bacteria. But it does not affect the treatment of virus..
• Just like insecticide resistance does not change the effect of herbicide
• However, abuse of anti-viral will affect the efficacy of that specifc antiviral drug or even other drugs in the same family
• One important fact is that once we are able to generate antibody to a specific strain of virus ourselves, we are immune for live. If we surived H5N1 or survived a SARS infection, we would never be infected by the same strain of virsu again. Then why do we catch flu more than once? because each time it is a new strain of virus. Each year the flu vaccine is different from that in the previous year.

C) Strategy to fight the virus

Understanding the last point above is important in our discussions below. There are 2 obvious strategies to fight H5N1.

1. Build a physical line of defense, fight back each infection, quarantine patients, kill every bird
2. Suppress major outbreak, quarantine patients, buy time and hope for more people would become immune in the meantime (I will elaborate on this later).

Option 1 is basically what we have done when we fought SARS. If SARS is, as alleged, passed from civet cats, which are very shy animals, once we have eradicated the virus in our environment and promise not to pat (or catch) civet cats again, we are pretty safe.

However, option 1 does not work for bird flu. Because, as you can see in the chart on the right, our fowls may contact with migrating birds, and migrating birds fly all over the earth. They are a lot more mobile than civet cats. There is no way we can cut our contact with these birds, nor should/could we kill all these birds.

So we are actually left with option 2, and minimize human death. Considering the fact that it had been a full 8 years since we first saw H5N1 in 1997, we have been extremely successful. We have bought a lot of time and many people in SE Asia and South China may already be immune to this virus. This is because, for every human infection of H5N1, there must have been thousands who might have contact with the virus and end up healthy, because the amount of virus is small or the human being is strong and able to generate antibody to fight the virus.

In fact, many of us may already be immune to H5N1 (and even SARS) at this moment. When more and more of us become immune, it will be very difficult for virus to spread between human beings (so far all cases observed have been bird to human), because when the virus jumps to the next person, he might already be immune and the chain of infection will stop there. (Analogy: firebreak in the forest) Some suspect this mechansim is also responsible for our winning the war against SARS (many in South China might already be SARS immune).

• Contact with a weak virus, while you are healthy and strong, is how Dr Jenner discovered the vaccination against small pox. The girl pictured at the top of this post is probably immune from H5N1. (However, do not go out to kiss birds now, since you are not sure if you are strong enough, or if the virus in not lethal)
• In other words, buying time is effectively the creation of a natural process to immunize our population, and equip ourselves in am arms race against the virus. The analogy of a 10 soldier guard against a 100 soldier attacker applies, except that after each battle the winner gets stronger.

Therefore, buying time is very important in our war against virus. Effective suppression and treatment of chicken is one of the measure we can adopt to buy time. In fact, instead of killing birds en masse (HK in 1997), we may want to simply isolate these chicken and see how many of them survive the pandemic. It is certainly a more human way to treat these animals, and it is also scientifically justified.

D) Implications to ourselves

• No need to panic, but be vigilant
• Avoid contact with birds, contact with human are still safe so far (until a mutated strain appears, it has not for the past 8 years)
• Exercise to maintain fitness, avoid stress, sleep well and rest well
• The buy-time strategy also works at individual level: If you caught a cold or flu, the first day is extremely importantly. If you can cope with it well, you got youself enough time for your own immune system to figure out the weakness of the virus and develop weapon (antibody) agaisnt them, before they could multiply exponentially.

p.s. After reading the backgroun material above, you would know why Roche's allegation that Taiwan's applying its own version of Tamiflu will generate resistant virus strain is full of bullshit. Because, resistance is only generated when the treatment fails and the virus survive and pass on its genes. If Taiwanese doctors are following the proper procedures, the risk (of resistance) will be no different from those in Europe or US.

Taiwan is democratic but not free - Where can I find Lian Wu in Shanghai?

Chairman Mao said, "We oppose anything our enemy supports 凡是敌人赞同的，我们就要反对)". Politicians in Taiwan listened.

I will start with a very minor issue: a simple business analysis of expanding the market for the mangos and bananas, and the delicious Lain Wu (莲雾) of Taiwan. (Fig = Black Pearl Lian-Wu 黑珍珠莲雾 , breeded by Taiwan farmer, the most delicious fruit from Taiwan. click picture at your own risk)

Upon hearing requests for market opening from Taiwanese farmers, PRC government offered a tariff-free deal with Taiwan for fruit trade. (I suppose that is a result of its success in dealing with the Tung Chee Hwa crisis in 2003/2004, CCP learned from its mistake) Instead of taking a free gift, Chen Shui Bian, the graduate of the prestigeous Taiwan University law school, and Annette Lu with a Master degree from the US, got childish and talked as if they (or the audience) were idiots. Listen to what Lu said (Chen's speech was similar)

• "The fruit trade deal is a conspiracy of the mainland"
• "mainland will get the technology, grow the fruit and dump back on Taiwan"
• "Our fruits are of high quality, they should only be sold at high price to more affordable country Japan" (Chen talked the same 'illogic')

By technology she probably meant the seeds of the bananas and mangos, conveniently forgetting that anyhone can buy them in HK, Japan, Singapore and Taiwan.
The price analysis is also laughable. Taiwanese farmers are not stupid. They know if there are two customers they should sell to the one who offers a higher price. Why did the farmer's association asked for mainland to open the market?

1. Japan alone cannot consume all the bananas and mangos
2. There are also middle or lower quality fruit on each tree or each farm, which her masters in Japan would rather not consume
3. Some of the high quality fruit can actually command a good premium in the mainland. Some dinners cost 10000RMB per head in the mainland these days!
4. One more option (market), better bargaining power with other customers

To add to Lu's bigotry, Chen added, "Since this is an un-negotiated offer, the mainland can withdraw it any time in future". How about enjoy the profit to the greatest extent before they withdraw it? What do you have to lose?

Despite over 10 years of democracy practice, Taiwan still has not graduated. Common senses do not prevail in the politics in this island. Worse still, the freedom indicators seem to be retreating under the democratically elected DPP government.

• Democratic but immature: pan-Blue and pan-Green continue their bickering at the Legislative Yuan (in issues not related to "arms procurement" - I have discussed in my previous posts that there are many very legitimate causes to oppose the arms deal). In addition, the knowledge of martial arts has miraculous effect on attracting votes.
• Freedom to travel: DPP continues to ignore the extreme inefficiency in air traffic detour, making a 0.5-2 hour flight to into 6-9 hour ordeal (see map),destroying productivity and squandering resources of the Taiwanese people and business, hence hurting their competitiveness (Kinmen's official population increased by 30% when direct traffic to Xiamen was allowed for local residents!)
• Freedom of migration: DPP continues to drag the feet of Taiwanese businesses from investing in the mainland, again hurting their competitiveness. When Dr. Richard Chang set up SMIC in Shanghai with the funding of US Venture Capitals, DPP resorted to prosecute the businessmen with dual citizenship for disobeying the ridiculous rule. Dr Chang countered by giving up the ROC passport, but the democratic and free "ROC in Taiwan" decided to ignore his constitutional right by forcing him to remain as an ROC hostage.
• Freedom of speech: Today even freedom of speech is under threat when TVBS exposed a DPP scandal. DPP first forbid all its party member to appear on TVBS program and is now trying to accuse TVBS as a CCP minion. How can one of the top rating program in Taiwan be run by CCP? Please do not insult the intelligence of the people in the island. Remember it was also TVBS' criticism of the KMT regime which contributed to DPP's winning the 2000 election. (for discussion of technical/legal isssue see here , Satellite TV law see here)

Don't get me wrong, the immature democracy in Taiwan is still better than what the mainland, or even Hong Kong could enjoy today. I used to have high hope for DPP and I set a high standard for it, higher that waht I set for CCP or KMT. I have also believed it was too harsh to require DPP to learn how to rule in its first 4 years. CCP's policy in HK failed to meet its objective of making a show-case for Taiwan. Unfortunately, Taiwan also failed to show the CCP what democracy, rationality and freedom of speech really is. All I heard in this week was bigotry and ignorance, especially from the DPP. Is the benefit of the Taiwanese people on top of their priorities? Do they really care about these farmers? or about the ideal they have fought for all those years?

HK is free but not democratic. Taiwan is democratic but not free.

Commodity demand and the China factor

A recent presentation of the Macquarie Bank contains very interesting data charts on world commodity demand and some discussions about the impact of the China factor.
The first chart shows that the trend in metal prices finally decouple from that of OECD lead indicator in recent years. The explanation is pretty simple, as over 2 billions people joined the world labor, and hence consumer market, the indicator needs to include the urbanization of these 2 billion people.

The second chart shows that after the steel consumption (per capita) peaked in 1973, for about 25 years the growth in GDP/capita did not drive growth in steel consumption. It was only by late 1990s, that the correlation was observed again.

The third chart shows the same information for Copper and Nickel (but the axis were curiously switched). The stagnation in per capita consumption was less persistent than that for steel. One possible reason is that technology innovation (recycling and substitute materials) for steel may have played a more important role than for copper/nickel.

The fourth chart is the most interesting. There is a GDP/cap correlation line, showing China is about 1/3 below the line in terms of per capita consumption of copper.

1. There is still room to grow for China's consumption, especially as its GDP/cap grows
2. Even more room for India and other developing countries (unlabelled dots)
3. Much more interesting observation is that for Taiwan and South Korea (and Finland, Sweden, Belgium). I believe that is due to the electronic and computer related industries, which consume a lot of copper
4. An immediate corollary for this observation is that Taiwan and S Korea are not the end consumers for copper. The consumers scatter in various parts of the world, in their export destinations (mainly the OECD). I can even bet that Japan in the 1960s stands high above the line.
5. Now come back to look at China, the "world factory". It is now quite straightforward to conclude that a lot of "China's consumption" is not consumed by China, instead, it is "re-exported" as finished goods to the rest of the world. Therefore, some of China's "apparent consumption" growth are indeed relocation of processing and assembling factories from existing processors such as Korea and Taiwan, and that the end consumer are still the same people in OECD countries -- i.e., a zero-sum transfer to China.
6. Therefore, to predict the future we need to separate China's consumption into 2 portions, domestic consumption and export consumption, because the two have very different starting bases and growth trends. Projecting the per capita growth for China is a very different task compared with that for Japan's or France's, as some may have reached the saturation levels.

A per capita study on a per country basis could be misleading in today's globalized world, especial when we analyze exporters. It is important to carefully distinguish secondary industry consumption (processing and exporting) from ultimate consumption (end consumer), in order to make an accurate projection.

The fifth chart is Macquarie's projection for 2001-2010. It shows China's consumption (red) as a portion of the world, for copper, aluminum, nickel and zinc. Macquarie projected China's consumption in 2001-2010 to be from 1/3 (Nickel) to 2/3 (Zinc) that of the world! Based on our discussion above, I believe this is definitely an over-estimate. The more likely number could perhaps be between 1/3-1/2 of the world. I am also curious about their projection of steel consumption, because a lot of the steel was indeed consumed domestically (construction and builfding) and such unsegmented trend analysis may be more accurate..

Now 1/3-1/2 is still a very high number. That is because this includes end-consumption of the OECD countries and many other which import from China. One way to verify this is to trace the historical per capita consumption of OECD countries, they most likely have decreased significantly as production was shifted to China. In particular, the US consumption may begin to decrease in mid 1990s and that for EU beginning of this century.

A much more reliable benchmark for per capita consumption of a commocidty is oil. Since the re-export for oil (and derivative products such as plastics) may distort the big picture less dramatically (except for Singapore and the Netherlands, they would be the odd one out above the correlation line). China consumes about 1/4 of the oil in the world, commensurate to its population share. (slightly higher than its population share due to its high energy consumption industries, compared with that of, e.g. California or Bangalore)

To conclude,

• Is China part of the cause for recent surge in commodity demand and price? Yes, one of the main factors.
• Is this reflected by the trade figures? Not really, the amount processed to be exported as finished goods needs to be taken into account. They are not consumed by China.
• Would China's consumption grow at the current speed for long? No. Because most of the 'transfer from Korea/Taiwan' will be completed soon and then it is about the true growth of China.
• Would China continue to have a low productivity/energy ratio (measured by GDP/fuels burned)? Yes. Because China's industries are mainly manufacturing indsutries. In fact, it will continue to be lower than that of India.
• Is China consuming all the commodities (as the Macqarie projection predicts) of the world? No. Raw metals flow into China only because the first step of manufacturing occurs in China. China's role in commodities is no different from that of Holland and Singapore in oil refinery.

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Update: My hypothesis on copper "consumption" of Taiwan, Korea and Japan is confirmed. See this chart by a BHP Billiton Report.

• Japan's line flattens below the BHP trend line since 1993 (the rightmost 10 red points). But I would actually push 6-7 dots further left and trace the decline back to 1986/87. Strong indicator that the consumption shifted into indirect, i.e. via imported parts/finished goods, mostly from China. The vertical descent between 2000-04 (rightmost 4 dots) could represent another wave of migration of factory.
• The slope for Korea (green dots) is higher than that for Japan, and that for Taiwan (blue dots) higher than Korea's. A strong evidence that slope is inversely correlated to the size of the economy. i.e. export (of copper related products) as a % of GDP is highest for Taiwan, then Korea, then Japan when they are at the same GDP/cap level
• One can view Korea and Taiwan's numbers as the sum of two numbers, the export portion, and the true domestic consumption which is comparable to that of America or Japan
• China's (per capita consumption) line, will have a slope smaller than Japan's, because its population base is larger.
• In fact, Henandez of BHP Billiton raised the same question I raised in the upper corner of his chart, "High apparent consumption for export oriented manufacturing economies?" I feel good. :)

Light viewing (and listening ): China's "Back Dorm Boys" and others

China's answer to Romania's Numa Numa show (original show) is called the "Back Dorm Boys 后舍男生 " (via www.tian.cc). Don't miss Tian's other cool stuffs.

• AFAIK they have been around for at least over half a year now. Boing Boing is also featuring this recently, with some related links in the comment fields as well.

As for how the internet has changed the enterntaiment (esp music) industry, some anecdotes here.

The Myth of the strategic location of the Taiwan Strait

I read from many reputable reports that the Taiwan strait is a strategic sea route for oil (and other commodities) from middle east to Japan (presumably via Malacca Strait / Singapore). e.g.

• "Tokyo must have concluded that a potential cross-Strait war would interrupt Japan's energy supply routes from the Middle East" - Yale Global
• "Japan sees a key sea route, the Taiwan Strait, in danger." - Der Spiegel

I was confused. So I did a small exercise with maps, Curzon style.

• The red route is the shortest path between Singapore and Yokohama. It passes the Luzon Strait (Babuyan Channel and Bashi Channel), not the Taiwan Strait
• The yellow route passes through Taiwan Strait, is obviously a detour from Japan to anywhere, except maybe Haiphong
• For transportation of other materials from SE Asia, e.g. Brunei, the Black route shows that Taiwan Strait is even further away from the ideal route
• Even if Taiwan Strait is more convenient, the availability of the alternative via Luzon Strait deems it "optional" instead of "essential"

Indeed Taiwan Strait is of strategic important to China, as it connects Guangzhou/HK to Shanghai and beyond. It may also serve as a short cut between Korea (Pusan) and Vietnam (Haiphong). If anyone should be worried, it should be the Koreans and Vietnamese.

Update: US PACOM map agrees with me.

Now, why is Japan so interested in a sea route which is really very marginal to its needs?

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Apppendix

A note about Great Circle (geodesic) path:

Since the earth is a sphere and the map is a projection onto a plane (with area distortion), my straight line approach is only an approximation.

To be more precise one needs to use the "great circle" to find the shortest path on a spherical surface. The graph on the right shows the great circle for (see great cicle tool here)

• Singapore -Tokyo (via Luzon Strait): 3324 miles
• Singapore - Makung (Penghu) - Tokyo: 3352 miles (should be longer because the GC path has to cut into Hsinchu, which tanker cannot sail into)
• Singapore - Kinmen - Tokyo: 3383 miles

So the path via Taiwan strait is 1-2% longer than that via Luzon Strait, not a sizable difference, but Luzon Strait is more "strategic".

The last chart is using azimuthal projection from Singpaore, so that every striaght line from the center represents the shortest (great circle) distance, (but lines not passing the centers are not). We can again see the shortest path is closer to the NW tip of Luzon.

Koizumi, Lorelei of the Pacific? - do we understand our Japanese friends?

Koizumi told Robert Novak of CNN, about his visit to the Yasukuni Shrine, which honors the war deads 'including 14 “Class A” war criminals from World War II'

• "I understand because of the war 60 years ago [that the Chinese] feel Japan is a threat. So, I understand that they want to contain Japan. I think to advance this perception of Japan as a rival and to create a sense of ‘anti-Japan’ in China would be advantageous to the Chinese leadership.”
• He then parrots Rummy, "We have to be careful about China’s military buildup, it has to be made more transparent than it is”, conveniently forgetting to mention Japan has been maxing its own defense budget at 1% GDP, or $45bn this year, compared with China's $30-45bn (official vs Rand's high end). Japan's number does not include its space program and it has a much smaller territory to defend. (See for yourself Yosukan's view of history in this picture (via Life After Jiangxi).

I seldom blog about the recent diplomatic problem between China and Japan. Because there is not much reasoning or solution I could offer.

• China is obviously worried about a re-arming Japan. It is further pissed off by Japan's meddling with the Taiwan matter. It also oppose granting a permanent seat in the UNSC to a Japan which is still ambiguous about war of aggression in general
• Western media (I mean US mainly), mostly side with the Japanese, with different motivations, ranging from the generic distrust of China's current political system to those who prefer to enlist Japan into the front of containing China

China did conveniently leverage the popular discontent to support its decision to block Japan's bid to UNSC (and let some steam off the pressurized cooker). But its reaction to Koizumi's recent Yasukuni visit has become much more restrained (since that objective is already achieved - thanks 88s for the clarification). In fact, even the street protests this spring has led to only very limited damage. CCP is more worried about letting popular movement out of control. That is why the scale of protest you have seen in Korea in the past 60 years has not been observed in China until this spring.

On the other hand, there is no doubt that today's Japan is hardly the Japan in 1930s, nor is today's international environment which is dominated by globalization and commercial interests.

In fact, one key fact that is consistently missed in westerm reporting is that PRC had always been careful to distinguish the "majority of peace-loving Japanese people" from the "minority right wing revisionist". Your can discount this as party rhetoric, but that has been emphasized every single time domestically and internationally, from 1949 to 1972 to 2005.

Personally, I have no doubt the majority of the Japanese would not endorse any war of aggression, nor do the Chinese. We have all learned that it is easier to assure one's interests through trading and negotiating (than warring). I also believe that many of the Japanese soldiers killed in WWII are innocent and there is nothing wrong in honoring them. I actually was told by some old Chinese that some officers in the Japanese Army were very friendly to kids. Furthermore, I am sure we all agree that those who run Yasukuni and Yushukan represent only the minorities in Japan.

However, what has been troubling the Koreans and the Chinese are

• Is this minority right wing endorsed by some in the mainstream in Japan? if so, what is the extent?
• How many percent of the vote do they really represent?
• How likely will the support of the right grow, given the official endorsement such as the Yasukuni visit?
• What the Japanese school and Japanese society really teach their next generation?

These are important issues, given Japan is a 'democracy'. I do not have an answer. I will just share with you some anecdotes I found.

1. The interviews by Japan Today in Yoyogi Park in Tokyo, a random sample of personal views. Please read for yourself.
2. Kyodo News Poll in MAy/2005 (via Japundit): 57.7% are of the opinion that Prime Minister Junichiro Koizumi should not visit Yasukuni Shrine this year. BUT 34.3% said he sould (the rest probably won't care). A similar survey in Dec/2004 (before the Korea/China protests): 40.8% vs 51%, so there has already been dramatic change in 5 months.
3. There is a movie call "Lorelei: Witch of the Pacific", which was a blockbuster in Japan this spring, viewed by 2M people in theatres, collecting Yen2,5Bn ($22.5M) in box office.
• For US comparison, Yen2.5M is about 8.3% that of all time high Howl's Moving Castule's Yen30Bn. 12% of all time high US Box Office (Titanic's $600M in 1997) would be $50M, i.e. comparable to the "Phantom of the Opera (2004)" or "Austin Power: IMM (1997)"
• This in important because its box office success and the popularity of the author of the original book, Harutoshi Fukui. I would talk about why this movie troubled me below
• For a review see this, for interview with the director here. Japundit called it 'ring winged and nationalistic".

I think Japan deserves to be treated as a normal nation, like Germany does. To require Japan do what Germany did is probably too demanding, but there is definitely more Japan could do. I would still want to believe the right wing will be contained at the minority status, but the trend is not entirely optimistic. While there is perhaps no clear reason to be worried about Japan today, I really hope US can take over the enormous Plutonium stockpile Japan owns. This would serve Asian people, including the Japanese people, a great favor.

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Appendix: some comments about the movie Lorelei:

The film is entertaining by itself, except the the CGI is very primitive (even compared with computer games). It is basically a what-if scenario fantasy, telling a story of how a submarine, equipped with a human sonar, stopped the evil American's B-26 which planned to drop its 3rd A-bomb on Tokyo. Instead of going into the revisionist approach of "what-if" Japan acquired this secret weapon, and potentially changed the result of WWII, I will just list a few examples

• The background of the movie is told in 3 lines. "1) 1945 Summer, the world was full of pillage and discord; 2) it was the waning days of WWII; 3) people had lost all hope in life" (click screenshots in the right). Nothing more. It then shifts to the bombing of Hiroshima, and then Japanese Navy's heroic effort to stop further nukes

• It is adrenaline ride afterwards, until the sub accomplished its mission and disappeared into the sea in front of some 5 dozens of US destroyers. It ends with the aged US navy officers talking with admiration the "Witch of the Pacific" in Saipan years later. Maybe US surrendered unconditionally, maybe Japan did, choose your own preferred version.

• Throughout the movie, all Japanese soldiers and officers talked about how their family members were killed (presumably by US air raid). One of the main characters was so vengeful wanted to revenge the Kamikaze way.
• The movie talked about Nazi's eugenic experiments. But apparently the best gene comes from a Paula who is half Japanese and speak fluent Japanese
• The only anti-war dialogue is from the American naval officers, who said "I hate war"
• Norimitsu Onishi of NYT commented, 'Colonel Asakura, wants America to annihilate Tokyo with an atomic bomb so that Japan can be reborn; if Japan simply submits to America, Colonel Asakura says in one of the movie's most memorable lines: "Japan will degrade itself and become a slave to the United States. Does a country like that have any worth?".....Those sentiments, Mr. Fukui says, are the movies' most salient because they reflect widespread feelings among Japanese that their country is stumbling forward....Those extremists, though destroyed in his stories, are more attractive than the heroes. The good guys, in another commentary on today's Japan, ''have no strong vision,'' he said.....Mr. Fukui's stories reflect prevailing beliefs among the political class. But more than speeches or newspaper editorials, the big-budget movies based on his stories may go a long way toward influencing ordinary Japanese who, according to polls, have yet to be convinced that Japan needs a strong military.'

More reviews in Chinese can be found here , here and here.