A blog on strategies, and applying strategic perspectives on business related issues, and on miscellaneous discussions about China
A picture in Beijing
This is a picture from my hotel room in Beijing. The two building in construction next to the tallest one in construction is the (in)famous CCTV Tower. A closer view of which can be seen below (taken at the SE corner of 3rd ring, just outside China World Hotel).
The sky is clear, because it has been raining the previous day.
The green area is the embassy zone in Chaoyang District. The only reason the trees were preserved is because the land belongs to foreign governments. All these friends who recognized China during the early years were rewarded financially (on paper) with the land appreciation. A particular example is the enormous lot comprises of two buildings right in front of the picture. It belongs to one of the former socialist brother countries. Later, after democratization. The two reached a deal for a friendly parting. The big brother was happy to get rid of the poorer pal, while the younger one wanted independence. So a part of the land was split and a new building was built. The enormous lot was split into two, the smaller building to the left of the picture becomes the embassy of the "new" country.
Quiz: (leave answer in the comment field please)
1) which two countries are these?
2) I pass by the German emabassy a few times, I am wondering what happened to the former Democratic Republic of Germany emabssy now. It should have been much larger than the size of the FRG embassy.
Shanxi travel notes
I went to Shanxi for a few days recently (the bonus is to cover one more province in my footprint map). For the interest of time, instead of posting a travelogue, I will just list a few notes to share.
The Brick Kilns
1. People talked to me about the slave kiln voluntarily (before I asked). People I talked to confirmed that this has been widespread for some time and the local governments have at least been aware of such things to some degree.
Worse still, there was at least another case of burying a slave alive in Ruicheng County (芮城). I hope if there are journalists who come across this could go there to confirm if this is true. Because if it is indeed the case, that means there have been cover-ups in the investigation. The People (or Mr Wen) will have more ammunition to ask for a thorough review of the accountability of the bad officials
2. Contrary to the sentiment outside, in general, the local people do not feel that the punishment has been too lenient. I even heard of sympathetic comment about a deputy county mayor who was on the job only for 1 year.
3. On the road, one often see some 'wanderers'. the locals who drove with me told me that many of them were "released" from the kilns, and left to survive by themselves. "release" was actually a euphemism, the kiln owners actually drove them to the middle of nowhere and got rid of them. Since many of these ex-slaves are mentally retarded, they have no idea where they want to go. So they just wandered around.
4. Across the border in Sha'anxi province (陜西), I saw many klins by the freeway as well. I do not know if the situation is similar as it is in Shanxi (山西). But I think this worths a good story to cover for the journalists because
- if these kilns do not hire slave labor, it would be interesting to know how they managed to compete with the kilns 50-100 kms away across the provincial border
- if there are many kilns in Shaanxi, but there has been no abuse. That means something has really been going wrong in Shanxi. Mostly likely it is the provincial government
6. Many small factories were seen along the coal area (e.g., between Linfen 临汾 and Pingyao 平遥 ). We saw coal everywhere along the river and the rail tracks. Many of these small factories store a lot of coal in their back yard. Apparently, it is cheaper to burn coal for power for them
7. When we passed through Xian 西安，construction was everywhere. It was reminiscent of Pudong in 1996-1997. If you ask me whether China's growth will continue for the next decade, you need to visit these cities. They are undergoing the same dramatic changes as the coastal cities on 10-15 ago. In 10-15 years, Xian will be like Shanghai, Taiyuan will be like Nanjing.
8. We took the cheap cabin train for a large part of our trip, mainly because there is only one cabin class ("Hard seat") available in the schedule. But we also wanted to talk to the average citizens. In a culture where people are shy in talking to strangers the train is perhaps the only exception, this has been so even back in the Mao era (when the society was more close).
On the way, we were inquired twice about the pork price in HK, by two groups of middle age ladies. They said 500g of pork cost 5-7RMB last year and it cost 17.5RMB now. To them pork price is like gasoline price to the American.
I asked my mom when I went back to HK. Apparently she failed to notice the difference. After some questioning, my conclusion is that the price hike was probably less than 50% in HK. It is understandable that the price hike was much more noticeable in Shanxi, because all the cost come from the real cost of "manufacturing" the pork, i.e. rearing. Whereas in HK, or perhaps in coastal province the "value-added" (transportation, middle man, distribution) represent a large portion of the price, which has not changed as dramatically.
(similar observation on the change in gasoline price in US vs HK, while crude oil price hiked in the past few years. The percentage increase in US was much higher than that in HK, as the base in HK was much larger.)
Going into the GFW
Probably much less blogging here, please also check the msn blog which I had sort of abandoned since this year. I will proably post there if I find the GFW too time comsuming to tackle.
Meanwhile, enjoy this cross-strait link via ESWN, perhaps a much better gauge of what the people inside the GFW think about the other side of the strait, which is quite different from what you read from the Angry-youth over the internet.
help - accessing blogspot from inside the evil GFW
I would appreciate if anyone could let me know how to do this. my email is sunbinblog (at) gmail (dot) com.
Many thanks in advance.
Economists Against Protectionism - WSJ.com
Economists Against Protectionism
By PAT TOOMEY
August 1, 2007; Page A15
On May 4, 1930, 1,028 economists signed a petition urging Congress and President Herbert Hoover to reject the Smoot-Hawley Tariff Act, arguing that "increased restrictive duties would . . . operate, in general, to increase the prices which domestic consumers would have to pay." Neither Congress nor the president listened, but the stock market certainly did.
Though many associate the Great Depression with the stock market crash on Oct. 29, 1929, the market actually rallied during the six months following Black Tuesday, while the defeat of Smoot-Hawley appeared likely. The market turned south again in April 1930 as those hopes of defeat gradually dimmed.
The Dow Jones Industrial Average sank a full 8%, from 250 to 230, over just two trading days in June 1930, in direct response to the Senate's passage of Smoot-Hawley and Hoover's announcement that he would sign it. Exacerbated by other flawed governmental policies, an international trade war continued to drive the market down until the Dow hit a low of 41 on July 8, 1932, having lost 89% of its value from its September, 1929 high. It would be 25 years before the market recovered its 1929 peak.
Unfortunately, Congress is suffering from a bad case of amnesia. Over the past several months, protectionism has reached a fever pitch with lawmakers in both Houses clamoring to attach their names to as many as 50 anti-trade bills.
In the Senate, Max Baucus (D., Mont.) and Chuck Grassley (R., Iowa) have joined longtime protectionists, Chuck Schumer (D., N.Y.) and Lindsey Graham (R., S.C.), in sponsoring legislation to punish China for currency intervention. Tomorrow, hearings in the House Ways and Means Committee commence with a host of protectionist measures on the agenda, including legislation by Reps. Timothy Ryan (D., Ohio) and Duncan Hunter (R., Calif.) that would allow the Commerce Department to increase duties on China. Not to be outdone, the top-tier Democratic presidential candidates are falling over themselves to reject the free trade policies of Bill Clinton's Democratic Party.
In this respect, Congress hasn't changed much over the past 77 years. Thankfully, economics hasn't changed much either: 77 years after 1,028 economists stood athwart protectionism yelling "stop!" a new batch of economists are just as determined to turn back the rising protectionist tide.
The Club for Growth is disseminating a petition advising Congress "against imposing retaliatory trade measures against China." Like its historical counterpart, this petition is signed by 1,028 economists from the left and the right. They come from all 50 states and include four Nobel laureates, three former chairmen of the Council of Economic Advisors, former members of Congress, a former Treasury secretary, and economics professors from our country's most prestigious universities.
While the signatories on this petition will certainly disagree on a host of other issues -- at least 20 signed a 2003 petition against the Bush tax cuts -- they all agree that, in the words of the petition, "there is no foundation in economics that supports punitive tariffs."
Adam Smith long ago observed that "It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy." As members of Congress should know -- but unfortunately don't -- the maxim of the family applies equally to a nation. This simple truth explains the irresistible logic of free trade.
Free trade among and between people of various nations is the mechanism that allows producers to maximize their comparative advantage while consumers maximize the value they receive for their dollar. Free trade allows American producers to sell jets and software to the Chinese, while American consumers buy toys and apparel from China -- a win-win proposition for both buyer and seller.
Protectionists attempt to disrupt the market's natural tendency to seek efficiency by imposing tariffs in order to artificially increase the price of foreign goods relative to domestic competition. Thus, tariffs are simply a tax on American consumers, and it would be Americans, more than the Chinese, who pay the price. The very people Sens. Schumer and Graham claim to help will suffer from the higher prices, fewer jobs and potential trade war that will result from their legislation.
As the Club for Growth petition demonstrates, support for free trade is virtually universal among reputable economists. More importantly, history has shown the devastating consequences of protectionist policies. Let's hope Congress steps back from this precipice and rejects the misguided policies of Smoot, Hawley, Schumer and Graham.
Mr. Toomey is the president of the Club for Growth. More information about the petition is at http://www.clubforgrowth.org/
Protectionism - the real threat to growth, stability
Stand Up, Free-Trade Democrats!
THE PETITION TO STOP PROTECTIONIST MADNESS
The net effect of Little Boy and Fat Man
Fat Man killed another 40,000 in Nagasaki on 9 August, 1945.
Tojo and Emperor Hirohito had 3 full days to save the people in Nagasaki. They decided to wait and take chance.
A total of 110,000 were killed as a result of these two bombs. Including the injured who are dead subsequently, the number could increase by another 20-35%.
Of the killed, perhaps only 10% or so are military pesonnels, plus another 15-30% engaged in military industry, as shown in the maps here.
Total death of the atomic bombs in WWII in then about 110,000 to 140,000 (according to the wiki source above).
Total death in the Asian Theatre of WWII, according to wiki data, is about 29M (including civilians and military personnels).
Total number of days of WWII (from 8/Dec/1941 to 15/Aug/1945) is 1464 days, For China, the war started on 7/Jul/1937 and the total length is 2961 days.
The death/day, according to calculation here, is 12,889 people per day. i.e. had the war been prolonged for one more day, about 13,000 more people from all countries would have died.
Therefore, if Little Boy and Fat Man had together ended the war by 140,000/12889 = 11 days earlier, they had reduced the total number of people died in the war.
If they ended the war half a year earlier, it would have saved (183-11=172) x 12889= 2.2 million people
If the war was ended one year earlier as a result, the number of people saved would have been (365-11=354) x 12889 = 4.6 million lives
The Japanese lives that were killed per day is 1790. So from Japan's perspective the sacrifice of the people of Hiroshima and Nagasaki would be "worthwhile" if the war was ended 140,000/1,790 = 78 days earlier. (i.e. less than 3 months)
Of course it is unfair to the people who lived in these two cities, especially those who were not even engaged in the military industry, who were the ladies, the elderlies, and the children. The tragedy is that it had to take all their lives to convince Tojo and Emperor Hirohito (Showa) that the war was over for them.
But in a war the victims are quite random. If it were not for them, it would be the residents in Tokyo...
The Tokyo firebomb killed 80,000 to 100,000 Japanese people.
If Little Boy and Fat Man had avoided 2 such firebombs which might have been launched subsequently, they had reduced the net casualties of Japanese civilians.
Total death in the Battle of Okinawa is about 77,500 (12.5k US soldiers, and 66k Japanese militia and soldiers).
If 2 of such battles were avoided as a result of Little Boy and Fat Man, they would have saved 155000-140000=15000 lives.
The population of Okinawa is about 1% of the total population of Japan. If conventional war had to go to Tokyo from the south, at least 60-75% of Japan would be battleground like Okinawa.
i.e. total death would have been 60-75 x 77,500 = 4.6-5.8M people.
Fumio Kyuma might have been kissing up his US ally, or what he said was not exactly the right reason. The fact that the two bombs were necessary was something that could really "not be helped", as Fyuma stated. But to characterise the strategic importance of the two bombs as the beginning of the Cold War is gravely wrong, and is a great dis-respect to those who died in the two cities.
- The Soviet entered the war on August 8, 1945. After Little Boy was dropped, and shortly before Fat Man arrived. Therefore, it its totally against any logic that US dropped the 2 bombs to prevent the Soviets from entering. The more realistic scenario is, that, Tojo and his clan is more afraid of the Soviets than the American, and decided to surrender.
Remember this when you visit Hiroshima or Nagasaki next time. Remember the sacrifice of the innocent Japanese who died in August 1945. Remember how many lives they have saved for their own country, and for the world.
Remember Manhattan Project. Remember Oppenheimer. Remember Einstein.
Geo-stats Jan-Jun 2007
You may wonder how I got different visitors from all these 150 countries, and why there is some traffic even though I almost stopped posting for a few months in this period of time. My page stats here is the answer.
Why the Economist is so lovable
In Asia we do not have drinkable tap-water, but the boiled water from your mom's kitchen is even cleaner and healthier.
There are cases I have bought bottled water, mainly for convenience. But I have always been puzzled by why people would prefer a bottle, potentially with more bacteria and impurities, than the alternatives. I wonder why Green Peace never mention about this, and why the HK government is not imposing a 'plastic bottle tax' :)
Drink less bottled water, save the money and subscribe to the Economist.
Bottled water and snake oil
Jul 31st 2007
Is bottled water proof that consumers are daft?
SO THE emperor really isn’t wearing any clothes. Last week PepsiCo announced that the label on its Aquafina brand of bottled water will soon carry the words “public water source”, instead of simply the innocent looking “P.W.S.”. That’s right: Aquafina is to all intents and purposes tap water. Coca-Cola is under pressure to follow suit with its Dasani brand, though so far it is refusing to do so. “We don’t believe that consumers are confused about the source of Dasani water,” Diana Garza Ciarlante, a Coca-Cola spokeswoman, said. “The label clearly states that it is purified water.”
No doubt Coca-Cola still remembers what happened in Britain in 2004, when the press made a stink over the fact that Dasani was simply filtered tap water. The company became a laughing stock, as readers were reminded of an episode of a popular TV comedy, “Only Fools and Horses”. In it Del Boy, a decidedly dodgy businessman, decides to bottle tap water, selling it as “Peckham Spring”, named after the unprepossessing inner-London borough. No sooner had the initial furore died down than Coca-Cola discovered that some of the water had been contaminated betwixt tap and bottle, and decided to admit defeat. Dasani was axed in Britain a mere five weeks after it was launched.
Will Pepsi’s new label have a similarly disastrous impact on sales of Aquafina, which is now the market leader in bottled waters in America? It is by no means inevitable.
The success of bottled water is in many ways one of capitalism’s greatest mysteries. Studies show consistently that tap water is purer than many bottled waters—not including those that contain only tap water, which by some estimates is 40% of the total by volume. The health benefits that are claimed for some bottled waters are unproven, at best. By volume, bottled water often costs 1,000 times the price of tap water. Indeed, even with oil prices sky high, a litre of bottled water can cost more than a litre of petrol. And on top of that, there are the environmental costs of transporting bottled water and of manufacturing and disposing of the bottles.
Yet sales of bottled water have been booming. In 2006 Americans spent nearly $11 billion buying 8.25 billion gallons (31.2 billion litres) of the stuff, an increase in volume of 9.5% on a year earlier. The average American drank 27.6 gallons of bottled water last year, up from 16.7 gallons in 2000.
AFP Quite a business model
In Britain, despite the failure of Dasani, sales of bottled water have soared from 990m litres in 1998 to 2.28 billion litres in 2006—worth $3.3 billion and accounting for 15% of the total soft-drinks market. Its share is forecast to rise to 21% next year.
Moreover, drinks companies are betting heavily on the future growth of bottled water, including popular new varieties with added “healthy” ingredients. In May Coca-Cola paid $4.1 billion for Glaceau, the company that makes vitaminwater.
To many, all this is the ultimate proof that consumers are daft and easily manipulated by retailers to buy things they don’t need. Indeed, a campaign, “Think Outside the Bottle”, is now under way in America, aiming to wean the public off bottled water. It is winning influential converts. Having successfully popularised gay marriage, San Francisco’s charismatic young mayor, Gavin Newsom, is now trying to achieve the opposite impact on bottled water: his ban on the use of city funds to buy the stuff took effect on July 1st. Other mayors are starting to follow his lead.
Even so, there may be good, rational reasons for the popularity of bottled water. It is convenient, much more portable than a tap. Also, some consumers suspect, perhaps correctly, that there is a “last mile” problem with tap water. It may be pure as driven snow when it is tested at the plant, but is it still so virginal once it has passed through old pipes in homes and offices?
Above all, consumers may be buying bottled water because they believe it is fundamentally safer, less likely than tap water to become contaminated—a growing worry nowadays, thanks to terrorists. And, if it is contaminated, that contamination is likely to be spotted and neutralised faster and more effectively by a bottler than by government regulators or a water utility.
The contaminated Dasani water in Britain brought bad publicity, but the dirty water never reached the public. Likewise, the impressive way that Perrier handled its benzene contamination scare in 1990—immediately recalling its entire output of bottles—is a case study in how to manage such a problem.
Perhaps the popularity of bottled water is an indictment of the waste inherent in capitalism. On the other hand, maybe it is testimony to the good job that capitalism, in the form of bottled-water producers, has done in developing quality controls and safety protections that are more reassuring than those put in place by our governments and regulated utilities. The difference may be small—but big enough to get those who can afford it to pay a substantial premium for what is, after all, the stuff of life.