Monday, October 15, 2018

A View of China not Understood in the US

I gave a presentation to a high school teachers' workshop in the Bay Area in August 2013. Reviewing the presentation, I find that most of the material are still relevant today.

Fake Conversation about Jamal Khashoggi

King Salmon: Hello.

Operator: This is White House operator, please hold for President Trump
DJT: Hello, King. Wonderful to hear your voice, just great, great.

KS: What can I do for you?

DJT: I am calling about this Ja-, Jamal Khashoggi. You know what the Turkish government folks are saying, don't you?

KS: No what? I don't know anything about this Khashoggi.

DJT: They are saying that he went into your consulate in Istanbul and never came out. They think he was killed inside.

KS: Can't be. My people said he left within one hour.

DJT: The Turks said 15 Saudi nationals flew into Istanbul in two separate jets from Riyadh just before Khashoggi came into your consulate.
DJT: They are saying that your hit squad killed him and used bone saws to dismember him and carried his body parts back to Riyadh.

KS: Impossible. Khashoggi left on his own accord.

DJT: Hey King, I am afraid I can't convince my Congress of that story line. How about if I say some rogue killers did the dirty deed?

KS: Rogue killers? Yeah, that will be OK.

DJT: Which of the two planes did the rogue killers came in?

KS: Er, ah in both planes.

DJT: I think I can convince the American people that some rogue killer did the job.

KS: Thank you. We must maintain our country to country relationship.

DJT: Absolutely. By the way, our $160 billion arms deal is still on, right?

Monday, October 8, 2018

Comment on Secretary State Pompeo's visit to Beijing

Pompeo made a visit to North South Korea, Japan and China. I was asked to comment on his visit to Beijing on CGTN on October 8.

Less than a week later, I was asked to comment on Premier Li's trip to Tajikistan and Europe and on Shanghai Cooperation Organization.

Thursday, October 4, 2018

China’s smartphone is paving the way to AI supremacy

I wrote the short piece below in early September to help publicize Kai-fu Lee's book and speaking tour.

Artificial intelligence (AI) used to be a popular sci-fi topic but the idea that the computer can do things that the human cannot, took a lot longer to come into reality.  Even today, AI is far from perfect; a self-driving car can still run over a pedestrian.

However, thanks to the development of deep learning in AI, Waymo, the self-driving startup spun off from Google, is already valued at well over $1 billion despite not yet having a commercial version that would replace the driver behind the wheel. Deep learning is the concept that the algorithm can self improve based on the date fed into the AI program. This is why Waymo vehicles constantly drive around Mountain View to generate more data and thus keep refining the computer model intended to replace the human driver.

According to Kai-fu Lee, within the last three years, deep learning has also enabled China to catch up to Silicon Valley in AI. Lee has just written a new book entitled, “AI Superpowers: China, Silicon Valley, and the New World Order,” in which he explains that China’s adoption of the smart phone and mobile computing has allowed China to catch up to Silicon Valley and in some situations even surpassed Silicon Valley.

Today 800 million smart phones in China are used in many more ways than in the US and thus can generate orders of magnitude of more data for their applications based on AI. For example, the smart phone in China can serve as a digital wallet to send and receive money. The homeless sitting on the sidewalk can panhandle by dangling the computer code for the passersby to scan by phone if they wish to donate to the panhandler’s bank account. The AI algorithm may not be as powerful as that written in Silicon Valley, but the availability of vast amounts of data can more than make up the difference.

After getting his PhD in AI from Carnegie Mellon, Dr. Lee joined Apple and led the development of the voice recognition system that became Siri. This was even before Steve Jobs rejoined the company. He then went to China to start R&D centers for Microsoft and Google before becoming a leading venture capital investor of AI startups in China. He is certain that AI will be as revolutionary to the world as the steam engine that led to the first industrial revolution and electricity to the second.

As part of his book tour, Dr. Lee will visit the Bay Area to talk about AI, the strides China has made and the implications for the world. He will speak at the Santa Clara Convention Center on September 26, jointly sponsored by The Committee of 100, The Commonwealth Club and NACD, northern California chapter. Go to
For more information and to register.

The author is a retired international business consultant, a member of Committee of 100 and occasional contributor to online Asia Times.

Saturday, September 1, 2018

Leapfrog for Cchina to catch Silicon Valley in AI

Edited version first appeared in Asia Times.

Kai-fu Lee’s book on artificialIntelligence will be published by Houghton Mifflin Harcourt in September and Dr. Lee is already scheduled to make several appearances in the Bay Area to talk about his book around the last week of September.

The full title of his book is “AI Superpowers: China, Silicon Valley, and the New World Order.” In his book, Lee makes the startling contention that within the last three years, China has caught up to Silicon Valley in AI. And, no, Mr. Trump, it’s not because the Chinese has stolen the algorithm from Google. Rather, China leapfrogged the US in mobile computing, which enabled China to take a different path to AI nirvana.

Dr. Lee is one of the pioneer creators and thinkers of artificial intelligence. After he obtained his doctorate degree in AI from Carnegie Mellon, he joined Apple in Cupertino to develop the voice recognition system and then left for China to build research centers of excellence for Microsoft and Google. Now he is the premier venture capitalist investing in AI startups in China.

Nowadays, artificial intelligence has become part of daily conversation, even if not everyone understands what AI is all about. Wall Street considers AI to be the latest winning investment in technology following the Internet and the smart phone. Lee believes development of AI is even more profound than that, equating the future impact of AI on the human civilization to be as fundamentally revolutionary as the invention of the steam engine that ignited the first industrial revolution and electricity for the second.

Deep learning raised the power of artificial intelligence

AI became a real emerging technology when researchers moved machine learning to the next level called “deep learning.” Properly designed algorithm, called neural network, can learn to fine tune its algorithm by repetitive trial and error calculations, at lightening speed, until the best solution is derived based on the data set fed to the algorithm. The bigger the data set that’s fed to the algorithm, the better is the resulting optimization and solution.

The importance of big data, explains Lee, has allowed China to close the gap with Silicon Valley in AI because China generates much more useful and higher quality data than in the US. Lee credits Steve Job and the introduction of the smart phone as the event that pushed China into AI development.

Observers in the West may not have noticed that as China’s economy grew at dizzying rates in the 40 years since reform began, the country leapfrogs certain crucial development along the way. Telecommunication is one such example. When China began its economic reform, its telecommunication network was woefully inadequate. The country was so under invested in copper wire lines overland that it was easier for the consumer to adopt the mobile phone rather than waiting for the allocation of a landline.

The smartphone facilitated China’s entry into AI

When Apple introduced the iPhone in 2007, China already had the largest number of mobile phones users in the world, and the users were primed to upgrade to a smartphone, albeit not always an iPhone but a lower priced, domestically made alternate. At the time most Chinese did not own a computer at home and the smartphone gave the Chinese user Internet access bypassing the need to buy a computer.

Chinese entrepreneurs quickly learn to develop apps specifically for the smartphone. For example, being decades behind the West, the use of credit card never really took off in China. Now with WeChat, considered a “superapp” by Lee, the smartphone can be linked to the owner’s bank account and the phone becomes a digital billfold able to make and receive payments.

The American AI monitors the user preferences such as what website the user visits. In China, Tencent, the owner of WeChat, can gather data not only on what the user looked at, but what he/she bought, from whom, where and when. The data collected is much higher quality and multi-faceted. In addition, China has at least 3 times more users generating data for feeding into AI optimization than in the US.

The author argues that while China remains behind the US on the creative side of writing AI algorithm, China has been closing the gap and in some aspects surpassing Silicon Valley for certain uses of AI. This has occurred within the most recent three years because China has been gushing high quality data derived from the smartphone.

Data drive the AI virtuous cycle

The vast quantity of quality date is helping China refine their AI, which helps to improve the product offering, which increases customer acceptance, which generates even more data to optimize the AI program. Lee calls this the virtuous cycle of AI whereby the availability of date would allow an inferior AI algorithm to surpass the performance of a superior AI that do not have access to as much data.

One example would suffice to illustrate the difference between China and the US. A program in China called Smart Finance has used AI and access to the user’s smartphone to determine the creditworthiness of the individual and grant the user a personal loan. No collateral, no credit report, no personal references, and no banking information are needed. And the single digit loan default rate is the envy of commercial banks.

Apparently AI correlation of hundreds of data points residing in the smartphone (Lee calls them weak features) can more accurately evaluate the reliability of the borrower, even if no human banker can fathom why. The iteration of AI over millions of smartphones have established predictive rules and the accuracy will only improve with use—and default becomes even more uncommon.

While ground breaking AI research will continue in the US, China is graduating upwards of a million AI engineers every year. They are motivated and will work long hours to find new products and services based on AI solutions. And the access to huge amount of data will more than offset their not being as good in designing the algorithm.

China’s leadership recognizes the importance of AI and has allocated financial support to encourage and further AI research. The US? Not so much federal support and America will continue to depend on private sector efforts. Private sector AI will remain proprietary and be kept behind closed doors.

The author does not express much anxiety over the possible rivalry between the US and China. He is much more concerned with eventual advances in AI that could lead to wide spread displacement of human by machines. Owners of the powerful AI could become members of a small elite class that enjoy all the wealth and status while an “useless” class of masses can no longer generate enough economic value to support themselves.

This is where Lee becomes very personal drawing from his own dramatic experience as a cancer survivor. He suggests that no matter how advanced AI becomes, it can never replace human interaction that offer love and compassion. He proposes that we begin to prepare for the day by placing higher priority and monetary value for socially beneficial activities. In other words a drastic and basic reordering of our value system based on humanity.

His book is a thoughtful treatise on the possible benefits and destructive damages AI poses to the world. Anyone wanting to understand the downside of unbridled AI advances on the humankind will find relevant questions and answers in this book.
The Committee of 100 is the cosponsor with the Commonwealth Club of Dr. Kai-fu Lee’s speaking engagement in Santa Clara on September 26. Go to here for more information. Dr. George Koo is a retired China business consultant and a regular contributor to online Asia Times.

Monday, August 27, 2018

The World could take a lesson from Ultimate Frisbee

The World Junior Ultimate Championship has just concluded in Waterloo Canada last week. The United States won both of the under 20 men and women events, pretty much as expected because the US has been dominating this sport in recent years.

Eighteen nations sent teams to compete on the boys’ side and 13 on the girls’ side. As a proud grandpa, I went to watch my grandson play. Born and raised in Atlanta, Matthew has been a member of the Atlanta elite team that competed for the US national championship.

In Waterloo, however, Matthew was going to play on China’s team. This was the first year that China was sending a youth team and the team was short handed and pleased to invite my grandson to join and play on their team. I was curious as to how the 6 foot 6+ inch young man that does not speak any Chinese would adjust to his new teammates.

Even though Ultimate as an organized sport has been around for over 30 years, most people don’t know much about this sport. The rules are really simple. Each team put 7 players on the field and the object is to throw the flying disc over the opponent’s endzone. Catching the disc inbound and over the goal line constitutes a score. If the disc is dropped or knocked down and hit the ground or intercepted by the opponent, possession reverts to the other side and they will try to score.

To be any good at this sport, the player must be in top physical condition, able to sprint and leap for high flying discs and dive for low flying ones before the disc hits the ground. Each line of 7 players must stay on the field until one side or the other scores. A normal squad typically carries a complement of over 20 players. The team from China came over with a roster of 14 players plus Matthew. By the last day of the tournament, China was down to 13 including Matthew. (Ultimate in China is a private sector club sport and does not enjoy any government support.)

Matthew Dacey Koo reached high to snatch the disc away from a Dominican player

Any physical contact between players, intentionally or not, is not permitted. And, screens and picks as practiced in basketball would constitute an infraction. The most fascinating aspect of this game is that there are no referees to officiate the game! In the event of any dispute on the field, the players are expected to be fair-minded, show good sportsmanship at all times and negotiate a settlement acceptable to both sides.

The games were played under the auspices of the World Flying Disc Federation, a body recognized by the International Olympics Committee, and relied on adherence of all the players to the doctrine known as “Spirit of the Game.”  According to the WFDF, “actions such as intentional fouling, cheating, dangerous plays, disrespectful conversations and other ‘win at all costs’ are contrary to the Spirit of the Game.”

Consequently, the dynamics of Ultimate are unique compared to other competitive sports. In an officiated sport, the players are psychologically disposed to push the boundary of acceptable behavior leaving the question of whether a rough play has taken place to the judgment of the referee. In Ultimate, the players have to play based on self-restraint and give more leeway to the opposing team during play.

At the end of the game, the two teams form a large circle with alternating players from each team and their arms draped around their neighbors. The players congratulate each other on good plays and vote on the player on the opposing team that is most emblematic of the Spirit. Win or lose, the players leave the game with feelings of fellowship and sportsmanship.

                                    China and Mexico formed a team circle after their game

Each team has to rate the opponent on how closely they followed the Spirit of the Game. At the end of the tournament, the ratings were added up for a total score. This year, both teams from New Zealand were honored as the teams that best exemplified the spirit of Ultimate.

I was left to ponder the question: why can’t the world community of nations interact with each other along the same principle? A recent article from New York Times raised the same question describing the use of a game of Ultimate to promote peace between the Israelis and the Palestinians.

As for my grandson, he enjoyed being one of the major scorers for China, even though China was winless in nine matches. He also interacted and made friends with players from all over the world. By hanging around his Chinese teammates, he was introduced to a world of ethnic cuisines heretofore new to his palate that he would take back to Atlanta. Two years from now at the next world championship, he will be too old to compete in the Junior level but will be eligible for under 24 championship. Already, there were murmurs that China will want to invite him then.

Friday, August 17, 2018

The World According to Donald

Anything he says must be true unless he says something opposite the next day, in which case the latter is more true.

He is not above the law; he is the law.

He is not above the law, because he does not know what law is.

He is not above the law, but he doesn’t care.

He is not above the law, because law applies only to everybody else.

He doesn’t even think the law of gravity applies to him. (Let’s take him to the middle of a lake and see if he can walk on water.)

He has revoked the security clearance from former CIA Director John Brennan for disclosing a devastating national secret, namely, that his conduct is nothing short of treasonous.

If you write or publish something critical of him, you are fake news.

If you buy from him, you are a good country. If you sell to him, you are a bad country.

Wednesday, July 11, 2018

Should the US try to keep China's technology from advancing?

This blog first appeared in online Asia Times.

A number of commentators, including Asia Times’own Pepe Escobar, have suggested that the trade war started by the Trump Administration is not about IP theft or unfair trade but about not losing the technology race with China.

Escobar believes Trump is feeling threatened by China’s stated goals to become the world leader in 10 fields of technology by 2025. CNBCagrees though more narrowly focused on who will win the 5G development, the technology that will control the next generation of mobile Internet.

One way to slow China down is to grant one-year visas to students from China wishing to continue their graduate studies in the US. Since most PhD programs take 4 to 5 years to complete, having to renew their visa every year and subject to arbitrary rejection would discourage some from applying to American universities. 

The visa processing at the US consulates in China has also gotten murky lately. PhD researchers planning to present their research findings at national technical conferences in the US are finding the visa approval process delayed without explanation. In some cases by the time they have their visa, it was too late to attend the conference.

Folks like FBI Director Christopher Wray and Senator Marco Rubio might privately snicker and applaud these tactics as ways of deterring “non-traditional” intelligence collection; the actual consequences will be more seriously damaging to US national interest.

American universities need STEM students from China

Every year, about one third of international students coming to America for graduate studies are from China. Most the students from China major in STEM (science, technology, engineering and mathematics.) Graduates of these majors are most needed for the US to maintain its technology leadership and these are the same majors that born and raised in America kids find too challenging and thus avoid.

Graduate schools of major universities depend on students from China to staff their research programs and uphold the quality of work. Without them, many of the graduate schools would shrivel and survival becomes problematic.

The claim that tens of thousands of students from China are sent to spy is nonsense and comes from xenophobia. Graduate research advances the boundary of human knowledge. Such research does not get involved in militarily sensitive or national security related work unless the researchers qualify for appropriate levels of clearance. 

Often overlooked is that in the past, most of these students, upon completion of their advanced degrees have remained in the US to work. Silicon Valley would be a mere shadow of itself if Chinese with advanced technical degrees did not choose to accept positions at Apple, Cisco, Google, Intel, Microsoft and others.

Just a bit over ten years ago, Don Pryzbyla, the FBI special agent in charge of Silicon Valley, said in a BBC interview that his enormous challenge was to keep track of around a hundred thousand Chinese working in the Bay Area because they were all potential spies for China.

As if buying Pryzbyla’s line of thinking, the Trump administration is now figuring out different ways of discouraging Chinese from remaining in the US but pushing them back to China. Instead of sticking around to add to America’s edge in technology, they will contribute to China’s instead. How smart is that?

Racial bias also hurt Americans with Asian ancestry

America’s racial discrimination doesn’t just apply to students from China, but ethnic Asians with American citizenship feel the same sting. As a recent studyrevealed, Chinese Americans are especially susceptible to false arrest, accused of espionage, spend time in jail and then have charges dropped or dismissed.

Unfortunately for the Chinese Americans victimized by such incidents of false arrest, they almost never receive compensation for the damage done to their reputation and career. They simply do not get justice.

Sherry Chen is the latest example of atrocious miscarriage of justice. She was arrested, put in jail and accused of spying for China. Before her arrest, she was an award-winning hydrologist working for the National Weather Service. After the charges were dropped, the Department of Commerce (has oversight over NWS) would not let her go back to work.

With the support of the Asian American community, Chen took her case before the Merit Systems Protection Board, the judiciary body that addresses complaints from Federal employees. Historically, MSPB ruled in favor of the plaintiff less than 2% of the time. Yet Chen won. The presiding judge wrote a 135-page opinion that overwhelmingly ruled in her favor.

This should have been the bitter sweet, happy ending for Chen but it was not to be. Despite a letter from a Congressional Caucus and a letter from over 130 Asian American organizations to Commerce Secretary Ross urging rectification for Chen, the DOC spokesperson said on June 18 that DOC would appeal the MSPB decision.

The DOC announcement gave no new arguments that would justify the cynical decision to appeal. 

With the bench lacking appointments to replace missing members, the DOC knows that the MSPB panel does not have enough judges to form a quorum and rule on the appeal. It will be years before the appeal could be heard. In the meantime, Chen will not get her job back, not get her back pay and will remain in limbo.

Sherry Chen is totally in the right but because she is a Chinese American, justice is not served. That’s the way it is in America.

Chinese American kids punch way above their weight

However, if America hopes to maintain its technological edge over China for the years to come, Congress and the Federal government need to face an inconvenient reality. Asian Americans make up less than 6% of the population but earn over 25% of all the STEM PhDs awarded in America every year.

A recent article in the New Yorkerreported that Asian students make up 16% of the public school student body but occupy 62% of the enrollment to the elite high schools of New York City. Admission to those schools is based on competitive test scores.

These Asian kids live in the same ghettos and are as poor and disadvantaged as their black and brown brethren but they are brought up differently. Asian parents scrimp and save to make sure that their children get the best possible education and they regularly remind their kids that education is their ticket out of poverty.

Rather than wrinkle their white noses at the supposed personality flaws of Asian kids, America needs to encourage their development and not penalize them by depriving them of opportunities for superior higher education.

We now live in a world of fast developing and ever changing frontier in technology. It’s time the American white mainstream abandon century old racial bias against Asian Americans and reconcile the reality that the future of America will need every one of these Asian American kids to realize his/her full potential.

Saturday, July 7, 2018

How will the trade war started by the US end?

First posted on Quora.

It will end when Trump hears enough complaints from (1) American farmers who suddenly have all kinds of harvest ready for export but no place to sell to, (2) American consumers who find prices on everyday goods increase by 15 to 25%, and (3) American multinational corporations with locations all around the world telling him that tariff on intermediary goods they make or buy and tariff on final products they export are killing their bottom line.

At that point when the voices of discontent are sufficiently loud and because Trump is not tone deaf, he will declare, possibly with China’s complicity, that he has won the trade war and is calling an end to the war.

Saturday, June 23, 2018

Can you call China a democratic country? Why?

This blog was lifted from an answer from Quora

China is not a democracy in the sense that while they might have election for local officials, they do not get to vote for their national leaders.
Not being a democracy means China does not go around telling other governments how to be democratic.
Not being a democracy means they don’t spend money of TV ads telling their people as to who is a lesser crook and don’t have to make promises they can’t keep just to get people to vote for them.
Not being a democracy does mean that China care about fulfilling the basic needs of its people and lifting them out of poverty.
Not being a democracy does mean that China have compassion for other people of the world and promote economic cooperation for global mutual benefit.
Not being a democracy does not mean that China insist on China first and everybody else can go to hell.
Ergo, I would not call China a democratic country and there is a lot to admire about that.

Friday, June 15, 2018

Kim Jong-Un and Donald J. Trump

Question: Why did Kim borrow an Air China 747 to fly to Singapore for the summit instead of his own jet?

Answer: Because he didn't want to hear Trump say, "My plane is bigger than yours."


Question: Do you think Trump will build Trump Hotel in Pyongyang?

Answer: Sure, why not. If he hires the Chinese to build the hotel for him, it will be done in ten days.

Tuesday, June 5, 2018

Stopping systemic prejudice another Obama legacy Trump can reverse

This blog first appeared in Asia Times.

It may take Congressional action to put a halt to the systematic racial bias against Chinese American professionals working in the Department of Commerce, but if Secretary Wilbur Ross answers the Congressional call, he will have reversed a terrible legacy from the Obama administration. And, that should make his boss, President Trump very happy.

Last Wednesday, members of the Congressional Asian Pacific American Caucus appeared on a Capitol Hill press conferenceto announce that they have sent a letter to the Commerce Inspector General Peggy Gustafson asking her to investigate the wrongful dismissal of Sherry Chen as hydrologist for the National Weather Service.

The same press conference also disclosed that a separate letter was sent to Secretary Ross signed by 132 Asian American community organizations asking him to facilitate the inspector general probe and give Chen full restitution.

America is supposed to provide equal protection and equal justice to all her citizens. Sherry Chen got none of that since she was wrongly arrested and falsely accused of spying for China in 2014.

After she was exonerated and all charges dropped in March 2015, Chen’s family, friends and supporters rightly anticipated that she would be given back her job, which was to model and monitor the Ohio River for threats of flooding and destruction of life and property. 

Instead Laura Furgione, the then deputy director of NWS, notified Chen that she was being dismissed from employment in the weather service. Louis Uccellini as director of NWS and Furgione’s superior had to sign off on the official notice, which he decline to do and recused himself. 

Furgione then went over his head and got Vice Admiral Michael Devany as Deputy Under Secretary for Operations of National Oceanic and Atmospheric Administration (NOAA) and Uccellini’s boss to approve the dismissal. Because Furgione had to try twice to formalize the paper work, Chen’s employment was officially terminated a year after all her charges were dropped, in March 2016.

The Asian American community rallied around a stunned Chen who appealed her case with the Merit Systems Protection Board. MSPB was established to adjudicate appeals from Federal government employees. Over the period from 2012 to 2017, MSPB heard nearly 70,000 cases and only in 1.6% of the cases that the board ruled in favor of the employee filing the grievance. Not a terribly promising prospect for justice but appeared to be the only avenue available to her.

A hearing was held by MSPB in March 2017.  Judge Michele Szary Schroeder issued her decision on April 23, 2018.  She ruled overwhelmingly in favor of Ms. Chen. Judge Schroeder took a year to write a 135-page judgment in which she carefully refuted each of the arguments presented by DOC to justify their termination of Chen’s employment.

Jeremy Wu, as trustee of Chen’s Legal Defense Fund, wrote to Senior Executives Association seeking to remove Furgione from the board of directors of SEA. His letter, dated May 15, 2018 said in part, The rest of the MSPB decision further describes Ms. Furgione’s bias and vengeance, lack of integrity and impartiality, disregard of exculpatory evidence, and conducting or staying silent on scandalous activities under her watch in the NWS.”

After the MSPB ruling, the only DOC response was to express an intent to appeal and in fact sought and got an extension to June 18 to file a formal reply. It seemed to be the usual reflex of delay and stall by a government with unlimited resources to wear down a victim of limited means.

The continued intent to deny Chen her due prompted 31 members of the Congressional APA Caucus to sign the letter to the DOC Inspector General and call the press conference. Concurrently, 130 some Asian American organizations wrote to Secretary Ross asking him to do the right thing.

These same Congressional and community leaders had previously called on Loretta Lynch, Obama’s Attorney General, urging her to give Chen justice. Lynch never responded. Thus, the stain of racial prejudice during the Obama administration became a part of his legacy.

Lest anyone think Sherry Chen represented an isolated incident, she was not. Last year, the Chinese American Committee of 100 published a white paperindicating that under Obama years, Asians were more likely to be charged with economic espionage than people of any other race. They are also found innocent at a rate two times higher than individuals from any other racial group. However, people with Asian-sounding names received sentences twice as long as those with Western-sounding names. 

The scandal did not occurred on Trump or Ross’ watch. Xenophobia does not have to be part of their legacy. They should want to know what is it in the DOC that is so protective of racists and bigots. If there is no systemic rot within the department, then what are the perpetrators hiding and acting so insistent on denying Chen her justice?

By exposing bigotry in the federal government, Secretary Ross, at no downside risk and personal cost, can strike a blow for fair and equal employment and ensure the full participation of every citizen in America without prejudice. Indeed the message of treating every citizen with respect and due process would be a breakthrough unprecedented in America’s history of race relations.

Friday, May 11, 2018

Full tilt trade war will have unintended and serious consequences

This piece first appeared in Asia Times in April.

President Donald Trump’s order to deny ZTE access to essential American made electronic components for telecommunication equipment and mobile phones will for sure stymie ZTE. Just as surely the move will lead to a tit for tat response from China.

One obvious reaction is for China to stop supplying rare earth compounds to the US. Rare earth components are essential for all kinds of high tech applications including electronic warfare. While a dominant world supplier, China is not the only source and therefore the retaliation would not be as dire for the US as for ZTE.

However, as the confrontation raises the ante, unintended consequences will inevitably follow. Being “unintended,” of course, means not all outcomes can be anticipated.

One can reasonably expect China to intensify its effort to develop its own semiconductor technology and become totally independent of American devices and components.

It would be a mistake for US policy makers to assume that China’s technical and scientific development will always rely on inputs from America.

China developed its own atomic bomb in the mid ‘60s and was followed by the hydrogen bomb in quick order, a rate of progression more rapid than any other members of the nuclear club including the US.

In that era, China was very much isolated from the West including the Soviet Union and the only western influence came from the PhD graduates trained in the West and returned to China to lead the weapon development.

In the ‘90s, China began a concerted effort to grow its internal semiconductor technology. A major part of the strategy was to enter into a joint venture with a foreign semiconductor company. NEC was the partner that signed on.

This effort largely failed because bureaucrats with no technical training were put in charge of China’s effort. These leaders did not understand that one couldn’t leap to the latest and greatest without learning to walk and grasp the technical fundamentals in as complex a field as semiconductors. They pressed until the partnership broke down.

The situation is vastly different now. There are many more returnees that are seasoned technologists having worked at senior levels in the West. They are already engaged in developing basic technologies and devices that would free Chinese products from the US strangle hold.

The latest trade war development will add pressure and incentives for them to succeed.

Hard to know when China will have their own competitive technology but they surely will. They are fully aware that licensed technology or even purloined technology will only get them to a level behind the West.

By way of confirmation, China has already broken through in many technical fields based on their own development. Examples include mobile phone and applications, facial recognition using artificial intelligence, robotics in manufacturing, advances in drone design and so on.

With the world’s largest domestic market to test and verify their advances, the day will come when China will announce their own proprietary chipsets and licensing terms, confident of their competitive advantages relative to American sources.

China’s appetite for semiconductor devices that goes into all kinds of electronics far exceeds the US. The competition developed to serve this hunger will be formidable and American makers may rue that day sooner than expected.

Another possible unintended consequence is the rumor that Hainan Island may be permitted to develop casinos on the “Hawaii” of China.

A major blow in the trade war would be for China to allow Hainan to become a destination with gambling and divert visitors that would otherwise be visiting Macau—most of the visitors to Macau are from inside China.

Whether Hainan becomes a competing tourist attraction or not, Beijing can always put the squeeze on the American casinos operators in Macau, specifically MGM, Wynn and Las Vegas Sands.

The hurt on LVS would be particularly painful since slightly more than 60% of the New York listed company revenue comes from Macau. So far since early this year, Macau has been doing nicely, but I wouldn’t want to make book on the future.

LVS is majority owned by Sheldon Adelson and his family. Thirty plus billions of dollars of his net worth is tied to his holding in LVS. As one of Trump’s principal supporters, it’s undoubtedly a good time for Mr. Adelson to have a private conversation with the president.

He could be wholly above board and speak for the greater good of both countries to counsel President Trump that anti China action will only have short-term effect and won’t stop China’s rise. The president should be thinking of the benefits of long-term collaboration as opposed to inflicting mutual losses in the near term.
The author was a former member of the board of Las Vegas Sands from 2008 to 2014.

Friday, April 20, 2018

There are no winners in a trade war

This op-ed piece appeared in the April 19, 2018 issue of San Francisco Chronicle.
As the United States and China approach the brink of a trade war, it would be wise to cast aside the inflammatory rhetoric to weigh the cost and benefit of such a war to the American people.
President Trump accuses China of unfair trade practice leading to a huge trade surplus. It’s not that simple. As many have pointed out, the trade imbalance is distorted by attributing the value of all the components as coming from China — including those China purchased and included in the final product. For example, China’s content in an Apple iPhone is around 5 percent of the total value but is “credited” as the total value.
China’s export of household items and consumer goods represent good deals that the American public would be foolish to turn down. 
To impose a general tariff on goods from China would either force the Chinese seller to raise the prices or take the products elsewhere. In either case, the cost to the average American household would go up.
On the other hand, the Chinese consumer has choices and does not have to buy American. 
Take wine. It has taken 15 years to develop a customer following in China for California red wine. If that export were to be penalized by China’s reciprocating tariff, the market California worked hard to create would benefit winemakers in Australia, Chile and South Africa, all eagerly waiting to fill the void. 
Also, technology has been developing so rapidly that China now has intellectual property worth stealing and that will only increase with time. Raising tariffs will do nothing to influence the flow of intellectual property transfer — legal or not.
Accusing China of taking jobs from the United States rings hollow. The challenge is just the opposite: Jobs are going begging for lack of qualified candidates. China hasn’t been taking away low-paying jobs — America’s defective educational system is not preparing students for the future.
Aa trade war is would create an uneven playing field against America's own interest. President Trump is supposed to be too shrew a businessman for a move that makes no sense.
George Koo is a member of the Committee of 100.

Wednesday, April 18, 2018

Treating China as an adversary is not in America’s interest

This blog first appeared in Asia Times
A recent Gallup Poll reveals that favorable American public opinion on China has finally climbed over 50%, albeit just barely. This is a remarkable development in light of the continued barrage of negative sentiments from American politicians and pundits.
Politicians with national ambitions seem to need to attack China as part of their résumé. US Senator Elizabeth Warren is the latest example. It’s almost as if she took a trip to China just to criticize its human-rights record – and to earn a merit ribbon for her foreign-affairs credential.

Since she is supposed to be a progressive candidate of the people, she could have spent her visit learning how China has taken hundreds of million out of poverty and see if any of their techniques could be copied to help take Americans out of poverty—a domestic challenge in serious need of solutions.

A common failing among political leaders in Washington is their being quick to criticize China while oblivious to gross human-rights violations at home.
Then there are those pundits who make a living by demonizing China. A glaring case in point is Gordon Chang, author of The Coming Collapse of China, published in 2001. In the US, he continues to get invited to pontificate in public. Outside of the country, his prediction of the collapse of China is seen itself to have collapsed.
Peter Navarro has run wild using Chang’s playbook and has produced books and documentaries that distort China and its trade policies based on exaggerations and outright fabrications.
Navarro’s colleagues at the University of California at Irvine can attest that he has no background or expertise on China. Professionally trained economists around the world look on his amateurish China-related writings with disdain. Even so, Navarro has ridden his China-bashing rhetoric to the inner circle of the White House.
Now that we are faced with threats of mutual economic disruption via a trade war, it’s time to weigh the costs and benefits of treating China as an adversary based on factual information instead of rants and exaggerated tweets.

Why China joined the WTO

China entered the World Trade Organization in 2001, having begun the application process some 15 years earlier. At the time, the size of China’s economy was less than 5% of that of the US. As a developing country, China was entitled under WTO rules to certain measures to protect its manufacturing industries.
The motivation for China to enter the WTO was to force its domestic industries to improve their manufacturing practices so as to compete in the global market. Contrary to implications from President Donald Trump’s announcements, being a member of the WTO did not give China any license to game the system.
Not without irony, it is the White House that is violating the US membership in WTO by arbitrarily and unilaterally threatening to raise tariffs against China.
In those early days, China insisted that in certain industries, for foreign companies to enter the country, the foreign company had to form a joint venture of which it owned no more than 50% and had to share the technology necessary for the JV to succeed.
That was China’s strategy to catch up by learning from the West. US companies did not have to enter the China market if they found those conditions unacceptable.
General Motors for one was very glad that it did. GM made more money on Buicks sold in China through its 50:50 JV than its total sales in the US, and this delayed having to declare bankruptcy. The import duty on foreign-made cars also helped GM in China. Even today, it continues to enjoy a higher margin on cars made and sold in China than in the US.
Lest anyone get the impression that China’s economic success depended on transfer of American technology, the total US investment in China has been far less than factories set up there by Hong Kong and Taiwanese businesses. These ethnic-Chinese businesspeople entered mainland China at least a decade before US companies, and they were the ones that introduced good manufacturing practices to China.

A trade war puts the US at a disadvantage

If the Trump team insists on launching a tariff war, it needs to understand that America will be at a disadvantage, simply because China does not have to buy commodities such as soybeans, pork and wine from the US. Other countries are eager to sell to China. You can think of China as a buyer’s market.
In contrast, if the US were to stop buying daily-use consumer goods from China, the American household would have to pay a lot more for imports from elsewhere. You can think of the US as a seller’s market.
There is no question that membership in the WTO has greatly helped China’s rise economically, because if a factory can’t compete, it goes out of business. Consequently China is a much stronger country than it was two or three decades ago.
Reliance on stolen intellectual property might have been important in the past, but China is now generating significant IP of its own. In some areas, such as fifth-generation mobile communications, robotics in manufacturing and artificial intelligence, China is already among the world leaders.
Threatening a trade war and other combative posturing will not deter China’s goal to become the strongest economy in the world. At the same time, China does not interfere with American elections or join in Middle East conflicts.
China goes out of its way not to pose a security threat to the US. A quick comparison should amply illustrate this point: The US Navy holds “freedom of navigation” exercises in the South China Sea. China has declined to reciprocate by conducting such exercises in the Caribbean.
To treat China as an adversary is a misuse of the US federal budget, takes attention away from genuinely urgent issues in other parts of the world and gives up any opportunity to collaborate with China in ways that could spell real benefits for the American people.