Monday, December 26, 2011

Time to Hold US Congress Accountable

When I was starting out in my career, one of my bosses had a favorite saying," Your next pay increase becomes effective when you are." I think it's time we hold our Congress accountable using this logic.

One of the viral email that I received gave me the idea for this blog. According to this email, Warren Buffett, in a recent interview with CNBC, offers his solution to the debt ceiling: "I could end the deficit in 5 minutes," he told CNBC. "You just pass a law that says that anytime there is a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election."

The 26th amendment (granting the right to vote for 18 year-olds) took only 3 months & 8 days to be ratified! Why? Simple! The people demanded it. That was in 1971...before computers, e-mail, cell phones, etc.

Of the 27 amendments to the Constitution, seven (7) took 1 year or less to become the law of the land...all because of public pressure. This is one idea that really should be passed around.

Let's call it the Congressional Reform Act of 2012:

1. No Tenure/No Pension. A Congressman collects a salary while in office and receives no pay when they are out of office.

2. Congress (past, present & future) participates in Social Security. All funds in the Congressional retirement fund move to the Social Security system immediately. All future funds flow into the Social Security system, and Congress participates with the American people. It may not be used for any other purpose.

3. Congress can purchase their own retirement plan, just as all Americans do.

4. Congress will no longer vote themselves a pay raise. Congressional pay will rise by the lower of CPI or 3%.

5. Congress loses their current health care system and participates in the same health care system as the American people.

6. Congress must equally abide by all laws they impose on the American people.

7. All contracts with past and present Congressmen are void effective 1/1/12. The American people did not make this contract with Congressmen. Congressmen made all these contracts for themselves. Serving in Congress is an honor, not a career. The Founding Fathers envisioned citizen legislators, so ours should serve their term(s), then go home and back to work.

Whether Mr. Buffett actually voiced the ideas above doesn't matter to me. The ideas stated in this email have merit in their own right irrespective of who gets credit for originating them. I have already seen an op-ed in a major daily that essentially presented the same view (without acknowledging possible role by Buffett).

We need to hold Congress accountable and if there is enough ground swell in favor of such a movement, we may then begin to institute some real change.

Friday, December 23, 2011

Autumn in Jiuzhaogou, 九寨沟

The natural scenic beauty of Jiuzhaigou was not "discovered" until modern times. The Tibetans that reside in the nine villages of this "Y" shape valley knew about its breath taking scenery, of course, but this valley is located in such a remote northwest corner of Sichuan that it was unknown to the Chinese in ancient times. For this, today's visitors are blessed with the total absence of man-made edifices and calligraphy carved into rocks. All one sees is mountains, and strings of mirror smooth lakes connected by cascades, water falls and running stream.

To visit Jiuzhaigou during the autumn foliage colors is to take a out of the world journey. The serenity and beauty literally takes ones breath away. Most of the fall color comes from the oily pine tree, a pine tree that is not evergreen and the color change only lasts about two weeks. Thanks to the advice of Dragon Delight, our tour operator, we were in Jiuzhaigou in the last week of October and witnessed the peak of nature's display.

The Chinese authorities deserved all the kudos for taking the most ecologically friendly route in developing this valley into a tourist attraction. Some examples of their green policy: Only park operated buses are allowed inside the park. Visitors are allowed to walk only on designated walkways. Hundreds of miles of footpath were constructed out of wooden boardwalk. The wooden planks were grooved to improve slip resistance. Plenty of rest pavilions, toilets and trash receptacles dotted along the parthways. Unlike toilets in many other parts of China, these toilets were oder free and even featured water less urinals.

On our first day, our group of 12 rented our own park operated minibus and driver. It was a particularly crowded day and by renting our own vehicle, we could skip around various stops and alight where it was least crowded and avoided the jostling crowd. The next day, a few of us went into the park on our own. We got off the park bus about mid way and walked downhill, following the path along the strand of lakes. It was a magical walk to be savored especially for the time when we've become too old to tour again.
The town of Jiuzhaigou came into existence because of the park. There are now a large assorment of hotels to choose from. There are however only two 5-star hotels in the area. The Sheraton is within walking distance to the entrance of the park. The Intercontinental is more than half hour drive from the entrance. The feeling of staying in the latter is more like staying in a self-contained integrated resort because of its isolated location.

To get there: There are direct flights from many of China's major cities to JiuHuang airport. Or, fly to Chengdu and connect from there. You can also drive from Chengdu but that would be a long ride requiring a very long day.

Tuesday, December 20, 2011

Review of US China Bilateral Relations for 2012

US China bilateral relations had an up and down year and most indications point to more of same or worse for 2012, a presidential election year in the US. I have written an analysis exclusively for China-US Focus which can be read in full at their website.

One of the most contentious issues bedeviling the bilateral relations has been the proper value of the Renminbi and its alleged impact on the placement of manufacturing jobs, i.e., whether jobs have fled the US because an undervalued yuan.

My chat friends have called attention to a series of articles that would shed light and dispell much of the confusion surrounding this subject.

A professor of economics from Tokyo presented a careful deconstruction of the cost of an iPhone (3G) designed in the US and made in China. The value added in China in assemblying the iPhone was $6.50 out of a total export price of $179. The difference between China's value add and the export price represents the cost of bill of material consisted of parts and components purchased from Germany, Japan, Korea and the US. In calculating the trade deficit, the entire $179 is credited to China's account and not just 3.6% of the total.

Another analysis revealed that Apple captured 58.5% of the profit from each iPhone sold while China's share of the profit was 1.8%. In other words, for every dollar China made on the iPhone, Apple made $32.50. Both authors went on to say that with more than 60% margin, Apple could afford to make a little less and have the iPhone made in the US but choose to have it assembled in China to maximize its profit.

The same case can be made about Apple's latest "insanely great" product, the iPad. China's value added is about $8 out of $499 cost of the product. Apple's share of the cost for design and marketing is about $150. Ironically because the iPad sells for a higher price inside China, Apple makes even more money for the iPad made in China and sold in China and it doesn't even show up in trade statistics--except of course for those made in America parts and components that were imported by China to put into the iPads.

Basically iPads make in China and sold in America inflates the trade deficit while iPads sold in China reduces the actual deficit by the amount of made in America parts put into the iPad. This is not a new story. When Zhu Rongji was premier and was asked about the trade deficit, he pointed out then that a pair of Nike sneakers that retail for over $100 in the US contained only a couple of dollars of value added from China.

Maybe Congress and the watchdogs of Washington can be fooled by derivatives and home mortgage swaps, but it doesn't take advanced degrees in rocket science to understand that trade deficits are greatly exaggerated. Politicians are not stupid enough to not understand, they just don't want to.

Monday, November 14, 2011

As agent for change, Obama is a disappointment

President Obama ran on the promise that he represents the agent for change and as president he would do things differently. So far he has delivered mostly more of same.

Banks that were too big to fail under the previous adminstration continues to be too big to fail.

Wars too costly to fight has lingered and America continues to bleed.

Most recently, Obama has joined the chorus that blamed the US economic woes on an undervalued Renminbi, as if a sudden valuation would solve his problems at home. Fact of the matter is that the US has been printing greenbacks faster than China could keep up with, even if they wanted to.

Last week a column written by a former military person in NYT proposed that Obama approach China with the offer to swap American disengagement of Taiwan for the American debt China is holding. The logic behind this piece is that if the US leaves the room, then the two parties across the Taiwan Strait would natually sit down and negotiate a peaceful settlement.

This is certainly a bold and provocative idea that stands no chance of getting Obama's attention. He has to date shown no inclination to make any bold and thus potentially risky moves.

Wednesday, October 5, 2011

There you go again, Senator Schumer

Dear Senator Chuck Schumer and your esteemed colleagues, to quote a famous US President, “There you go again.” Since nothing else was working very well coming out of Congress, it was mighty clever of you to beat up on China again. It might even convince your constituents that you are doing something to right the floundering US economy.

It’s hard to know if you have any other ideas about what ails our country but you sure know to put the hurt on China by calling them currency manipulator. You started to accuse them of currency manipulation when the renminbi was 8.3 to a dollar. Somehow you figured that yuan was 40% undervalued. Now that the exchange rate is 6.3 to a dollar, or nearly 30% appreciation since China took the yuan off the peg, you believe that the yuan is still 40% undervalued. That’s the kind of dogged insight we admire in our elected officials.

It looks like you didn’t let House Speaker, Congressman Jim Boehner, in on your joke. He simply dismissed your attempt to brand China a currency manipulator as “not the way to go.” Apparently Mr. Speaker believed there are more urgent matters to deal with. But congratulations to you because this means there won’t be any downside consequences such as a trade war and you get to jerk China’s chain for free.

Has it occurred to you that the one manipulating the currency is our very own Fed, weakening the dollar by design? Paying off our massive debt with dollars of declining value is so clever on the part of our Fed, don’t you think?

As for China taking jobs away from America, you should have talks with the major multinationals headquartered in your home state. Ask them why they are sitting on the sidelines with their billions of cash and not investing at home to create new jobs.

Maybe they will tell you that the wage rate and cost of doing business in New York is just too high. Maybe they will say that the incompetence and impotence of Congress evokes so much uncertainty of the future that they are afraid to invest.

Actually China is losing jobs too. Many of the low-end, labor intensive jobs such as in textile and shoes are leaving China. Faced with economic reality, the Chinese companies in the labor intensive industries are taking the lead and locating their plants in nearby lower cost countries such as Bangladesh, Cambodia, Myanmar and Vietnam.

No way, of course, that such low paying jobs could hope to come back to America—does water flow uphill—but Chinese companies sitting on ample cash reserve would like to invest in America to take advantage of certain comparative advantages available here. As you probably know, investments of virtually any kind are good for the local economy because they really do create jobs.

However, Chinese investments face such a dauntingly hostile reception in America, thanks in no small part to creatively fanciful objections from members of Congress. As a revered member of this august body, you really can help stimulate the US economy by becoming more welcoming of direct investments from China.

Up to now, American multinationals have been the major beneficiary of trade surplus enjoyed by China. That’s because most of the inputs that goes into their plants in China are from the outside and most the profits earned when exported from China though credited to China's account ended up in the bottom line of the multinationals.

But, dear Senator, that’s about to change. Native Chinese companies, not foreign invested enterprises, have learned to move up the value chain and make products with better profit margins that are not as labor intensive. They may not be making products that can directly compete with an iPad or Tesla yet, but they can make price attractive products to sell in less demanding markets.

The Chinese companies will learn from their experience selling lower end products just as Toyota had and Hyundai had with lemons before they became fierce competitors that almost put GM out of business. The Chinese companies can count on endless supply of well trained and highly motivated graduates to fill their ranks and they can count on a government that supports their goal of becoming global companies.

Dear Senator, with all due respects, you should be concerned about the future of America but calling China the currency manipulator isn’t going to fix the problem.

An edited version ran in New America Media on Oct 14 and Global Times and on the China-US Focus blog.

See my response to video interview on

Thursday, September 8, 2011

The Diverging Trajectories of China and America Since 9-11

Before September 11, 2001, China looked at the U.S. with a bit of awe, envy, admiration and even affection that was rooted from the days of being comrade-in-arms against the Japanese Imperial Army. Some of the positive vibes could be traced even further back to the 19th century when the western powers were carving up China and the Americans were the least rapacious.

After 9-11, China’s attitude gradually turned skeptical tinged with condescension as China along with the rest of the world saw America embark on a path of self-destruction.

Immediately after the tragic implosion of the twin towers, China’s then president Jiang Zemin called the White House to express his concern and sympathy. Then China watched with amazement as the U.S. used the tragedy of 9-11 to launch a war against Iraq.

As if reasserting American values over Al-Qaeda were sufficient pretext, the Bush Administration became obsessed with the so-called liberation of Iraq. The search for fictitious weapons of destruction became the excuse to hunt for Saddam’s head.

Sadly, America’s subsequent fumble at nation building in Iraq was for the world to see. The gross incompetence, waste, and corruption severely eroded the U.S. prestige and credibility. Mao used to call the U.S. a paper tiger; many in China began to think he may have had a valid point.

Even so, the lesson for China was to witness the American war machine in action. American advanced weapons, especially the missiles and drones remotely controlled by former video game jockeys safely ensconced in bunkers thousands of miles away, were not to be trifled with.

Confrontation with the U.S. was never in China’s national interest; after 9-11, staying out of the way of the American ire definitely was. Rather than casting the veto at the Security Council over issues where they disagreed such as Iran or North Korea, China was more likely to abstain than openly disagree with the U.S.

By surprising an American flotilla surrounding the Kitty Hawk with a quiet running submarine and shooting down one of its own satellites, China demonstrated enough military capability to send an occasional signal to the U.S. that the cost of any arms conflict would be too dear to contemplate.

China also began to actively practice soft power around the world, making investments in Africa, Asia, Australia and Latin America. Those investments not only made economic sense but also benefitted the local economy and made friends with the people. There were no strings attached such as imposition of moral values or insistence on what constituted acceptable forms of government.

The day that truly jolted China was September 15, 2008, the day Lehman Brothers collapsed. Suddenly the prospect of holding onto trillions of dollars of questionable value confronted China’s central bankers.

Treasury Secretary Hank Paulson in the waning days of the Bush Administration had to fly to Beijing to reassure the Chinese leaders that the value of the dollar would be protected. Secretary of State Hilary Clinton and Treasury Secretary Timothy Geithner at the beginning of Obama administration had to do the same.

Most recently, Vice President Joe Biden had to make the pilgrimage to Beijing to once again reassure the Chinese that their dollars will continue to have value even after Congress nearly put the U.S. in default of its sovereign debt.

Of course both sides understood that the grand gesture of reassurance while necessary for appearances sake was an empty one. Until the U.S. economy recovers and the government can generate a budget surplus, the only way the federal government can repay its debt obligations is by printing more money. Printing more money will cheapen the value of the dollar. There is no way to defy this law of fiscal gravity.

The manner in which the U.S. federal government handled the debt crisis offered no assurances to China that the U.S. will find a way out of their financial quagmire. What China has seen was the incredible pettiness of Congress and the inability of the Obama administration to accomplish anything.

Ironically the only time in recent memory that the U.S. Congress unanimously rallied in support of the president (except for one dissenting vote) was to go to war in Iraq. All the other times, politics and paralysis ruled.

Since that fateful 9-11, the value of the dollar has fallen by nearly 20%. The aftermath of the home mortgage induced financial collapse and the flirting of U.S. default have not evoked confidence that a done-little, changed nothing President can find a way to work with the do-nothing Congress and turn the American economy around.

When China began its economic reform more than 30 years ago, the U.S. was the gold standard to aspire to. In the decade since 9-11, the U.S. by any measure has found itself on a downward spiral with no prospect of reversal in sight.

China, on the other hand, has found its own way up. During the recent decade, China has surpassed Germany to be the leading export nation and its economy has surpassed Japan to be the second largest in the world.

China built the Qing-Zang Railway at an elevation that experienced Swiss engineers said couldn’t be done. Then China built the largest network of high speed rail in the world and is now offering their technical expertise to the world.

In face of budget cuts, the U.S. has discontinued its space exploration program. China is just beginning theirs. Perhaps this is an apt metaphor for the future of the two nations.
See edited version in New America Media and China-US Focus and People's Daily online.

Saturday, August 20, 2011

Like Father, Like Son--Taiwan's Long Running Saga of Shame

Chen Shui-bian, Taiwan's first freely elected president that served two full terms, freely helped himself to any under the table gold he can grab and is now in jail serving time for his many convictions.

Throughout Chen's ordeal leading up to his final court appearance and sentencing, he fought his case publicly. Rather than covering his face from public view, he relished every public exposure into attempts to turn the proceedings against him into a farce.

He even boasted that all the tainted funds he was alleged to have in Swiss bank accounts would magically reappear in Taiwan within days of his release from detention. No shame, no slinking away for this man.

It appears that Chen Chih-chung is taking a page from his father's book. Chen junior the son has been convicted of perjury and sentenced to three months in jail. He fought the conviction all the way to Taiwan's Supreme Court and lost.

Chen Jr. promptly went public and unabashedly proclaimed that his sentence was politically motivated. He thought the Supreme Court of Taiwan should have cut him a deal where he could perform public service and pay a fine in lieu of going to jail.

According to Taiwan's law, a felon cannot hold a government post and Chen Jr. was stripped of his seat on the Kaohsiung City Council. Chen Jr. protested that said law was full of loopholes--no doubt he knows them all--and he should have received some sort of exemption.

The people of Taiwan are probably relieved to know that Chen Jr. will not run for the legislature upon his release from jail. This family does not know impropriety from their personal holes in the ground and is constant reminder of disgrace to the embarrassed people of Taiwan.

Saturday, August 13, 2011

Nouveau Art is Thriving in Tibet

Most people get their information on Tibet based on declarations from Dalai Lama or his exiled followers residing in the west. Since these sources have not been to Tibet for decades, people can be expected to have at best a partial idea of what today's Tibet is like.

Those that have visited Tibet are likely to have a more well-rounded impression of what Tibet is like today. By touring various temples and souvenir shops, visitors would have been exposed to the richness of traditional Tibetan art embedded in religious objects and takeaway thangkas.

Very few, however, would know that there is such thing as modern Tibetan art and the art is dynamic and evolving in dramatic directions. My good friend, Dr. Cyrus Hui knows. A PhD economist and former banker, he became fascinated with Tibet, its culture and people, and he visits there often. He has written a historical fiction based on his Tibetan experiences.

He got to know some of the artists and had decided to help promote the new Tibetan art by opening an art gallery in Lhasa in late June 2011. See his eloquent discussion of the evolution of Tibetan art on the website of his gallery.

Many years ago, Cyrus was the first to recognize the universal appeal of paintings from Vietnam by artists trained in French impressionism. He bought the first collection of paintings back to Hongkong that became the seed for Galerie LaVong, the first gallery to launch its business exclusively on Vietnamese art.

Owned and operated by Shirley Hui, Cyrus' wife and good friend, the gallery in Lan Kwai Fong, has become the place where trendy new art is first unveiled. Prior to opening of the Lhasa gallery, a selection of Tibetan art was shown at Galerie LaVong with a gala in mid June. A selection of Tibetan art depicting its versatility and diversity can be seen at the end of the blog.

By opening an art gallery on Tibetan art, Cyrus is doing more than introducing today's Tibetan culture to the world. He is also explicitly saying: "Look, Tibet is a thriving place where its artists are free to experiment, innovate and create." Can we say the same for the residue of Tibetan culture eking out an existence in Dharamshala?

From top to bottom and left to right, the paintings are
Thousand Buddhas by Ang Sang
Story from Ruins by Penba
Deliverance by Sonlang Tsering
Longevity by Han Shuli
Shepherd Weavers by Bama Tashi

Posted with the permission of Cyrus and Shirley Hui.

Friday, August 5, 2011

non Book Review: Tiger Trap by David Wise

This is the first time I am reviewing a book I have not read. Instead my review is simply based the author's willingness to espouse the same ludicrous assertion that China conducts espionage differently from other countries by relying on the so-called grains of sand approach. This approach alleges that instead of relying on professional spies and dastardly derring-do, China collects tidbits of data from the millions of cooperative Chinese in America. Putting all the scrapes of information together and incredulously, China gets the design of the latest multihead missile system or some other equally devastating secrets.

The FBI has been claiming this theory for decades to justify their indiscriminant and racially prejudiced actions taken against Chinese Americans in America. No one has seen fit to challenge the notion that bits and pieces of information could possibly add up to the secrets the U.S. holds dear. Since J. Edgar Hoover first made this claim as a cattle prod to hit over the heads Chinese Americans, this bit of racist rant has persisted within the law enforcement community.

Whatever the merits of his book, that the author would continue to promote this myth about the Chinese way of spying calls to question as to his intelligence and integrity. Some years ago, I have written a summary of the well known bias of the FBI towards Chinese Americans.

See the book review in the Wall Street Journal for an actual review that attempts to explain the grains of sand hypothesis. The review mentioned FBI expert Paul Moore, a prominent proponent of this hypothesis. As I have pointed out in the past, Moore is the car pool buddy of Robert Hanssen, a senior FBI official and eventually convicted for leaking secrets to the USSR. Yet Moore who never smelled a rat sitting next to a real spy can readily speculate that any two ethnic Chinese talking at a cocktail party could be passing secrets.

Wednesday, August 3, 2011

America narrowly missed being a deadbeat--this time

The last time the world faced a financial tsunami in 2008, smart money looked for safe harbor and that was to buy U.S. treasury bills. Even though it was the American financial market running amuck that led to the financial collapse, everybody remained convinced that the dollar as the safest place to be. So much money piled into the U.S. that, for a while, the dollar actually rose in strength relative to other currencies.

After the latest fiasco from Washington, will the rest of the world continue to have faith and confidence in the value of the dollar? After watching Congress played politics and care not a whit about upholding the honor of United States, can the world assume that America is not about to become a deadbeat to beat all deadbeat nations in history?

Even if the US Treasury honors its obligations this time after undergoing the tortuous exercise between House, Senate and the White House, can any investor feel assured that there would be a certain outcome the next time? Who is to say that some fringe group won’t successfully hijack the government and decide to renege on the government obligations?

China holds more US federal debt than any other foreign country. What has China done about this situation other than wringing the collective hands in Beijing? Actually, quite a lot.

On the one hand, even at the outset of the financial crisis, Beijing asked Washington to keep the value of the dollar from sliding. Members of the Obama administration serially assured China that the US will uphold the integrity of the dollar, maintaining as deadpan a demeanor as possible all the while knowing that printing more money is inevitable.

Of course, no one in Beijing took the U.S. assurance to the bank. Instead, China has been actively investing declining dollars into hard assets, such as oil fields and mineral deposits in Africa, Australia and Latin America. (China would make more investments in the U.S. as well except for Washington's generally frosty reception.)

Since the activity of China’s central bank is not transparent to outsiders, we can only speculate that China has also been diversifying their foreign exchange holdings into other currencies. However, no other currency has large enough circulating volume to allow China to fully divest out of dollars by exchanging into it.

The other means of not depending on the dollar is to conduct bilateral trade based on bilateral currency swap agreements that would allow the use of Chinese yuan rather than the dollar to settle the trades. China has entered such agreements with selected countries such as Brazil, Russia and South Korea. This is considered a step towards internationalizing the Renminbi.

In May, I attended an international conference on global financial security in Beijing. All the speakers from outside of China as well from inside China expressed concern on what action the U.S. will take to stabilize the world financial market. None anticipated that the American politicians would play political chicken and brinksmanship with the U.S. national debt and throwing America’s prestige and image down the sewer.

Since America’s financial collapse that drag the world down, which China side-stepped with its own considerably more effective economic stimulus plan (one that does not require bailing out banks), China has been looking at the U.S. with skepticism. Now that China has seen America’s much touted democracy in action, China is even more certain not to follow the U.S.

China’s economic stimulus meant more superhighways and bridges as well as a high speed rail system becoming the envy of the world, recent accident notwithstanding. In contrast, America’s superhighways need repairing and bridges that threaten to fall down.

Since 2008, China has formulated a national development plan that placed reduced reliance on export, especially away from labor intensive, low cost goods but aimed for higher valued added manufacturing. Recent Wall Street Journal article reported that multinational corporations are placing their high value manufacturing investments near foreign markets where they are making profits, not in the U.S.

China has continued to invest in education and allocated more of the national budget for R&D. Hundreds of thousands of graduates, mostly in technical disciplines, have gone overseas for graduate education. Many have returned to China to found companies that are competing on the global market such as Baidu, Huawei, and Suntech.

These companies compete on their proprietary innovations. With a pipeline of well trained technologists, there will be more coming from China. The U.S. with an increasingly dilapidated education system will need a steady infusion of foreign students to keep pace.

It’s not at all certain that the eventual accord reached by Congress will create jobs and restore the dignity of the millions of Americans seeking employment. The next time the U.S. lectures China about human rights, the spokesperson should be careful lest he/she is accused of wearing no clothes.

The U.S. is mired in two wars it doesn’t know how to win. Now the dysfunction of Washington has been laid open for all to see. While China is too diplomatic to question America’s vulnerability, will the rest of the world continue to see America as the sure footed hegemonic power that can be counted on to step in as the ultimate peacemaker?

There are pundits that still insist that America remains a great power and that eventually the country will pull out of this downward spiral. I would like to know how.
A shorter version ran in New America Media. The New America Media version was also picked up by Xinhuanet and Global Times.

See interview on Russian TV.

Thursday, July 14, 2011

Zatoichi's legacy is beautiful

When I was more or less a young man, I was introduced to the Japanese screen character, Zatoichi. The basic premise of Zatoichi films was that though blind, he could see right and wrong with faster clarity than the sighted; with heightened sense of hearing, he ably compensated for not seeing as he cut down his opponents in massive scale; and, with his bow legged gait and plain face, he was decidedly unheroic.

On a recent flight to Asia, I was surfing through the menu of films selections when "Ichi" caught my attention. The film began with a woman in rags stumbling alone in a blinding snowstorm. It was not immediately apparent that she was connected to Zatoichi.

As the story unfolded, the woman turned out to be a beautiful blind young girl who had been kicked out of the “goze” troupe. In medival Japan, goze troupes went around northern Japan entertaining gatherings with their singing and while strumming the shamisen. In flash backs, it was revealed that the manager of the troupe who was male and not blind had raped her. When he tried again, she accidentally killed him with her sword sheathed in her cane.

The movie actually started with her wandering in the countryside and ended up in a temple. One of three members of gangsters had sex with another blind goze woman and did not pay as promised. When she protested, they beat her and then they saw Ichi and started to harass her with obviously evil intentions. This is when a young good looking samurai came along and offered money to the gangsters in exchange for leaving Ichi alone.

Make long story short, the young samurai, Toma, had a psychological block and cannot pull out his sword from the scabbard and Ichi had to killed the three gangsters herself. The villagers thought it was Toma who killed the gangsters that had been terrorizing them. The rest of the gang of bandits too thought it was Toma who killed their comrades.

Ichi has been searching for a blind masseur (the film implied that this was Zatoichi but never said so) who raised her and taught her how to fight. She wanted to know if he was her father. Banki, the gangster leader, before defeating her and taking her prisoner told her that the blind masseur was the one person he wanted to meet who had died of natural causes.

Toma who was hired by the village to defend them was a colossal disappointment because he never could pull his sword from the scabbard. Banki was rejected by society because of his severely disfigured face. Everybody suffered from psychological problems.

There was a final bloody, sword-play confrontation between the villagers led by Toma and Banki and his gang. Of course, having fallen in love for Ichi, Toma was finally able to unsheathe his sword but the climatic ending is typically Japanese and not western.

The cinematography was exquisite and the story line more complex than the old Zatoichi stories. I hope we will see more of Ichi in the future.

Sunday, June 26, 2011

Her Mother Remembers Iris Chang

Ms. Ying-Ying Chang has written a book (The Woman Who Could Not Forget) about her daughter and gifted author, the late Iris Chang, and about their mother-daughter relationship. Iris was at the top of her game as an amazing writer of history and non-fiction when she shocked the world by taking her own life. Many speculated about the cause of her death. Her mother was driven to write this book to set the record straight and preserve the memory of her daughter.

I got to know Iris when she became a member of The Committee of 100 after the publication of her worldwide bestseller, The Rape of Nanking. I found her to be passionate about the subjects she wrote about and highly intelligent in how she saw the world. As her mother described in her book, Iris was outraged by injustices in any form and was particularly sensitive to the rights and equality of women.

I was among the minority that did not read her book on the Rape of Nanking. In my case, I simply could not bear the thought of again reading the graphic descriptions of Japanese atrocities already known to me and becoming enraged once again by Japan’s refusal to apologize for the crimes against humanity that they committed in WWII. From Ying-Ying’s book, I came to appreciate that Iris identified herself with the heroic action of Minnie Vautrin in protecting the lives of Chinese civilians--eventually at the cost of her own life. I had read about Minnie Vautrin before I met Iris.

When Iris decided to write the history of Chinese immigrants in America, I was delighted. It was a subject dear to my heart whose scope and complexity needed someone of Iris’ skills and dedication to do it justice. When the book came out, I read it promptly and wrote a review on my own volition. Iris contacted me and asked for permission to use a portion of my review as part of the blurb on the cover of the paperback edition. Naturally, I was flattered that she thought enough to want to include it.

I also organized a book signing for Iris at Ming’s, a restaurant in Palo Alto. Many came to hear her and talk to her. I recalled a set of parents originally from China that brought their young daughter and had photos taken of their daughter beaming with pride standing next to Iris. At the time, I remember thinking to myself that although Iris said all the right things and was gracious toward her audience, she seemed a little stiff and awkward. Upon reading Ying-Ying’s book, I now understand that Iris had suffered the stresses of a frenetic book tour and was beginning to experience the strains of her illness.

The news of her suicide surprised and shocked us all and was beyond any comprehension. I got to know Iris’ parents after her death as a member of the team working to preserve her memory by staging a worldwide annual essay contests on war crimes and atrocities. During the three years that the essay contest was held, Ying-Ying spoke about her resentment of a series of specious speculations on the cause of Iris’ death. She eventually took time off to write a book that revealed the intimate details of a strong bond between a loving daughter and a devoted mother.

Ying-Ying made a strong case that lack of sleep and nutrition led to Iris’ initial mental illness. Improper psychiatric diagnosis led to prescriptions of antipsychotic medications that not only did not help her but the side effects actually pushed her into the abyss. Mental illness is considered shameful and difficult in the Chinese culture to admit and owned up to. It took a lot of mother’s love and courage to want to address Iris’ illness and document her tragic end as a warning for the benefit others.

If you want to understand how Iris became a hugely successful writer, read this book. If you want to learn about the uncertainties of current state of psychiatric medicine and the perils of antipsychotic treatment, you need to read this book. If you believe that successful daughters need not spring from Tiger Moms but from warm, loving and supportive parents, this is a book for you and an effective antidote to rampant Amy Chua-ism.

Wednesday, May 25, 2011

World Financial Security and the U.S.

Last week, I attended an international symposium on “Financial Security: China and the World,” held in Beijing and sponsored by China Institute for International Strategic Studies and the Katie Chan Foundation. Speakers came from all over the world including a former President of the European Commission, a former First Secretary of State of the UK and a former President of China’s Export and Import Bank.

Chen Fengying, George Koo & Katie Chan

Inevitably, the status of the U.S. financial health was on the minds of most of the speakers. They raised concerns over the mounting national debt and expressed skepticism as to whether any real solution has been proposed. One economist pointed out that interest payment could take up 20% of the US government revenue now and debt service by 2040 could amount to 58% of the total revenue, clearly an unsustainable proposition.

The US budget deficit continues to increase with no end in sight and counting on foreigners to continue to buy 70% of the US debt remains a keystone to the US strategy. But the foreign appetite for US treasuries cannot keep up with growing supply. As America having to print more money as the only resort becomes more obvious, foreign buyers will avoid buying rather than increase their purchase which will exacerbate the debt crisis.

Concerns were also raised over the prospects of the financially strong nations in the European Union having to bail out the weak yet again. The Germans in particular may face having to bail out the bad debt nations or bail out the over-exposed German banks that carried too much sovereign bad debt in their books. Eventually, the EU will have to create a bail out mechanism that does not look like bail outs in order to overcome domestic political pressures among donor nations.

The speaker from Australia announced that his nation suffered least from the financial tsunami and experienced no recession from 2007 to 2010. Australian banks continue to lend and provided the highest shareholder return among the world’s leading banks. In addition to having China as its major customer, he attributed strong regulation and close government supervision as the cause of the success of the banking sector.

There was universal agreement among the speakers that the world needs regulatory reform in order to prevent another financial meltdown. The speaker from Singapore pointed out that having Standard & Poor or Moody’s provide sell side credit rating for a fee is basically flawed. He offered a not-for-profit organization to compute creditworthiness based on scientifically sound methodologies and offer access to the ratings free of charge to users.

Comments by Mme Chen Fengying, Director of World Economic Studies, China Institute of Contemporary International Relations made quite an impression on me. She said while 9-11 radically changed the U.S. perspective on terrorism, 9-15 (the date Lehman Brothers filed for chapter 11) has led to financial terrorism. Heretofore the world looked up to the US financial model. Now the world needs to look for another.

Ms. Chen went on to say the US debt has now exceeded its GDP by over 30 fold*. She wondered how this could be sustainable but then she professed not to understand how 98% of dot com companies in the US could lose money and not suffer in the price of the their stock. She labeled the US as a credit card economy.

Only 11% of the US GDP comes from manufacturing while nearly twice that percentage comes from financial services sector of the economy. “Wall Street is supposed to serve the economy,” Ms. Chen said, “And not to hold the White House hostage.”

One veteran America watcher from China commented on the current US budget and debt service crisis and speculated that the two political parties will begin by taking on extreme and polarized positions but hopefully in the last minute the Congress will end brinksmanship and do the right thing. If the US government actually collapses, the financial terror that will strike the collective hearts of the world would be beyond comprehension.

I spoke by comparing the economies of Macao with Singapore and it is reported on Peoples’ Daily Online.

* A friend who read the blog commented that total US debt, public + business + financial + household, amount to approximately 52 trillion, which is 3.6 times GDP. Accounting for all public and private sector assets, US probably has a net worth about 5 times its GDP. In other words, the US debt crisis is serious but not so dire as presented by Ms. Chen.

Tuesday, May 24, 2011

A counterpoint to the Three Gorges Dam Controversy

China's Three Gorges Dam was first conceived by Dr. Sun Yat Sen in the early republican period. It was finally realized in recent times when China had the resources to build the dam. As with any high profile project, the dam attracted a lot of attention. Most from the west tend to be critical including a recent spate of them. I came across a well reasoned arguments that presented the positive sides of this project. With the author's permission, I am posting his comments below:
Some three years ago, I recall a similar article on the Three Gorges Dam by Shai Oster, in the Wall Street Journal, suggesting that disaster will soon befall the Dam. Alas, no catastrophe happened to the Dam in the intervening years, but it seems that there remains a clan of people in America anxious to see the “demise” of the Dam in some way.

If we roll back the history of the Dam, we will recall that when China applied to the World Bank for a loan to build the Dam nearly twenty years ago, it was the U.S. who exerted strong pressure on the Bank to deny loan to China. As a result China had to foot the bill herself. But China persevered. Not only did it managed to come up with the huge sum to pay for the enormous job of building the world’s largest dam (which it still is), but it also managed to finish the job on time.

Fast forward to the time of the article of Mr. Oster; at that time the Dam was not yet finished, but there was a significant carping chorus from the U.S. who cited all the factors mentioned in the present articles and more, and strongly suggested that the Dam will be a failure.

At that time I wrote a response which basically said: “Cool it!” I mentioned that from all the reports from within China, and all those who took the Yangtze River cruise through the Dam seemed to say that while the project encountered some problems, they were not such as to slow the project or to impact the project negatively.

Now to the present; I am very sad to see that the carping chorus has not been quieted. Both of the articles forward by Roger quote a “brief statement” from the Communist Party, but then try to play it up like a doomsday announcement.

It happened that Premier Wen Jiabao himself also made a brief statement a few days ago. The gist of it was that the Dam is now finished and doing its job, but that China should not forget the few problems uncovered during the building of the Dam and should work to overcome them.

The editorial from the Washington Post did acknowledge that: “Though the project has generated much-needed electric power and helped control floods, ….” But power generation and flood control were in fact the two major reasons for China to build the Dam in the first place. In all respects, the Dam seems to have carried out these two functions very well. It is now capable of generating enough electricity to power a city the size of Shanghai; and last fall it showed its mettle in helping to relieve the potential big flood plaguing the upper part of the Yangtze.

For a project of unprecedented magnitude, it should not be surprising that it encountered various difficulties. The important question is whether they are surmountable. The “numerous problems” (actually five) cited by Venetia Rainey appear to be all readily solvable if they are seriously addressed. For example, the “small earthquakes” actually were shifting of the ground experienced by some localities because of the added weight of water. I believe the frequency of these incidences is decreasing, and by moving people away from areas where the incidences were more frequent, the problem is essentially overcome. Landslides also occurred in some of these areas, with rocks and earth falling at the side of the river. Again these occurrences are rarer now.

The silt deposits at the upstream side of the dam was something the experts in China worried about ever since the first large dam was built on the Yellow River (which infamously carries a huge volume of silt from the Loess Plateau up stream). However, the Chinese engineer devised a “silt flushing” mechanism which was first successfully applied at the Xiolangde dam, the largest on the Yellow River. The same method has been built into the Three Gorges Dam and the silt threat has been basically removed (the amount of silt on the Yangtze is much less than on the Yellow River to start with).

It will be time-wasting to refute the charges of these articles point by point. But from reports of those who visited the Dam lately via cruises or other mean, the Dam, fully operational, is looking majestic, and is enjoying a booming tourist trade. Where previously only 3000 ton ships can go from Shanghai to Chongqing, now the River can accommodate ships up to 10,000 tons. It has already played a role in flood relief on at least two occasions. In short, the Dam is alive and well, thank you!

I do however hope that the nay-sayers find better things to do. If they still want to carp, how about writing articles on the sad state of American infrastructure, where a great deal of it is old and decrepit and hardly any new construction is taking place.

Jay Hsu

Wednesday, April 20, 2011

Is Gary Locke America’s Answer to China’s Anson Burlingame?

Assuming that he is an unworthy target for obstructionist politics and is confirmed by the Senate, Gary Locke will be first American of Chinese ancestry to serve as ambassador to China.

Over 140 years ago, Anson Burlingame became the first American to be appointed by the Qing imperial court to serve as ambassador from China to Washington.

There are some interesting mirror image parallels in these two historical appointments and some important differences.

Burlingame was first appointed Ambassador to China by Abraham Lincoln. After six years in that capacity, Prince Gong, the regent behind the throne approached Burlingame and asked if he would accept the appointment as China’s ambassador to the West and help China renegotiate the many unequal treaties signed with the western powers.

Burlingame known for his integrity and highest sense of right and wrong immediately submitted his resignation to Washington and accepted the appointment to represent China. He was credited with the Burlingame Treaty of 1868 between China and the U.S. which recognized the sovereign rights of China.

In 1870, Burlingame died of pneumonia in St. Petersburg while negotiating with the Russian Czar on behalf of China. Less than a decade after his death, the U.S. began to renege on the terms of his treaty but that’s another story.

Locke did not come from China, his father and grandfather did. Locke was born and raised in America. His qualifications to be ambassador come from his past service as governor of Washington and as Secretary of Commerce.

Washington was one of the most active states in building trade relations with China, long before China emerged as a world economic power and predating Locke’s terms as governor. As governor, he was certainly engaged in those initiatives and can rightly claim a leadership role.

Then as Secretary of Commerce, Locke has been one of Obama’s key players in the bilateral relations with China. He can certainly claim ample experience with and knowledge of China

However as the next ambassador, Locke will face some challenges that might be uniquely his because of his being an ethnic Chinese.

In some circumstances, a foreign country does not always welcome a native born who have immigrated to America to return as the ambassador from America. Sometimes such appointments are regarded as a put-down—the psychology of “aren’t we important enough for Washington to send a real American envoy?”

Locke is unlikely to encounter such a form of reverse snobbery because of the strength of his credentials and stature. Instead the Chinese officials might expect more from him because of his presumed cultural affinity than a “real” American.

Even for a Mandarin speaking Jon Huntsman, the Chinese officials would never think of him as one of them but looking at Locke, they might, even if his Mandarin is not as fluent as Huntsman, his predecessor.

The Chinese officials may presume Locke to possess certain cultural empathy and can pick up the nuances and innuendoes that a white person cannot and they would expect Locke to be more sympathetic to the Chinese points of view.

Such a presumption would put Locke in a delicate position since his duties and obligations are to represent America’s interest, not necessarily that of China. Inevitably he will be call on to occasionally deliver hard-nosed messages from Washington, whereupon he would have to exercise his diplomatic skills to moderate America’s traditionally imperious approach.

Locke also risks being challenged by select members of Congress and other Americans on occasions when they are having xenophobic fits and demanding to know, “Whose side are you on?”—a question that would never be asked if Locke were white.

On top of all this, Locke is also becoming America’s envoy to Beijing in a new era when the basis of bilateral relations is shifting from big brother/little brother to one of equals between peers.

While America may not willingly relinquish its position as the senior partner, the reality suggests that the next envoy will have to. As holder of over a trillion dollars in American IOU’s, China expects to be treated with the respect of someone the US is beholden to.

The US China bilateral relation has arguably become the most important in the world. As ambassador, Locke’s priority will be to enhance closer cooperation despite the expected bumps on the road when the two sides cannot agree. Obama faces plenty of challenges for the remainder of his term of office and he does not need China to be among them.

Even though no other American ambassador to China had become a turned-around envoy from China since Burlingame, nearly all, since George H. Bush was appointed by Nixon, have returned from their posting to share their understanding of China with the American public and reject simplistic lambasting frequently indulged by Congress.

Many became proponents and supporters of less confrontational and closer bilateral relations. Whether Locke’s term is two years or more, we can expect him to join the ranks of positive emissaries when he returns from China.

A version of this post appeared in New America Media and subsequently picked up by China-US Focus.

Monday, April 4, 2011

South Africa, Tourist Destination - 2

The game watching experience at Kruger is different from that on the Serengeti Plains where herds of animals range freely and predators can be seen stalking them. At Kruger, presence of game is more elusive and one has to work harder to spot them. The hyena appeared on the roadside for a fleeting second and disappeared into the bushes.

Impala is by far the most common sighting but nevertheless one of the handsomest animals on the Reserve.

Spotting lions copulating in the bushes is not difficult. While they tryst often, each tryst does not last long. The hard part of catching them in the act is the act itself.

At the Mkaya Reserve in Swaziland, wild nyalas and warthogs walked freely around the camp grounds and rangers took us on walks for close views of rhinos, tsessebes, zebras and giraffes.

As our ranger quickly backed the safari vehicle out of the way, he said, "You'd never want to get between a herd of elephants and their water."

South Africa as a Tourist Destination

South Africa is a beautiful country: spectacular coast lines on eastern and western part of the country that funnel down to the famous Cape of Good Hope; Drakensberg mountain range with peaks higher than 10,000 feet that runs north-south and divides that the country into a wet eastern region and a dry western region; wild game preserves, waterfalls, beaches, breathtaking mountain passes and Cape Town, the crown jewel of South Africa.

The surface area of South Africa is about 10% larger than the combined territory of California and Texas. Officially the population of South Africa at 50 million is about 10 million less than the two states but there could be as much as 10 million unregistered immigrants from other parts of Africa living in South Africa. Even though California and Texas have illegal immigrants residing within their state borders as well, the number is believed to be vastly less than those in South Africa. My observations of the challenges facing South Africa have been discussed in my earlier blog.

On our tour of South Africa, I find Kruger National Park, Mkaya Preserve in the Kingdom of Swaziland, Sani Pass of the Drakensberg Mountain and Cape Town especially memorable and selected photos are presented in this blog. We were in South Africa early March, which was the beginning of autumn, and we experienced ideal weather. The one thundershower that met us as we arrived at the hotel in Drakensberg was impressive by the massiveness of the quick downpour and made us appreciate the clear blue skies that preceded and followed that shower.

Just as I am glad to have visited Tunisia and Egypt when we did, I am appreciative of the natural beauty of South Africa and a bit fearful of its future as a tourist destination. My advice to anyone thinking of visiting South Africa is to do so sooner rather than later.

Rock formations caused by swirling waters on Blyde River.

The three rondavels on the Blyde River Canyon.

The morning mist that envelops the lowveld and Kruger National Park.

Thursday, March 31, 2011

A Brief History of South Africa

As recorded history goes, South Africa is a young country, and that's because the original people, the San (also called Khoisan), had no written language and left only rock art. For centuries, they were protected by an east-west, coast to coast belt of deadly swamp full of malaria bearing mosquitoes, Tse Tse flies and poisonous water that isolated South Africa from the rest of the continent. The eventual southern migration of the Bantus from Central Africa pushed the hunter-gatherer Sans to less desirable land.

The Portuguese were the first white men to land in the Cape Town area on their way to India. Their swords and lances were no match against the greater number of Sans' wooden spears augmented with herds of charging cattle. The heavy casualty suffered at Table Bay (in today’s Cape Town) convinced the Portuguese to keep sailing around the horn of Africa and establish their bases elsewhere.

By the time the Dutch arrived about 150 years later, they had guns and the strength to push their way in. They came to settle and farm and were known as Boers (Dutch for farmers). Together with slaves from other parts of Africa and Far East along with Khoisan and protestant immigrants from France and Germany, they made up the Colored and Afrikaner populations of the Cape Town area of South Africa.

About another 150 years go by (until just before 1800) before the British captured Cape Town to protect the trade route and keep the strategic area out of the French hands. The Boers that did not care for British rule moved out of the Cape Colony toward the interior and came into contact with various tribes of the Bantus that had settled in areas north of the colony.

The fiercest of these was Shaka, king of the Zulus. Ironically he was able to make a technological breakthrough in war craft using iron from the Europeans to devise a short thrusting spear, suitable for repeated thrusts against the enemy and not just one heave and hope for the best. For a brief time, he even held the firearm equipped British soldiers to a standoff.

With the discovery of diamonds (1868) and gold (1886), all hell broke loose. The British had to get their hands on all that wealth from the ground. Some of the biggest diamonds from South Africa literally found their way to the crown jewel collection of the British throne. The British proceeded to fight the Zulus and the Boers to achieve hegemony over South Africa which they eventually accomplished. The different states were consolidated into the Union of South Africa, sometime in the early 20th century.

Seeds of apartheid were already sown by this time as segregation was widely practiced in the urban areas. The de facto practices were steadily formalized into laws and regulations by the white ruling class culminating into official policy of apartheid formed shortly after WWII.

There were two black heroes that wrestled Africa from the white ruling class. One was Robert Mugabe who won control of Rhodesia and turn it into Zimbabwe in 1980 and the other was Nelson Mandela who came to power in South Africa in 1994. Mandela has since stepped out of the limelight and bask in accolades showered on him as a senior statesman. Mugabe, alas, does not know when to retire and has earned worldwide scorn or even worse epithets.

Wednesday, March 23, 2011

The Diversity of South Africa

With the repudiation of apartheid, release of Nelson Mandela from prison and the election of African National Congress (ANC) into power in 1994, South Africa became a democracy governed by the wishes of the majority. The world applauded the selection of Mandela as the first head of the new nation. The successful hosting of the 2010 World Cup seemed to suggest that South Africa is on the way to joining the ranks of fast growing nations such as the BRICs, (Brazil, Russia, India and China).

We spent nearly two and half weeks travelling around South Africa and came away impressed with the tourist potential of this country with its diversity in flora and fauna and in its spectacular scenery. South Africa is also diverse in its people but instead of being a plus, the diversity of people seems to work against the nation than being an advantage. While South Africa has been held up as the standard for other African nations to aspire to, I see troubling signs ahead.

The most obvious is corruption at the top. While still a poor second to the king of Swaziland, who is on to his 14th or 15th wife, President Zuma has announced his intention for take on his fifth, or is it sixth, wife. As our township guide, an ethnic Xhosa, said to us, “As the leader of this nation, he is setting a terrible example for the people.” (Zuma is a Zulu.)

Then there is the leader of the ANC Youth League, Julius Malema, who is merely scary. He struggled through more than the required years to complete eight grades of schooling. He is a fiery orator and self proclaimed admirer of Robert Mugabe and he has been advocating nationalization of the mines. Because as much as 20% or more of South Africa’s black youth have no gainful employment, Malema’s rabble rousing rhetoric finds a receptive audience among the restless youth. Zuma was one time leader of the Youth League and thus Malema could be regarded as a potential future leader of this nation. Needless to say, for a Mugabe-like leader to turn South Africa into another Zimbabwe would be a prospect of enormously frightening proportions.

Some of the policies since the ANC came into power seem to have been taken from Mugabe’s book of governance. For example, we were told that admission to the medical school is strongly biased in favor of the blacks. The minimum entrance test score needed to qualify for admission for the blacks is around 70, but 82 for the colored people and 92 for the whites. One can only shudder at the future of South Africa--where world’s first ever heart transplant was performed--staffed by mediocre doctors that are poorly trained and poorly qualified.

The whites in South Africa are decreasing in absolute numbers and in relative percentage. Some of the whites left South Africa just before the end of apartheid fearing for the uncertainty of the transition. Others have left since the end of apartheid because they now face fewer opportunities under economic policies that are tilted in favor of the black majority. The whites that leave tend to be professionals and thus causing a brain drain. The end of apartheid seems to have been replaced by reverse apartheid.

Corruption by government officials is probably not avoidable but there are two general kinds of corruption. When a government only knows how to line their pockets and does little or next to nothing to develop their domestic economy, those countries are inherently unstable and face occasional uprisings of Egyptian proportions or trudges along in a zombie state where the rich stay very rich and the poor have no hope of a future, not unlike many of the banana republic’s in Latin America.

The South African economy is growing but not fast enough to be considered as a rising economy in the league of BRICs. Furthermore, the rate of growth has been slowing to around 3% per year—not enough to create the number of new jobs necessary to employ a growing population of young blacks and illegal immigrants. Most blacks still live in townships where the school system has been degrading from bad to worse. Most of the young people are not trained for productive work and thus suffers from high unemployment, as high as 30% in places. With so much idle youth, high crime rate is a persistent problem. Without the safety network of state sponsored pension that comes from regular employment, the people in the townships procreate more kids as a form of security in retirement. Thus a downward spiral is formed.

When Mandela first came into power, he declared that no one should live in the dismal hovels found in shanty towns. So far the government has built enough housing for 5 million people, a tiny fraction of the number needed in order to get rid of the shanty towns.

South Africa has a nice highway system. Most of the roads were built during the apartheid rule. For the 2010 world cup, the government built a number of new soccer stadiums. Many have been underutilized since the world cup. The one in Cape Town located in prime real estate has been sitting unused. The local government is said to be considering tearing the new stadium down to save on the annual maintenance cost. Of course, new public works projects create opportunities for graft, which is the biggest driver to spending taxpayers’ money.

Despite its troubles, South Africa is better off than rest of Africa and thus is a magnet for illegal immigrants. The continuous inflow of immigrants adds to the burden of having to provide them with basic services.

South Africa recognizes 11 official languages, English and Afrikaan being two of these. The other nine are languages of the black native tribes dominated by Zulu and Xhosa. Ironically by insisting on each ethnic tribe being allowed to teach in their respective language, it is encouraging de facto segregation and separateness.

Ultimately, the economic well-being of the people of South Africa depends on having good government. By becoming a democracy ruled by the majority does not guarantee good government. Whether South Africa will continue to be the beacon for the continent will depend on the current and next generation of leaders.

Overturning apartheid was South Africa's greatest day in history. Now the leaders will have to deliver for not just the black majority but everyone and put the nation on the path to greatness. The nation may be at a tipping point either leading to economic growth and stability or to disaster. Only time will tell.

We were on a tour of South Africa organized by Overseas Adventure Travel. This tour company emphasize discovery and learning as part of the travel experience and made sure that we had a chance to interact with blacks (which represent the majority) as well as the colored segments of the population. We automatically interacted with the whites because our guides were white and so were most of the managers of hotels and restaurants.

Among the dozen travelers in our group, we had two retired professional African American women who were particularly interested in and sensitive to the racial issues of South Africa. They led pointed discussions with our white tour director. Their presence added zest to our discussion, even if we may hold varying views.

A racist could attribute what ails South Africa or even the continent of Africa to race, blaming the supposed inferiority of the black race. The counter to the racist point of view is to argue that educated black leaders such as a Mandela can be as capable and effective as any leader. The crux of the matter is whether black leaders care enough about the population they lead to bring everybody up, to make sure they all get quality education, and to create economic opportunities for all. To the extent they fail to do so, they are reinforcing the biases of racism.

I will write about South Africa as a tourist destination in a future blog.

Wednesday, March 2, 2011

Some People Can't Wait to see the Jasmine Revolution Invade China

One of the first to see the revolt of Tunisia as the beginning of the dominoes that will topple China was Gordon Chang. He suggested that after Tunisia and then Egypt it could be China. He made this bold prognostication on January 30, weeks before Mubarak took the actual tumble.

Mr. Chang, known to boldly sally forth where no real experts would, is famous for his book on the coming collapse of China, which was published in 2001. That China has only more than doubled their economic output and become the second largest economy in the world since the publication of his book does not cramp his style in the least. He continues to hammer on the collapse theme as if constant repetition will eventually make him credible.

Others in the western media are even more "proactive" than Mr. Chang. They are reporting mass unrest and movements of Jasmine proportions in China with sleigh of hand, cut and paste photos. Old photos of mass protest in China against Japan and other equally deceptive file photos became handy tools to illustrate how revolution in China is alleged to look.

The media in the West can get away with such shenanigans in disinformation because they presume that the audience in the west can't tell the difference between a Hong Kong cop, or a Taiwan mass protest or some patriotic movement in China and a disturbance they purport to be reporting. In such cases, photos do lie.

Anyone with a smidgen of understanding about China would realize there is no analogy between what has happened in North Africa to what might happen in China. Yes, there is vast unequal distribution of income in China and yes, corruption and injustice is a major problem. But that is about as far as it goes before the parallel diverges.

The standard of living of the Chinese people has never been better. A great majority of people are satisfied with their lives and the way things are run. Most important, the central government of China far from ignoring the plights of their people actually care and spend a great deal of energy to look after the general population. The leaders of Beijing are sensitive to public opinion and there is no mass feeling of disenfranchisement.

Beware of pundits and their wishful thinking and those desperate enough to fit the facts to their flawed vision.

Thursday, February 17, 2011

Ma Ying-jeou Says “Nihao Dalu

Taiwan President Ma Ying-jeou celebrated the Year of the Rabbit by instructing all government officials to henceforth stop referring the other side of the straits as “China.” He reasoned that to call the other side China was to imply that Taiwan was not part of China, in violation of the 1992 One-China Consensus subscribed by both sides.

Instead, Ma suggested duian (对岸) meaning the shore across the way or dalu (大陆) meaning the mainland when referring to the big neighbor across the straits—akin to the US continent as the mainland to the Hawaiians.

Ma was elected president in 2008 on the pledge of closer economic cooperation with the mainland and reversing his independent minded predecessor’s tension filled approach of “one China and one Taiwan.”

Ma’s popularity initially tumbled as his economic policy did not bring about the immediate miraculous economic recovery that the impatient people of Taiwan expected. Instead Taiwan in 2009 was as much a victim of the global financial meltdown as most other countries.

However, Ma upon taking office began cross strait talks in earnest culminating in the Economic Cooperation Framework Agreement. Even as details of ECFA were being hammered out, direct flights began and economic cooperation flourished.

The payoff became evident in 2010 when Taiwan’s economy grew by nearly 11%, strongest gain since 1986. Export increased by nearly 35%, over two-fifths of which headed to the mainland. Private sector investments in Taiwan increased by nearly one third, an unprecedented show of confidence in Taiwan not seen for more than 40 years.

Tourism from the mainland to Taiwan, not possible under Chen Shui-bian, Ma’s predecessor, has grown to over 100,000 visitors per month and contributed $3 billion to Taiwan’s economy since Ma opened Taiwan to mainland tourists. In less than two years, mainland Chinese visitors have already become the largest source of tourists visiting Taiwan. In addition to tour groups, Ma’s administration is now exploring a way to allow individual tourists in order to tap into even greater tourism spending from across the straits.

By proclaiming appropriate cross-strait terminology, Ma is betting his political future on the presumption that closer economic cooperation with the mainland will continue to pay off. There are plenty of indications that this will be a safe bet.

Despite the fast growing rate of inbound tourists to Taiwan, the frequency of person visits from Taiwan to the mainland, for business and tourism, is still 4-5 times greater than in the other direction. China sends 57.4 million tourists out of China last year and is expected to overtake the US as the largest source of outbound tourists by 2015. Right now Taiwan is only attracting 2 out of every 100 tourists from the mainland and thus has plenty of upside yet to be realized.

Taiwan companies have invested well over $100 billion on the mainland. Mainland companies have only been recently allowed by the Taipei government to invest in Taiwan. This is timely because only in recent 3-4 years are Chinese companies encouraged by Beijing to make outbound investments. The amount invested in Taiwan to date, around $137 million is not even one percent of total outbound investments. The potential of direct investment from the mainland into Taiwan is huge and can only further stimulate Taiwan’s economy.

Ironically when China first opened to the west after 1972, foreign visitors were admonished not to use the term dalu or mainland but China or People Republic of China in order not to suggest separateness between Taiwan and the mainland. Now the use of the term seems to suggest closer cooperation between the two sides.

No one seems to care as to how long the two sides will remain separate or if they will actually reunite. In the meantime, Ma is betting that continued economic improvements in Taiwan will win the peoples’ confidence in him, enough to ensure his reelection.

A version of this piece appeared in the New America Media.

Sunday, January 23, 2011

Building Mutual Trust between US and China has a long way to go

China’s President Hu Jintao has concluded his state visit and returned to Beijing. By most accounts, his visit was considered a virtually unqualified success—for him and for his host, President Barrack Obama—in a rare win-win in the bilateral relations.

The mainstream media considered the visit a win for Obama and his team for successfully presenting all their concerns to Hu: Secretary of State Clinton on North Korea, Treasury Secretary Geithner on the value of the RMB and Commerce Secretary Locke on protection of intellectual property and level procurement policy inside China. Obama in his joint press conference with Hu mentioned his concern on human rights. All the potentially confrontational issues were delivered diplomatically and in easy to digest doses.

Hu’s visit to Congress the day after the state dinner was the most problematic, but the Congressional leaders despite threatening to confront the leader of China had their meetings with Hu behind closed doors. Afterwards they could claim before the press to have raised their concerns with Hu and expressed satisfaction with the outcome.

Hu also won because he got the high profile treatment and honor accorded to him as the head of a major nation and there were no unpleasant surprises or glitches, except for a minor one when everyone expected simultaneous translation at the joint conference and there were none.

The usual China bashing howlers and screechers were kept on the fringe and did not steal the limelight as they might have wished. The confusion at the White House press conference did present Russ Limbaugh the opportunity to make a complete ass of himself on national radio. He broke out with a 20 second verbal burst that sounded like a savage recently descended from the trees. Limbaugh’s infantile braying alleged to imitate Hu’s remarks offended many and did nothing but tarnished his own image.

So is this a new beginning for the US China bilateral relations? I don’t think so. Some fundamental differences between the two sides have not been resolved and until they are, it will be pretty much business as before. The $45 billion of potential export business that Hu’s advance team brought to the US certainly made the whole visit go down more smoothly but does not represent a permanent cure.

How to deal with Taiwan represents by far the most challenging issue facing both sides. In Obama’s remarks at the press conference, he referred to the Taiwan Relations Act, but in the joint statement about the US commitment to one China policy, there were no reference to TRA. Thus, China could claim to have made progress on this issue while the US can claim that nothing has affected the status quo. In fact, until the US renounces selling arms to Taiwan and stops referring to TRA as though it were an international treaty—in fact it was only a Congressional act—progress in the bilateral relations will be sluggish.

The differences are not just on substantive issues but also on style. Both sides need to devote more effort to understand how as well as what messages are being conveyed by the other side.

For example, the media made a fuss about Hu’s public admission that China has more work to be done to improve human rights. In fact, there was nothing remarkable about Hu’s admission. Most officials inside China from local to national level will freely admit that there are plenty to improve about human rights in China.

The media however did not pick up that Hu also said, “The two sides should respect each other’s value systems, beliefs and development models.” In other words, Hu was saying we know we have a human rights problem—so do you America—and we will deal with our problem our way and not according to your standards.

Hu’s speeches were full of references of China looking to be a cooperative partner with the US. He meant a partner in the full sense of the word and not a subordinated party to the US as the big brother. He was looking for mutual respect as well as mutual benefit. Obama’s team of officials seemed to have accorded that sense of mutual respect on this visit.

How Obama was regarded and treated following his visit to Beijing in November 2009 has also been subject to erroneous interpretations by the mainstream media. Because westerner's perspective was based on win-lose confrontation, they thought Obama was too soft and concessionary throughout his visit and did not win China’s respect. They credit the success of this visit to Obama being harder and more assertive. I disagree.

I believe while in Beijing, Obama positively impressed Beijing that he was an American president that China could work with as a collaborative partner. Shortly after his return, however, he announced arms sales to Taiwan which shocked Beijing and they felt betrayed. Obama was oblivious to how Beijing might react. He felt that the US had always sold arms to Taiwan and nothing has changed. China thought that if Obama had considered China a collaborative partner, then he would have taken China’s feelings into consideration and not made a unilateral announcement on a matter most sensitive to Beijing.

This incident did the most damage to the budding feeling of mutual trust that Obama had built while in Beijing. He could have avoided the set back, I believe, if while in Beijing he had privately confided to Hu that because of politics, he would have to sell some arms to Taiwan upon his return and not catch Beijing by surprise.

Mutual trust, much deeper than it exists today, will be required if the US truly wants China’s help in resolving the North Korea crisis, one of the most nettlesome foreign policy issues facing the US. As recent wiki leaks revealed, some Chinese officials have expressed the view that letting the North Korean regime collapse would save Beijing a lot of grief. China has good relations with South Korea and certainly can work with that government as a neighbor once the Korean peninsula is unified.

However, China could not possibly entertain the thought of having American troops stationed on the border of a unified Korea and China. For China to seriously contemplate letting North Korea implode, the US need to assure China that the US would not take advantage of such a collapse and put troops in the north. We would be looking at a lot of mutual trust that does not exist now.

In the past, the US practice of strategic ambiguity meant making conflicting statements and taking inconsistent positions to keep China guessing. Obviously, this did not build trust and did not alter China’s perception of US as unreliable.

To build mutual trust, both sides need to modify their style of communication as well revising their priorities offering selected concessions. The Americans need to improve their ability to receive and digest nuanced signals from China. The Chinese need to be able to communicate in a more direct and straightforward manner so as not be misunderstood.

The day when both parties can feel that there is mutual rapport is when Secretary Gates could say to President Hu upon landing in Beijing, “Gosh, Mr. President I see that I am way off on China’s stealth plane development schedule. If China has been as transparent as I had suggested in the past, I wouldn’t be so embarrassed,” followed by a jocular chuckle shared between friends.

An edited version appeared in New America Media.