China’s growth: An economic miracle built on sand? (Not necessarily)

Dror has written another provocative post about China’s economy that is well worth a read, even if I don’t completely agree with him. It’s about an issue many of us reflexively shy away from, i.e., the true sustainability of China’s boom, and the West’s refusal to acknowledge the possibility that much of the boom is smoke and mirrors. As Dror points out, there seems to be something irrational about leading economists writing in all seriousness about a recovery, for example, in China’s real estate industry when so many huge half-built and empty new structures dot the skylines of most of its cities (Chongqing seems to take the cake for this one but Beijing seems determined to catch up). And yet new malls and luxury housing are still being built left and right. Should they count as proof of China’s booming construction business and overall growth? In manufacturing, over-production and sometimes really bad production (dry wall and melamine toothpaste) are often par for the course, though on paper the results may look impressive – people are employed, factories are busy, production is rising.

On the other hand, China’s manufacturing has gone far beyond shoes and toys and they now make most of the electronics we’re buying, and increasingly the more complex items like sophisticated semiconductors. Many of their factories are truly world class (and I know, many are not). They seem to be serious about correcting their environmental mess (if not, they’re doomed). The infrastructure improvements in many Chinese cities are as impressive as America’s. And while I agree with Dror that consumer spending won’t start until the masses are assured they don’t need to save every cent for healthcare and education costs, there’s still a massive amount of money being spent here by a rising middle class. While the dream of 1.2 billion customers is exactly that, a dream and a fantasy, even if it’s just 400 million customers it can be one of the world’s most robust markets.

We all know the downside, the environment, the impossible problems, the corruption and the crimes of the government. But there is still enough change and progress that is real here to justify a lot of attention from the West, and everywhere else. As I quoted James Kynge in an earlier post:

It must be said that from a global perspective, China’s emergence is of enormous economic benefit. The value created by the release of 400 million people from poverty, the migration of over 120 million from farms where they perhaps raised chickens to factories where they churn out electronics, the quantum leap in educational standards for tens of millions of children, the construction of a first-class infrastructure, the growth of over 40 cities with populations of over a million, the commercialization of housing and the vaulting progress up the technology ladder have helped unleash one of the greatest ever surges in general prosperity.

Before anyone jumps on the quote with evidence to the contrary and the laundry list of reasons why China cannot succeed, please go back and read the entire post – this is one of many quotes, and all those problems are acknowledged. Kynge is not looking at China like a wide-eyed and naive child, and he sees much of what Dror sees. But he believes China will continue to “shake the world.” And “shaking the world” is not necessarily a good thing; in fact, it can be pretty awful. But China has the leverage, the tenacity, the ambition and the government coffers (and government protectionism) to shake the world for many years to come, so I suggest we get used to it and think about how to deal with it rather than denying it.

A part of me says those husks of buildings looming over us and the warehouses full of unbought refrigerators and dysfunctional state-owned businesses that employ millions of unnecessary workers – it all has to catch up with them and plunge them into a far worse crisis than they expect. Like China’s recently collapsed “modern art” industry, I see many, many of bubbles in Chinese construction and manufacturing. The structural deficiencies in the Chinese system are as deep and as many as the structural flaws in the Three Gorges Dam. But at least for now, the dam keeps operating, and China does too.

Fragile, improbable, sometimes absurd – yet in its own surreal way China “works,” no matter how much of its success is built on corruption, protectionism and/or Western self-delusion. If you write it off and conclude it is not a real, dynamic and ever-present force in global economics and politics, you do so at your own peril.

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Richard Burger is the author of Behind the Red Door: Sex in China, an exploration of China's sexual revolution and its clash with traditional Chinese values.

The Discussion: 98 Comments

@otherlisa

Absolutely China has some fabulous film makers, painters, sculptors. My point was, in terms of quality if not necessarily quantity, it is roughly equal to… Portugal or even Romania. (Seriously, take a look here: http://www.nytimes.com/interactive/2008/01/18/magazine/20080120_ROMANIAN_FEATURE.html , there’s a long feature article as well. Huh, Romania. Who knew?)

It is very tricky – many would argue it’s impossible – to “rank” artistic or cultural output… nevertheless, I have a very strong feeling that China punches far, far, far below its weight.

For me, Russia before and after 1917 is an obvious parallel.

But you may disagree and I fully respect your viewpoint. I’m fully aware that my opinions might be more driven by my ignorance than by an actual state of fact.

I just don’t think so right now 🙂

May 29, 2009 @ 10:24 am | Comment

Resident Poet: OK. I am gonna be juvenile once and play your game. I nominate Jet Li from mainland China. Now it’s your term to name dudes from Portugal, Thailand and Romania. Then we will argue who has the most soft power.

Dror: I am not asking whether or not you have invested in Chinese stocks. My question is whether you’ve SHORT SOLD Chinese stocks. I assume you know the difference. Otherwise I will be happy to explain it to you.

May 29, 2009 @ 11:40 am | Comment

I hope you all understand that when it comes to literature it is all subjective. To me, the greatest literature ever produced by humanity is Art of War by Sun Tsu and On the Origin of Species by Charles Darwin.

May 29, 2009 @ 12:01 pm | Comment

Dror: Trust me, what goes on in China is much worse than America’s sub-prime crisis.

Please tell me you are not serious about this statement. If you are serious, then you have no clue about Chinese family financial structure, or the overall capital structure of today’s China.

Let me begin by giving you a 5 year period chart of the The Shanghai A-Share Stock Price Index
http://www.bloomberg.com/apps/cbuilder?ticker1=SHASHR%3AIND
The market was at an all time high at 6395.757 in 10/16/2007, a bubble, and subsequently from that point went to 2940.592 in 06/04/2008. A 54% decline, and this is still before financial crisis. What you notice is that 54% decline did not in anyway, as it would have in USA, create a systemic risk.

How is that possible? One immediate explanation people come up with is that Chinese stock market has a relatively small total market value compared to the whole Chinese GDP, but there is flaw to the explanation when you compare the Chinese scenario with other countries. The main reason is that bank cannot lend money to ordinary Chinese investor, that is all the excessive capital that created the bubble in the first place is NOT LEVERAGED. Hell, most ordinary Chinese investor don’t even have access to margin account when they invest. So what happened during this boom-bust cycle is elite Chinese capitalist manipulating the market through pump-and-dump, information flow control, and other market manipulation methods that is unbeknown to me. They effectively the lure the average middle class Chinese investor to take their money out of their mattress and put it into the market hoping for a lucrative return. This is the only way to make average Chinese citizen to take their money out to the surface. In the end, it was just a massive wealth transfer scheme. The elite took the saving money from the average Chinese, money which they are not going to spent anyway.

Now let’s look at the Chinese real estate market. This sector also when through a boom and bust cycle that has “trapped” a lot of average Chinese investor’s money. It is, however, fundamentally different than American sub-prime mortgage crisis, simply because there is no sub-prime mortgage lending in China. This is all thanks to relatively rigid and dull Chinese financial market, as opposed to the dynamic and vibrant American financial market. In other word, their financial sector is shielded from the crisis simply because of its backwardness. The majority of the house purchase in China are one lump sum payment, which are black money comes from source the government has no way of tracking. Some borrow money from their relatives, most well to do Chinese family today still maintain some family network, although not as extensive as the feudal era.

May 29, 2009 @ 12:08 pm | Comment

The Economist magazine points out a study showing that China’s nationwide power production is much, much lower than it should be according to official GDP and output statements and projections. Can’t produce without power! Are Chinese factories setting up big wheels for FLG members to run around in for mechanical power?

May 29, 2009 @ 1:19 pm | Comment

Resident: My point was, in terms of quality

Serve: I nominate Jet Li

Um, Snap!?

May 29, 2009 @ 2:57 pm | Comment

This is as subjective as it can get, but no different that most opinions here anyway:

If you have 2 sinking boats, one with all current European movie directors on it and the other with Feng Xiaogang alone, and I can only save one. I would save the latter one. OK, hopefully a couple UK and Russian directors are not on the sinking boat… Just so that you know, the opinion at least isn’t an uninformed one — I watch a lot of films each year, including quite some European ones.

Come to think of it, if I have to choose not watching any Chinese films, or any Hollywood films for the next 2 years, I will choose not to watch any Hollywood films. To me, the difference is kind of like UFC and boxing. Boxing still reaches a far wilder audience and pays a lot more, but UFC is a lot more interesting.

May 29, 2009 @ 4:32 pm | Comment

Damn, there’s a blast from the past – Nanheyangrouchuan! What have you been doing with yourself?

May 29, 2009 @ 4:42 pm | Comment

My point was about mainland China.

I’m not sure you noticed, but Jet Li spent (almost) his entire professional life in HK and the US. Do you really think there would be a Jet Li without the HK movie industry?

The Shaolin Temple, which was his real debut, was a HK production by the way, Once Upon A Time In China and Fist of Legend likewise, and for the past 10 years he’s mostly been in Hollywood.

So my point stands.

(Historical note: HK is a part of China only since 1997.)

May 29, 2009 @ 5:45 pm | Comment

For some people, it has really become a popular “sustainable” talk that the growth which has been going for 30 years is “unsustainable”. A blind man can get the bull eye, sooner or later, if he keeps shooting as time goes by.

May 29, 2009 @ 6:06 pm | Comment

@Serve: I do not invest in Chinese stocks. Long, short, or otherwise.

@Fobtacular: Thanks for the comment. I said that what goes on in China is much worse than the sub-prime crisis, I did not say that China has/will have a sub-prime crisis. To paraphrase Tolstoy, every unhealthy economy is unhealthy in its own way.

Let me start by pointing out that the US sub-prime crisis was not the cause of the current crisis. It was a symptom and not the malady itself. As for the details, in the US, too many people who wanted an apartment got easy loans. In China, too many people who want an apartment could not (and still cannot) afford one since prices were driven up by speculators. In the US, the buyer-apartment ration is considerably lower than in China (i.e. the average number of apartments sold to a single buyer). And so, an apartment in a first or second tier Chinese city costs like an apartment in a major US city, even though the average income of a Chinese city dweller is fraction of his US counterpart.

For lack of other alternatives, the RE market has become the investment avenue of choice in China. So, as you pointed out, families invest all their cash in this market as if it was savings account. During the last five years, China’s “emerging middle class” bought every piece of real estate they could put their hands on, regardless of location, decoration, or relation between price and average yield. The phenomena is so extreme that individuals even bought shops and offices without any intention to lease them out.

The problem is that an apartment or a shop is not really a savings account, and when property prices go down these people will lose a few generations of savings in one go. Then they’ll get angry. That’s why the CCP would not let the bubble burst and is now pouring money into an already overheated real estate market. Sadly, this type of anesthetic willl note cure China of it’s illness. It will only delay the pain and make the situation worse. It’s like giving baijiu to a freezing man.

As for systemic risk. Saying that the current crisis does not pose any real threat to China’s financial system is like saying that Hu Jintao is the people’s president of choice. In both cases, we’ll probably never know. The Chinese government has been pouring billions of dollars into local banks and other strategic industries, either directly or through its sovereign wealth funds or the banks themselves. The fact that we have have little information about the way it happened, does not mean it did not happen.

I don’t think you could compare America’s stability to China. It wouldn’t be fair. America has an incredible ability to absorb shocks, and the current crisis is a perfect example. Just imagine what would happen in China if a few large banks go bankrupt, together with several other key industries. In fact, China and the US are now experiencing one single crisis which both share. In the US, it does not pose a serious threat to the country’s political and geographical structure. In China, it does.

For god’s sake, in China, even letting people access youtube is considered a systemic risk…

May 29, 2009 @ 6:21 pm | Comment

@ justice: a country with “5,000 years of history” is not judged over 30 years. I do not know about others, but when I point out problems in the current model, it is in order for them to be fixed and for China to continue to grow. Nothing is determined. It’s in the government and people’s hands.

May 29, 2009 @ 6:24 pm | Comment

@Dror,

US has the ability to absorb shocks but at a cost to its deficit. China definitely doesn’t want its banks to fail and the government is going to provide the banks with liquidity if necessary because they can always sell of its bonds.

If the Chinese use the homes as a savings account, so what? They have to pay at least 20% down when they buy. Then what does an average American own? More than 20% of American Homeowners are underwater in their mortgage loan.

May 30, 2009 @ 2:12 am | Comment

Meanwhile…

May 30, 2009 @ 3:46 am | Comment

@pug_ster: Everything has a price and nobody is saying that America is in ideal shape. Still, when it comes down to bare fundamentals, the current crisis poses a more severe threat to China than it does to almost any other country.

20 years ago, the Chinese people were very angry. One of the main reasons for that anger was inflation (the loss of value of one’s savings). Today, a good chunk of the savings of the Chinese people are invested in local RE. The value of these savings has gone down considerably during the last year, and must go down much more in order to reach its true value. This means that the savings of the Chinese people are once again under serious threat. Add to this the fact that another big chunk of these savings are invested in American debt (and denominated in USD). The US is now printing more and more dollars, so if/when the USD collapses, the savings of the Chinese people will take another hit. etc. etc.

May 30, 2009 @ 8:13 am | Comment

Resident Poet: So now not only the actor has to be Chinese. to count as a Chinese success story, he can only appear in movies shot in China, produced by a Chinese company, with no non-Chinese colleagues, and distributed by Chinese distributors. Have you heard anything called globalization? I am still waiting for your Portuguese, Thai, and Romanian cultural icons.

Dror: So you have not shorted any Chinese stocks. You can talk the talk, but not walk the walk.

May 30, 2009 @ 9:20 am | Comment

@Dror

I agree with your analysis.

What would happen is (successful economic system) China let the RMB become fully convertible?

I believe it would initially rise then at the first sign of a crisis, the wise Chinese people would rush to the bank to convert all their rmbs into dollars or euros producing the “coming collapse of China.”

As long as the rmb hides behind the Chinese Wall and refuses to come out to play, I believe it is nothing but an economic paper tiger.

May 30, 2009 @ 10:03 am | Comment

@Serve: In fact, my talk is very consistent with my walk. China is currently the best place to make money and the worse place to save money. Hence, my long term investments are not in China, and in the short/medium term, I am here making good money, mainly in the real estate and infrastructure sectors.

Besides, I did not say that China will collapse tomorrow. In the short/medium term, the fact that most people don’t understand what’s going on here means CN-related stocks will go up. The stock market reflects people perception of reality. It does not reflect reality itself.

In addition, I am not a day trader and normally don’t invest in individual shares (only ETFs, commodities, and currencies).

May 30, 2009 @ 10:41 am | Comment

Probably Portugal’s greatest cultural icon is Jose Saramago (he got the Nobel for literature, among other countless prizes).

But I’d much rather compare Jet Li to Cristiano Ronaldo 🙂

May 30, 2009 @ 11:52 am | Comment

@Resident Poet: I’d say it’s Fernando Pessoa. Much more significant than Saramago, though much less appreciated.

Jet Li is indeed better compared with Ronaldo. Beating people up on film does not count as a contribution to humanity in my book.

May 30, 2009 @ 11:55 am | Comment

@Dror

I’m with you on Pessoa vs. Saramago, but I thought the discussion was limited to people alive today.

Antonio Lobo Antunes is also a very interesting writer…

May 30, 2009 @ 1:08 pm | Comment

@Serve
“…am still waiting for your Portuguese, ”

I like Madredeus

http://tinyurl.com/nykzxm

By the way Saramago is nobel price Laureate.

How many Nobel prices are Chinese? I only can find 6 and all of them do not live in China. Why is that so? Why so few?

Tsung-Dao Lee, Physics, 1957 – Chinese American
Edmond H. Fischer, Physiology or Medicine, 1992 – Swiss-American (born in China)
Daniel C. Tsui*, Physics, 1998 – Chinese American
Gao Xingjian, Literature, 2000 – French Emigre
Chen Ning Yang, Physics, 1957 – Chinese American
Samuel C.C. Ting, Physics, 1976 – Michigan-born Chinese American

Well 7. I forgot the DL 😉

May 30, 2009 @ 1:40 pm | Comment

At least in patent ranking things are improving. 5th position from what can I find.

1 JP
2 US
3 SK
4 EU
5 CH

2006 data.

Maybe a side effect will be IP property will be taken even more seriously in CH…

May 30, 2009 @ 1:45 pm | Comment

@Ecodelta – Just in case anyone is wondering, the number of patent applications is no way WHATSOEVER to measure inventiveness. Instead it is usually a measure of a) how easy it is to get a patent, b) how many companies wish to use patent portfolios to eliminate competition. Case in point, despite the equal importance of each market in terms of sales etc., the last company I worked for made 4,000 patent applications per year in the US and virtually zero in Europe – why? firstly because the applications were of an extremely obvious nature (and many of them were not even new) and were unlikely to be accepted by European patent offices, and secondly because there was a high risk that such activities would constitute anti-competitive behaviour under EU law. The same company made 8,000 applications in China.

Likewise, these stats hide important differences – firstly, the ratio between true patents and utility models (so-called ‘mini patents’ which are of less inventive value and receive a lower level of protection) is 1:3 in China, whereas the US and many European jurisdictions do not allow utility models. Even the true Chinese patents are generally accepted to be of extremely low value, and would not be accepted by other patent offices.

This is not to say that China has nothing in the way of inventiveness, but the number of patent applications made is no way of measuring this. Even a straight measure of R&D spending would do a better job.

May 31, 2009 @ 6:25 am | Comment

I’m curious about property laws. In Taiwan those massive cookie cutter housing complexes need only sell 1/2 of their residences to break even, because of land use laws that tremendously favor developers, the cultural habit of buying housing no matter how stupid the investment, and tax laws that keep people from selling homes. In Taichung about 1/3 of all homes are empty but developers make big $$. Is there zoning or other controls that have similar effects in China? What about taxes? All those empty buildings may actually be making money for the developers, if the government has arranged the system in their favor.

May 31, 2009 @ 10:07 am | Comment

Hongkong is on life support from mainland central government, it’s a ponzi scheme at best, there is no way for it to compete with neighboring provinces and it really has nothing to compete. The only fate of Hongkong is going back to be a fishing vilage. To mainland China, Hongkong’s role as being the only connection to West is ending.

May 31, 2009 @ 11:11 am | Comment

@serve

“Dror: So you have not shorted any Chinese stocks. You can talk the talk, but not walk the walk”

If everyone in China thinks that the stock market is a reflection of the true fundamentals of the economy, you are heading down the path of a serious crash landing in the future.

In fact, if you are schooled on the subject of economic bubbles, you would realize that a historic and successive stock rallies precedes a devastating crash. The Nikkei stock index reached all-time high in 1989 before the bubble burst with horrific ferocity. The same happened in the 1987 Black Monday Stock Crash. Dow Jones peaked at a historic 2722 points in Aug 1987 before a single day collapse of 508 points on Oct 19, 1987.

As John Maynard Keynes brilliantly put it, “The market can remain irrational longer than you can remain solvent.” The undying faith in stocks as an indicator of economic optimism and prosperity may well be a recipe for disaster.

May 31, 2009 @ 11:55 am | Comment

@FOARP
I am aware of the missuses of the patent system as a way to block competitors or secure competitors on the market.

Still, although it is a faulty measure of true inventiveness it considers that it shows an improvement in the situation in CH. At least a patent system is in place,
not a bad start after all

I am also well aware of the low research i+d budgets in CH and their tendency to copy foreign technologies. But when you have fallen back well behind it is more effective to copy what is already done rather than invent all the way back to the first places in technology.

But not a few of the knockouts products tomming from CH reveal truly invectiveness, copying modern technologies ad processes is not so simple as pressing the button of the xerox machine.
(yes foreign outsourcing companies helped a bit, sometime they got a good surprise..)

Eventually we will see more surprises coming out from CH. They have the people. Lots of young graduates looking for a way o earn their daily bread, the need to catch up at the technology level and good pile of dire problems that require novel solutions.

And…. Need is the mother of all inventions.

Stay tunned for what may come in the future…

May 31, 2009 @ 1:28 pm | Comment

Damn!

….block competitors and secure market position

….I consider that is shows…

May 31, 2009 @ 1:30 pm | Comment

Can I nominate FengXiaoGang to be the most watched movie director ever lived in this planet? He beats the living sh1t out of all the Portuguese diretors combined … LOL

I mean really? Portugal?! really? I mean no offense I think they are a wonderful country and all that but someone seriously thinks Portugal has more “softpower” (whatever that means …) than China? Shouldn’t you at least add something like “more softpower among China-hating-no-matter-what male Caucasians?

May 31, 2009 @ 3:05 pm | Comment

@ FOARP

“Damn, there’s a blast from the past – Nanheyangrouchuan! What have you been doing with yourself?”

I do post on china law blog as “another anon”. I’ve been busy working on a very interesting project involving water filtration. Other than that, drinking good wine, eating good food and avoiding Chinese girls.

Bah mantou!

May 31, 2009 @ 3:17 pm | Comment

@MoneyBall

Small Portugal? Yes, small but…

Just a little bit of history. Small Portugal opened the route to east Indies, and doing that opened the route for the following west powers to Asia. Spanish, Holland, British…. and eventually US.

Ever heard of Vasco de Gama?

It provoked Spain to attempt to find a different route to Asia… towards the west. What happened afterwards his well known history. A new continent, ….place of birth of the US. Ever heard of that country lately?
Quit a small thing…

Magellan, was commander of the first fleet that made the first travel around the world. It opened the route from Mexico to Asia. Ever heard of The Galeons from Manila? A lot of silver from Potosi (Bolivia) reached this way to China, and Chinese goods started to flood into west markets…. bringing the attention of other western powers….

http://en.wikipedia.org/wiki/Manila_Galleon

Zeng He travels could have been magnificent, and their naval technologies even superior, but no comparison on the impact down the road with what was started by small Portugal.

And what about Brasil? Do you know what language is spoken there? Brasilian? What is the origin?

And if you Visit Africa, you may also find that Portuguese is spoken there.

Be careful with small things.
Don’t make the same mistake of Chinese Scholars counseling their emperor.
“Those western barbarian small kingdoms are far away and so powerless like small seagulls, take no heed of them”

May 31, 2009 @ 3:35 pm | Comment

Sad thing that to find more about Zheng He travels we are limited to wild especulations.

The travel reports were destroyed and the ships too. 🙁

Fortunately that didn’t happen here. Lot of documents about our travels can be found in the “General Archive of the Indies”

http://en.wikipedia.org/wiki/Archivo_General_de_Indias

We didn’t burn them… and full sizes copies of the old ships can be visited. 🙂

May 31, 2009 @ 3:43 pm | Comment

Tickets anyone?

http://es.wikipedia.org/wiki/Archivo:SantaMariaPalos1.jpg

Not as impressive as the treasure ships… but it is there to visit.

May 31, 2009 @ 3:45 pm | Comment

@serve

“Dror: So you have not shorted any Chinese stocks. You can talk the talk, but not walk the walk”

If everyone in China thinks that the stock market is a reflection of the true fundamentals of the economy, you are heading down the path of a serious crash landing in the future.

In fact, if you are schooled on the subject of economic bubbles, you would realize that a historic and successive stock rallies precedes a devastating crash. The Nikkei stock index reached all-time high in 1989 before the bubble burst with horrific ferocity. The same happened in the 1987 Black Monday Stock Crash. Dow Jones peaked at a historic 2722 points in Aug 1987 before a single day collapse of 508 points on Oct 19, 1987.

As John Maynard Keynes brilliantly put it, “The market can remain irrational longer than you can remain solvent.” The undying faith in stocks as an indicator of economic optimism and prosperity may well be a recipe for disaster.

May 31, 2009 @ 4:03 pm | Comment

@zhaoleban

“Hongkong is on life support from mainland central government, it’s a ponzi scheme at best, there is no way for it to compete with neighboring provinces and it really has nothing to compete. The only fate of Hongkong is going back to be a fishing vilage. To mainland China, Hongkong’s role as being the only connection to West is ending.”

The rest of China, including Shanghai, did not have something that Hong Kong has which is crucial to economic success: the rule of law and an independent judiciary.

You may argue that cities like Shanghai has been successful but contrary to the common perception, i don’t think it would surpass Hong Kong as a financial hub? Why? Shanghai and the rest of China do not have a proper legal framework based on common law like the former British colony. Furthermore, the rest of China is far from a position to allow free flow of capital and undertake capital account liberalization.

May 31, 2009 @ 4:19 pm | Comment

I’m not going to get into this debate about Portugal. I made a comparison with Imperial Russia and I think that’s fair enough. Russia before 1917 produced two Tolstoys, Chehkov, Musorgsky, Borodin, Rimsky-Korsakov, and Dostoevsky. The only scientist of note was Tsiolkovskii, and he was ignored under the Tsars. In spite of the insanely long and obsessive post on the China Daily thread listing all China’s ‘inventions’ (including golf, football, the steam engine and beer, apparently), little has actually been achieved by mainland Chinese scientists under the current government.

May 31, 2009 @ 5:54 pm | Comment

Golf?

May 31, 2009 @ 6:11 pm | Comment

Richard… I think we need a new post on China’s cultural/scientific output vs. other countries. Your place of mine?

May 31, 2009 @ 7:50 pm | Comment

Dror, I don’t even have time to read my own comments at the moment. Want to put up a guest post? Email me. (And anyone else who’s interested please do the same.)

May 31, 2009 @ 8:59 pm | Comment

Haha… I am working on two other posts for TAM. Will see what I can do.

May 31, 2009 @ 9:25 pm | Comment

@Michael Turton – The situation on the mainland is similar to the way you describe Taiwan. Large blocks of flats will be built, with most being sold before the building is even finished. In fact you will sometimes see unfinished buildings being torn down, not because of lack of sales or structural factors, but because in the intervening months since building commenced funding/permission/sufficient interest has been obtained for a larger building to be built and sold. Many of these flats will then stand empty as investment properties.

The main difference (I guess, I know little about Taiwan property law other than zoning is pretty strict – hence the rice paddies in central Miaoli) is that there is still no private ownership in the PRC, only rights for use, with much land being reserved for particular uses, although developers will often ignore these rules and try to get them re-zoned post-development. As far as I know, residential land is still leased from the government on 70 year leases, and no-one knows what’s going to happen when the first of these leases starts to run out. However I don’t know what the 2007 land reform law has done about this. From what I can gather from a brief read-through, nothing, but you can check this out yourself:

http://www.law-lib.com/law/law_view.asp?id=193400

May 31, 2009 @ 9:37 pm | Comment

@FOARP/Michael Turton: It’s still 70 years lease for residential use and 40 years lease for commercial use. But there’s a lot of mischeif in between, and many consumers have no idea or don’t care what they’re buying to commercial land means “serviced apartments” or strata titled office space which are being sold for investment purposes.

As for the land, it is normally not cheap, which is another absurdity – the government claims that RE prices are too high, but these prices are derived directly from land prices which are set by the government (normally through auctions).

May 31, 2009 @ 10:40 pm | Comment

@ecodelta,

You said “Be careful with small things”, fair enough, what about the big things? We’ ve gotta be careful with small things like Portugal but can so easily dismiss a big thing like China? where is the logic?

I dont have a problem with Portugal, I’m sure they had their time in history, so did a lot of other peoples even the Arabians. I have mad respect for Portugal… maybe not true but I know I’d be very cautious to pass a simple statement like “even Portugal has more softpower than China” when it comes to a whole people with their thousands of yrs history, not that I dont have the shallow knowledge to draw the comparison, but because I ‘m an EDUCATED and RESPECTFUL person! Only a 10 yr old would say something like “Kobe owns LeBron”! I can’t believe a silly and childish statement like that are ferociously defended by so many supposedly knowledgable and fair-minded western posters here. That’s why I stopped coming to this place regularly.

June 2, 2009 @ 6:57 am | Comment

For big chunks of time CH isolated itself, making itself irrelevant to the world, and blissfully ignoring what was going on beyond its borders… at is own risk!

Its relathionship to foreign entireties was not a few time in history very condescending, overbearing, even preventing an effective diplomacy against foreign powers… with terrible consequences.

And that is what I was my the point of my critic. It is a constructive, not destructive critic. What I felt when reading your post was ignorance and shortsightness. Maybe I misread.
But anyway, I would never use you argumentation even with Lichtenstein.

My point is that we must look beyond our border, physical and mentally.
Be careful with big things of course,… but also with small ones, you never know

Is China big? Yes. But for most of the time in history here, it has been irrelevant to us. Seems it is changing lately. Hope for the best.

” I ‘m an EDUCATED and RESPECTFUL person!” No need to say it so loud 😉

“Kobe owns LeBron” ???

June 2, 2009 @ 7:19 am | Comment

I don’t understand how anyone with an ounce of brainpower can claim that Portugal currently has more soft power than China. Can anyone here name one Portugal director here off the top of their head? How about any Portugese film’s within the last 20 years. Anyone know of any famous Portugese companies? What’s the name of the Portugese President? What big international celebrities are from Portugal? (Off the top of my head I can think of Nelly Furtado and Christiano Ronaldo, that’s about it). I just love how some people here use Vasco de Garma/Magellen to evoke Portugal’s old glory days as an indication of Portugal’s awesome “softpower” without realizing that those people have been dead for quite sometime now. Clearly these people don’t know what softpower is. More than anything else softpower is a case of “what have you done for me lately”. When most foreigners think of the US they don’t think of the founding fathers, Abraham Lincoln, Thomas Edison, they think of Coca Cola, Levi’s, Nike, Hollywood movies, the NBA, Hip-hop music, MickeyD, Disney World, the list goes on and on….

June 2, 2009 @ 10:16 pm | Comment

China will collapse. They use fake numbers, they are oppressive, the government can and does prop up industries, they’re closed and don’t let outsiders look at “the books,” they can print Yuan as much as they want because who can tell and they can pump their fake, manipulated currency into Chinese companies. Gee, how hard is it to be successful if you prop up entire industries? More than 840 million Chinese live on $2.00 or LESS per day. What will happen is this: some Chinese will enjoy SOME level of success. Most will not. When there are over 900 million living in abstract, 200 million living in somewhat barely tolerable conditions and 100 million just falling below what is middle class…how long before they start to hate the 100 million or so that may be living fairly good lives? This is what causes total fear in the government of China. They will rise up and demand better lives. But…they won’t get it. Think of it this way: China’s economy is only about $4.4 trillion…yet they have a population of over 1.3 billion. They would have to have an economy of $60 trillion to even come close to good living standards.

India is where it is at. China has been cursed and their day of falling back into nothingness is at hand. The west knows this, which is why the West is focused on India.

June 5, 2009 @ 11:54 pm | Comment

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