China Challenges

Shanghai Ages Fast

Howard French in the NYT writes:

Shanghai is rightfully known as a fast-moving, hypermodern city full of youth and vigor. But that obscures a less-well-known fact: Shanghai has the oldest population in China, and it is getting older in a hurry. Twenty percent of this city's population of 13.6 million is over 59, the official retirement age in Shanghai, and retirees are easily the fastest-growing segment of the population, with 100,000 new seniors added to the rolls each year. By 2020, about a third of Shanghai's residents will be over 59, remaking the city's social fabric and placing huge new strains on its economy and finances.

To read more: http://www.iht.com/articles/2006/06/28/news/age.php

Reporting Bad Events

The IHT says:

News has always been a tough nut for Communist dictators. It happens unexpectedly, giving bureaucrats precious little time to prepare the correct ideological explanation; it often undermines whatever propaganda line the state is pushing, and if it happens to involve embarrassing events like riots, strikes, accidents or outbreaks of disease, it can make the party bosses look less than perfect.

To read more:
http://www.iht.com/articles/2006/06/28/opinion/edchina.php

Chasing the Sun

Tom Plate writes about a new book just released:

The authors are a pair of former American diplomats. One is Morton Abramowitz, now a staff think-tanker at The Century Foundation in New York, and a former Thailand ambassador. The other is Stephen Bosworth, now dean of the elite Fletcher School of Law and Diplomacy in Massachusetts, and a former top-notch ambassador to South Korea.

Their book is titled Chasing the Sun, and in about 192 spiffy, sometimes witty and occasionally self-deprecatory pages, it lays out a basic approach to American policy in East Asia that may not be so quiet but neither is it remotely ugly.

Their sensible and seasoned approach asks Americans to cut out the lecturing, huffing and bluffing and to assume a more modest, even respectful style of American leadership.

We need to accept China for the growing power that it is and bear in mind how American support for the military reawakening of Japan will be negatively received in Asia.

To read more:

http://www.asiamedia.ucla.edu/columns.asp?parentid=48023

Dan's Diary

If you are into high-tech, check out Dan's China Diary. To take a look:

http://www.silicon.com/research/specialreports/china/0,3800011742,39159766,00.htm

North Korea Missile Concerns

The China Economic Review reports:

A possible long-range missile launch by North Korea has Chinese authorities "very concerned", international media reported Thursday. Both China and Russia, the communist state's two last major allies, have expressed their alarm at the announcement by Pyongyang.

The US and Japan have already warned of unspecified retaliation if the launch goes ahead. China is “very concerned about the current situation,” the Foreign Ministry said in Beijing.

Tensions have grown in recent weeks after US officials reported activity at a launch site near the country's northeastern coast, where the North Koreans could possibly be fuelling a Taepodong-2 missile. North Korea also said this week it has the right to launch a satellite, as it claimed to have done after a missile launch in 1998.

To read more:

www.chinaeconomicreview.com

People's Daily: Yuan Expected to Appreciate

The People's Daily reports:

RMB will witness obvious appreciation trend in 2007, and is likely to appreciate by large degree, said Yu Yongding, a member of Chinese central bank's monetary policy committee.

The central government has been trying to avoid hurting export firms too much by RMB exchange rates, but fluctuation of exchange rates should abide by the reality, Yu said Friday at a forum on foreign trade.

"We must implement contractive monetary policy to contain the overheating investment," Yu said.

To read more:

http://english.peopledaily.com.cn/200606/24/eng20060624_276953.html

Years Ago - Bird Flu in China

Bloomberg reports:

China had at least one case of lethal bird flu two years before the country reported any infections to officials at the World Health Organization, according to a letter to a scientific journal.

The case occurred in a 24-year-old man in November 2003, according to a letter in today's New England Journal of Medicine. The first human case reported to the WHO during the current bird flu outbreak occurred in Vietnam in December 2003, and China reported its first case to the WHO in November 2005.

Doctors originally suspected the man died of severe acute respiratory disease, or SARS, the lung virus that infected more than 8,000 people in 2002 and 2003, killing 774. The letter, written by eight Chinese scientists, didn't say when the samples were analyzed.

To read more:

http://www.sinolinx.com/frame/sinolinx.php?XML=0421mkw90sinolinxnewsfeed4vhjHi4341&url=http://www.bloomberg.com/apps/news?pid=10000087%26sid=anUklmwf__os%26refer=top_world_news

Manned Lunar Mission

The China Economic Review reports:

A Chinese manned lunar mission including a walk on the moon's surface has been scheduled for 2024, AP reported, citing comments made by a Chinese scientist to a Hong Kong newspaper. Lunar program vice-director Long Lehao said the moon walk would be the culmination of a program that would see a robot explorer bring a chunk of the moon's surface back to earth in 2017.

There are also plans to send a landing vehicle to the moon in 2020 to conduct tests, including soil studies. The first stage of China's lunar program – named “Chang'e” after the mythical Chinese moon-inhabiting fairy – has already been unveiled by chief scientist Ouyang Ziyuan. It will begin next spring with the launch of a two-ton moon-orbiting satellite.

To read more:
www.chinaeconomicreview.com

Angry Students in Central China

There are some very unhappy students in central China.  The Vail Daily News reports:

College students in central China smashed offices and set fires in a riot sparked by administrative changes that made their diplomas less prestigious, students and school administrators said Monday.

Photos of the weekend riots posted on the Internet showed fires set in debris-strewn school courtyards and glass smashed in administrative offices, shops, cars and a bank.

Students said police with water cannons had moved onto the campus of Shengda Economics, Trade and Management College in Zhengzhou, the capital of Henan province. It was unclear if there were any clashes.

To read more:

http://www.vaildaily.com/article/20060619/NATIONAL03/106190051/-1/rss01

Thank you

Today is the first anniversary of China Challenges.  After a slow start last summer, readership continues to grow with each passing month. Thank you.

The High Cost of Pollution

The China Economic Review reports:

Some US$162 billion, or 1.6% of the country's GDP over the next five years, will go to clean up the environment and prevent further damage, the South China Morning Post reported, citing Mao Rubai, director of the Environment and Resources Protection Committee of the National People's Congress. Speaking at a forum on Sunday, Mao said the budget would be just enough to control mainland pollution. This is the first time the projection has been made public since it was approved by the NPC in March. The new budget is 0.2% higher than the 1.4% of GDP spent in 2004. China's massive growth in recent years has been accompanied by ever-growing pollution woes.

To read more:
www.chinaeconomicreview.com

The Virtual Forbidden City

TechWeb News reports:

The type of technology that allows gamers to interact online will soon merge real and virtual space for people visiting China's Palace Museum and those who cannot travel to the actual site.

IBM announced "The Forbidden City: Beyond Space and Time," a philanthropic cultural heritage initiative Friday that will enhance real tours of the 800-building complex, while also bringing the city to a global audience. In partnership with The Palace Museum, Big Blue is creating a fully immersive, interactive, three-dimensional online environment that corresponds to the grounds and cultural artifacts of such places as the majestic Hall of Supreme Harmony.

To read more:

http://www.techweb.com/wire/ebiz/189500134;jsessionid=BSDGADJVY4QXQQSNDLQCKHSCJUNN2JVN

Falling FDI in China

While it maybe only temporary, AP reports actual FDI in China is falling.  To read more:

http://www.businessweek.com/ap/financialnews/D8I8IPFG1.htm?sub=apn_asia_up&chan=gb

China's "Death Vans"

USA Today reports on China's new death vans:

The country that executed more than four times as many convicts as the rest of the world combined last year is slowly phasing out public executions by firing squad in favor of lethal injections. Unlike the United States and Singapore, the only two other countries where death is administered by injection, China metes out capital punishment from specially equipped "death vans" that shuttle from town to town.

Makers of the death vans say the vehicles and injections are a civilized alternative to the firing squad, ending the life of the condemned more quickly, clinically and safely. The switch from gunshots to injections is a sign that China "promotes human rights now," says Kang Zhongwen, who designed the Jinguan Automobile death van.

To read more:

http://www.usatoday.com/news/world/2006-06-14-death-van_x.htm

Pressing Ahead With Reform

In the Japan Times, Mr. Frank Ching writes:

A recent well publicized article in the official People's Daily newspaper shows that another debate is raging, but party leaders, including President Hu Jintao, have come down decidedly in favor of pressing ahead with reform.

The authoritative nature of the article published earlier this month was reflected by the wide publicity given to it by the official media. It called on all party members to "unwaveringly uphold reform" and said China had no choice but to deepen market reforms and open further to the outside world.

To read more:

http://search.japantimes.co.jp/mail/eo20060615fc.html

Wanted: Skilled Chinese

Another story about about Asia's shortage of skilled workers.  Focusing on China and India, AsiaOne explains:

How can two countries that together manage to produce almost seven million graduates a year be running short of talent?

The most obvious explanation is that their economic growth is outstripping even their abundant supplies of labour. Another reason is globalisation, which is raising the competitive bar for local companies and placing new demands on labour markets.

China's dearth of accountants is one symptom of those changes. In its command economy days, it had no use for professional accountants. Now they are in demand, as its companies seek to meet international financial reporting standards and tap capital markets.

To read more:

http://www.asiaone.com.sg/./st/st_20060614_24248.html

China's Trade Surplus Soars

The China Economic Review reports:

China announced a record US$13 billion trade surplus for May on the back of a 25% year-on-year rise in exports. This puts exports for the first five months of the year at US$347 billion, up 26% on the same period in 2005, while imports have risen 22% to US$301 billion. Based on this form, China could well surpass the record US$102 billion annual surplus recorded in 2005. Coming shortly after reports that bank loans rose 16% in May while M2 money supply expanded 19.5% – both figures well above government targets – there is likely to be further pressure on Beijing to introduce further tightening measures and allow greater currency appreciation.

To read more:
www.chinaeconomicreview.com

Beijing Olympics - Alleged Corruption

High-level corruption allegations have hit the 2008 Olympics.  The Financial Times reports:

A Beijing vice-mayor with a central role in the Chinese capital's preparations for the 2008 Olympics has been fired for alleged corruption.

To read more:

http://news.ft.com/cms/s/4dad5c64-f987-11da-8ced-0000779e2340.html

Dispute Over Wireless Standards Grows

AP reports:

An international dispute over a wireless computing standard took a bitter turn this past week with the Chinese delegation walking out of a global meeting to discuss the technology.

The delegation's walkout from Wednesday's opening of a two-day meeting in the Czech Republic escalated an already rancorous struggle by China to gain international acceptance for its homegrown encryption technology known as WAPI. It follows Chinese accusations that a U.S.-based standards body used underhanded tactics to prevent global approval of WAPI.

To read more:
http://news.yahoo.com/s/ap/20060611/ap_on_hi_te/china_encryption_feud

Report of Chinese M&A

Recently the Boston Consulting Group published a report called China’s Global Challengers: The Strategic Implications of Chinese Outbound M&A.  They write:

In recent years, Chinese companies have burst on to the global mergers and acquisitions scene. So far, the value of Chinese "outbound" acquisition deals has not equaled the flow of investment on the part of Western companies into China. Nevertheless, the recent flurry of M&A activity on the part of Chinese companies is only the beginning of a powerful long-term trend. This report explores the strategic implications and managerial challenges of Chinese outbound M&A--both for potential Chinese acquirers and Western targets.

To read the report:

http://www.bcg.com/publications/publications_search_results.jsp?PUBID=1835

Chinese Middle Class Trends

A new study from McKinsey Quarterly says:

Two features of China's emerging middle class are already particularly notable. First, it will be unusually young compared with that of most developed markets, whose highest earners tend to be middle aged. In the United States, for example, income generally peaks between the ages of 45 to 54.9 Since higher-paying jobs, on average, require a higher level of education and training than what older generations have obtained, the Chinese government currently makes substantial investments in higher education for the younger cohorts, meaning that the country's wealthiest consumers will be from 25 to 44 years old.10

Second, the urban middle class will dwarf the current urban-affluent segment in both size and total spending power. From 2010 onward we will see some distinct subsegments among the affluent—including the mass- and global-affluent categories—but they will still total only 40 million households by 2025, accounting for just 11 percent of all urban dwellers. Their total consumption will equal 5.7 trillion renminbi11—just 41 percent of middle-class consumption.

To read more:
http://www.mckinseyquarterly.com/article_page.aspx?ar=1798&L2=7&L3=10&srid=17&gp=0

Tibet Allegations of Genocide

The Independent reports:

China has denounced a Spanish court's investigation into claims of genocide in Tibet as an interference in its internal affairs and dismissed the allegations as "sheer fabrication".

A spokesman for the Chinese Foreign Ministry, Liu Jianchao, said Beijing opposed any interference in its internal affairs, including on Tibet issues.

To read more:

http://news.independent.co.uk/world/asia/article656410.ece

Pollution Cuts GDP Growth by 10%

The China Economic Review reports:

Environmental pollution costs China an estimated 10% of GDP every year, according to a white paper released by the State Council Information Office to mark World Environment Day. Launching the white paper, Zhu Guangyao, deputy director of the State Environmental Protection Administration, the country's top environmental watchdog, said the estimate was two percentage points higher than an estimate made in the mid-1990s.

Zhu said the central government had focused on tackling environmental problems and had a detailed clean-up plan for the next five years. He added the environment was playing an increasingly important role in the government's attempts to cool the economy.

To read more:

www.chinaeconomicreview.com

The Global Creative Economy

At Cato Unbound, Mr. Richard Florida argues:

American economic experts and policy-makers are rightly preoccupied with the emergence of behemoths like India and China, which offer huge markets, capable workforces, and cost advantages. Unfortunately, they overlook a subtler but even more profound shift in the nature of global competition.

In the past two and a half decades, this shift has taken us from the older industrial model to a new economic paradigm, where knowledge, innovation, and creativity are key. At the cutting edge of this shift is the creative sector of the economy: science and technology, art and design, culture and entertainment, and the knowledge-based professions.

The U.S. is at the forefront of this global creative economy. Over the next decade, it’s projected to add 10 million more creative sector jobs, according to the newest numbers from the Bureau of Labor Statistics. At the present rate of increase, creative jobs alone will soon eclipse the total number of jobs in all of manufacturing. Already, more than 40 million Americans work in the creative sector, which has grown by 20 million jobs since the 1980s. It accounts for more than $2 trillion USD—or nearly half—of all wages and salaries paid in the U.S.

To read more:

http://www.cato-unbound.org/2006/06/04/richard-florida/the-future-of-the-american-workforce-in-the-global-creative-economy/

A Perception Gap

China is now unafraid to show that beyond economic growth are a billion problems, writes Mark Magnier in the LA Times (via the Standard).  He explains:

Mainland officials have settled on a new mantra in meetings with visiting foreign dignitaries: You've seen Beijing and Shanghai. Now it's time to go out to the countryside and see our tired, our poor, our huddled masses yearning to be fed.

Behind the polite invitation is a more substantive message. Namely, you may view us as a strategic threat poised to steal your jobs, drive up your gas prices and take over the world. But take a peek beyond the tall buildings and bright lights and you'll have more sympathy for our problems. And then maybe, just maybe, you won't be so hard on us.

"You should visit outside Shanghai and Beijing," said Cai Wu, director of the information office of the State Council. "It's like visiting the house of a friend. The first time you stay in the living room. But next time, after you become better friends, you go into the kitchen and the basement."

To read more:

http://www.thestandard.com.hk/news_detail.asp?we_cat=9&art_id=20063&sid=8245950&con_type=1&d_str=20060605

A Moment to Remember

Remember the students of 1989.  Slate has some pictures (blocked on the mainland).

http://todayspictures.slate.com/20060602/

China Challenges

Pfizer Wins Landmark IPR Case

Forbes notes:  In what is seen as a landmark ruling in support of greater intellectual property rights protection for foreign companies in China, a Beijing court has backed U.S. drug company Pfizer's patents for its anti-male impotence drug, Viagra.

The verdict, announced Friday afternoon according to press reports, overturns a ruling by China's patent review board, which in 2004 had supported the challenge of a dozen of the leading generic-drug makers in China against Pfizer's patent on sildenafil citrate, the main chemical in Viagra.

To read more:

http://www.forbes.com/2006/06/03/pfizer-china-patent-cx_pm_0603drug.html?partner=msn

Software Piracy Falls

The China Economic Review notes:

Twice as many PCs equipped with legal copies of the Microsoft Windows operating system were sold in China during the first quarter of 2006 compared to the final quarter of 2005, Reuters reported. The sharp rise – 48%, up from 25% – has been put down to renewed efforts my major PC makers to tackle software piracy.

Domestic manufacturers Lenovo, Founder, Tsinghua Tongfang and TCL all recently complied with orders from Beijing and pre-installed legal copies of Windows on the units they sell in China. These four companies, alongside global manufacturers such as Dell and Hewlett-Packard, account for three quarters of China's PC market, the second largest in the world after the US.

To read more:

www.chinaeconomicreview.com

Honoring Chinese Victims in Hiroshima

The Japan Times reports:

Three deceased Chinese men were registered Wednesday at a national memorial to victims of the 1945 bombing of Hiroshima, where they worked as forced laborers during the war.  It is the first time Chinese nationals have been registered at the Hiroshima National Peace Memorial Hall for the Atomic Bomb Victims.  Victims from the Korean Peninsula, Brazil, the United States and Canada are also registered at the memorial, official Kaori Fujiwara said.

To read more:

http://search.japantimes.co.jp/cgi-bin/nn20060601a9.html

Disney Ties Promotion and IPR Protection

The Wall Street Journal reports: 

Walt Disney Co.'s latest marketing campaign in China features a nervy gambit: getting consumers to help it weed out counterfeit products.

The company's "Disney Magical Journey" promotion, its biggest Chinese marketing campaign of the year for consumer products, is a twist on the traditional customer-loyalty program. To enter a contest for free Disney DVDs, television sets and trips to Hong Kong Disneyland, customers peel a sticker off a Disney product, attach it to a form, fill in a few personal details and mail it in.

The catch: Only legitimate Disney products carry the specific red hologram-covered stickers, in a market rife with pirated Disney products that often are of similar quality to the real thing.

To read more:

http://online.wsj.com/article/SB114902904291766786-email.html