China – Page 33 – artdiamondblog.com

Chinese Price Ceilings on Diesel Fuel Cause Shortages

“Looking for usable coal at a cinder dump in Shanxi Province in China. Inadequate coal in the north limited power production.” Source of the caption and photo: online version of the NYT article quoted and cited below.
The article quoted below uses the word “tariff” in the sense of “price.”

(p. C4) HONG KONG — The Chinese government issued an “urgent notice” on Wednesday to the country’s power generators, coal companies and railways to address an electricity shortage that has led to rationing in more than a third of China’s provinces in recent weeks.
The rationing, mostly achieved by telling factories that their power will be shut off for a day or two each week, coincides with the annual frenzy of factory production to meet orders before shutting down for the Chinese New Year holidays, which fall in early February this year.
. . .
Power executives and government statements attributed the electricity shortfall this winter to a confluence of problems. Many of the problems appear to have their roots in the government’s imposition of a long list of price controls in recent months in an attempt to tamp down inflation, which reached 6.9 percent at the consumer level in November.
Trucks did not deliver adequate coal stockpiles to power plants before winter snows arrived in northern China, partly because of nationwide diesel shortages. Refiners had cut back on the production of diesel because price controls were forcing them to sell the diesel for slightly less than the cost of the crude oil needed to make it.
. . .
Low electricity tariffs, particularly for residential users, have been another problem.
The central government issued an official “suggestion” to provincial governments last fall that they not allow increases in electricity tariffs charged to customers, as part of national price controls.
Provincial governments have responded by freezing tariffs, and even reducing them in the case of Guangdong Province in southeastern China, the home of much of the country’s export-oriented light industry.
The low tariffs have made it uneconomical for oil-fired plants to operate, and many have stopped doing so.
“It makes absolutely no sense for anyone to run a diesel- or oil-fired plant. They’re all shut down,” said a power company executive in China who asked not to be identified because of the sensitivity of commenting on regulatory policies.
The executive added that even when ordered by the government to resume operating at a loss, many state-owned oil-fired plants had not done so, scheduling maintenance and repairs instead.

For the full story, see:
KEITH BRADSHER. “Pinched by Price Controls, Power Plants in China Scale Back.” The New York Times (Thurs., January 24, 2008): C4.
(Note: ellipses added.)

“People Giddy on Hope and Thrilled to Be Changing”

"Emily Prager at her lane house in Shanghai." Source of caption and photo: online version of the NYT article quoted and cited below.

The centers of dynamism are not set in stone. I once asked the philosopher Alan Donagan why the Scottish enlightenment had occurred where (Edinburgh) and when (in the mid-late 18th century) it did. With his usual good humor he told me that I was asking a bad question–that my question assumed that enlightenments were determined. He instead believed that they were chance occurrences resulting from the free-will choices of individuals.

I think that there was something to what he said. But I also believe that some institutions, and some policies of government, can greatly increase the probability that fruitful dynamism will occur. For instance, free markets tend to tolerate diversity and experimentation, and to reward initiative.

In the past, locations of economic dynamism, also were often locations of intellectual dynamism. I wonder if the connection is still true today, and if not, why not?

Among past centers of dynamism were Miletus, Athens, Florence, Amsterdam, Edinburgh, and New York City. Today, centers of economic dynamism include Las Vegas, Dubai and Shanghai. The article quoted below paints a generally appealing picture of Shanghai.

(p. D1) I decided to move myself and my 12-year-old daughter, Lulu — whom I had adopted as a baby in China — from the old capital of the world to the new: to make a home in Shanghai, a city of the future.

I knew something about Shanghai, having been here on trips several times in the last few years. The city was always so excited it could hardly contain itself. It is a microcosm of the Asian boom, stuffed with people giddy on hope and thrilled to be changing. It recalls the greatness of New York in the early ’70s, except for one thing: Like the rest of China, Shanghai was largely closed to the outside world, and real economic growth, for nearly 50 years after World War II. It is a place where every car on the road is brand new and every pet recently acquired, but the person you just met might trace his family back 70 generations. The modernity and polish that Manhattan learned between 1945 and 1995, Shanghai is cramming for as fast as it can, and it’s fascinating to watch.

. . .

(p. D6) Pets are new to Chinese people and they don’t know very much about them. Dogs are not neutered and they are walked without leashes. Many people are terrified of dogs, particularly given the country’s serious rabies problem.

Twice when I was walking Skippy, young women caught sight of him and screamed in terror at the top of their lungs. Because having a pet is so new, there is a video showing how to pick up after a dog and wash his paws after his walk, which appears many times a day on a huge video screen on Huaihai, the city’s other main shopping street.

For the full story, see:

EMILY PRAGER. "At Home Abroad; Settling Down in a City in Motion." The New York Times (Thurs., July 19, 2007): D1 & D6.

(Note: ellipsis added.)

"On the streets of Shanghai, the author’s injured foot attracts less attention than her pet dog, still a rare sight in the city." Source of caption and photo: online version of the NYT article quoted and cited above.

Hong Kong Dim Sum Lovers Rebuke Government

"Wong Yuen enjoying breakfast at a Hong Kong restaurant. The government, he says, "shouldn’t be telling anyone how dim sum should be served."" Source of caption and photo: online version of the NYT article quoted and cited below.

Longtime dim sum lovers are indignant.

"The government is putting its thumb on every part of citizens’ lives, and it shouldn’t be telling anyone how dim sum should be served," said Wong Yuen, a retired mechanic and truck driver who says he has eaten dim sum every morning for the last two decades. "People can make their own decisions. If it’s unhealthy, they can eat less. They don’t need the government to tell them."

For the full story, see:

KEITH BRADSHER. "HONG KONG JOURNAL; Dim Sum Under Assault, and Devotees Say ‘Hands Off’." The New York Times (Thurs., April 28, 2005): A4.

“India is Outsourcing Outsourcing”

"Infosys employs workers in Brno, Czech Republic." Source of caption and photo: online version of the NYT article quoted, and cited, below.

(p. A1) MYSORE, India — Thousands of Indians report to Infosys Technologies’ campus here to learn the finer points of programming. Lately, though, packs of foreigners have been roaming the manicured lawns, too.

Many of them are recent American college graduates, and some have even turned down job offers from coveted employers like Google. Instead, they accepted a novel assignment from Infosys, the Indian technology giant: fly here for six months of training, then return home to work in the company’s American back offices.

India is outsourcing outsourcing.

One of the constants of the global economy has been companies moving their tasks — and jobs — to India. But rising wages and a stronger currency here, demands for workers who speak languages other than English, and competition from countries looking to emulate India’s success as a back office — including China, Morocco and Mexico — are challenging that model.

Many executives here acknowledge that outsourcing, having rained most heavily on India, will increasingly sprinkle tasks around the globe. Or, as Ashok Vemuri, an Infosys senior vice president, put it, the future of outsourcing is “to take the work from any part of the world and do it in any part of the world.”

. . .

(p. A14) Such is the new outsourcing: A company in the United States pays an Indian vendor 7,000 miles away to supply it with Mexican engineers working 150 miles south of the United States border.

In Europe, too, companies now hire Infosys to manage back offices in their own backyards. When an American manufacturer, for instance, needed a system to handle bills from multiple vendors supplying its factories in different European countries, it turned to the Indian company. The manufacturer’s different locations scan the invoices and send them to an office of Infosys, where each bill is passed to the right language team. The teams verify the orders and send the payment to the suppliers while logged in to the client’s computer system.

More than a dozen languages are spoken at the Infosys office, which is in Brno, Czech Republic.

For the full story, see:

ANAND GIRIDHARADAS. "Outsourcing Comes Full Circle As India Starts to Export Jobs." The New York Times (Tues., September 25, 2007): A1 & A14.

(Note: the somewhat different title of the online version was: "Outsourcing Works So Well, India Is Sending Jobs Abroad.")

Strong Global Support for Free Markets

Source of table: "World Publics Welcome Global Trade — But Not Immigration." Pew Global Attitudes Project, a project of the PewResearchCenter. Released: 10.04.07 dowloaded from: http://pewglobal.org/reports/display.php?ReportID=258

(p. A10) WASHINGTON, Oct. 4 — Buoyed and battered by globalization, people around the world strongly view international trade as a good thing but harbor growing concerns about its side effects: threats to their cultures, damage to the environment and the challenges posed by immigration, a new survey indicates.

In the Pew Global Attitudes Project survey of people in 46 countries and the Palestinian territories, large majorities everywhere said that trade was a good thing. In countries like Argentina, which recently experienced trade-based growth, the attitude toward trade has become more positive.

But support for trade has decreased in recent years in advanced Western countries, including Germany, Britain, France and Italy — and most sharply in the United States. The number of Americans saying trade is good for the country has dropped by 19 percentage points since 2002, to 59 percent.

“G.D.P. growth hasn’t been as dramatic in these places as in Latin America or Eastern Europe,” said Andrew Kohut, president of the Pew Research Center, referring to gross domestic product, the total value of the goods and services produced in a country. “But worldwide, even though some people are rich and some are poor, support for the basic tenet of capitalism is pretty strong.”

For the full story, see:

BRIAN KNOWLTON. "Globalization, According to the World, Is a Good Thing. Sort Of." The New York Times (Fri., October 5, 2007): A10.

Chinese Restaurant Entrepreneur: “A Citizen’s Legal Property Is Not to Be Encroached Upon”

CHONGQING, China, March 23 — For weeks the confrontation drew attention from people all across China, as a simple homeowner stared down the forces of large-scale redevelopment that are sweeping this country, blocking the preparation of a gigantic construction site by an act of sheer will.

Chinese bloggers were the first to spread the news, of a house perched atop a tall, thimble-shaped piece of land like Mont-Saint-Michel in northern France, in the middle of a vast excavation.

Newspapers dived in next, followed by national television. Then, in a way that is common in China whenever an event begins to take on hints of political overtones, the story virtually disappeared from the news media after the government, bloggers here said, decreed that the subject was suddenly out of bounds.

. . .

What drove interest in the Chongqing case was the uncanny ability of the homeowner to hold out for so long. Stories are legion in Chinese cities of the arrest or even beating of people who protest too vigorously against their eviction and relocation. In one often-heard twist, holdouts are summoned to the local police station and return home only to find their house already demolished. How did this owner, a woman no less, manage? Millions wondered.

Part of the answer, which on meeting her takes only a moment to discover, is that Wu Ping is anything but an ordinary woman. With her dramatic lock of hair precisely combed and pinned in the back, a form-flattering bright red coat, high cheekbones and wide, excited eyes, the tall, 49-year-old restaurant entrepreneur knows how to attract attention — a potent weapon in China’s new media age, in which people try to use public opinion and appeals to the national image to influence the authorities.

. . .

“I have more faith than others,” she began. “I believe that this is my legal property, and if I cannot protect my own rights, it makes a mockery of the property law just passed. In a democratic and lawful society a person has the legal right to manage one’s own property.”

Tian Yihang, a local college student, spoke glowingly of her in an interview at the monorail station. “This is a peculiar situation,” he said, with a bit of understatement. “I admire the owner for being so persistent in her principles. In China such things shock the common mind.”

. . .

With the street so choked with onlookers that traffic began to back up, Ms. Wu’s brother, Wu Jian, began waving a newspaper above the crowd, pointing to pictures of Ms. Wu’s husband, a local martial arts champion, who was scheduled to appear in a highly publicized tournament that evening. “He’s going into our building and will plant a flag there,” Mr. Wu announced.

Moments later, as the crowd began to thin, a Chinese flag appeared on the roof with a hand-painted banner that read: “A citizen’s legal property is not to be encroached on.”

Asked how his brother-in-law had managed to get inside the locked site and climb the escarpment on which the house is perched, he said with a wink, “Magic.”

For the full story, see:

HOWARD W. FRENCH. "CHONGQING JOURNAL; Homeowner Stares Down Wreckers, at Least for a While." The New York Times (Tues., March 27, 2007): A4.

(Note: ellipses added.)

On left, Wu Ping, with her tall brother in the background. On right, a map showing the location of Chongqing in China. Source of photo and map: online version of the NYT article cited above.

Futures Markets Would Reduce Chinese Volatility

Source of graphic: online version of the WSJ article cited below.

Market participants consider futures the next big thing for China’s financial-sector development. The exchange currently trades contracts in copper, aluminum, natural rubber and fuel oil — commodities that China imports in large quantities.

But trading is largely closed to foreigners. Futures on financial products, such as stock indexes and currencies, don’t yet exist in China, though they are integral to other market economies.

Reviving Case for Futures

China banned exchange-traded financial derivatives in 1995 in response to a meltdown in its bond-futures market. Within minutes, $10 billion in market value was wiped out, in what remains the country’s most damaging market debacle to date. By contrast, last week’s drop in stocks has revived the case for financial futures.

Officials now say share prices probably wouldn’t have fallen so abruptly on Feb. 27 if index futures existed. That’s because shares probably wouldn’t have surged as quickly as they did last year — the Shanghai Composite Index rose 130% — if investors had had the chance to use stock-index futures to bet against the market on its way up.

Futures contracts are thought to build more of a two-way market, because they give investors the right to buy — and sell — based on expectations about how the value of an index, stock, currency or commodity might move within a particular time frame. Without them, the only way for investors to make money is in a rising market, a risky prospect over the long term.

For the full story, see:

JAMES T. AREDDY. "Futures Could Help Cure China’s Boom-Bust Cycles." The Wall Street Journal (Thurs., March 8, 2007): A2.

(Note: the online version had a slightly different title: "China Tries Longer-Term Response to Stock Volatility.")

Is Political Freedom a “Normal Good”?

Shenzhen, China. Source of photo: online version of the NYT article cited below.

Are starving citizens, or a growing midddle class, more likely to stand up for their rights? In the ongoing debate, here is a bit of evidence in favor of the middle class.

(In economics, a "normal good" is one where, ceteris paribus, more is consumed, when income increases. So in the language of economics, the following article supports the view that political freedom is a normal good.)

(p. A1) When residents here in southern China’s richest city learned of plans to build an expressway that would cut through the heart of their congested, middle-class neighborhood, they immediately organized a campaign to fight City Hall.

Over the next two years they managed to halt work on the most destructive segment of the highway and forced design changes to reduce pollution from the roadway. It became a landmark in citizen efforts to win concessions from a government that by tradition brooked no opposition.

And it was no accident that the battle was waged in Shenzhen, a 26-year-old boomtown that was the first city to enjoy the effects of China’s breakneck economic expansion and that has served as a model for cities throughout the country.

. . .

. . . Possibly the greatest force taking shape here is the quiet expansion of the middle class, thicker on the ground here than perhaps anywhere else in China. This middle class is beginning to chafe under authoritarian rule, and over time, the quiet, well-organized challenges of the newly affluent may have the deepest impact on this country’s future.

”Many people laughed at me, because they don’t have confidence in the government,” said Qian Shengzeng, a 62-year-old former rocket scientist who led the movement against the expressway. ”They think the government is hopelessly rotten. However, our view is that maybe there is a remaining sliver of hope, and the government needs to be pushed.”

In newly rich Shenzhen, as in much of China, social change is being driven by economic transformation and, more than anything else, property ownership.

For the full story, see:

HOWARD W. FRENCH. "In Chinese Boomtown, Middle Class Pushes Back." The New York Times (Weds., December 18, 2006): A1 & A8.

(Note: ellipses added.)

Map showing Shenzhen’s proximity to Hong Kong. Source of map: online version of the NYT article cited above.

Hong Kong’s Growth Was Due to Cowperthwaite’s “Positive Noninterventionism”

In Free to Choose, Milton Friedman compared Hong Kong’s free market, with India’s state control of the economy. The dynamism and growth of Hong Kong was a stark contrast to the inertia and stagnation of India. In the decades since Free to Choose, India has become more free and, alas, Hong Kong less free:

(p. A14) . . . it was sadly unsurprising to see Hong Kong’s current leader, Donald Tsang, last month declare the death of the policy on which the territory’s prosperity was built.

The really amazing phenomenon is that, for half a century, his predecessors resisted the temptation to tax and meddle. Though a colony of socialist Britain, Hong Kong followed a laissez-faire capitalist policy, thanks largely to a British civil servant, John Cowperthwaite. Assigned to handle Hong Kong’s financial affairs in 1945, he rose through the ranks to become the territory’s financial secretary from 1961-71. Cowperthwaite, who died on Jan. 21 this year, was so famously laissez-faire that he refused to collect economic statistics for fear this would only give government officials an excuse for more meddling. His successor, Sir Philip Haddon-Cave, coined the term "positive noninterventionism" to describe Cowperthwaite’s approach.

The results of his policy were remarkable. At the end of World War II, Hong Kong was a dirt-poor island with a per-capita income about one-quarter that of Britain’s. By 1997, when sovereignty was transferred to China, its per-capita income was roughly equal to that of the departing colonial power, even though Britain had experienced sizable growth over the same period. That was a striking demonstration of the productivity of freedom, of what people can do when they are left free to pursue their own interests.

For the full commentary, see:

MILTON FRIEDMAN. "Hong Kong Wrong." Wall Street Journal (Fri., October 6, 2006): A14.

(Note: ellipsis added.)

Laptops Update Read and Friedman’s “I, Pencil” Story

Source of graphic: scanned from p. B1 of NYT article cited below.

Leonard Read in his classic "I, Pencil" told the story of how the various compenents of a mere pencil came from different suppliers the world over. People who did not know each other, and might not like each other if they met, but who were brought together in productive co-operation through the power of the market. Milton Friedman frequently presented his own verison of this story. The cover of my 1980 edition of Free to Choose has a picture of Friedman holding a pencil as if in the middle of this story. And there is a short video-clip of Friedman telling the story.

A similar story could be told with many other products, and several sources have presented the raw materials in print to tell the story for laptop computers. (By "raw materials" I mean that they list the diversity of sources of the inputs; but usually without drawing all the lessons that Reed and Friedman drew.) One source is a chapter in Thomas Friedman’s The World is Flat.

Two other sources are articles that appeared within a few days of each other in The New York Times and The Wall Street Journal.

The reference to The New York Times article is:

DAVID BARBOZA. "An Unknown Giant Flexes Its Muscles; Amid Talk of Deal With I.B.M., Lenovo of China Sheds Some Obscurity." The New York Times (Sat., December 4, 2004): B1 & B3.

The reference to The Wall Street Journal article is:

Jason Dean and Pui-Wing Tam. "The Laptop Trail; The Modern PC Is a Model Of Hyperefficient Production And Geopolitical Sensitivities." The Wall Street Journal (Thurs., June 9, 2005): B1 & B8.

Source of graphic: scanned from p. B1 of WSJ article cited above.

Chinese Learn “a Way of Life” from U.S. TV Shows

Shanghai friends watch downloaded, subtitled, episode of "Friends." Source of photo: online version of the NYT article cited below.

SHANGHAI, Aug. 8 — For the past year and a half, said Ding Chengtai, a recent university graduate, friends have wondered why he seems to have disappeared.

Mr. Ding, 23, an Internet technology expert for a large Chinese bank, chuckled at the thought. He has kept himself in virtual seclusion during his off hours, consumed with American television programs like “Lost,” “C.S.I.” and “Close to Home.”

He is no ordinary fan, though; none of the shows he watches can be seen on Chinese television. Instead, he spends night after night creating Chinese subtitles for American sitcoms and dramas for a mushrooming audience of Chinese viewers who download them from the Internet free through services like BitTorrent.

. . .

To a person, the adapters say they are willing to devote long hours to this effort out of a love for American popular culture. Many, including Mr. Ding, say they learned English by obsessively watching American movies and television programs.

Others say they pick up useful knowledge about everything from changing fashion and mores to medical science.

“It provides cultural background relating to every aspect of our lives: politics, history and human culture,” Mr. Ding said. “These are the things that make American TV special. When I first started watching ‘Friends,’ I found the show was full of information about American history and showed how America had rapidly developed. It’s more interesting than textbooks or other ways of learning.”

On an Internet forum about the downloaded television shows, a poster who used the name Plum Blossom put it another way.

“After watching these shows for some time, I felt the attitudes of some of the characters were beginning to influence me,” the poster wrote. “It’s hard to describe, but I think I learned a way of life from some of them. They are good at simplifying complex problems, which I think has something to do with American culture.”

For the full story, see:

HOWARD W. FRENCH. "Chinese Tech Buffs Slake Thirst for U.S. TV Shows." The New York Times (Weds., August 9, 2006): A6.