May 31, 2006
Faster than a speeding bullet

Quick, name me the world's fastest growing economy. China? Saudi Arabia? Nope - try little 'ol Macau:

Macau’s gross domestic product (GDP) grew by 18.8 percent in real terms in the first quarter of this year, as compared with the same period of 2005, official figures showed.

According to data published Tuesday by the Statistics and Census Bureau, GDP growth was mainly due to a 14.9 percent increase in gaming revenues, a 19.9 percent increase in visitor spending – excluding gaming -, growth in investment in private construction with large projects being carried out and a 26.9 percent increase in exports.

If this gambling bubble ever bursts, it's not going to be pretty in Macau. In the meantime, why isn't the Macau government getting ready for an IPO?

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Come together

Survey finds cause of Hong Kong's population problem.

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May 30, 2006
Beijing Olympics are smoking...

Proof the Beijing Olympics will bring great benefits to the people of China:

Zhang Bin, an official with the Ministry of Health (MOH), said on Monday that smoking will be banned at all hospitals that will be used specifically for the Games by the end of 2007.
That from the People's Daily telling us about the "non-smoking" Olympics. Unfortunately all non-Olympic hospitals in China will not be covered. And then there's the pollution....

Will has more on China going up in smoke.

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The great Chinese money vacuum

Jake van der Kamp observes in today's SCMP that what foreigners promise to invest in China isn't necessarily what they actually put in...and what they do put in loses money hand over fist. Chart below the jump.


the impression some people may get that foreign direct investment (FDI) inflows to the mainland are rising. The story dealt exclusively with private equity inflows and these do indeed appear to be up. They also constitute only a very small proportion of total FDI inflows and the larger picture suggests that foreign investors are increasingly less ready to follow up their money talk with money itself.

The first chart tells you the story. The red line shows the amount of FDI contracted over the last 10 years and the blue line the amount of FDI actually utilised. The two were about the same in 1999 but in 2005 the utilised was less than a third of the contracted FDI and, in fact, slightly down from 2004. Relative to the size of the mainland economy, utilised FDI is barely half of what it was 10 years ago.

Look also at the green line. Private equity inflows more than doubled in 2005 but still amounted to barely 5 per cent of utilised FDI, leave alone what they were relative to contracted FDI.

And why may foreign investors now be showing greater reservations about backing up their investment promises with investment capital?

I find one clue tantalising. A data series in mainland statistics aggregates the losses of loss-making enterprises. The second chart shows you this data on an annual basis for foreign-invested enterprises including Taiwan, Hong Kong and Macau ones.

Ouch indeed. These losses have doubled in the last two years.

fdichart.jpg



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Spot the difference

In the old days, Hong Kong was a den of vice and corruption, where the cops were in cahoots with the triads and everyone made out like bandits. The family of one of the infamous "four sargeants" has finally struck a deal with the ICAC (which was originally set up to deal with this corruption). How did ICAC realise something was amiss?

The ICAC first began investigating Hon in 1976 for "assets disproportionate" to his humble salary, which totaled HK$193,852 over a 31-year career with the Royal Hong Kong Police Force.

By the time Hon retired in August 1971, he held 49 properties then worth HK$2.12 million, plus HK$1.24 million in investments, HK$703,000 in bank accounts and two Mercedes-Benz cars worth HK$78,911.

That's some savvy investing. The SCMP has a short piece summarising how these comparitively lowly ranked policemen managed to control so much power and wealth. It's below the jump. Meanwhile, compare and contrast with another story in today's SCMP:
Almost 80 per cent of raids on suspected illegal gambling dens last year ended in failure, figures released by police have revealed.
Finally, and again completely unrelated, LegCo rolled over and approved the Tamar white elephant, although law makers are annoyed the government isn't promoting Tamar as the "people's project". That's fair enough - it is taxpayer money that's being wasted. Plus ca change and all that.

The notorious "four great Chinese sergeants" - among them Hon Sum - began their corrupt reign in the 1960s. They were all police staff sergeants, a post that has since been abolished, and were in their posts for years, unlike today where officers are rotated.


As officers on beat patrol had close contact with gambling, prostitution and other organised crime, the very nature of their job offered ample opportunities for graft. Those who refused were ostracised or pressured to leave.

But, as a retired customs officer explained, this was made worse by the organisational structure of the police force, in the form of the staff sergeant and sergeant major. "A staff sergeant, while being lowly on the organisational chart, actually exercised enormous power," he said in an interview with the Post yesterday on condition that he not be named.

"You didn't have a choice. If you refused to take bribes, you were thumbing your nose at your superiors, you would be upsetting careful arrangements maintained between crime and law enforcement - upsetting the balance, so to speak."

There were three or four staff sergeants at any one time, and they were in charge of all the rank-and-file officers in their areas. Unlike today's division by districts, they were responsible for huge geographic areas - Hong Kong Island, Kowloon - Yau Ma Tei had its own sergeant - and New Territories. A sergeant major lorded over them.

Notionally, the staff sergeant ranked below an inspector, but even senior inspectors had to show them respect. This is because these powerful sergeants knew the pulse of the street, and effectively controlled gang activities and the territories each was allowed to operate - all the while taking a large chunk of commissions. Peter Godber, one of the ICAC's most high-profile cases, was a chief superintendent.

The sergeants' immediate boss, the sergeant major, communicated directly with the assistant commissioners.

"Police staff sergeants could directly communicate with a superintendent or senior superintendent who would probably be on the take," the former customs officer said. "They were powerful because they were the links between the top brass and the low ranks."

The four sergeants - Hon, Lui Lok, Nan Kong and Ngan Hung - effectively divided Hong Kong among themselves.

Hon entered the police in September 1940 and retired in August 1971. When he retired, he had a fortune estimated to be worth more than $4 million on total salaries of $193,852 over 31 years in the force.

In 1976, the ICAC bought charges against Hon for alleged bribery and applied for an arrest warrant but he had moved to Canada. The government sought to have him extradited in May 1977 but the bid failed when he fled to Taiwan, where he died in August 1999.



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May 27, 2006
Tamar and the newspapers

"Tsang wins the battle of Tamar" screams the SCMP on its front page today. No, The Don didn't manage to repel the invading hordes. Rather the Democrats rather meekly rolled over because the Government promised to keep a couple of trees and a heritage trail around the old Central Government Offices. With concessions like that, we can all be thankful that these politicians are keeping The Don honest. The rather pathetic DAB are still flogging their Kai Tak idea, even though they've downgraded their ambition from all government offices down to a shop front. Will The Don throw the pro-Bejingers' a bone and let them establish a tiny outpost at the old airport? It's the least he can do.

Hong Kong's political parties have been busy, however. While The Don gets Tamar going, they've been busy collating membership lists because the lawyers that formed the new Civic Party read the law. Due to a legal quirk, political parties are setup under the Companies Ordinance rather than the Societies one...the quirk being under the Societies law the government has the right to shut them down. But under the Companies Ordinance, the parties need to publicly display their membership lists. Somewhat amazingly, no-one realised this was the case until this year. The last few days have made interesting reading, despite the parties having tiny memberships.

But most interesting is this piece from today's SCMP article on The Don's military victory:

Speaking to the media yesterday, Democratic Party chairman Lee Wing-tat said the party had decided to support the funding bid after the government responded positively to its demands.

The party has previously said it wanted Government Hill to be preserved.

The government has made a commitment to that effect in articles published today in the South China Morning Post and some Chinese-language newspapers.

Sure enough, turn to the SCMP's op-ed page and there's the government written piece. Does the SCMP charge the government to do its announcements? Do they worry about being a mouthpiece rather than a centre of critical journalism? Does it feel good to know The Don can want something published and it will be done? Who needs Pravda or Xinhua?

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May 26, 2006
Condensed Chinese history

China's history in 4 web pages - one can quibble in parts, but one always can with history (feel free to let fly with your quibbles in the comments). If you want to cover 4,000 years of history in 4 pages, take a look. And if you're looking for a good list of China books, here is a recommended China books list.

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[boomerang] Posted by Simon at 13:46
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May 25, 2006
In Case World Cup Fever is Transmissible

Now I've seen it all. Yes folks, go down to your local Hong Kong 7-Eleven and thanks to Durex you will now find 'England Supporter', 'Germany Supporter' and 'Brazil Supporter' rubbers for sale, and I mean it in an American sense (i.e. not pencil mark erasers).

An interesting way of demonstrating your passion for your chosen team at the quadrennial Football event of the world, to say the least. I understand buying kits, or uniforms in American parlance, but it seems the average condom doesn't really see the light of day much if at all, providing precious little opportunity to bandy about your national loyalty.

Given that Poland is to be involved as a contender in this year's Finals, it reminded me of an idiotic joke from my youth -

"Q: What's the ultimate luxury good in Poland?
A: A fur-lined condom."
Ugh. A final thought to end this little latex thought balloon: Would sales of 'Japan Supporter' condoms in China (specifically Zhuhai) cause an international incident?

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[boomerang] Posted by HK Dave at 17:01
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Chinese language instruction

Victor Mair talks about learning Mandarin in America, especially on the introduction of Hanzi characters.

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Compromised world leader of the day

The story of a drunken teenager, a tennis coach, Chinese intelligence and a man with his finger on the button.

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May 24, 2006
Long term prediction of the day

Russia to lose Siberia to China. There's a bonus analogy included at the link.

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Engineering numbers

I expect this will be ESWN's cup of tea...The Standard reprints a WaPo article that digs into the supposed plethora of engineering graduates in China and India as opposed to the United States. It appears the numbers on graduate engineers from both China and India, unsurprisingly, are on the rubbery side of accurate:

Among such recent attention-getting statistics are 600,000, 350,000 and 70,000. These are, allegedly, the number of engineers produced in 2004 in China, India and the United States, respectively....Bialik couldn't find any obvious birthplace for the Indian figures, but National Science Foundation analysts told him the number was unlikely to be anywhere near 350,000. As for the academies' report, Deborah Stine, who led the study, told Bialik that the committee had "assumed Fortune did fact- checking on their numbers" and so used them.

Meanwhile, a McKinsey Global Institute report had cast doubt on the quality of the Chinese engineering graduates, so Bialik reasoned that removing unqualified candidates would obviously reduce the total.

Read the full article to see "conventional wisdom" at work and at its worst. We saw something similar with the numbers for Hong Kong's July 1st marches (something ESWN looked at both in 2004 and in 2005). It also emphasises two truths: it pays to be sceptical of statistics in the press and it pays to be sceptical of statistics from China.

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May 23, 2006
Dam it

Appropos Dave's recent post on the Three Gorges Dam, and courtesy the generosity of the British taxpayer, the BBC has an excellent photo-essay of the Three Gorges Dam. I can only echo Dave's sentiments - they might have moved 1.3 million people, flooded arceological wonders and more but it's quite an achievement.

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Down the tubes

The Standard reports on the exodus of expats from Hong Kong due to air pollution, with many heading to Singapore instead. But how could you leave a city where you can't vote for the Chief Executive but you can vote in something far more important. The SCMP reports:

When Hong Kong's 18 district councils were asked to enter their toilets for a city-wide cleanliness contest, Wan Chai, Yau Tsim Mong, Kwun Tong and Yuen Long did not even bother. The other 14 district councils, however, submitted 28 toilets for the contest organised by the Hong Kong Toilet Association (HKTA), Radio Television Hong Kong (RTHK) and People's Health Actions, part of a campaign that aims to praise well-managed toilets and the hard work of their frontline cleaning staff, not to mention reminding the public about hygiene.

Those submitted include toilets renowned for their cleanliness, such as the ones in the Star Ferry car park in Central, Yee Kuk Street in Shamshuipo, Repulse Bay and Ngong Ping Road on Lantau Island.

From today until June 11, members of the public can vote for their favourite public toilet through the RTHK's website, while a panel of toilet experts headed by HKTA chairman Michael Siu Kin-wai and vice-chairman Lo Wing-lok will pick their favourites.

Mr Siu said the winning toilets should meet four criteria which are known as "Cash" - an acronym for comfort, accessibility, safety and hygiene. He said the design and hygiene of the city's public toilets had improved a lot in recent years. "Some toilets here even have devices to remind you to do something such as flushing water," Mr Siu said.

Voters are also encouraged to submit the address and a picture of any public toilet they believed needed urgent improvement. "We will pass the information to the Food and Environmental Hygiene Department for follow up," said the HKTA's Lo Wing-lok.

Who knew the city had a panel of toilet experts? Or that reminding people to flush was progress? I urge you to take part in this vital piece of democracy. If you don't speak up on the toilet issue, who will?

Ironically, in Singapore they can vote for their leaders (well, sort of) but not their toilets. Who's more civilised?

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May 20, 2006
Three Gorges: Tragedy and Triumph

I have been concerned from the beginning about the Three Gorges Dam project. But the more I consider what has been accomplished as the project nears completion, the more I must reluctantly express my admiration for what has taken place.

The national Chinese grid will have its electricity supply augmented by up to 10%, with the power coming from hydroelectricity, which is far less environmentally damaging than the dirty coal-fired plants that have popped up across China over the last couple of decades as short-term solutions.

Yes, there have been costs. Aside from the US$25 billion paid to make this dream a reality, a million people have had to have been moved, from prime arable land to marginal land. Some of the areas they have been moved to have been contested areas with ethnic minorities.

There has also been a lot of corruption. Huge embezzlement, especially in the funds earmarked for helping the displaced start over, has been de rigeur.

But I do not buy the arguments put forward that the environmental damage does not justify the cost of building the Three Gorges Project. What possible environmental impact could be worse than 10% of China's electricity requirements generated by coal? Sitting in Hong Kong, I marvel at the scale of the audacious project, I feel sorry for the million people that have had to be moved from their ancestral homes, and I thank them for their sacrifice. It may have just added a few years to our collective lives.

It also highlights the stark difference between China and India. The compulsion requisite of the Herculean labor is beyond the beyond any government of India. But in China, if it is deemed necessary, it shall be done. Tragedies are part and parcel of such decisions, no doubt. But as much as I am against taking away everything a million people have ever had or known, China's unflinching pragmatism, its ability and will to compel sacrifice, and a canny, calculating Central government are surely a combination of great power.

I suppose a government that is, in its own way, compelled to deliver perpetual growth in order to ensure order and legitimacy, must see this end justifying every means.

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May 19, 2006
New improved M:i-3

If only they could take out Tom Cruise it'd be watchable.

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May 18, 2006
Public health announcement

But honey, it will help me live longer.

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Linklets 18th May

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Blown away

Every typhoon has a silver lining. Chanchu, one mother of a storm, has steered clear of Hong Kong. Not by co-incidence, today is one of the clearest, pollution free days the city has had in a long time.

For the low-down on how Hong Kong prepares for incoming typhoons, you need to read Hemlock's Tuesday and Wednesday entries.

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May 17, 2006
Arrangement of the Christ

I am sure we are all aware of the massive friction that has arisen between the Vatican and China on the issue of the appointment of Bishops in China. Obviously, a 2,000 year old organization has always appointed its own bishops and metropolitans, and sees no reason to change. The Communist Party of China, although far younger but more confident and feeling the weight of 6,000 years of history on its side, sees no reason to budge and allow a foreign power outside of their control to choose leading members of an important non-governmental organization (the Catholic Church either).

Typical of comments from Beijing are those of Liu Bainian, whose quote below gives you some idea of my choice of title:

"The current prosperous development of the Chinese Catholic church owes totally to China's long-term practice of selecting and ordaining its own bishops and independently managing the churches, " said Liu Bainian, vice-president of the China Patriotic Catholic Association, during an exclusive interview with Xinhua on Tuesday.

"This is the arrangement of the Christ."

China now has a total of 5 million followers nationwide, in sharp comparison with 2.7 million in 1958, according to statistics released by the association.

"The development of the Chinese Catholic church in the past 20 years has greatly exceeded that of the 300 years before," said Liu.

In the history of the Catholic church, he said, a bishop can be selected by believers, appointed by an emperor and consecrated by the neighboring diocese.

"The practice for the pope to install a bishop started just about two centuries ago," he said.

But Mr. Liu is only partly correct. The Pope and the Vatican in Rome has always had control and some say in the appointment and approval of every bishop and archbishop. As flawed as the Catholic system has proven itself over the past two millennia, the idea is that the Popes represent an unbroken line of authority stretching back to St. Peter and to 'the Christ' Himself. Their approval is therefore a necessary part of a church that considers itself Catholic, rather than Anglican where Henry VIII of England, for instance, considered himself the head of the Church of England, and had to fully break with the Vatican as a result.

Naturally, this debate boils right down to control over Chinese civil society, and whether the Chinese government will tolerate any form of civil pluralism or alternate authority hierarchies in the country, or whether the corporatist model it has adopted will dominate social and even religious life in China, in all its aspects, for the forseeable future.

Maybe China should just break with the Vatican officially and form its own 'Sinican' (as opposed to Anglican Church) since it appoints its own bishops anyway. Or should we call it the Cynical Church?

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[boomerang] Posted by HK Dave at 16:11
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Copy cats

First, China's previously heralded breakthrough in computer chip design turns out to be a fraud, in an earily similar scandal to the Korean cloning one. Then it turns out that 60% of Chinese PhDs admit to plagiarism and bribery (via Asia Business Intelligence). Richard at ABI asks:

For modern-day mainland Chinese, does the goal and one's pursuit of it validate any means of obtaining it, including the purposeful obscuration of the truth?
In short, does the ends justify the means? Given the boom in China's efforts to lure research dollars and a greater share of the outsourcing trend, these findings could be disturbing. But it could also be the start of something. Japan grew wealthy partly by becoming extremely good at copying Western technology and then improving on it, for example by miniaturisation. By imitating this technology, they mastered it and evenetually developed their own innovations. Other countries have done the same.

It now appears China is well qualified in the copying area. The innovation and improvement parts might have a way to go. What's most impressive is this guy was caught and it was published, rather than swept under the carpet and kept quiet.

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May 16, 2006
Linklets 16th May

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Who's Naomi Simmons?

I'll let the China Daily answer:

...But Naomi Simmons, whose books do not appear on any sales charts, has outsold him [Dan Brown, author of Da Vinci Code] by more than two to one.

Simmons, from Shenley in Hertfordshire, north of London, is the author of "New Standard English," a series of text books for primary school children that has sold 105 million copies in China. But unlike Brown, who has earned US$425 million from royalties for his novels, Simmons took a fixed payment of US$272,000.

Simmons and her co-authors became a phenomenon in China after the Ministry of Education decreed in 2001 that English should be taught in schools. Her book published by Macmillan English and FLTRP, the publishing house of Beijing University has inspired a generation of Chinese schoolchildren to sing songs about how the British use knives and forks rather than chopsticks.

I'm hoping Simmons' book has a better ending than Da Vinci Code. And who's bought the movie rights? I'll bet Ms Simmons never again opts for the fixed payment rather than a royalty.

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May 15, 2006
Linklets 15th May

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Great moments in markets

Chaos hit the Shenzhen border late last week, all thanks to a sub-market subsidy and canny traders. Picture below the jump, report from the SCMP:

Fuel shortages in Shenzhen brought chaos to the Huanggang border checkpoint yesterday, with a queue of container trucks several kilometres long all but bringing traffic in the area to a standstill. A Shenzhen government spokesman denied there was a fuel shortage, but truck drivers complained they could not fill up in Shenzhen or Dongguan.

"It has been like this for two weeks. But today it is particularly serious because it is a Friday and many container drivers returned to work after the May 1 holiday," Cheung Man-shing, a container driver from Hong Kong, said. Another container driver said the service station at Huanggang was rationing drivers to 50 yuan worth of diesel. "Some drivers have to queue up twice to fill up," he said.

Tse Long, vice-president of the Container Transportation Employees General Union, said long-distance drivers had encountered the same problem a month ago.

Service station operators had been limiting drivers' purchases because the government would not let them raise prices in line with increases in wholesale fuel prices. "The service stations have enough fuel for drivers. But they figured that they would rather keep the fuel than sell it at a loss," said Mr Tse.

The government is claiming there is no shortage, and they're right. There's enough fuel, but thanks to the cap on pricing the station owners are refusing to sell. Just chalk it up to another lesson in markets for our Communist friends.

truckqueue.jpg



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May 12, 2006
Linklets 12th May

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China's ridiculous leftists

When you're at the losing end of an ideological battle, what's the best thing you can do? Why not turn your loss into a victory, simply by wishing it to be so? In today's edition of tortured logic, the SCMP reports:

Economic globalisation will help revive the international socialist movement on its path towards inevitable success over capitalism, according to a leading central government think-tank. But mainland analysts have questioned the conclusions in the Chinese Academy of Social Sciences' Yellow Book on World Socialism, saying they represent only the self-contradictory views of a few leftist scholars.

Academy vice-president Li Shenming unveiled the book yesterday at a seminar on leftist thinking in Beijing, according to the academy's website. It marks the latest stand in a leftist backlash against China's economic reforms..."The international socialist movement is at its low point, but the advance of economic globalisation will provide the material foundation and social conditions for its revival," China News Service quoted the book as saying. "The world socialist movement has not only withstood the powerful impact of the sudden political change in the Soviet Union and Eastern Europe, but also revived and progressed. It is an invincible principle that socialist societies will grow from weak to prosperous and strong and eventually surpass and win over capitalism."

The book also takes aim at the United States, lashing out at its expansion of political, economic, military and diplomatic power."The new national security strategy in the US is likely to pose the biggest threat to China's economic security. China must be put on full alert to the realistic threats posed by the US' `soft war' offensive," it warned. Hu Xingdou , a Beijing-based political scientist, said the book's findings could be interpreted as China developing a new definition of socialism, different from the authoritarian Soviet system.

"It is true that the international socialist movement has been at a low ebb and there have been various understandings of the definition of socialism," he said.

Professor Hu said it would be right to say that socialism had revived itself in a different form, which allowed people more freedom and offered protection of their personal property.

Liu Junning , a former political researcher at the academy, was more critical of the book. "The findings showed the leftist academics who contributed to the book were confused themselves," Professor Liu said. "It is ridiculous and wishful to say that globalisation, a product of the capitalist market economy, can help China revive the international socialist movement. It is simply a way to boost their own morale."

There's a prize if anyone can work out how socialism is poised for a global revival and eventual triumph over capitalism thanks to globalisation. Most impressive is the section in bold - socialism being redefined to allow for people more freedom and private property. Extra prizes to entrants from North Korea and Cuba, who's examples of socialism give us all something to admire.

If globalisation (ie the free movement of people, goods, services and ideas between countries) leads to the "inevitable" success over capitalism, I'll move to North Korea.

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[boomerang] Posted by Simon at 09:21
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Don't believe this

The SCMP reports:

People's dissatisfaction with news magazines climbed to 42 per cent last month, according to the latest poll by the University of Hong Kong. Robert Chung Ting-yiu, programme director, said people's appraisal of the news media in general dropped to 49 per cent over the past six months, mainly due to growing dissatisfaction with the print media. "Over the last six months, people's satisfaction with newspapers dropped by 7 percentage points, while their dissatisfaction with news magazines climbed to 42 per cent, which is a record high since this survey series started in 1993," Dr Chung said.

Satisfaction with newspapers was down to 31 per cent, while satisfaction with television increased by two points to 73 per cent...Fifty-five per cent said television was the most trustworthy source of news, the same level as the October survey. Sixteen per cent trusted newspapers the most, up by 1 per cent from the last survey. The figure was 14 per cent for radio and 3 per cent for the internet. Less than 1 per cent found news magazines the most trustworthy.

That makes this site 3 times more trustworthy the The Economist. It would be churlish to point out the irony of this report appearing in the pages of the SCMP.

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May 11, 2006
China's Africa Strategy

Looking to impress your friends at the next dinner party? In our high brow China reading department, try the American Foreign Policy Council paper on China's Africa Strategy. Don't thank me for raising your IQ.

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[boomerang] Posted by Simon at 15:27
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Hong Kong quotes of the day

The SCMP is Cathay Pacific's in-house newsletter. The top of the front page leads with the heroic story of passengers that stuggled through a Cathay flight where the air-conditioning had broken down: A London-bound Cathay Pacific flight was forced to return to Hong Kong after a faulty air conditioning valve left more than 200 passengers gasping for air for four hours. Cabin crew fanned distressed passengers and gave them iced towels. Some lay down in the aisles. Yes, that's front page news.

The article heavily relies on an interview with Amisha Hira, age 26, who provides us our first quote of the day:

"My driver in economy class told me the situation was even worse there, with at least two people lying down in the walkway."
Those poor plebs in economy.

Staying on the Cathay theme, the second quote of the day comes from Bobo Chan, a Cathay flight attendant (not stewardess). She tells the SCMP:

Her two children, aged four and 12, also receive the benefits until they reach the age of 23. She said she takes her children to a hospital at least eight to 10 times a month.
Do you now understand why Hong Kong's hospital system has a serious problem?

Why all this coverage of Cathay? Could it be a co-incidence that Cathay is one of the SCMP's top advertisers?

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[boomerang] Posted by Simon at 08:22
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Linklets 11th March

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May 10, 2006
Classified

Are you a geeky tech kind of person who loves writing and picking up some easy cash? Then please read this from CNet Asia:

We're actually looking for someone who can write in English on the personal tech/IT lifestyle scene in Hong Kong, about twice a week.

It's more a passion and an opportunity to showcase the SAR's tech scene
usingthe CNET Asia platform rather than a livelihood as we're paying a
token amount.

If that sounds like you and you could use a token payment in return for your IT blogging expertise, please leave a comment or send me an email and I'll put you in touch. As a special offer to readers, I'll waive my typical spotter's fee.

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[boomerang] Posted by Simon at 16:43
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China facts of the day

The folks at Marginal Revolution have turned in not just one but two different but interesting posts.

Firstly they point to an LA Times article on the village of Renhe, where villagers took advantage of a loophole in a government regulation by getting divorced to qualify for better housing as compensation for their land, only for the government to change the rules. It'd be funny if it weren't so sad that many elderly villages have been screwed thanks to a government cock-up.

Even more interesting is the pointer to a research paper looking at how cultural differences matter for behavioral biases:

Behavioral economic research has tended to ignore the role of cultural differences in economic decision-making. The authors suggest that a systematic bias affects existing behavioral economic theory - cognitive biases are often assumed to be universal. To examine how cultural background informs economic decision-making, and to test framing effects, morality effects, and out-group effects in a cross-cultural study, the authors conducted an experiment in the United States and China. The experiment was designed to test cultural and cognitive effects on a fundamental economic phenomenon - how people estimate the financial values of objects over time.

Results of the experiment demonstrated dramatic cultural differences in financial value estimations, as well as on the influence of variables such as framing effects. Chinese participants made higher object value estimates than Americans did, even when adjusting for differing national inflation rates. In addition, the results showed that contextual information, such as framing, morality information, and group membership affected judgments of financial values in complex ways, particularly for Chinese participants. The results underscore the importance of understanding the influence of cultural background on economic decision-making. The authors discuss the results in the context of behavioral law and economics, and propose that importing cultural competence into behavioral models can lead to cognitive debiasing, both temporary and permanent.

Thirdly, Sam Crane points to a comparison between Singapore and China, which includes the stunning and thought provoking line In comparison [to Singapore], China is a paradise of academic freedom. Add another to Hemlock's pathetic Singapore list. The rest of the article is a look inside Tsinghua University, one of the country's elite places of learning, and how one academic finds teaching a potentailly fraught topic: politics.

There, you just learnt three new things today. No need to thank me.

(MR link to LA Times and to the research paper).

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[boomerang] Posted by Simon at 12:35
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May 09, 2006
Things you won't see in the New York Times

"Man tortured. Forced to drink urine and lick dog prick."

Click the link. You really need to read the whole thing.

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[boomerang] Posted by Simon at 13:49
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Assorted Hong Kong news

A few bits of Hong Kong news that, cobbled together, make up today's post.

1. There's been a fuss in recent days over the discovery that...prepare yourself...Hong Kong school kids cheat in their exams. In the English exam, the examinations authority gave the website that quotes were sourced from. Crafty students nicked off for toilet breaks, used their web enabled phones to look up the website and thus had all the answers for the fill-in-the-blanks questions on the paper. Naturally there's been an uproar, but I can't see why. If a pimply 18 year old student is able to out smart the worthies from the government education bureaucracy that set the exams, they should get full credit for their efforts. The exam rules did not, as far as I can tell, ban students from using their phones in this way while outside the examination room. If the exam setters are so stupid as to put URLs on the paper and the supervisors can't control the kids with their phones, they are the ones that should be punished, not the kids.

2. Better air quality top priority for Hong Kong's Environmental Protection Department. That's a relief. But maybe charity begins at home. A disturbing report says that a staggering 86% of kids admitted to hospital with respiratory problems have dads that smoke at home. The mums find it too difficult to stand up for their kids' lungs at a risk of dmoestic tension with their chimney husbands.

3. Time magazine does a number on Disney's Hong Kong woes. Lots of reports of staff walkouts and worse at the not-so-magic-kingdom. Obviously well worth the massive subsidies the government put into it.

4. While on government subsidised boondoggles, Cyberport bursts to a massive 54% occupancy rate...at least in the corporate area, which is what was used to justify the project in the first place. Meanwhile PCCW's massive residential property developments are going great guns and with a far higher occupancy rate.

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May 08, 2006
One step closer to the grave

Thanks for all the birthday wishes and gifts.

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May 07, 2006
Hong Kong's missing children

The SCMP's Sunday magazine leads with an article titled "Million-dollar babies", where Simon Parry and Hazel Knowles "investigate" and find it costs a lot of money to raise kids, ergo to urge to procreate is being superceded by the urge to recreate. The article leads with the staggering estimate reached by Janice and Louis from Tai Tam, that their new baby Luke will cost them HK$11.67 million. This implausibly precise number comes thanks to Louis, a private equities dealer. A man with almost as much time on his hands as bloggers, I would welcome a look at his no doubt comprehensive spreadsheet analysis. Some of the numbers of Luke's cost to age 26:

1. Kindergarten........$252,000
2. Schooling.............$1.8 million
3. Higher education...$3.2 million (overseas, naturally)
4. Food....................$949,650
5. Clothes................$1.87 million
6. Transport.............$438,000
7. Pocket money......$720,000
8. Glasses...............$176,000
9. Dentistry.............$100,000
10. Language/music lessons................$832,000

Why age 26? Apparently that's the cut-off for kids to get on their feet these days. Forget about working part time as Luke studies in high school and uni. His folks have already decided the kid will need specs (I seem to manage with one pair of glasses for 3 years at a time, which makes one wonder what kind of specs they're planning to put on this kid). Lucky Luke will get more in pocket money than most Hong Kongers earn. Assuming Louis and Janice (an MD in an ad agency) have a combined income of $2 million (no doubt a very conservative estimate), they're earning $52 million over the next 26 years to cover this outrageous parasite of a baby.

Later Louis admits they could raise Luke on the cheap, for a total of $2.61 million. That's no doubt the no-private-school, no-pocket-money, one-pair-of-specs, hole-in-shoes, stinky-breath estimate. I wonder if Louis's estimates on his private equity deals vary so much?

The article continues the myth that money is what matters when it comes to having babies. Yet the notion is clearly wrong - poorer countries and poorer people generally have more babies, not less. These "costs" of having kids are often blown out of proportion. In Hong Kong schooling can be almost free or subsidised for the vast majority of residents. The city boasts some excellent tertiary institutions. That's saving you $5 million already. If you want kids, the financial burden is rarely a deciding factor.

What are the more likely factors? Growing wealth means people feel less need to have kids as an insurance policy, to support them in old age. Better health systems means lower infant mortality, so you don't need "strength in numbers". Social mores are changing and the decision to not have kids has become far more accepted than any time in the past. A plethora of distractions and alternatives have made the decision tougher too. Hong Kongers live, on average, in 500 square foot apartments. That's not especially condusive to kids. The city's growing pollution problems are another factor. The list goes on.

The decline in birth rates is happening everywhere. It's not a crisis. Greater immigration is one obvious solution. Better child-care, improving government schools, curbing pollution can all help. Does it really matter to people's well being? If people are feeling better off, then not having a following generation to support them becomes a non-issue. Look at Japan - its population has already started to fall, just as everyone's getting excited about that country's economic recovery. What we need to get used to is nominal growth rates may become static or even decline, but per capita rates continuing to increase. In short, those of us who are left on this good planet will continue to enjoy better living standards. And we won't have to share it with as many people.

Having a child is one of the biggest decisions any couple can make. Governments and do-gooders have no place in the privacy of a couple's bedroom. That includes in the decision to mate. Campaigns to encourage people to have kids are a waste of money. Who's ever heard of someone deciding to have a kid because they saw a Planned Parenthood poster?

My kids enjoy Chicken Little. The birth rate "debate" is a classic example of "the sky is falling" - people assume the decline in birth rates are a bad thing without knowing why. It's a piece of conventional wisdom in the worst sense. It's different to what humanity's been used to, but that doesn't make it bad.

We're just not making kids how we used to. And we're not making parents how we used to, either. Memo for Louis, Janice and Luke - if the high estimate proves to be out, I've got 3.9 kids of my own that are happy to take any leftovers.

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Can Greenpeace say sorry now?

A few weeks back Greenpeace made a big splash with the shocking and scary announcement that some vegetables stocked in supermarkets in Hong Kong had dangerous levels of pesticide (fellow blogger HK Dave looked at the issue when it hit the headlines - read the comments). They got the requisite front page coverage, the supermarkets immediately took the suspect produce off the shelves and an investigation was duly ordered.

Today, buried deep in the SCMP, comes the investigations results:

Test results on vegetable samples from supermarket chains following pesticide claims were satisfactory, the government said yesterday. The tests were conducted after Greenpeace said last month that some vegetables sold at two major supermarket chains contained banned pesticides and excessive levels of other chemicals.

Mak Sin-ping, of the Centre for Food Safety, was satisfied by the test results, saying: "Let's say if some indicators were passed, it does not automatically mean the sample is poisonous. It depends on the quantity that was eaten."

A government spokesman said: "The testing method was also in accordance with Codex Alimentarius Commission's guidelines as well as international practice. That means tests were conducted on the whole edible portion of the vegetable...The 39 samples were tested for 70 pesticides.

Much ado about nothing and all that. Funny how it doesn't seem to get the same headlines. Anyone seen Greenpeace's press release?

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May 06, 2006
Chinese sex toys

Time to bump up the ratings using that old adage that "sex sells". From the SCMP, a comparison of Chinese and Western preferences in sex toys. The main article discusses how one family got their start in the business, realising that yet again Chinese made sex toys could be cheaper but just as good as foreign models (pardon the pun). Far better is the breakout article:

The Chinese are much more adventurous than Europeans and Americans when it comes to sex toys, said Wu Hui , chairman of Wenzhou Adam and Eve Health Products. "It's strange. Among the countries we export to - developed countries in Europe and the Americas - they like simplicity. In China, they want more functions."...

At one of the company's shops in Wenzhou , a middle-aged woman clerk proudly shows products to a customer. "Before I worked here, I had never seen these things before," she said. Despite a lack of customers on a recent morning, she claimed that all the types of products on display had found buyers. "Someone has bought everything, even these," she said, gesturing to a pile of leather garments adorned with metal.

Holding up an item labelled the Erotic Butterfly, she said: "This is suitable for young ladies." She then moved on to demonstrate several other products. Customers who make it through the door are not usually embarrassed. One day last winter, a man bought an inflatable doll and declared he needed it to keep warm.

But even the clerk admitted she felt embarrassed sometimes. Dropping her voice to a whisper even though there was no one else in the store, she pointed to a device displayed in a sealed glass cabinet and said: "Someone from Shandong bought this once."

Those crazy people from Shandong. Could exotic sex tours of Chinese provinces be far behind? It would give new meaning to "Golden Week".

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May 05, 2006
Health food made tasty

I just offered JC and BL their choice of breakfast cereals: Frosties, Nutri Grain or museli. Both took museli. What's happened to kids these days? They're actually rejecting the sugar coated stuff for the health food.

It didn't happen in my day.

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May 04, 2006
The greatest question: PC vs Mac

Mrs M and I are engaged in a serious debate. Our hardy PC is now a stately 3 years old and is showing its age. As our thoughts turn to updating, the natural question becomes "now Macs are actually on the radar screen, do we make the jump"? Now I know there are two types of people in the world: Macaddicts and PCaphiles. But I need help....your help. We've spoken to the people from the Apple shop in Central (moderately helpful but no real answers...and why does Apple make it so hard to find people that sell and can explain their stuff?). But I need input from people who've used a PC and then a Mac and what their experiences were in converting.

We use our PC primarily for: email, internet, web-cam/video conferencing with the folks in Oz, music (iPod and a Sony), limited word processing and spreadsheets, photos, some scanning, some kids games. There's other stuff but these are the main tasks. The PC is adequate for these tasks and we back up the photos and music regularly to an external hard drive. One option is for us to just upgrade our current PC, and that's not a bad option. But we feel it's right to at least look at Macs, given those that use are so adamant they are better.

My questions are simple:

1. How easy is it to convert from PC to Mac, especially in importing photos, music and email?
2. What can we keep from the current setup, especailly peripherals?
3. What are the real benefits of Macs? Why the fuss? And what are the pitfalls of Macs (there must be some)?
4. Is there a big learning curve in going from PC to Macs?
5. Are our PC files and programs generally runnable on Macs (e.g. Word and Excel files)?
6. What kind of Mac is right for us?
7. What the hell is .Mac and is it worth it? We currently use Now broadband.
8. What additional software will we need to buy for the Mac?

Thanks in advance for any help you can give. In the meantime I'm going to keep on loading all these CDs onto iTunes.

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Scenes from a dysfunctional democracy

Some snippets from the SCMP, demonstrating the blossoming democracy that is Hong Kong:

A motion calling for the commemoration and vindication of the 1989 Tiananmen Square protest was defeated yesterday in the Legislative Council for the ninth time since the handover...Directly elected legislators voted by 16 to seven in favour of the motion, moved by Democratic Party vice-chairman Albert Ho Chun-yan, but functional constituency legislators ensured its defeat.
That's voice of the people for you. Now to part 2.
Legislators late last night rejected a motion calling for a comprehensive fair-competition law.

After a five-hour debate, functional constituency legislators rejected the motion by 13 votes to 10, with one abstention. The directly elected legislators supported the motion 15-2, with five abstentions, but a majority of both needed to support the motion for it to be passed.

You read right - a total of 28 voted for it, only 12 against with 5 abstaining. Yet it still gets knocked down thanks to the distorted system. Yet, to the surprise of some, it turns out the democrats who voted against the proposed political reforms last year are being blamed by the public for it. That's as it should be - the ones that voted against should carry the blame.

But the final and most curious result in this distorted "democracy":

Four in five people want to see competition for the post of chief executive next year, according to a survey commissioned by a US-funded think-tank.

Still, 73 per cent support Donald Tsang Yam-kuen's re-election.

Is that what they mean by a competition law? If the survey is to be believed, Hong Kongers want more than one candidate for Chief Executive, just so they can vote for Donald Tsang in overwhelming numbers. It's a backhanded compliment to The Don...the people want to make a race of it so he can win by a mile. Beijing must be happy.

With a democracy like this, who needs voting?

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[boomerang] Posted by Simon at 10:22
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May 03, 2006
Train Kept-A Rollin' (Into Tibet)

The Chinese government proudly announced that trial services of its Qinghai-Tibet railway, the highest rail line ever built, will begin July 1st, and that the tickets have already been sold out. That the government wanted to quash any lingering notions of independence in Tibet by bringing it more firmly into the Chinese economic orbit with this audacious infrastructure project, there is no doubt. I myself have almost no reservations in saying that this is an entirely good thing, because of the poverty experienced by most of the inhabitants of Tibet. If nothing else, it will hopefully also bring better food (I rank Tibetan food as the worst on earth - if anyone can think of anything nastier than yak milk with tsampa every day, please tell me).

My issue concerns more the safety arrangements of the trains, which the People's Daily somehow makes sound equivalent to a cruise on Cunard:

For travelers to have sufficient time to enjoy the natural beauty on the plateau, the passenger trains will depart in the morning and arrive in the evening.

Meanwhile, this world's highest and longest plateau railroad will have two oxygen supply systems on trains to combat the effects of altitude sickness on passengers.

Oxygen will come from a system like central air-conditioning on trains, which can ensure the oxygen content in carriages at about 85 percent of that in plain areas, said Ma, adding that oxygen masks will also be installed near seats for passengers to use in case they still feel sick.

Now the last time I rode the trains in the Western areas of China, I had trouble getting a seat, and remember the tremendous scrum at the on-board ticket counter that made the Rugby Sevens look like church bingo when I boarded at an intermediate station (Kuqa) at 3 in the morning. Imagine the fights between enraged, disoriented, oxygen deprived Chinese men when that most precious resource, air, is in dispute on an overcrowded train!

I for one could not be paid enough to get on that first train, and happily leave the task to hardier souls.

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May 02, 2006
And the Oscar goes to

If you only see one movie this year, you need to get out more. So to help you, here's Harry Hutton's take on Chicago...but not the musical. Look out for the sock.

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[boomerang] Posted by Simon at 19:02
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Papa don't preach

Jake van der Kamp in the SCMP on the latest spat between the Vatican and China (and just as they were getting all chummy):

Consider the facts. A distinct community within a larger one elects its own immediate leader rather than have this leader imposed from above by a central governing authority that insists on absolute sovereignty in such matters. It is just the sort of thing that Cardinal Joseph Zen Ze-kiun has long advocated for Hong Kong. Bring on democracy, he thunders at Beijing from every pulpit and podium that he can find. Let Hong Kong choose its own chief executive.

But when the priests, nuns and parish representatives of the Roman Catholic Church in Kunming then elect their own bishop rather than have the choice foisted on them by the Vatican, he suddenly discovers a different message. It's sabotage, he protests. The choice ought to be made by the Pope alone. The central governing authority must have absolute sovereignty in such matters.

Have I already said in this column that our cardinal has difficulties understanding the meaning of the word hypocrisy?

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China rural land reform

Geoff Koch from MSU emails with an interesting article discussing the difference between China's rural land reform policy and its reality. Well worth a read.

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May 01, 2006
If China's banks worked

The Economist looks at how much better off China would be if it's banks worked "properly". By properly, they mean banks that allocated capital and credit by risk rather than political factors, and banks that didn't prop up ailing state firms. Below is a chart that shows the difference between China's GDP by sector and China's bank lending by sector. This mismatch is estimated to have cost China a massive 16% of its GDP...or $320 billion. That's one hell of a mismatch.

chinabanks.gif

Full article below the jump.

THE Chinese economy continues to astound. Behind its latest surge lies a renewed acceleration of bank lending. Credit growth at the mainland's financial institutions reached 15% in the year to March, just above the official target of 12-14%. Loan volumes are again nearing the levels of the 2003 credit boom, notes Jonathan Anderson, chief Asia economist at UBS. This week the authorities acted to stem the flood.

But China could sustain an even faster pace if its banks did their job properly. A mountain of bad debts is only the most visible sign of the persistent misallocation of capital. Many more loans do not go bad but yield only negligible returns. In a study* to be published on May 4th the McKinsey Global Institute, the consultancy's economics think-tank, calculates that China's GDP would be a staggering $320 billion, or 16%, higher if its lenders knew how to lend.

Around $60 billion, the think-tank reckons, could be gained from raising the banks' operating efficiency by cutting costs, putting in proper electronic payment systems, and developing bond and equity trading. The rest—some $260 billion—would come from redirecting loans to more productive parts of the economy. The banks should switch funds from poorly run state firms to private enterprises, which contribute 52% of GDP but account for only 27% of outstanding loans (see chart). This would both increase the efficiency of investment and raise returns for China's army of small savers.

Easier said than done. Aided by generous government bail-outs, the banks have worked to restructure themselves over the past several years. But changing old habits takes time: a recent paper by economists at the International Monetary Fund found little evidence that Chinese banks' lending decisions had become more commercial.

Even the industry regulator, which has been leading the reform effort, seems unwilling to break some taboos. Allowing foreign banks to take control of domestic rivals would undoubtedly help to introduce healthy competition and speed modernisation. Yet the long-running attempt of a consortium led by America's Citigroup to purchase 85% of Guangdong Development Bank (GDB), a relatively small institution, seems to have hit a brick wall. On April 25th Lai Xiaomin, director-general of the China Banking Regulatory Commission, said that he believed the “GDB case should not break the current rules”. These rules limit foreign investors to buying a total of 25% of a Chinese bank. No single investor is allowed more than 20%.

The poor state of the banks increases China's reliance on macroeconomic tools. The central bank raised interest rates surprisingly on April 27th, and announced guidelines to control banks' lending. It is expected to raise their reserve requirements next month, after China's spring holidays. Such top-down direction has served the economy fairly well in this cycle, averting the violent swings of earlier decades. Still, there is little doubt that this latest lending boom will produce another batch of bad debts and low-yielding loans. If the leaders in Beijing carried out the reforms needed to create a banking system that allocates capital properly, they would find the economy easier to steer—and their countrymen would be better off.

*“Putting China's Capital to Work: The Value of Financial System Reform.”



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Chinese cinema

While I'm pilfering things from the Economist, an article discusses the woeful state of China's cinemas even while it's cinema productions are becoming world beaters. Full article needs subscription so I've put it below the jump.

Everyone is in love with Chinese cinema. Except the Chinese

THE Chinese are hot in Hollywood right now. At last month's Oscars Ang Lee, who hails from Taiwan and is a hero in mainland China, won the best director award for “Brokeback Mountain”. “Memoirs of a Geisha”, which carried off a further three Oscars, starred Gong Li and Zhang Ziyi, two Chinese actresses playing Japanese courtesans. Tom Cruise, Ewan McGregor and Nicole Kidman are all making films in China. And Britain's Merchant-Ivory studio has just released “The White Countess”, the first western picture to be shot entirely in China.

Unseen in China

It looks like a remarkable comeback for a film industry that was destroyed by the Cultural Revolution after a glorious early debut. Chinese cinema was born in 1896, just a year after it was invented in France. Yet between 1966 and 1972 not a single film was made on the mainland. Last year there were 260, almost twice as many as two years ago. Only America (425) and India (over 800) produced more. Box-office receipts have also been growing fast, reaching 2 billion yuan ($250m) in 2005, up a third on a year earlier, according to the State Administration of Radio, Film and Television (SARFT), the government ministry-cum-regulator. Those figures pale beside the $23 billion that Hollywood raked in last year. But they compare decently with estimated receipts of $266m for India's Bollywood in 2004.

Like many a Californian starlet, however, the Chinese film industry is not as healthy as it looks. Zhang Hongsen, deputy director of the film bureau at SARFT, admitted this month that only 90 of those 260 films were ever screened in China. Many had to be withdrawn days after their release because of a lack of interest among cinema-goers.

A dearth of screens is partly to blame. China has only around 3,000 cinemas, with less than a tenth of the screens in America for a population five times as big. Much of the countryside is not covered. All in, China's 1.3 billion people managed a mere 200m cinema visits last year.

But the fault also lies with the quality and price of Chinese cinemas. Fewer than half of them are modern, reckons SARFT. The new ones charge a whopping 40-120 yuan ($5-15) a ticket, so are affordable only to the middle-classes. Xiang Yucheng, general manager of Kodak Cinema World, a 930-seat luxury cinema in Shanghai, says his average occupancy at just 20-24% is one of the highest in the country. No wonder China has never developed “a popcorn culture”, says David Wolf, a Beijing-based media consultant.

A more fundamental problem is that the industry is not making the films that people want to watch. Like nearly everyone else, the Chinese adore Hollywood blockbusters. “Titanic” is the biggest-grossing film in Chinese history and the fourth “Harry Potter” adventure is the favourite today. Yet only some 20 foreign films a year are allowed into China—although that number should rise to 40 in 2006 under the country's commitments to the World Trade Organisation.

Even then, though, choice will remain limited. China's censors are as prudish and culturally conservative as they are politically repressive, preferring bland family fare from overseas. Horror, violence (unless of the kung-fu variety) and anything challenging are ruled out. Since China has no proper ratings system, every film must be suitable for all. In a speech last December marking the centenary of Chinese cinema, President Hu Jintao left no doubt that censorship would stay: “All those working with China's film industry should stick to the correct political direction all the time,” he said. Neither “Brokeback Mountain”, with its homosexual theme, nor the Japanese-centred “Geisha” were screened in China. Mr Xiang, whose own cinema is barely profitable, says he could charge a third more to exhibit those films: “I just don't have enough good movies to show.”

Many domestic films are also banned. Directors are eager to comment on the rapid changes in Chinese society. But films such as Li Yang's “Blind Shaft” (a bleak, compelling picture about life in China's illegal coal mines) and “Cry Woman” (whose heroine uses her distinctive wail to become a professional mourner and buy her husband out of jail), were not shown to local audiences even though they had been acclaimed abroad. Liu Bingjian, the director of “Cry Woman” gave up, and now sells men's beauty products for Amway, laments Zhang Xianmin, a professor at the Beijing Film Academy.

A little help from the state

Even those Chinese films that survive the censor's blue pencil and are more than mere propaganda, often fall at the next hurdle: promotion. Budgets are low, advertising costs are high and marketing in China is haphazard. As Mr Wolf points out, “There is no studio system as in America where films must pass a series of executives judging their commercial viability. China needs its own Steven Spielberg—someone who really knows what people want to see.” Most Chinese remain glued to the television and opt to watch the latest pictures on pirated DVDs, which, at 10 yuan each, cost a fraction of a cinema visit and deprived American studios of $2.7 billion of revenues last year.

In response, the Chinese government is doing what it typically does to generate growth—build infrastructure. Cash has been found to set up mobile cinemas in rural areas, while businesses in Hong Kong and Macau were told in February that they could set up 100%-owned cinema chains. The same privilege should eventually be extended to western companies such as Warner Bros, the first foreign firm to get into film distribution on the mainland—it operates several cinemas there including a huge new complex in Chongqing, a city of 30m people. With cinemas being built from scratch, there are opportunities for foreign providers of the latest technologies, such as Imax, which is already selling 3D systems in China, and Texas Instruments, with its digital projectors.

New hardware, however, does not foster creativity. What the Chinese film industry needs is less regulation and greater competition. That would mean allowing in more western films, curbing censorship and removing the onerous cap that limits foreign-studio profits to 17% of Chinese box-office receipts. If a reliable ratings system replaced the censor, domestic filmmakers could take more risks, attract bigger audiences and plough back their growing revenues into marketing and more projects. If all that happened, even the Chinese might start to watch Chinese films.




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