Zero-Sum Games and Suffering Flesh

Fan Gang, Beijing University professor and the Chinese Economic Research Institute, explains his view of China’s trade deficit in March in a guest article for Der Standard, Austria.

“China has recorded a trade deficit of 7.2 bn Dollars (5.4 bn Euros)  in March, the first one since April 2004. And still, at the same time, the U.S. Congress has denounced China as an alleged exchange manipulator and accused the Chinese leadership of keeping the RMB pegged to the Dollar to save the bilateral trade surplus.“

One of Fan’s arguments: if America and the European Union lifted their export ban on high-tech products to China, their trade deficit would be reduced by at least 40 per cent – and in that light, the exchange rate was a secondary issue.

Fan doesn’t explicitly mention the arms embargo against China, imposed after the June-4 massacre in 1989, but it is most probably included in his argument.

Meantime, Germany’s Wirtschaftswoche believes China’s March 2010 trade deficit is just an age-old trick – the ploy of the suffering flesh.

Wikipedia lists the stratagem as #34. Of course, it can be useful to know these ideas. The funny thing is that business people in China – both Chinese and foreign – seem to be the stratagems’ biggest fans. For that reason alone, it can be useful to be aware of the list.

Obviously, I will have missed the operation of such strategems once in a while, when they were applied in a subtle way. But from what I saw of it, people who put a lot of emphasis on the use of strategems mostly wasted everybody’s time (their own included). It was a nuisance to see them at work. Just like war, stratagems usually make only one side win, at the cost of the other. And they lead to a lot of suspicion – Chinese people often seem to see themselves surrounded by scary and hostile specters – even during a Sunday meal in a Burger King restaurant.

In an interview with Der Spiegel in 2005, the late economist Paul Samuelson described war as a zero-sum game. The rise of Bismarck came with the decline of Napoleon III, but after the 1870/71 war, both France and Germany fared well in terms of economic growth.

Stratagems in business life? That’s a zero-sum game, too. They are in the way of productive problem-solving.

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Related
Hermit: Happy New Agreement Year, February 7, 2010
The End of Globalization, Der Spiegel, Nov 12, 2007

About Bigots, and an Endorsement

Belonging to the camp left of the center myself, I know a thing or two about bigots from this side. Maybe the worst bunch of them lives (and governs) on the opposite side of the globe, in Australia.

Yes, smoking kills. But so does paragliding. And even non-smokers have to die. Also, if smoking is terrible, you can at least make sure that the packages look nice.
I have the suspicion that bashing smokers has become so popular within the left spectrum because they are supposed to be lower-class – and social democrats are most likely to feel embarrassed of their own clientele. Besides, there is that particular leftist drive to “educate the common people”. I know – it’s a tradition to venerable to simply do away with, even if it does more harm than good.

*Puff*

Talking about bigots, I have no idea if the potential voter Leonid Brezhnev Gordon Brown had a word with this week is a bigot or if she isn’t. All I can say is, have a cigarette, folks. That will help you to relax. Brown may have shown some disdain for a voter – but I’ll quit smoking if someone can convince me that his main political competitors are really more respectful than him.

*Puff*

Anyway. If Gordon Brown is the man you people of Britain love to hate, vote for him on May 6th. Because whichever party you are going to vote into government (if any in particular), it will have to make very unpleasant budget cuts. You can vote Mr Brown in for another term, hate him for five years (or less, depending on a number of factors too complex to discuss in a short post), and make a fresh choice then, with a rebalanced budget. He’ll do a good job at rebalancing it.

*Puff*

As for Australia, where elections are to be held this year, too: I don’t know. It’s so far away. But anyway, vote for some bright, nice and relaxed people.

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Related
Embarrassed of your Yellow Toe Nails, Ezine, someday

ECFA: Jus Primae Noctis?

On a press conference with the Foreign Correspondents’ Club in Taipei on Tuesday, J. Michael Cole of the Taipei Times had a question for president Ma Ying-jeou, which wasn’t taken, according to his blogpost of today:

President Ma, you and your administration have repeatedly said that Taiwan must sign an ECFA with China because of regional economic integration. You claim that Taiwan does not have a choice. But the reason Taiwan does not have a choice is because China has now [not?] allowed other countries in the region to sign free-trade agreements with Taiwan. Granted, some of those countries, as you just said, told Taiwan they’d rather it sign an ECFA with China before they can consider negotiating an FTA with Taiwan, comments that nevertheless are an extension of Beijing’s diplomatic bullying. Taiwan should have a choice, but it doesn’t, and this is because of Chinese interference.

Now, how can we expect that Beijing will show “goodwill” toward Taiwan through an ECFA this time around? How do we know this is not a trap?

Cole writes that he intended to underscore his question with a crude, but descriptive analogy:

Beijing is like the village’s serial rapist who sees a poor young lady outside in the rain. First, it goes to the other villagers and tells them ‘You leave her alone and you do not allow her into your houses, or I’ll beat you up.’ He then goes over to the young lady and tells her ‘You are welcome to seek shelter into my house. Only after you’ve spent the night will I perhaps allow you to visit some neighbors.’

Justrecently’s Beautiful Blog isn’t an ECFA blog. But the past two weeks or so, with the TSU’s referendum initiative and the televised debate have been highly dynamic – Reuters news agency reportedly called the latter event “historic”.
For sure, it would have deserved much more international attention, just as the whole ECFA process contains a lot of more general questions about doing “business” with China. They should be debated worldwide – not only in Taiwan.

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Related
ECFA Double-Ying Debate, first Impressions, April 25, 2010
“Droit de Seigneur”, Wikipedia

Possible Lessons from the ECFA Debate

No or only few numbers were available on Sunday – but the picture has become much clearer now in terms of how the Taiwanese public rates president Ma Ying-jeou‘s and DPP chairwoman Tsai Ing-wen‘s performances during Sunday’s televised debate on the government’s core project, the Economic Cooperation Framework Agreement (ECFA) with China.

There seems to be a considerable error margin, or a big difference anyway,  between the surveys taken by TVBS public opinion poll of April 26, and the one taken by United Daily News.

According to TVBS, 41 per cent of the interviewees watched the debate, while 59 per cent didn’t. The numbers are 46 and 54 per cent respectively in the United Daily News poll. The most interesting findings by TVBS are that if Ma and Tsai run in the 2012 presidential elections, 38 per cent would vote for Ma, and 28 per cent for Tsai Ing-wen, and that the number of those who support the ECFA rose by three per cent, to 41 per cent, after the debate.

But the picture seems to be comprehensive enough to tell that Ma convinced more of the audience than Tsai. The United Daily News poll says that 42 per cent believe that Ma did better in the debate, while only 30 per cent believe that Tsai did better. Bot polls suggest that the debate helped the public to understand the ECFA.

Much of the English-speaking blogosphere seems to correspond with these impressions.

My own impression on Sunday was that Ma’s and Tsai’s performances were  equally matched.

I still see it that way. And maybe some or much of Ma’s win in public confidence can be explained with the high expectations Tsai Ing-wen was facing. These expectations were raised before the broadcast. There were high expectations in the Pan-Green camp, and the government on their part did what they could to raise them further, to the degree that the presidential office complained that the president had too little time to prepare for the debate.

There may be lessons to be drawn. For the DPP and the Pan-Green camp it could be the one that in the long run, you can’t portray an intelligent man as an idiot, and don’t portray people as sellouts without good evidence. It will most likely backfire, sooner or later.

For the KMT and the Pan-Blue camp a conclusion could be that  there is no reason to shy away from stating ones case whereever possible. This is true for a referendum, too. In a democratic society, people want both leadership, and a say of their own on crucial issues. When leadership is provided, chances are that the leaders will have their way, with public consent, and corresponding legitimacy.

The debate and its results can’t provide answers on the issue – the ECFA – itself. The way the audience view the planned agreement has probably  shifted much less – by three per cent or so  only – than their views of the president.

There is no reason for the KMT to try to torpedo a referendum, by every possible tool that may be available in the reviewing process. The TVBS poll suggests that 41 per cent now support the ECFA, and that 33 per cent do not. 26 per cent are undecided. And according to United Daily News’ poll, the debate shifted the opinions of 6 per cent of the viewers – 81 per cent of these six from opposition to support, and 10 per cent from support to opposition.
These are no bad prerequisites for the government for either winning a referendum, or seeing it becoming invalid because of a lack of participation.

May I start dreaming for a moment? Maybe the KMT even discovers that democratic means provide less safe, but more sustainable results than manipulation, and abuse of power.

The DPP, the TSU, and other Pan-Green parties on the other hand, should accept any outcome of a referendum, even if it conflicts with their goals. No matter the gravity of the issue – if the voters can’t count as the final authority, who else should? The Pan-Grens, if back to power from 2012, can’t expect the KMT to be a loyal opposition now, if they don’t set a good example themselves now. Once they are back in power, it will be their turn to expand Taiwan’s scope in the global economy, with countries other than China.

Maybe a process of continuous improvement has started on Sunday.

ECFA, the DPP, and the Moderates

Michael Turton, from Taichung, argues that economic forecasts disprove president Ma Ying-jeou‘s (馬英九) warnings in yesterday’s ECFA debate:

It is ironic to contrast the President’s claim that Taiwan needs ECFA and that Taiwan will be isolated “like North Korea” if ECFA is not signed, with the economic reality that the economy is doing well without it.

Turton quotes Taiwan’s minister of economic affairs (MOEA) Shih Yen-shiang (施顏祥)’s forecast of 6.5, or at least five per cent, GDP growth this year.

The arguments about isolation are simply emotional appeals to the visceral fear of being weeded out instilled in every Taiwanese by the educational system. The reality is that Taiwan’s economy is performing well with the links it already has, and there is no reason to assume that shipping more industry off to China will help it perform better.

A-Gu (阿牛), himself tending to support Tsai Ing-wen‘s (蔡英文) positions, doesn’t see a blow-out in yesterday’s debate by any means, but would still give Ma the win:

Polls are naturally divided on partisan lines, but I have to say I was most impressed with Ma’s performance in the ECFA debate. I wasn’t expecting him to come out swinging. But instead, he was aggressive and dripped sarcasm, and somehow it worked better than I would have imagined. He was a man on a mission out there.

Despite Ma’s rhetorical sway, A-Gu also notes that

Tsai Ying-wen had a set of four reasonable questions which she felt Ma refused to answer even after being asked four or five times. She kept bringing that up, and that was making Ma look evasive. She was also amply able to answer questions asked to her, and appeared very competent.

On Stocks and Politics, Richard, an American-born Taiwanese, argues that

For those who may not know all the past details and comments made by Ma and Tsai, it would seem as if Ma was the winner here. But for those who have been keeping up with all the developments with ECFA, it’s clear that Ma’s responses just touch the surface of the murky waters beneath.

Ma had defended the unknowns in the ECFA negotiations with China by saying that “The list has not been finalized yet, that’s why we can’t show it at the moment. We try to keep everything behind closed doors during negotiations, but we will make the results public. I promise that I won’t only publicize the list when it’s sent to the legislature”. But

[w]hat Ma fails to mention is that by the time the list is sent to the legislature, it is too late. Negotiations will have been over and the agreement will be well on its way to being inked in.

Not to mention the time it takes to carry out a referendum on ECFA.

Looking beyond yesterday’s debate, an editorial by the Taipei Times today reminds the DPP and Tsai Ing-wen herself that given the KMT’s dictatorial approach to policy, there was plenty of potential for winning support from political moderates, and that the moderates would decide the presidential elections in 2012.

Tsai and her fellow DPP leaders should keep pushing their series of public forums which they began in April, in order to map a ten-year policy platform, recommends the Taipei Times.

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Related
ECFA Double-Ying Debate: first impressions, April 25, 2010
MAC: “Completely Pro-Taiwan”, March 4, 2010

Laobaixing against RMB Appreciation

Central bank heads and governors Henrique Meirelles (Brazil) and Duvvuri Subbarao (India), and Singapore’s prime minister Lee Hsien Loong made the most forceful statements to date in demands for a stronger Chinese currency, the Financial Times reported on Wednesday. A few days earlier, the New York Times reported that the Chinese government was preparing to announce in the coming days that it will allow its currency to strengthen slightly and vary more from day to day. Liu Bin (刘斌), of the Southern Metropolis Daily, sums some Financial Times analysis (“金融时报”文章综合整理分析) up:

Nobody foresaw that, just after chairman Hu Jintao (胡锦涛) had taken part in the “BRIC” conference, in the twinkling of an eye, India and Brazil, China’s BRIC “comanions”, would actually strike the same note as America and strongly demand a RMB appreciation. All of a sudden, a tilt occurred in the sino-western confrontation about the RMB’s exchange rate.

But what is more noteworthy are Obama’s diplomatic means. He has abandoned his predecessor’s hegemonial way of applying unilateral force China to lower its head, and rather convinces the emerging economies to join a big chorus of demands to appreciate the RMB.

Of course, maybe India and Brazil aren’t just speaking in support of America. They obviously believe that an appreciation of the RMB will help their own economies, or help to solving global economic imbalances. China’s exporters can, of course, curse the two countries for becoming America’s accomplices, but we should see clearly that, the technical argument about RMB appreciation aside, there is no doubt that China’s international public relations are facing a test.

This is because China’s traditional diplomatic measure of aligning with third-world countries to resist American pressure are now flexibly turned onto China itself by Obama. One can say that the pressure India’s and Brazil’s attack have added are more important than America singling China out as a currency manipulator.

It’s actually foreseeable that more developing countries will join this chorus, that China’s international public relations will face more pressure, because Obama’s flexible diplomacy is a mellow measure with unmistakable effects.

The online commenters don’t see eye to eye:

1. Currency appreciation is related to sovereignty, it’s the Chinese laobaixing and Chinese businesses who have to decide, and not other countries or groups of countries. Whatever the chorus of other countries says, it’s futile at best, futile. The finishing touches to this piece [a work of art] haven’t yet been made, and they hope it won’t be a big one [literally: the eyes haven’t yet been painted onto the dragon yet, and they all hope it will be a small eye – i.e. a botched opus]. This is the western-led and international anti-China forces’ consistent method.

6. India is just a jumping clown, making thankless poor performances before the developed European and American countries! The sad thing is that Brazil, all of a sudden, is also blinded by lard on its eyes! They have forgotten how the developed countries grab their national interests.

8. Once you get used to it, it won’t hurt anymore (习惯了就好).(…..)
10. The question of RMB appreciation isn’t only a matter of sovereignty, but also one of human rights. Since the design of the Chinese people’s livelihood is related to the livelihood of the world, in this world, human rights are a bigger matter than sovereignty.

11. Every country has its own interests, it’s no use to tell them what to do.9. I’m a bit shallow – can one subjectively say that China’s diplomacy is becoming more and more disappointing? Can one say that China’s current officials are becoming more incapable?

12. Why should China assume this responsibility? Won’t we, the laobaixing, be the ultimate victims? (那我们老百姓不就成了最后的受害者吗？)

Comment 18 begins to look at the technical issues of revaluation, rather than historical ones.

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Related
北京颐和园－画龙, (look at the big eyes), Phototime

ECFA Double-Ying Debate, first Impressions

If a man fights best with his back against the wall, Ma Ying-jeou‘s (馬英九) performance today might serve as an example. In terms of show(wo)manship, I believe that he and Tsai Ing-wen (蔡英文) were equally matched.

That’s not to say that Ma had better points than Tsai. The question remains if an agreement with Beijing actually has to precede agreements with other regional trading nations (most specifically ASEAN members), if these agreements will only become possible after Taipei reaches agreement with Beijing, or if free-trade agreements with countries other than China wouldn’t be possible at all (or only last as long as agreement with Beijing does). The latter two are questions the ASEAN member countries themselves would have to answer. They and Taiwan are WTO members and can build on their common membership, if both ASEAN and Taiwan are prepared to do so.

The details of the negotiations also remained obscure in the debate. That’s not unnatural, given that ongoing negotiations were the topic – it would be hard for the Taiwanese negotiators to achieve concessions from China in a certain field first, and trade it for a concession elsewhere later – a already apprehensive public will see any concessions made, rather than any concessions earned. The main problem doesn’t appear to be the way the negotiations are conducted. The main problem is the “partner” with whom Taiwan is conducting them. China’s underlying and publicly confirmed agenda of annexing Taiwan – by force if necessary, and slowly and stealthily if possible -, is the cardinal problem.

Understandably, president Ma appealed to the courage – and the trust – of the Taiwanese people. His administration has been lacking a success story to date, and he is obviously determined to make ECFA one. But smaller steps would engender public trust more easily than a comprehensive trade agreement with a country which, after all, explicitly denies and threatens Taiwan’s sovereignty.

During Ma Ying-jeou’s and Tsai Ing-wen’s discussion, there were several references to Taiwan’s dignity. The way this debate was organized and carried out was a showcase of the country’s luster. Besides, it shows that Taiwan could negotiate FTA’s – with whomever – much more easily if more governments and people around the world were more prepared to support its sovereignty.

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Update
ECFA Debate highlights with English translation, Taiwan News, April 26 (Taiwan time)

Related
Taiwan President, Opposition Leader debate, Kyodo, April 25, 2010
Referendum on ECFA: How it might happen, April 23, 2010
Economic Cooperation Framework Agreement, Wikipedia

Chinese Naval Exercise near Nansei Islands

Naval Parade off Qingdao, xinwen lianbo, CCTV News, April 23, 2009

Two Japanese Maritime Self Defense Force (MSDF) destroyers, the Choukai and Suzunami, unexpectedly encountered several Chinese People’s Liberation Army Navy (PLAN) warships, including a pair of submarines and eight destroyers, approximately 140 kilometers west-southwest of Okinawa near the Nansei (Ryukyu) Islands in mid-April, on their way from the East China Sea to the Western Pacific, writes the Asia Times. Anti-submarine warfare, underway refueling and helicopter flight training were reportedly some of the exercises.

Richard Fisher, senior fellow on Asian military affairs with the International Assessment and Strategy Center, describes the PLAN exercise as “a significant step”. “Absent a sustained investment by the US and Japan in space defenses, naval energy weapons to counter ASBMs, plus their own, and, fifth and sixth generation fighters for air force and naval deployment, they will lose maritime dominance in the Western Pacific by the mid-2020s.” [..] “These investments are less likely as long as Washington and Tokyo remain transfixed by the mirage that Beijing will become their ‘pivotal partner’ in meeting future challenges, they simply want to ignore the fact that it is China which is the challenge.” Abraham Denmark, Center for a New American Security, believes it would be important “to retain a military hedge against the possibility that China could become confrontational and militarily aggressive”, and that the PLA navy’s primary tasks had long been defending the mainland and operations related to a Taiwan contingency, which would primarily involve anti-access/area denial operations in the Western Pacific.

Chinese defense ministry spokesman Huang Leiping (黄雪平) said on Friday that naval exercises in international waters were common practice, and the countries concerned shouldn’t make arbitrary assumptions (主观臆断) and improper speculations (妄加猜测). To organize exercises in international waters corresponded with international law and was conducted by various other countries, too.

The Southern Metropolis article quoting Huang refers to the Nansei or Ryukyu Islands as Gonggu Dao (宫古岛), apparently next to the Gonggu Strait.

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Update (May 30, 2010):
Another Japan-China confrontation at sea, Japan Security Watch, May 8, 2010

Related
Hermit: the Stupid Little Mermaid, March 12, 2009