Archive for May 13th, 2011

Friday, May 13, 2011

From under the Cauldron, choose from the Market

Enorth (Tianjin) / XinhuaWith effect from May 18, the People’s Bank of China (PBoC) has increased reserve requirement ratios (存款准备金率). It’s the fifth time within a year that the reserves commercial banks need to keep – rather than lending them out – has been raised; this time by 0.5 percentage points, requiring big and medium-sized financial institutions to maintain reserves of 21 per cent on their checkable deposits (or transactional accounts).

[Main link: http://news.enorth.com.cn/system/2011/05/13/006545780.shtml]

Reserve requirement ratios are frequently used by the PBoC to control inflation. In 2007, by November, it had taken this step five times, too.

Xinhua quotes (unnamed) experts (专家) who refer to the decision as “taking away the firewood from under the cauldron” (釜底抽薪) – the cauldron of  inflationary pressure and excess liquidity (流动性过剩).

It’s not the preferred measure in every country. The Federal Reserve Bank of Texas website describes it as

the least-used monetary policy tool because changes in the reserve requirement significantly affect financial institution operations. Reserve requirement changes are seen as a sign that monetary policy has swung strongly in a new direction.

And the Xinhua article (see main link above)  also quotes experts as pointing out that small and medium-sized enterprises in particular were affected by the tight monetary policy, as their capital costs were to be rising further.

Some two months ago, on the occasion of the 15th National People’s Congress 4th plenary session, PBoC governor Zhou Xiaochuan (周小川) and three more members of the board answered questions from the national and international press. Not surprisingly, it was a provincial reporter who addressed the issue of capital costs for SMEs. Governor Zhou’s answer was lengthy, but the best advice he could give the SMEs seemed to be to choose from the market.

In December 2011, financial researchers met at Sun Yat-Sen University in Guangzhou, for their Chinese Finance Annual Meeting. Their descriptions of China’s financial structure was candid, and they called for a long-term policy, beyond the measures currently applied, or prescribed.

Throwing out the firewood may be a macro-economic tool, too, but to ensure SME access to capital at reasonable costs would do more to help sustainable economic development.

Innovation is a matter of definition – last week’s Economist had a definition quite different from the paper’s edition one week earlier*), and both articles were China-related – but the Global Reporting Initiative (GRI) suggested in 2008 that

China’s small and medium businesses are quickly becoming China’s innovators of tomorrow. Internationally, innovation in many countries is taking place in garage workshops and factories of small to medium sized companies. In China, this is also fast becoming the rule.

Now, China’s small businesses have a new opportunity to innovate – they can produce sustainability reports in an effort to make their businesses more sustainable, and more transparent.

Most SMEs worldwide will be busy with other things than producing sustainability reports. But also in 2008, a – no longer available online – OECD paper suggested that

  • SME [Small and medium-sized enterprises are] potentially the most dynamic sector of economy, that
  • In China > 10 million SME representing 99% of total enterprises
    Due to their small size and lean structures, SME are potentially more dynamic than big enterprises, which make them particularly important for job creation – but also  a word of warning, that
  • SME are also more vulnerable, lacking often access to capital and to funding sources.

Innovative segments of an economy are where students could ideally find jobs. The lack of such working opportunities – presumably – contributed to a decrease in the number of young people actually willing to study.

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Note
*) Hope to get round to both of them some time next week.

Related
» The Emperor’s New Thermometer, February 16, 2011

Friday, May 13, 2011

Observations along the Way

Today is Friday, the 13th.

Water is becoming a scarce commodity.

But this blog’s commenting rules are among the top-five reads today. That’s good.

Friday, May 13, 2011

“Mao’s Legacy”: Kremlin Astrology continues to Matter

Another day in history is upon us – the May 16 Notification, of 1966. It is widely  seen as the starting point of the “Great Proletarian Cultural Revolution”, forty-five years ago, although, upon its initial release, there was some confusion as to what the May 16 Notification actually meant amongst Party members*).

And once again, we are being inundated with a flood of news articles, suggesting that China were “split” about Mao.

Zhong Nan Hai Compound, western wall

Zhong Nan Hai Compound, western wall (Wikimedia Commons, click picture for source)

Hardly any of them suggest that there were an open debate. But many articles seem to suggest that there was some transparency, and a way to assess the consequences of contributions to such a discussion in China through that kind of transparency.

Which is true – but in a way rarely mentioned – or observed – in such articles. They seem to take Chinese scholarly – or propagandistic – artwork for information, and the real source of information – coverage on the decisions arrived at by China’s nine full-time dictators – as something too boring to deal with.

Jürgen Domes and Marie-Luise Näth offered some context in “China after the Cultural Revolution”. It’s an old book, from 1975 (in German) or 1977 (in English). But it may be able to inform us better than most of the “real-time” news articles of these days. This is how it starts:

The process of political decision-making in the PRC does not take place in a framework of open discussion before a well-informed public. This makes it alsmost inpenetrable even to the Chinese-speaking foreign observer. Consequently, a different set of rules has to apply for a study of this and similar political systems than for the description and analysis of open societies.

In this context, “Kremlin-astrology”  shouldn’t be rejected, according to the authors. Domes and Näth suggested that without that somewhat derided practise, there would be no way of understanding political events in the (then Brezhnev-led) USSR, nor of events in China: This is true for China at least to the same extent as it is for the Soviet Union.

That was in the mid-1970s. But it is still true.

Domes and Näth listed several ways of gathering information, and pointed out that

Experience has shown that a clear scale of importance can be drawn up for the data content of the various sources. At the top there are the provincial radio broadcasts that are copy-taped outside the country, and which include articles taken from the provincial press. This is where the leadership speaks directly to the people. This is where details are made public that are seldom mentioned by central organs like the central Peking Radio; the daily newspaper Jen-min jih-pao (People’s Daily; JMJP) and the monthly theoretical Communist Party journal Hung-ch’i (HC). These sources are only of secondary value in terms of the value of their data. Third in importance are the reports in foreign languages put out by the PRC. The data-content of these sources is reduced considerably because of the propaganda interest of the media. Finally, there are travellers’ reports, the reports from Peking correspondents of the foreign news media, and remarks made by refugees from China. This scale does not include the internal communications of the Chinese leadership, which only rarely get abroad. These, of course, are particularly valuable, but they are not regularly available to us and cannot therefore offer a complete picture.

We don’t need to listen to provincial shortwave radio stations anymore to look behind the People’s Daily or Peking Radio. On China National Radio (CNR, 中央人民广播电台 – China’s central radio station with a number of topical channels), we may listen to FM when in China, or online (or still on shortwave) when outside China. Moreover, we can read provincial papers online, too. In addition, even those of us who don’t speak or read Chinese can make use of many translations – also online, nearly real-time, and quite various, such as the China Media Project‘s website, Danwei, China Digital Times, etc.. And former SCMP editor-in-chief Willy Lam might take us on a tour of Chongqing, to look at how princeling business and some kind of “Maoism” seem to go hand in hand in that place.

Given these changes in the range of Chinese sources on offer, I’m wondering where Domes and Näth would put the English-language Global Times these days, in their old scale-of-importance ranking. I’m almost chucking up when seeing how even international broadcasters handle China’s official English-speaking media as actual “Chinese press”.

And I’m wondering where Domes and Näth would rank most of the reports from Peking correspondents of the foreign news media.

To engage in some Kremlin-astrology (or Zhongnanhai astrology) of our own, we can’t avoid the most boring sources that are available in China. That’s to say, leaders’ speeches to their people. By putting speeches by Wen Jiabao, Wu Bangguo, and Hu Jintao together, and by reading resolutions and decisions the politbureau actually arrived at, I began to feel in April that I could put together a picture of the ways China is going to take, for the coming ten years. From what I can see, the “divide” between “Maoists” and “liberals” in Chinese politics is neither decided, nor will it play a great role in shaping the coming decade anyway.

Granted – my pasttime astrology can’t count as something scientific. The time I can spend on it is limited, and to read a Chinese article still takes more time for me than to read an English-language equivalent. I’m following my hunches by doing that, rather than acting out of scientific ambition, and am only realizing now that Domes and Näth offered a guide some thirty-five years ago.

If our media’s correspondents would take such an approach into consideration, I would probably stop blogging, because my main motivation to read Chinese sources is the near-absence of serious Zhongnanhai astrology in our press. I’m blogging, because our medias’ coverage of China usually bores me. And I’m reading “bridge blogs” because they help to fill some of the resulting gaps our regular press leaves behind.

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Notes

*) Wikipedia, referring to Mao’s Last Revolution (2006) by Roderick MacFarquhar and Michael Schoenhals, p. 41

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Related
» Rare Essay humbles Mao, CMP, April 28, 2011
» Three Educationals: Truthfulness is Everything, April 8, 2011
» “World Media Summit”: Be more Xinhua, October 10, 2009

Friday, May 13, 2011

2008 Earthquake, almost Remembered

[Update: the original on the Southern Metropolis Daily is apparently available again.]

Rising from dust and to dust returning, there is one responsibility we cannot forsake. This is to commemorate them. It is about the schools commemorating their students, about the hills commemorating the farmers, about clay sculptures [commemorating] the witnesses [[CMP] NOTE: This is a reference, apparently, to a set of sculptures erected at Buwa Village in Weizhou, the seat of Wenchuan County at the epicenter], about families commemorating those who were lost, about fresh flowers commemorating the graves, about life commemorating life. We will never forget. We will ever gaze off to the distance in their direction. They are a part of our lives. We do not live for ourselves alone. The river of time brings us together here, so let us reunite, just as though we never suffered this loss.

起于尘土而又归于尘土,可有一种责任无法推卸。这就是我们对他们的纪念,是校园对学生的纪念,山野对农夫的纪念,黄泥雕群对凝视者的纪念,是家庭对逝者的 纪念,是鲜花对坟墓的纪念,是生命对生命的纪念。我们始终不忘,始终向着他们的方向眺望。我们的生活里有他们,我们不只是为自己过活。时间的河流联系彼 此,让我们重聚在一起,就像是真的没有失去过。

From a – now removed – Southern Metropolis Daily editorial, which had appeared on Thursday. The China Media Project (CMP) provides a full translation, the Chinese original, and offers explanations as to why the editorial may have been removed from the paper’s website.

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