Posts tagged ‘Huang Yasheng’

Tuesday, August 18, 2015

Former leading Tianjin Cadre: Beijing won’t cover up Causes of Disaster, because there isn’t much to Lose

Asked by the BBC‘s Mandarin service if he believes that a former member of the politburo standing committee had been a patron for Ruihai Logistics, the company on whose premises the Tianjin explosions occurred last week, Dr. Zhang Wei (张炜), an economics lecturer at Cambridge University, said that this couldn’t be ruled out, but that the lawlessness that had led to the disaster could just as well be the fault of low-ranking local “snakes” (地头蛇). Both explanations were equally likely, he suggested.

Nextmedia, a magazine published in Hong Kong and Taiwan, had allegged in an online article on Saturday that a major shareholder of Ruihai Logistics were a nephew of former permanent politburo member Li Ruihuan (李瑞環) – this name, however, wasn’t repeated or quoted in the coverage mentioned in this post. Links to any former politburo heavyweights could be touchy information, given that citizens in Tianjin are demanding answers from the authorities as to why cargo of this accident level had been stored less than one kilometer from residential areas, and in apparently illegal quantities. Laying out a possible lawless structure that would be in line with the “local” theories, Time (online) quotes Chinese magazine Caijing as suggesting that one of the Ruihai stakeholders, Dong Mengmeng (董蒙蒙) had been the son of Dong Peijun (董培军) former public security director, an allegation also addressed by Zhang Wei, as quoted by the BBC.

But even if investigations should find traces to a former member of the politburo’s standing committee, Zhang thinks it unlikely that the current central leadership in Beijing would try to cover up the truth. A former member, rather than an incumbent, wouldn’t be of great use to the current government any more, and there would be no reason to halt the investigations.

According to the BBC, Zhang once served as secretary of Tianjin’s municipal Communist Youth League committee (共青团天津市委书记), as director of Tianjin Economic-Technological Development Area, as director for external economic matters at Tianjin municipal government, and in other functions. Zhang’s view of Chinese economic reform in the 1980s – and the slowdown or even reversal in reform during the 1990s – also influenced Huang Yasheng as he wrote Capitalism with Chinese Characteristics.

The explosions and the authorities’ difficulties in handling communication with the public didn’t reflect a public relations crisis (公关危机), the BBC quotes Zhang, but rather a problem rooted in the CCP’s belief in propaganda. Local officials and media in Tianjin had no powers to disclose information to the local public, but had to wait until Xinhua issued an integrated story. This seriously impaired or blocked flows of information.

Wednesday, October 12, 2011

From the Commenter Threads: China’s Options, as Exports Dwindle

King Tubby has drawn my attention to a Reuters article on a financial constellation within China which could spell a Chinese financial crisis, some three years after the West’s – and most of the world’s – financial crisis began.

If China had been asleep for centuries (as Napoleon Bonaparte allegedly once  put it), most of the English-language press seems to have been asleep for some three years, when it comes to this issue. Rather than being in awe for China’s simulus, they might have taken note of its financial sources back then. Victor Shih of Northwestern University actually pointed them out – to the international press in Beijing – in March 2010, and while the numbers may not have been easily available before, the press should have been full of questions anyway.

Even earlier, in February 2009, Huang Yasheng of the MIT told Nanfang Daily that while India’s investment only amounted to 50% of China’s, it still created economic growth that amounted to 80% of China’s. The issue is misallocation of capital – the state manipulating investment into channels where it either performs less well as it could elsewhere in the country, or even dumping money into white-elephant projects. Small and medium-sized enterprises (SMEs) might make better use of such investment, or loans, but are lacking the attention the state pays to state-owned juggernauts (or, more generally-speaking, .industrialists who are, for cousinhood or other forms or association, particularly close to the CCP.

But neither did  Chinese growth in past years spell as golden an age for the average Chinese people as the hype in our press seemed to suggest, nor will the future necessarily be as messy as is now predicted by a growing number of China experts.

From my comment, in reply to King Tubby’s:

While some of the aftermath of impending financial defaults within China (after all, the creditor-debtor relations are mostly a domestic affair) will be ugly and even dramatic (and it’s easy to excite the Chinese public, both willingly and unwillingly, isn’t it?), it still won’t spell comprehensive economic collapse. The real structural problem in my view is the one which Huang Yasheng and the very recent Reuters article describe: the misallocation of capital. That however is a malfunction China has lived with for decades, and will continue to live with. These have been seemingly golden decades – but never as golden for the average Chinese as our media kept suggesting. The future isn’t as bleak as they like to suggest now, either. The crux will be if the center, i. e. Beijing, will manage to turn the coastal provinces into investors, and consumers, in their domestic relationship with the hinterland which still has quite a potential to grow economically, as export keeps dwindling. I have my doubts about Beijing’s and their provincial fiefs’ ability to tap this potential for growth from within China – but it is an option, and could be a way out of the looming economic straits.

If they managed to do that, it could be a turn to a more sustainable pattern of growth than what we’ve seen so far.

Import substitution could be on the cards, too. There has been some public discussion in China about leaving the WTO more recently (leaving may be a prerequisite for the protectionism import substitution would require). The pressure that would stem from having to do your own R&D, rather than simply importing it, could help innovation. So, there is an underlying rationale underneath the “we-are-victims” talk here, too. Foreign bad, Chinese good is essential artwork for anything you wish to sell in a Chinese debate. But that doesn’t mean that a protectionist position in itself couldn’t make any sense.

____________

Related

» From another Discussion with King Tubby, January 28, 2011

____________

Tuesday, October 5, 2010

Income Redistribution: “Full of Expectations”

Income inequality China is nearing the red line of what society can tolerate (接近社会所能忍受的”红线”), according to chinanews.com, (republished by Enorth on Monday), and has become a big obstacle to development. Or as the English edition of Huanqiu Shibao, the Global Times, quoted a researcher of the National Development and Reform Commission in August, as early as 2004, the Gini Coefficient hit 0.44, which was well above the internationally recognized warning line of 0.4, and thereafter it has become larger.

The article in Chinese attributes much of the existing inequalities to the absence of a reasonable income distribution between state-owned enterprises, private enterprises, and the incomes of citizens.  Measures such as minimum wages and limiting wages at those enterprises within the state-owned tier which often pay much higher wages than companies outside the monopoly sector rather seemed to indicate the problem, than to solve it. The general public was full of expectations concerning the government’s responsibilities to redistributes the shares in the wealth of society (如果说做大社会财富这个“蛋糕”是政府的责任,那么,分好这个“蛋糕”就是政府的良知,广大民众对解决分配不公充满期待).

Hysohan Wikimedia graphics: Global Income Distribution (based on World Factbook Date)

Hysohan Wikimedia graphics: Global Income Distribution (based on World Factbook Date) - click on this picture for more information

According to the CIA’s World Factbook data, China’s Gini coefficient, among the BRIC countries, would look better than Brazil’s and Russia’s, but not as good as India’s – that said, the report’s latest statistics from India date back to 2004:

country coefficient year previous
Brazil 0.567 2005 0.607 (1998)
Russia 0.423 2008 0.399 (2001)
India 0.368 2004 0.378 (1997)
China 0.415 2007 0.40 (2001)

The inefficiencies deplored by the media above may also be a factor behind a lack of white-collar jobs in China as described by Huang Yasheng, an MIT economist, who told the BBC‘s Chinese service in February last year that every additional percent in GDP added less to employment and family incomes in China. India’s investment only amounted to 50% of China’s, he said in an interview with Nanfang Daily, also last year, but still created still economic growth that amounted to 80% of China’s economic growth.

Friday, June 11, 2010

Gaokao Season ends in China

June is the month when potential university or college students fail or pass the entrance exams in China. Preparing for and taking the exams is said to be extremely stressful – and it is costly, with entire families acting as investors in a hopeful young career. Three separate deaths of people taking the exams were reported on Monday. At least two of them apparently killed themselves. It probably doesn’t exactly help the candidates when three stakeholding generations of their families are waiting outside, brimming with high expectations.

Happy survivors blew their stack in Shenzhen’s Happy Valley (欢乐谷), Nanshan District, on Thursday this week, defying the rain.

China Daily on Monday:

In the examination process, more than 9.57 million Chinese students will compete against each other for 6.57 million places at the country’s universities or colleges, according to the Ministry of Education.

With enrollments at 68.7 percent, a 7 percent increase on last year, and a 650,000 drop in the number of students registering to take the entrance exam, the students have a greater opportunity of success than in past years.

But why the drop?

In another article, China Daily cites the decreasing birth rate and the rising popularity of overseas studies as combined factors that drag the number of candidates for this year’s make-or-break college entrance exam below 10 million – for the first time since 2007.

There may be yet another factor. Does it pay to study? Huang Yasheng (黄亚生) of the Massachusetts Institute of Technology (MIT) broached the issue last year.

In an interview with the BBC’s Chinese service on February 11, [2009], Huang pointed out that every additional percent in GDP added less to employment and family incomes in China. He is one of those who argue in favor of adjustments, rather than blind growth. And in an interview with Nanfang Daily (published online on February 15), he asks why the Chinese economy is unable to create more white-collar jobs, points out that China is still a low-technology country with little administrative efficiency, and comes back to the question of investment and growth. India’s investment only amounts to 50% of China’s, he says, but still creates still economic growth that amounts to 80% of China’s economic growth.

Zhang Jingxiu, an education consultant, also suggests that “if college education does not guarantee a decent job and a better life, it is no surprise to see the fading interest”. Chinese parents are said to have

become more accepting of their children not pursuing college education because of rising employment pressure.
“The cost of supporting a college students is high, particular for families in rural areas,” Wang Tongxun, the vice-director of Chinese Talents Society, said.

Then again, studying has probably been the best way to find a well-paid job, even during the rather critical past decade. And if the number of students in China keeps going down for a while (without the economy doing likewise), their chances to land reasonably good jobs after graduation may actually rise accordingly.

Wednesday, April 14, 2010

The weak Yuan and its Strategic Place in the Socialist Market Economy

Our Socialist Countryside is already very Modern.

GDP growth, but few jobs - Xiao Gongzhu still spreading scientific knowledge (see "Related")

The Great Chinese Stimulus was for everyone, just not for everyone equally, according to Yasheng Huang (黄亚生) of the Massachusetts Institute of Technology (MIT), and Eswar Prasad of the Brookings Institution. There was a political pecking order from the banks to the state-owned enterprises (SOEs), and from the SOEs to capital-intensive, rather than labor-intensive, projects. As for job creation, the export industry will have to see to it, and an undervalued Yuan RMB is all Beijing may be ready to provide as a help for the industry at that task.

After all, that’s what the CCP invented the socialist market economy for, in 1978.

____________

Related
CCP Choices: Inflation bad, Contraction worse, March 20, 2010
Xiao Gongzhu spreads scientific knowledge in the Countryside, April 5, 2009
At the Crossroads: China’s Development, Febr 20, 2009

Friday, February 20, 2009

At the Crossroads: China’s Development

The Chinese stimulus package – 4,000 billion RMB to be spent within two years – was passed with the goal of maintaining economic growth at 8%.

An article by John Garnaut at the Sydney Morning Herald (“Don’t miss the first signs of China’s economic recovery”):

Construction and heavy industry are the third and most powerful engine of the Chinese economy. These developers and steelmakers can make and break the Australian economy, at least in the short term, and they were at the front of China’s economic train when it crashed.

To be fair, Garnaut is aware of the weaknesses, too. He also refers to consumption, the “weakest engine” of China’s economy, and to the cause of this weakness: The problem is not that Chinese households save too much, as is often asserted, but that they have too little income in the first place.

Construction and heavy industry may be the global corporations’ greatest business opportunities in China, and “Bao Ba” (保八), maintaining economic growth at 8%, is also the goal of Beijing’s 4,000 billion Yuan stimulus package. But there are misgivings among academics, and maybe also among China’s leaders.

After all, the 11th Five-year-plan, passed more than three years ago, states that change is needed in the relationship between economic structural adjustments and the ways of economic growth.

Two paragraphs, both from last year, referring to China’s small and medium-sized businesses, might illustrate the problems with growth and investment.

Paragraph One:
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.
globalreporting.org, News 2008

Paragraph Two:
– SME [Small and medium-sized enterprises are] potentially the most dynamic sector of economy
– 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 SME are also more vulnerable, lacking often access to capital and to funding sources *)
OECD, Taiwan/Korea, October 2008
(Powerpoint presentation)

Professor Huang Yasheng (黄亚生) at Massachusetts Institute of Technology (MIT) argues that an assessment of China’s economic achievements and drawbacks needs to go beyond the superficial data on gross domestic product (GDP) and foreign direct investment that satisfy most researchers. His recent book, Capitalism with Chinese Characteristics, describes how peasants started to become business people – what looked collective was in fact private enterprise. That was before the Tiananmen massacre. In 1989, a generation of policymakers who had grown up in the countryside, led by Zhao Ziyang, were swept away by city boys, notably the president, Jiang Zemin, and Zhu Rongji, his premier, writes the Economist in a review of Professor Huang’s book. And the rural economy until 1989 was more capitalist than China is today, writes the magazine. I’m not sure if the book itself goes exactly that far.

In an interview with the BBC’s Chinese service on February 11, Huang pointed out that every additional percent in GDP added less to employment and family incomes in China. He is one of those who argue in favor of adjustments, rather than blind growth. And in an interview with Nanfang Daily (published online on February 15), he asks why the Chinese economy is unable to create more white-collar jobs, points out that China is still a low-technology country with little administrative efficiency, and comes back to the question of investment and growth. India’s investment only amounts to 50% of China’s, he says, but still creates still economic growth that amounts to 80% of China’s economic growth.

I should actually read the book. Professor Huang looks like a great iconoclast of Chinese economic orthodoxy – and probably more so, of Western economic orthodoxy. He stops at nothing:

Yes, India’s labor rules are rigid, but they can’t be changed because of political resistance, labor unions and so on. From an economist’s point of view, they would need change, but when I discussed this with human resource and technology development people, they said that this labor legislation actually advanced technological progress, because it limited exploitation of labor – so it has both advantages and disadvantages. Of course, in my view, the disadvantages outweigh the advantages, because what a country like India needs most is simple production work […..] At the high costs [for production factors] as they are in India, only people with a lot of confidence in their future, under circumstances where returns on investment are really high, will turn into developers.

(It should be mentioned that using India as an example for China – in whatever way – may count as a pretty thought-provoking… umm, yes, provocation.)

_______

*) The presentation doesn’t mention corruption, which of course also hampers small business more than big business. This unpleasant issue is often politely left out in researchers’ discussions and therefore often catches new arrivals in China by surprise.

%d bloggers like this: