Saturday, October 31, 2009

Studying Mandarin

China's Confucius Centers across the globe are making it much easier to study Mandarin.

From The Associated Press:

Image from

TAMPA, Fla. — In a small room at the University of South Florida, Maya Ueda and two classmates prepare for a Mandarin exam. A pot of green tea idles nearby and Chinese folk instruments, games and movies fill the cabinets and bookcases.

Although the students are doing their work at a state school on Florida's Gulf Coast, the center they are studying in is part of a global outreach by the government of China called the Confucius Institute. The cultural and language centers have sprung up around the world, hosted at universities eager to boost their Mandarin offerings as China's economic influence grows.


China observers see the Confucius Institutes as part of the nation's efforts to reshape its image from that of a threatening superpower. Such displays of "soft power" are hardly new, though analysts say the Confucius Institutes are unique in the close relationships they establish with universities.

Read On
One of the first Confucius Centers in the United States was at the University of Kansas, near where I grew up. Qian has asked about teaching at the school, but there are only subbing opportunities available since their full time teachers are all on exchange programs from China (ie. they don't hire locals). This is unfortunate since Qian would be a great asset to the Confucius Center.

Qian put an ad on the internet a few weeks ago for tutoring Chinese. The ad has worked pretty well. She has three students - two adults and a young girl - already. None of them have any experience with studying Chinese. Qian has been really impressed with the talent of the students though. They're all doing pretty well with the language.

A fellow China blogger just wrote a really long and in-depth analysis of studying Chinese. The title of Ben's post - Journey Across the Great Hump: Debunking the Myth that Chinese is the World's Toughest Language.

Ben grew up about five minutes from me here in the suburbs of Kansas City. Although I've never met him in person, I think it's interesting how we both ended up going from Kansas to China and falling in love with the place.

I'm really impressed with Ben's studying of Chinese. He's currently acting as a translator in Chicago. He seems to have taken a similar path as Peter Hessler did in Rivertown - a book I highly recommend to anyone interested in China. Both Hessler and Ben attacked Mandarin and learned it very quickly.

Unfortunately, I did not learn the language as quickly as Ben did. I was too intimidated when I first started and was more interested in learning "survival Chinese" than really perfecting what I was doing. This lack of time and effort in the beginning made my Chinese path much more arduous than Ben's. Whereas he got to a very high level in about two years, I'm still at a more intermediate level after studying for about two years. I regret that I didn't tackle the language more head on when I first got to China (I really wasted my first year linguistically in China thinking I was only going to stay for a year and then come back to the States... I ended up staying for three and a half years).

There's nothing I can do about how I learned Chinese now though. So I'm just trying to do the best I can after my rocky beginning. Although I've left China (for the time being), I'm continuing to use my Supermemo study method and am trying to use Chinese as much as possible on a daily basis with Qian.

I'm not sure I can say that I've cleanly crossed Ben's "Great Hump," but I'm relatively happy with my level. I've crossed many personal "humps." The way I'd put where my level is is that I can have fun with Chinese now. I can chat fairly easily in one-on-one conversations. I still get tripped up from time to time, but I can tackle a wide array of issues and topics. I can't understand a lot of what goes on on TV and am not ready to be a translator, but I'm having, and have had over the past year, a lot of fun. And since starting studying Chinese more seriously about two years ago or so, that's been my goal.

Thursday, October 29, 2009

Photos of the Week - Our American Wedding

I still haven't cut up the DVD of our Chinese wedding on our computer yet. I'll do that eventually. It shouldn't be too tough on my MacBook. Just a matter of sitting down and doing it.

Until I get that done, here are some photos of our US wedding from September 6th. It, like the Chinese one, was an unforgettable day. I can't believe I'm saying this, but I feel so lucky to have had two weddings.

There are tons more photos than what I'm posting here. Just am going to give a quick view of the evening:

Edited out photos

All in all, an incredible evening. It went so well. Such a happy experience.

Monday, October 26, 2009

Greening Black

Take a look at these horrific photos of China's pollution (h/t PKD). Seriously, click that link. China's pollution woes are unimaginable for people in the West. But hopefully such dystopian pollution won't be the norm for too much longer.

From The New York Times:

MONTREAL — The staggering economic growth in China has come at a heavy cost, paid in severe contamination of the country’s air, soil and water. But now the Chinese government is aggressively pursuing more stringent environmental regulation, with a particular focus on water distribution and wastewater treatment.

Recent stimulus spending has opened up the Chinese market to green initiatives. And Canadian companies are responding to the call for advanced water treatment and reuse technology.

“It’s not well known that China has set aside more money for the adoption of clean technologies than any other country on the planet,” said Dallas Kachan, managing director of Cleantech Group in San Francisco, which tracks global investment in clean technologies.

The Chinese economic stimulus package of 4 trillion yuan, or $585 billion, announced a year ago, focused nearly 40 percent of its spending on environmental and energy-efficient projects.


China’s water shortage, especially in the northern part of the country, is driving a need for wastewater recycling. “Right now, only 30 to 40 percent of the wastewater gets treated in China,” said Steve Watzeck, president of engineered systems at G.E. Water. “But we understand that Beijing aims to reuse 100 percent of its wastewater by 2013. Implementing advanced wastewater reuse technologies is key to China’s continued industrial growth.”

China’s capability in clean water technology is still underdeveloped. But the country’s solar industry is an example of how quickly it can sprint to the fore. Mr. Kachan of Cleantech Group, points out that Suntech Power, the Chinese company that a year ago became the world’s leading maker of crystalline silicon solar modules, did not exist eight years ago.

Read the Entire Article
China has a long ways to go when it comes to its environment. I understand that the country has done a lot and appears to be doing more. But it still has a far, far way to go. Xi'an's perma-gray skies and oppressive air are things I'm not missing at all.

I like to see that China committed 40% of its stimulus to green growth. Where did America allocate its? Failed banks, Detroit, etc. As the film producer Robert Compton told me a few weeks ago, "China's stimulus is building while ours is bailing." Whereas I've criticized China in the past about saving face to the detriment of its economy and people, the United States could definitely be criticized for the same thing when it comes to shelling out billions to failed companies such as GM and AIG.

Americans, more and more, don't believe in global warming. I'm wondering if this attitude is going to lead us to continue the attitude that we'll be able to drill our way out of any future energy problems. It's apparent that a significant number of Americans already believe such will be the case. If this thinking continues, I have to think that America is going to be left behind.

Shanxi, Shaanxi, and many other Chinese provinces are going to continue to pump out coal and China is going to continue to get oil from Africa and the Middle East. But China does deserve credit for making efforts towards serious green growth.

Friday, October 23, 2009

Frontline: OTC Derivatives

I love the PBS show Frontline. The program always does great reporting.

The feature from this week that I'm embedding here on financial derivatives is both startling and upsetting. It runs about an hour.

Unfortunately, it doesn't appear that the US has learned its lesson.

Thursday, October 22, 2009

Another Economics Post

China's had two very strong quarters of growth.

From The Wall St. Journal:

BEIJING—China's recovery is becoming broader and potentially more sustainable, a shift that could provide better support for a still-fragile global economy. Reinforcing those signs is a change of tone from China's cautious government, which is now becoming more confident in a solid rebound.

Economic data released Thursday showed China's gross domestic product growing by 8.9% from a year earlier in the third quarter, following the 7.9% gain in the second quarter. The expansion in industrial output, the backbone of the manufacturing-heavy economy, accelerated further to 13.9% in September from 12.3% in August.

Just as important is evidence that improvements in the economy are achieving a momentum that's no longer totally dependent on the government's massive stimulus program. The key shift in the latest quarter: a turnaround in the financial health of Chinese companies.

"Orders are piling up on our end. Now my headache is how to get our production to catch up," said Su Qisen, vice president of Xiangxing Bag & Luggage Group, located in southeastern Fujian province. Export orders started to rebound around June, he said, but Chinese consumers are also proving more willing to spend on the company's purses, suitcases and backpacks. "The domestic sales are doing especially well, especially our own brand," Mr. Su said.

He plans to hire 4,000 to 5,000 more employees in the next few months to work on 10 new assembly lines, up from around 10,000 workers now. To attract workers in an increasingly competitive labor market, Mr. Su said he is also planning to raise wages by 10% to 15%.

Read On
Things are looking up for China. The article goes on to say that the increased lending that fueled China's growth earlier this year have slowed. But some are still worried that even the slowed rate is not something that can be continued for the long term.

From The Financial Times:
China needs an “urgent” tightening of monetary policy to prevent the huge stimulus measures introduced this year from inflating stock and property bubbles, one of the country’s leading bankers has warned.

Qin Xiao – chairman of China Merchants Bank, the country’s sixth-biggest – says in Thursday’s Financial Times that the government should not be afraid of a “moderate slowdown” in the economy.

“Monetary policy must not neglect asset-price movements,” he writes. “Therefore it is urgent that China shifts from a loose monetary policy stance to a neutral one.”

Mr Qin’s unusually frank warning comes ahead of the publication on Thursday of third-quarter gross domestic product figures that are expected to underline the rapid recovery in China’s economy, with analysts forecasting growth of nearly 9 per cent compared to last year.


“This is the first thing you would expect the authorities to say before they begin to moderate policy,” said Stephen Green, economist at Standard Chartered in Shanghai. But any increases in interest rates or controls on lending were unlikely before Chinese New Year in February, he said.

Read On
China's response to the financial crisis has fascinated me. Is it all going to work? Is China going to continue to grow while much of the Western world deleverages/stagnates? Is China going to pull the world up with it? Is China going to be pulled down by the West?

At this point, I have no idea.

Tuesday, October 20, 2009

Revved Up

As the US car industry declines, China's is rising.

From AFP:

Image from AFP

BEIJING — China's auto production topped 10 million units for the year Tuesday, the first time it has broken the mark, state media reported, as makers boost output to meet demand in the fast-growing market.

The China Association of Automobile Manufacturers (CAAM), said the only other countries to attain that mark were the United States and Japan, according to Xinhua news agency.


The manufacturer's group had said last week that output was likely to reach 12 million for all of 2009.

It said at the time that China's auto sales soared 77.9 percent in September from a year ago to 1.33 million units -- the seventh straight month that sales exceeded the one million unit mark.

Last year, a total of 9.4 million units were sold in China, up eight percent from the previous year.

Read On
As I've talked about before, Chinese people are embracing the culture of buying cars.

For a young, urban-dwelling Chinese man, owning an apartment is still the most important prerequisite for marriage. Car ownership is coming in as a close second though. In talking with Qian and my other young adult Chinese friends, I've heard a lot of things like:
He's ready to get married. He has a good (or government) job, his parents bought him an apartment, and he has a car.
Zachary Karabell, in his book Superfusion, speaks about the Chinese people's desire to buy and own cars.

From p. 252 of Superfusion:
As late as 2003, there were fewer than 2 million passenger cars sold in China, compared to nearly 10 million in the United States. Cars were still expensive luxury items in China, which meant that they cost double the price that similar vehicles commanded in the Western world. Yet there was a palpable sense that the appetite for cars would soon explode, just as it had for other goods that were part and parcel of life in the capitalist world. Surverys pointed to a large pent-up demand; young Chinese viewed buying a car as one of the ultimate signs of status and success.
In this passage, Karabell is speaking in the past tense because he is describing when and how established car makers went into China. Having spent significant time in China recently, this feeling that owning a car is a status symbol is definitely still the case.

As China rises, millions upon millions more cars are going to drive off of dealers' lots.

Sunday, October 18, 2009

330k to be Relocated

Beijing is being proactive in getting water from its saturated south to its parched north. The move has significant costs though.

From The Xinhua News:

Image from

ZHENGZHOU, Oct. 18 (Xinhua) -- A resettlement project involving 330,000 people living in central China's Hubei and Henan provinces has started to make way for China's south-north water diversion project, according to resettlement authorities in Henan Sunday.

These people will be relocated from their homes near the Danjiangkou reservoir, where sluice will be built to divert water from the Yangtze River to thirsty north China regions including Beijing, Tianjin, Henan and Hebei.


The Chinese government has issued preferential policies to help compensate for the resettlers' relocation losses. For instance, apart from compensation for unmovable property with the old home, each family to be relocated will be allotted new arable land in the newly built village according to a standard of 0.1 hectare per person, plus an annual subsidy of 600 yuan (about 88 U.S. dollars) a person for 20 years, according to Duan Shiyao, deputy chief of Hubei Provincial Resettlement Bureau.

Read On
The end of this project - providing water to cities that are desperately in need of relief - is noble. But the means - relocating hundreds of thousands of poor farmers - are rough.

A couple years ago on my old (and now defunct) blog, I put a link to a really fascinating story on the the development of waterless north China. I'll link up to that article again now.

From The New York Times:
Hundreds of feet below ground, the primary water source for this provincial capital of more than two million people is steadily running dry. The underground water table is sinking about four feet a year. Municipal wells have already drained two-thirds of the local groundwater.

Above ground, this city in the North China Plain is having a party. Economic growth topped 11 percent last year. Population is rising. A new upscale housing development is advertising waterfront property on lakes filled with pumped groundwater. Another half-built complex, the Arc de Royal, is rising above one of the lowest points in the city's water table.

''People who are buying apartments aren't thinking about whether there will be water in the future,'' said Zhang Zhongmin, who has tried for 20 years to raise public awareness about the city's dire water situation.

For three decades, water has been indispensable in sustaining the rollicking economic expansion that has made China a world power. Now, China's galloping, often wasteful style of economic growth is pushing the country toward a water crisis. Water pollution is rampant nationwide, while water scarcity has worsened severely in north China -- even as demand keeps rising everywhere.


A century or so ago, the North China Plain was a healthy ecosystem, scientists say. Farmers digging wells could strike water within eight feet. Streams and creeks meandered through the region. Swamps, natural springs and wetlands were common.

Today, the region, comparable in size to New Mexico, is parched. Roughly five-sixths of the wetlands have dried up, according to one study. Scientists say that most natural streams or creeks have disappeared. Several rivers that once were navigable are now mostly dust and brush. The largest natural freshwater lake in northern China, Lake Baiyangdian, is steadily contracting and besieged with pollution.

Read the Whole Article
I hope that China's attempts to conquer nature can overcome north China's severe water problems. It seems likely to me that such projects will work in the short term. But the long term sustainability of redirecting rivers seems suspect. Especially given the fact that the source of China's main rivers - Himalayan glaciers - are becoming victims of climate change.

Saturday, October 17, 2009

An Easy Populist Target

With a struggling economy, Communist/currency manipulating/rising military power/etc. China is all too easy of a populist target for the US.

From Bloomberg:

Photo from The Center for American Progress

The U.S. view that China is keeping its currency undervalued in order to boost exports will foster a “more contentious” relationship between the two nations, said Stephen Roach, chairman of Morgan Stanley Asia in Hong Kong.

The convergence of mounting U.S. unemployment and next year’s Congressional elections will make it easy for both Republicans and Democrats to criticize China, Roach said in a Bloomberg Television interview aired today in New York.

“It will get more contentious as we move into 2010,” he said. “There’ll be a lot of cries on both sides of the aisle to do something about the plight of the American worker. China is, unfortunately, the whipping boy in many of these discussions.”

The U.S. Treasury Department yesterday criticized China in a semiannual report to Congress, saying “the recent lack of flexibility of the renminbi exchange rate and China’s renewed accumulation of foreign-exchange reserves risk unwinding some of the progress made in reducing imbalances.” The Treasury stopped short of branding China a manipulator of its yuan, also known as the renminbi.

Read On
It really is easier to blame others for one's ills. We still aren't seeing the full ramifications of the the bad loans and mortgages we've taken. We still don't have the ability to part with dinosaur corporations that have let the world pass them by. And we still don't understand why and how the incompetent leaders controlled by Wall Street that we've elected this past decade have dug us a gargantuan hole.

No, our troubles are being caused by the evil Chinese...

Unfortunately, I fully expect this rhetoric to convince the masses that they don't have to change the "American way of life" and that the problems our country has are due to reasons beyond our control. And instead of hunkering down and getting serious about preparing for a future that includes a very competitive China, America will continue to let its belief in its own superiority and infallibility blind it from addressing its real problems.

Wednesday, October 14, 2009


This has nothing to do with China. But I saw it the other day and think it's worth putting on here. Enjoy making tunes!

Tuesday, October 13, 2009

Superfusion by Zachary Karabell: Interview

Last week, author Zachary Karabell was generous enough to take some time out of his busy schedule to discuss his new book - Superfusion: How China and America Became One Economy and Why the World's Prosperity Depends on It - with me.

Here is Mr. Karabell's bio from the back jacket of his book:
Zachary Karabell is president of River Twice Research, where he analyzes economic and political trends, and is a senior adviser for Business for Social Responsibility. He received a Ph.D. from Harvard University and was formerly chief economist and president of a New York-based asset management firm. He is the author of Parting the Desert, The Last Campaign, and Peace Be Upon You. He is a regular commentator on CNBC and a contributor to Newsweek, The Wall St. Journal, The Los Angeles Times, The New York Times, Foreign Affairs, and The Washington Post.
Below is a transcript of my discussion with Mr. Karabell:

Mark's China Blog (MCB)
: Early in Superfusion, you say we have two paths - working with China to refine and develop the system for mutual benefit or falling back to "us and them." You then say that the world of nation-states with national economies is uncertain and that 2050 won't look like 1950. Could you explain what this world you envision looks like and how we could get there?

Zachary Karabell (ZK): Imagine telling a Parisian in 1950 that, in the year 2000, decisions regarding France would be made in Brussels. Nobody back then would've believed that Europe, a collection of nation-states, would be a cohesive unit known as the European Union. My point is that America could very well be tied to China in 2050 in a way that seems unimaginable now.

MCB: About Deng's quote - "Black cat, white cat, what does it matter as long as it catches mice?" - and his ideology in general, you say, "his ability to hold such contradictory beliefs shows he is either a genius or a madman." China, for the most part, has stuck with Deng's system. Towards the end of the book, you question whether the Chinese children of today - who've grown up with a remarkably comfortable and stable life - will demand more political freedom when they are adults. How long do you see Deng's contradiction being sustainable?

ZK: It's a mistake to assume that Jeffersonian liberal democracy is the only system that can meet people's needs and that the Chinese people will demand elections. People need to feel security and in control of their lives. As long as that occurs, the specific form could look like a lot of different things. The Chinese Communist Party needs to be responsible to its citizens and, for the time being, appears to be.

MCB: Your section about data and figures reminded me a lot of one of my all-time favorite books, Moneyball, by Michael Lewis. In that book, Lewis highlights the thinkers in baseball who challenged baseball's conventional wisdom. In Superfusion, you challenge a lot of the numbers - balance of trade, the consumer price index, and productivity - that people use to interpret contemporary national economies. When it comes to understanding the world economy, what numbers do you trust?

ZK: Very few numbers give us a good picture. It's not that I distrust numbers, I don't think they're made up, it's just that I see data as being incapable of telling us a complete story. Official numbers miss capital and idea flow. They miss how businesses are run.

Consumption of raw materials is a number that I look at. Numbers on trade can tell us a lot. One needs to go beneath the newspaper headlines. Look at the numbers used to compile official statistics.

MCB: I found your section on Chinese banks really good. On my blog, I've written a lot about the massive loans given out by Chinese banks this year. You say that a lot of the concerns about such lending is misguided and that loans are simply a means for modernization from the state and that the Chinese believe repayment isn't as important as "getting things done." Is China concerned about the repayment of loans given out this year? And if the US - and the rest of the West - stays in a funk for a year or two longer, can this kind of lending be sustained?

ZK: Comparing Chinese banks to western banks is a mistake. It's not that China doesn't care about repayment. They want the loans to be repaid. But right now, China is building its infrastructure. Internal loans to build up the country are going to be productive no matter what happens.

MCB: In the book, you write, "What China did in the 90s took the states of western Europe more than a century and the US more than five decades." Obviously, the costs of China's industrial revolution are being felt in the form of unfathomable pollution. The thing that concerns me most, having Xi'an as my home base in China, is north China's lack of water. The Himalayas' glaciers are melting. The Yellow River is dying. Northern Chinese cities are being built on falling water tables. How can this dire situation be resolved?

ZK: North China has the double whammy of being the site of the communist industrial revolution under Mao as well as a site of the '90s industrial revolution.

There is a huge draw on the resources there. I can't discount the severity of the situation. Alternative energy isn't an alternative to coal in northern China. But the government seems to have a grasp for where the crisis point is. I sense urgency from the government. They are moving quickly.

One thing about an autocratic government is that when faced with a sense of urgency, they have a much greater ability to address these problems than democratic governments.

MCB: You say, "China's transtition from Maoism to the market has been met with skepticism and mistrust rather than embrace." What does this say about America and the American people?

ZK: Our skepticism and mistrust say that we are having trouble dealing with losing the status of being "on top."

MCB: When the debate about China joining the WTO was going on in '99, the US was obsessed with Lewinski. You talk about how the world missed the development of Chimerica since "nobody analyzes the global economy as a system and because nobody developed a theoretical framework to predict it." Now, after coming back to America after three and a half years in China, I'm hearing reports about China all the time on NPR (National Public Radio). I haven't fully jumped back into the US media though. Does the US know what's going on in China and with Chimerica?

ZK: Americans aren't clueless that China's become a much bigger deal. People are mostly familiar with the populist rhetoric and not much else though. The implications of Chimerica are pretty beneath the radar. Americans, by and large, don't understand the greater meaning of its relationship with China.

MCB: Your discussion of US businesses being lenient on property infractions in the hopes of cashing in on the Chinese market was very interesting. I've written on my blog several times about "shanzhai culture" and the deep and intricate networks of intellectual property infractions in China. Can this shanzhai culture be overcome?

ZK: Complaining about shanzhai has been en vogue for years now. Innovation is going to be key in overcoming the intellectual property infractions occurring in China. Companies are going to have to make it difficult for people to extract income off of the Chinese copy of the product.

MCB: You say that the big difference between China and Japan's rise is that the Chinese have a culture of consumption. If you spend time at a Chinese night club or mall, this embrace of consumption is abundantly clear. But when I lived in China and told Chinese people about buying a house with a mortgage or having a wallet full of credit cards, they usually cringed. Can Chinese consumers come to embrace the culture of credit cards and debt?

ZK: Chinese people are already embracing credit cards and using debt. In fact, not enough companies are offering Chinese people credit cards. Once the Chinese trust paying online, that will also help encourage their consumptive culture.

MCB: For a long time, China's used "poverty alleviation" as an excuse for human rights abuses. Tibetans and Uighurs are obviously getting fed up though. Are these "harmony" issues critical to China's long-term, big-picture goals?

ZK: China needs to be "harmonious enough." Security of the Chinese people matters. The Chinese government understands that keeping people happy is a balancing act. Simply suppressing those angry with the system is not a viable long-term answer.

MCB: You talk extensively about the "feel" in cities like Shanghai and the general optimism of the country. Is China the new "land of opportunity?" Does that "feel" extend to those in the countryside or to migrant workers who've gone to the big city?

ZK: Well, I don't think anyone in China would use the word "land of opportunity." Those words are uniquely American. But the simple fact that migrants are doing everything they can to get out of the countryside and to the cities shows that the "feel" does extend to the entire country.

MCB: The Chinese stock market was up 90% on the year back in August. Housing prices in many cities are at all-time highs. Is there a bubble going on right now?

ZK: It doesn't matter if there is a bubble being created right now. The government popped a bubble in Shanghai in '04. They'll blow them up and pop them as they see fit. The government isn't afraid to intervene and pop. Popping bubbles isn't going to be a derailing phenomenon.

MCB: Does Obama have a coherent China policy?

ZK: Yes, Obama has a coherent China policy. Neither Obama nor the Chinese government seems ready to confront the existence of Chimerica though. Obama is going to China in November. He should have America's top business leaders with him on that trip. Another major need between the Obama administration and the Chinese government is better interest rate coordination.

MCB: I know you're very busy right now, Mr. Karabell. Thank you for sharing your time with me.

ZK: You're very welcome.

I want to thank Mr. Karabell and his publishing company, Simon and Shuster, for arranging this interview and asking me to review Superfusion.

Monday, October 12, 2009

Superfusion by Zachary Karabell: Review

Recent economic travails have triggered intensive questioning of the financial system that was created by the United States and warped by Wall Street. That has led many to reconsider America's place in the world and wonder whether this is indeed the twilight of American power. Yet what remains largely unchallenged is the assumption that the world remains a collection of nations, markets, and companies. For much of the twentieth century, that made sense. No longer. What is perceived as the rise of China is actually much more than that. The most important story is one that yet to be explicitly told, largely because most don't yet recognize what has taken place. In short, over the past two decades, China and the United States have become one intertwined, integrated hypereconomy: Chimerica.
Superfusion: How China and America Became One and Why the World's Prosperity Depends On It, page 3

Over the next three hundred pages of Superfusion, author Zachary Karabell expounds in great detail and in a lively manner how Chimerica came to be and its implications for the future of our world.

Karabell begins the book (to be released tomorrow, October 13, 2009, by Simon & Shuster) by painting a picture of China in the late 1970s just after Mao Zedong passed away. Deng Xiaoping's personality, his breaking with the planned economy, and his wide array of platitudes ("We mustn't stop eating for the fear of choking," "Black cat, white cat, what does it matter as long as it catches mice?" etc.) are chronicled in great detail.

The book then gives an account of "middling US companies" who in the late-80s and early-90s remade themselves into successes in a liberalized China. I really enjoyed this section of the book. Karabell describes how and why companies like KFC, Avon, and the NBA were able to corner the Chinese market and become runaway successes in the country. Not having an extensive background in business, I appreciated these stories a lot.

In addition to case studies of businesses, the book also delves into the political foundation of Chimerica. China's entry into the WTO, the relationship of China and America after 9/11, and CNOOC's botched purchase of UNOCAL are all discussed.

One of the main themes of Superfusion is that nobody, neither the governments of China or the United States nor the populations of either country, saw the big-picture implications of the two countries growing closer and more intertwined.

Karabell argues that very few numbers paint an accurate picture of Chimerica. Statistics, he says, that economists like to look at - balance of trade, consumer price index, and "productivity" - can't capture the nature of the countries' relationship.
All of these factors explain how it is possible for China and the United States to have converged over the past 20 years without anyone noticing. No one is paid to notice; no one has developed theoretical frameworks that would predict it; and almost everyone still thinks of China and the United States as two distinct countries with two sovereign national economies.
Superfusion, page 151
This section of Superfusion on the use of numbers and statistics reminded me a lot of one of my favorite books - Moneyball, by Michael Lewis. In that book, Lewis describes the historian/philosopher of baseball, Bill James, and his destruction of of baseball's accepted conventional wisdom. James says one shouldn't pay attention to batting average, RBIs, or stolen bases to determine baseball players' performance. Instead, James argues, one should focus on statistics like on base percentage, slugging percentage, and home runs.

Unlike James (and Lewis' description of James' ideas in Moneyball), I'm not sure Karabell ever tells the reader exactly what number should be looked at when it comes to Chimerica. But to be fair, I believe Karabell's point is that truly descriptive statistics don't exist. Instead, he thinks a broader view is required.

This section on economic statistics and how we perceive the numbers might have been my favorite in Superfusion.

Seeing that this book is just coming out now in the fall of 2009, Karabell discusses, in depth, the financial crisis and Chimerica's response to it. Karabell describes China and America's bank lending, their stock markets, and their stimulus packages. I don't want to give too much away in this review, but I will say that Karabell's convincing arguments have shifted my views and understanding on the current state of affairs in each country and the fused Chimerica.

I really enjoyed Superfusion. If you are a regular reader of Marks China Blog, you should pick up a copy. The fusion of China and America - Chimerica - is something the people of the world needs a solid understanding of. Karabell's Superfusion has done an excellent job of making such an understanding a possibility.

Tomorrow, I'll post the transcript of an interview I had with Karabell last week.

Saturday, October 10, 2009

Obama's Prize

The announcement of Obama's award is perplexing everyone in the world, including the Chinese.

From AFP:

WASHINGTON — China's dissidents are voicing unease about President Barack Obama's Nobel Peace Prize, saying that the award could have been effective in promoting human rights in their country.


Huang Ciping, an engineer turned activist who is executive director of Wei's Washington-based foundation, said that China "has come to such a turning point that the prize might have helped."

"The Nobel Peace Prize committee has the full right to decide to give coal to those who suffer and struggle or to present flowers to the powerful," she said.

But she said of the decision: "It is both a pity for the Chinese people and a danger to world peace."

Rebiya Kadeer, the exiled leader of China's Uighur minority, congratulated Obama but called on him to use the added prestige to put pressure on "dictatorships like China."

"I am very happy that he got it. Now he has to do something with the award. It raises expectations on him to stand up for oppressed nations," she told AFP.

Read the whole article

I was shocked to hear that Obama won the Nobel Prize yesterday. My first reaction to the news was like many others, "What for?" From the sounds of it, such was Obama's reaction too.

Domestically, Obama really doesn't need this right now. It gives his right-wing critics more ammunition for the idea that he is some kind of messiah-like figure (and this is a meme that American's have been pretty open to accepting). But unlike wing-nuts, I don't think Obama deserves any criticism here. It's not like he lobbied to win this thing. The award was given to him unprovoked and it's obvious that it caught Obama by surprise, just like it did everybody else.

I believe there is truth to what the people in the above article are saying. The opportunity cost of Obama winning is great. There are lots of people, especially within China, who are deserving of the award.

Hopefully, this award spurs Obama and America to improve itself. For better or worse, the US President is still the most important person on the planet. If the prize can kick-start a renewed spirit here, Obama could prove to be a great selection.

Friday, October 9, 2009

Opening Up the Digital Great Wall

Rupert Murdoch spoke in China today.

From The Wall St. Journal:

BEIJING—News Corp. Chief Executive Rupert Murdoch urged China's government to allow its media companies to take advantage of the opportunities in new media by addressing copyright piracy and a lack of competition in the domestic market that he said could impede their expansion.

"The digital renaissance offers China an opportunity to exercise leadership," Mr. Murdoch told the World Media Summit in Beijing, hosted by the state-run Xinhua news agency. Alluding to China's "open door" policy that ushered in economic reforms in the late 1970s, Mr. Murdoch said that the government now has a chance to open China's "digital door."

Addressing the same forum, Chinese President Hu Jintao pledged to "continue to make government affairs public, enhance information distribution, safeguard the legitimate rights and interests of foreign news organizations and reporters, and facilitate foreign media coverage of China in accordance with China's laws and regulations."

The three-day World Media Summit, attended by senior officials from several major international media organizations, is part of a broader push by China's state-run media to exert a greater global influence.

Read On
I'm not a fan of Rupert Murdoch. His pioneering work in the corporatizing of the Western news media has been a bad thing. And his work with Roger Ailes at Fox News is an absolute disgrace.

Saying that, I like what he said to Chinese leaders' faces. I agree with him that the opportunity for them to be taken seriously is theirs. Murdoch, no doubt, has his eyes on China and getting into its market. He's just had serious trouble getting anywhere with his efforts.

Interestingly, Murdoch, at this conference in Beijing, also took serious shots at places like Mark's China Blog:
He (Murdoch) blasted media companies that have refused to charge money for their content, and those that have taken advantage of free content on the Internet. "The Philistine phase of the digital age is almost over. The aggregators and the plagiarists will soon have to pay a price for the co-opting of our content," Mr. Murdoch said. "But if we do not take advantage of the current movement toward paid-for content, it will be the content creators, the people in this hall, who will pay the ultimate price and the content kleptomaniacs will triumph."
I'm amused that Murdoch thinks I'm an anti-intellectual.

Wednesday, October 7, 2009

Al Qaeda Not Only Against the West

China and America may not see eye to eye on everything. But that doesn't mean they can't share common enemies.

Form Reuters:

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DUBAI, Oct 7 (Reuters) - A prominent al Qaeda militant urged Uighurs in Xianjiang to make serious preparations for a holy war against "oppressive" China and called on fellow Muslims to offer support.

Abu Yahya al-Libi, in a video posted on an Islamist website on Wednesday, warned China of a fate similar to that of former communist superpower, the Soviet Union, which disintegrated some two decades ago.

"The state of atheism is heading to its fall. It will face what befell the Russian bear (Soviet Union)," he said in the message in which he accused China of committing massacres against Uighurs and seeking to dissolve their identity.

Soviet forces invaded Afghanistan in 1979 to prop up a Marxist government against Islamist fighters, but was ground down by guerrilla warfare and withdrew in 1988-89. Al Qaeda emerged from the groups that fought Soviet forces at the time.

Read On
It sounds like China is on Al Qaeda's hate list because it is an atheist state (and hasn't converted to Islam). And the consequence of this is that China will fall like the former USSR?! Yawn...

I really shouldn't yawn. Al Qaeda could strike China or America or a whole host of other countries across the world and we'd be in a post-9/11 state all over again. I sincerely hope that doesn't happen. I feel like we (Americans) have only recently started to get over the unfathomable attacks perpetuated against us eight years ago.

There's no doubt that China's situation with its Muslim population in Xinjiang is a mess. The riots this past summer and the recent wave of "needle attacks" are proof that the China's having a bit of a "harmony" problem. But Al Qaeda is no answer to these problems. Hopefully none of the frustrated Muslims of China get involved in Al Qaeda's network of hate and terror.

Monday, October 5, 2009

A Nation of Spenders

Can the world economy count on China to open up its pockets as Americans are closing theirs?

From The Washington Post:

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BEIJING -- Chen Zizheng wheeled his shopping cart down one of the aisles at the Carrefour store near his house and paused in front of the bottles of Remy Martin, Johnnie Walker and Hennessy, each selling for an amount about equal to the annual salary he earned when he was a young government employee.

But those days were about 30 years ago, around the time Deng Xiaoping launched China on a path of economic reform and opening up. Now China's thriving economy has made it possible for people like Chen, a 67-year-old semi-retired aerospace industry official, to plop down 1,168 yuan, or $170, for a bottle of liquor at a branch of a French "hypermarket" chain.

"It's not that expensive for ordinary Chinese people now," he said, adding that he planned to serve Johnnie Walker Green Label to guests he was expecting to share moon cakes with during last weekend's mid-autumn festival.

"As Chinese society has developed and opened up, people have a better appreciation of imported liquor," said Chen, who used to buy the traditional Chinese stiff drink known as maotai. "When you choose a gift, other people will look at it and if it is brand stuff they will feel respected because you chose it for them."

One year after the global economy went into a tailspin, many economists are wondering whether Chinese consumers, once a thrifty lot, will lead the world out of the recession. Last week, the International Monetary Fund said China would do just that, thanks in part to the government's $600 billion stimulus package and a flood of bank lending. The IMF increased its forecast of Chinese growth to 8.5 percent in 2009 while lowering its forecast for the U.S. economy, which it said would shrink 2.7 percent.

Read On
Chinese people, on the whole, are frugal. But their attitudes are changing. Especially when it comes to people living in cities who are getting rich.

Whether its Buicks or Louis Vuitton or Chivas Regal, Chinese people are quickly developing tastes for material goods. Any idea that China's history with communism took away the passion for these kinds of goods is dead wrong. China is a country full of new rich people. Just like in all countries in the world, people who have money for the first time in their lives like spending it.

I heard a lot of mockery about China's 60th anniversary on media reports this week in America. I suppose the mockery is deserved in a lot of ways. But westerners would be wise to look past this past week's homage to communism because it was just a big show.

China is becoming a blatantly materialist society and is more and more comfortable spending money. It'll take years. But I expect Chinese people to be making up for Americans' (much-needed) belt tightening before too long.

Sunday, October 4, 2009

Ryan Jiang's Podcasts

A good friend of mine from Xi'an, Ryan Jiang, has begun a radio show on China. You should check it out. Here is an episode on differing perspectives of contemporary China and here is an episode on 1989. There are more episodes on his main page.

I met Ryan during my first year in China. He is one of the smartest and most open-minded people I met in China. He is now studying and living abroad.

Saturday, October 3, 2009

US Losing Luster

When it comes to the question of which country the rest of the world would rather be with - the US or China - the choice is not as easy as it used to be.

From Korea's Chosun Ilbo:

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The American "hegemony" is receding, leading economist Jeffrey Sachs said Tuesday in an article for the Financial Times on the G20 Summit held in Pittsburgh. The article was titled "America has passed on the baton." In mid-September, 16 U.S. intelligence agencies released a document which pointed to Beijing as one of Washington's main global challengers in the future. All this shows that the U.S. is on the ebb in the 21st century, while China's international standing and influence are rising rapidly.

Since the Sept. 11, 2001 attacks, the U.S. has concentrated foreign policy attention on the Middle East, which it pointed to as the source of terrorism, but has paid less attention to Asia, Africa and Latin America. By contrast, China has been expanding its influence and raising its profile in those areas.

Citing Asia as an example, Newsweek said Asian nations are being asked to decide where they stand between the U.S. and China, as these two powers are building their respective alliances and engaging in fierce competition. All this was sparked by two military exercises staged in Asia in 2007. One was Malabar 07, an exercise initiated by the U.S. and joined by Australia, India, Japan, and Singapore. The other was the Peace Mission 07 under China's initiative and joined by members of the Shanghai Cooperation Organization such as Russia, Kazakhstan and Uzbekistan.

The SCO is a group formed by Beijing and Moscow in 2001 ostensibly dedicated to combating terrorism. With the exercise as momentum, weaker Southeast Asian nations such as Burma and Cambodia as well as Central Asian countries came under China's influence, experts say.

Read On
"Either you're with us or you're against us."

That doesn't have quite the same bite after Bush and his administration took their eye off the ball (China) and focused solely on "killing the terrorists" during their reign. Thanks for being such a visionary leader, President Bush.

The move away from China towards America isn't solely limited to alliances and political support. Businesses across the globe are lining up with China too.

From AFP:
ISTANBUL — The nascent global recovery is dividing Latin America between economies that pay the price for ties with the United States and those that benefit from growing links with Asia, experts said.

"The US economy is getting better, but with a lot of uncertainty along the road," Nicolas Eyzaguirre, the International Monetary Fund's Latin American director, said at a conference Friday in Istanbul.

"The effect on Latin America will be very different depending on what's your level of policy preparedness and what's your linkage with the US and vis-a-vis Asia," he said.

In its economic forecasts published Thursday, the IMF said that Latin America had begun to recover from the global economic crisis and would post growth of 2.9 percent in 2010.

But there were wide disparities, with countries such as Mexico, which depends heavily on the United States, losing out and others like Brazil benefiting from rising exports to China.

The United States is the epicentre of the crisis, while China is leading global growth.


Goldfajn, a former deputy governor Brazil's central bank, said Brazil used to export mostly to the United States, but "China is overcoming exactly now the US as our main export destination" for the first time in the country's history.

The economist said that generally the region's economic health depends on the degree of economic links to the United States, saying Colombia, Brazil or Argentina were at a safer distance.

Read On
The awarding of the 2016 Summer Olympics to Rio was a substantial repudiation against the US. The rest of the world is not in awe of the US' greatness any more. It's gotten so bad that Obama's visit and impassioned plea to the IOC was rewarded with being the first site to be eliminated. I understand that there were a lot of politics not related to Obama behind the decision, but there's no doubt that Chicago being eliminated first was a substantial, symbolic slap in the face.

America is way off of where it was even a decade ago. It's hard to see how or when it will get back to where it once was.

China is on the rise and is going to continue to be a yin to America's yang.

Thursday, October 1, 2009

Rich and Poor

China's economy continues to rise. But not everyone is ascending.

From Forbes:

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Oct. 1 (Bloomberg) -- At China’s newest Gucci store, in Shijiazhuang, snakeskin purses sell for the equivalent of $4,390, about twice the city’s per capita annual income. Next door at Brooks Brothers, button-down shirts go for $190.

“Shijiazhuang is becoming very well off,” Brooks Brothers saleswoman Wang Weixia, 24, says of the provincial capital, 291 kilometers (181 miles) southwest of Beijing. “A few years ago it was poor and backwards.”

Five floors up in the food court of the First Under Heaven mall, a lamb kebab griller surnamed Li has a different view. “The people here got rich by cheating others,” says Li, who earns 50 yuan ($7.30) a day and declined to give his full name.

The scene in Shijiazhuang is replayed across China, where a 30-year economic boom has lifted hundreds of millions of people from poverty at the price of yawning income gaps. China’s Communists came to power 60 years ago today, promising a utopian society run for the benefit of peasants and workers. Instead, it was ideological foes in neighboring Taiwan and South Korea that delivered economic gains more widely and equitably.

The growing wealth gap is a top concern for President Hu Jintao and Premier Wen Jiabao, who are dealing with rising protests from workers and farmers angry at corruption and the perception that some people are getting rich at the expense of many. Hu and Wen today took part in celebrations in Beijing marking the anniversary.

In a Sept. 10 speech to the World Economic Forum in the city of Dalian, Wen said China must “narrow the gap in income distribution.”

Read On
A rich man discarding trash onto the street. A relocated farmers picking up the refuse. Migrants huddled on street corners holding up signs saying 水电 (water electricity) looking for work. Little old ladies lugging massive carts of trash or recycled goods in bicycle lanes.

Although I've left China, these kinds of images are still burned onto my brain.

Having lived in a booming interior city of China, I've seen the income gap this article talks about first-hand. You see these scene play out walking down nearly every street in Xi'an.

China's growth is a great thing. It is making life better for millions upon millions of people. I hope that China's new-found wealth can trickle down to those not at the top rungs though. It can and has, but as the article goes on to say:
204 million people in China lived on $1.25 a day or less as of 2005, a 2008 World Bank study showed.

Expenses for health care and education, once provided at no cost for many workers, are pushing more people into poverty, said Dorothy Solinger, a professor at the University of California at Irvine who studies China’s urban poor.

“There isn’t a sense of upward mobility,” Solinger says. “There is a perpetuation of underclass.”

I'm not sure what the best way to curb income inequality is. More progressive taxes? I don't know. Whatever the solution may be, I hope that China's ever-widening gap can get under control. There are just too many people in China, and America for that matter, that are just barely getting by.