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Sol Sanders -- Follow the Money No. 53: Rolling the dice in China
Thought the ZH famiglia would enjoy this comment from my old friend Sol Sanders, who has been watching China long enough to actually remember Mao. I read Chinese history as an undergrad and worked as a banker in the semi cap equipment market, which is now dominated by Asian nations. But the export market that China and its neighbors depend upon has never come back. Is China the next Egypt? A version of this column is scheduled for publication in The Washington Times, Monday, Feb. 14, 2011. -- Chris
Follow the Money No. 53: Rolling the dice in China
By Sol Sanders <solsanders@cox.net>
When scientists get further along with epigenetics, they may discover the Chinese have two unique DNA: a gambling gene, and another for hospitality. The first, of course, explains why Macau is odds-on favorite for replacing Vegas as No. 1 world gambling champion. The second suggests why few escape the lure of a Chinese campaign to win visitors’ hearts and minds.
Looking at a new determined shift in Beijing’s economic strategy, one has to chalk it up to that gambling gene. Intoxicated with turning into “the world’s factory”, Beijing plans to sail right past their successful collaborative development with foreign multinationals. Its new strategy literally amends Maximal Leader Deng Hsiao-ping’s dying instructions two decades ago to hide their capacities until they had achieved his four modernizations.
One can only chalk up Western businessmen naiveté to that second suspected Chinese gene, the ability to vamp any visitor. Of course, Frederick Engels, Karl Marx’s more literary companion, explained it all more than a century ago. He foresaw that on the way to the gallows, the capitalists’ greed would drive them to compete with one another to sell the rope to their executioners.
From mid-summer last year Chinese authorities – as a muddled but highly informative U.S. Chamber of Commerce report concludes – shifted from defense to offense. Years of studying their acknowledged total dependence on foreign technology has culminated in proposing 16 new megaprojects. With them they aim:
1] To provide new opportunities for stealing foreign technology. Now, before any technology can be introduced into China, it must be intensely “studied” -- in fact, stolen even before it enters the market. Another is increased allocation of “patents” to Chinese firms with virtually no verification, making it virtually impossible to pursue legal indemnification for losses.
2] To restore the primacy of the SOEs, the state-owned enterprises, those giant behemoths notorious for their inefficiency and corruption but powerful political entities. Massive funds [$25 billion] -- out of the huge 2008 stimulus package, originally aimed at warding off contagion from the world financial crisis – have been allocated to the SOEs to produce “indigenous innovation”
3] To continue to ensnare foreign companies, Beijing will suggest in return for continued tech transfers, they will get a share of the growing Chinese markets. They will also be offered participation in new technologies in China using government funds. But increasingly “import substitution”, that protectionist policy which crippled much of the third world before “globalization” became fashionable, is government policy.
Beijing’s new turn is loaded with risk. The history of Chinese innovation during the current boom is miserable. Eighty percent of China’s major firms do not have R&D at all. One reason may be it has been so easy to rent or steal needed foreign technologies. But there may be even more important – if difficult to evaluate – cultural factors.
Although China was historically leader in basic scientific development, simply said, the Europeans picked up on those breakthroughs to initiate the industrial revolution leaving China behind. Why? The answer to this question is perennial among scholars. One answer lies in China’s intense bureaucratization, in part arising from the need for huge collective enterprises – largely for water control. Another, of course, is Chinese learning has always put the emphasis on rote memorization and an inordinate, even religious, respect and adherence to what has gone before. It may be no accident, as the Communists used to say, now bereft of its Marxist-Leninist-Maoist dogma Beijing is turning back to Confucianism. [A statue of Confucius was recently installed in Tien An Mien square alongside a huge portrait of his greatest adversary, Mao Tse-tung.] With its emphasis on ritual, Confucianism represents the antithesis to the restless European [Greek] mind. An even greater threat to the new effort to produce originality may be the all pervasive corruption permeating Chinese life today which means vast sums promised R&D will go astray.
China is also taking other risks. Despite an intense campaign, Beijing has not been able to lure home more than a few prominent scholars among more than 62,000 Chinese in the U.S., many in technological research. With ties in both cultures, they have been critical to transferring technology. The new Beijing strategy may jeopardize that relationship as American business, reluctantly, and the U.S. government becomes increasingly cautious about China deals.
True, economic development in East Asia was always full of warfare over intellectual property. Japan, Taiwan and South Korea have been major culprits. But the Chinese pour salt in the wound by offering products overseas based on stolen technology. Thus California’s former Gov. Arnold Schwarzenegger was talking to the Chinese about proposed federally subsidized high-speed rail based on their theft from three foreign companies that had cooperated in creating them in China. At the moment, Washington is grappling with the proposed purchase by Huawei, a Chinese entity with military connections, of an American IT company with the Pentagon as a client.
Beijing’s gamble if successful would insure continued giant leaps forward but like Mao’s infamous economic plays, this one could prove catastrophic.
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Anyone read The Coming Collapse of China by Gordon Chang? I thought the book was very interesting, but not knowing much about China I can't not judge his info/opinions with regards to the real situation there.
China’s Innovative Beggar-thy-neighbor Strategy!
China’s beggar-thy-neighbor strategy is not a competitive devaluation of its currency, which would only cheapen its exports and make exports into China more expensive, but an over-valuation of the currencies of one or more of its trading partners. This negatively affects all the trade of the pegged trading partner(s), not just trade with China. U.S. Dollar over-valuation was 8 times as damaging to the U.S. recovery as what the media refers to as “China keeping it currency undervalued”.
The United States’ trade gap is the proverbial “leak-in the-dike” with its de-simulative effect on our recovery. In November 2003, Warren Buffett in his Fortune, Squanderville versus Thriftville article recommended that America adopt a balanced trade model. The fact that advice advocating balance and sustainability, from a sage the caliber of Warren Buffett, could be virtually ignored for over seven years is unfathomable. Media coverage that China has kept it currency undervalued is a gross understatement, it has actually been keeping the U.S. dollar over-valued; which adversely affects all U.S. trade with ALL U.S. trading partners, not just trade with China. Until action is taken on Buffett’s or a similar balanced trade model, America will continue to squander time, treasure and talent in pursuit of an illusionary recovery.
A link to my submission for the record for the September 15, 2010 Hearing on China’s Exchange Rate Policy, follows:
http://democrats.waysandmeans.house.gov/media/pdf/111/2010Sept15_Campbell_Submission.pdf
An Inflation-Neutral Balanced Trade System (BTS), inspired by Warren Buffett’s 2003 Import Certificate Plan is introduced at the top of page 4 of the Pdf.
Yes sir, those sets of genes are also found in alot of women .. But i would guess its more inline with Communist than any chinese trait , last i heard Hong Kong had quite a few chinese living there and they didn't ascribe to your depictions...
'China ready to go to war to safeguard national interests'
"China on its part, it said, can consider the idea of launching economic warfare through strategies to contain the US dollar and making effective use of forums like the IMF and initiating a space war by developing strong space weapons. "
http://timesofindia.indiatimes.com/world/china/China-ready-to-go-to-war-...
Chins is nicely aligned for a massive crash. They are one bad harvest away from total revolution.
when the people of zimbabwe complain of "cheap chinese imports" something is seriously wrong.
All we have to do is send them an army of blond bimbos to show our good intentions towards the chinese male and eventually, female class, if they want hyper consumption of blond Barbies in the real flesh. Banzai! blond blue eyed bimbo exports to China from USA and EU and the West wins the tech transfer war! Epigenetics ...is an ugly word for exporting Marilyn's daughters to the East.
The chinese believe the west and 19th century western intervention in china is the reason the chinese are undeveloped. Therefore in their reasoning this justifies any level of.dirty tricks and theft of technology and business methods. If you understand chinese resentment and blame of the west then everything they do makes sense. They only.go through the motions to comply with treaty obligations. Everything they do in relation to the west is in bad faith. Grudging compliance mostly for show when they are pushed on intellectual property theft and trademark violations is all we can expect unless we demonstrate a willingness to engage in an all out trade war./p>
The legend has it that Picasso used to sketch poor drawings on the corner of the table when dining at the restaurant.
As he was named Picasso and a leader in deconstrustionist painting, people thought that these sketches were works of art, with an intense research and undeniable art worth and they usually paid well to acquire those sketches right in the middle of the restaurant room.
Looks like many propagandists judge themselves New Picasso as they keep sketching poor propaganda on the corner of a table...
"When scientists get further along with epigenetics" - are you a Nazi or something ?
Jk the political correctness crowd would crucify you in you mentioned genetic traits in public
switzerland, china and japan will prosper. america? not sure.
http://covert2.wordpress.com
next we will be discussing why functionally blind dogs bark at black people and that leads to...THE HOLOCAUST.