June 1, 2009
Peter Hitchens on the "Wicked Chinese Empire" in Africa
Quotes like those below make for great reading. The proclamations of friendship between China and African nations, common in the 1960s and 70s, based upon on a common penury and "revolutionary ideals," have long since vanished, replaced by mountains of cash.
China's cynical new version of imperialism in Africa is a wicked enterprise.
There are persistent rumours, which cropped up in almost every conversation I had in Zambia, that many of the imported Chinese workforce are convicted criminals whom China wants to offload in Africa. I was unable to confirm this but, given China's enormous gulag and the harshness of life for many migrant workers, it is certainly not impossible.
The limitation of the article -- not a weakness -- is the insistence that the writer's personal experience is repeated throughout Chinese business communities in Zambia and Africa. Nonetheless, I found many of the writer's assertions to be plausible. Confirmation of this story is essential. First-hand accounts would be extremely welcome, especially from Chinese who've lived and worked in these colonies. Readers aware of other such articles are more than welcome to pass those stories on to me.
If any of this is true, the writer is himself quite an interesting individual.
May 15, 2009
Another Prediction of Chinese Currency Supremacy
A Columbia University economist known for his extraordinary conclusions -- some right -- evidently knows something everybody else does not.
The Chinese yuan is preparing to overtake the US dollar as the world's reserve currency, economist Nouriel Roubini has warned.
Read his article and several comments here. Frankly, it doesn't look like anything more than an educated guess. What support is there for such an extraordinary statement? Certainly none in the article itself. And the RMB isn't even fully convertible -- and I don't believe will ever become so. Convertibility -- essentially, the making of a truly internationalized currency -- has been a subject of discussion and prognostication for 30 years, ever since China used foreign exchange certificates in the early days after the initial economic reforms of 1978. How is it in the interests of the Chinese government and Chinese commerce to make it fully convertible? This is a question that no one seems to address.
Already, some are hitching on to a star in the hopes of its ascending to the extraordinary heights. I well remember the reports and predictions of the supremacy of the Japanese yen in the 1980s.
As proof of this gentleman's economic wisdom, writers consistently cite his previous prediction of financial collapse. But then again, I know quite a few non-economists who predicted the same thing!
May 14, 2009
Zhao Ziyang's Dictated Diary to Be Published in May
Prisoner of the State: The Secret Journal of Premier Zhao Ziyang
With audio!
If you see this book available for sale online, please let me know. Amazon does not have it up yet.
Posted by Richard at 2:47 PM | Comments (0)May 12, 2009
Chinese Exports Fall 22.6%
The New York Times reports:
Exports from mainland China slumped 22.6 percent in April from a year earlier, official statistics showed — a fall that was not only larger than economists had expected but also bigger than that in March, when overseas shipments declined 17.1 percent.Posted by Richard at 2:34 PM | Comments (0)
May 8, 2009
New York Event: The Financial Crisis: The Impact on Private Equity in Emerging Markets
The Financial Crisis: The Impact on Private Equity in Emerging Markets
"Join a panel of distinguished experts as they share their insights on the future of private equity in emerging markets. Hear their perspectives on how these economies are coping with the changes caused by the economic slowdown, which countries are geared for positive growth, what the key areas of concern are, as well as where the new opportunities for private equity lie as it adapts through the financial crisis."
Speakers:
Shad Azimi, Managing Partner, Vanterra Capital
Victor Z. Gao, Executive Director, Beijing Private Equity AssociationSecretary-General, China Private Equity Association (invited)
Victor J. Menezes, Senior Advisor, New Silk Route Partners (invited)
Khaled Al-Muhairy, Founder and CEO, Evolvence Capital
Peter R. Ryder, Co-Chairman, IndoChina Capital
John Schumacher, Founder and CEO, New York Life Capital Partners
Date: Monday, May 18
Time: 6:30pm-9pm
6 - 6:30pm -- Registration
6:30 - 8pm -- Discussion
8 - 9pm -- Reception
Location: Asia Society, 725 Park Avenue, New York, NY 10021
Event URL: Click here
RSVP: By phone, (212)-517-ASIA (M-F 10am-5pm) or online
VERY FAR OFF-TOPIC: When in New York for this event, may I suggest that this website will direct you to great burger joints for dinner or a snack afterwards. I just think it's a great site.
Posted by Richard at 3:16 PM | Comments (0)April 24, 2009
Guest Post: Victor Shih on the Chinese Stimulus Package: "What did 5 Trillion RMB Buy?"
[Today's post comes to us, with our thanks, from Victor Shih, Assistant Professor of Politics at Northwestern University in the U.S., and blogger at Elite Chinese Politics and Political Economy. Victor is the author of the very fine, Factions and Finance in China, now available in paperback.]
Victor Shih | Apr 23, 2009
I have been getting a wave of bullish sell side reports about how the stimulus program launched late last year is having an unexpectedly good impact on leading indicators in China. Before we draw quick conclusions about how rosy everything will be, let's step back and examine what these figures are actually telling us. In essence, most of the benefits of pumping 5 trillion into the economy are temporary. When this pace of lending slows, many benefits will reverse into major problems.
First of all, I am more or less repeating some points that Mike Pettis raised in earlier notes. Also, unlike many sell side analysts, Stephen Green at Standard Chartered has issued several reports that give a more comprehensive view. Let's look at the latest figures. In conjunction with the stimulus program, the banks issued nearly 5 trillion RMB in new loans in the first quarter, a historically high level. Because there was basically no share issuance or new corporate bond issuance, the 5 trillion from the banks was really the main engine for 1Q 2009. The 5 trillion is almost the size of the US fiscal stimulus package and basically 1/6 of China's 2008 GDP. As far as I know, this is the largest monetary easing in this period of time as a share of a country's GDP (that didn't go into writing off bad debt, that is). Impressive indeed, but what did China get in return?
1. To be sure, fixed asset investment grew by 25+%, which was one of the intended effects of monetary easing of this magnitude.
2. Official PMI, which mainly reflects sentiment among SOEs or state corporation, went back into positive territory, but private sector PMI was still in negative territory at the end of March.
3. There has been a pretty impressive stock market rebound in the A share.
4. The housing market is showing some sign of life after a long winter. Sales in many major cities are going up significantly, even driving up prices in some cases.
So far so good, BUT...
When we look at figures for non-investment economic activities, things do not look good at all. In fact, it is down right disappointing after pumping 5 trillion into the economy.
1. First of all, export and FDI continue to fall at a pretty fast pace, which can't be helped.
2. More alarming, inventory for many industrial goods continue to build UP! According to a recent note by Stephen Green's team, refined oil inventory is up over 35% YoY as of the end of February.
3. Coal inventory seems to have gone down, but that's because many coal mines have ceased to operate. The 21st Century Business Herald reported that 50-70% of mines are "resting" for the moment. Iron ore mines are facing the same problem as international iron ore now costs less than domestic ore.
4. Electricity usage continues to be in negative territory.
Steel consumption has picked up somewhat from a collapse late last year. However, I think the problem there is continual over-capacity. The central government didn't want any major steel firms to go under, so they are spending billions to "merge" a bunch of steel firms. For example, Bao Steel based in Shanghai will buy up several steel producers in the Jiangsu/Zhejiang area. This maintains the over-capacity in the sector and will put upward pressure on inventory.
In electricity generation, there is rumor of CIC2, a mega company that will buy up distressed electricity producers and coal mines from across China, boosting the on-going consolidation financed by bank loans. In the airline industry, billions have been injected into airlines to keep them afloat amidst disastrous bets on world oil prices.
There is then the widely cited figures of 12% increase in urban income at the end of 2008 and increase in car sales in first quarter. In the first instance, I have no idea how the income figures were produced, but they almost always miss migrant workers, who are also urban residents. On the car sales, China Economist already points to a recent FT article which questions whether sales of minivans will help car company profitability. Finally, employment, which supposedly was the main point of the stimulus, was only marginally improved by the 5 trillion. Most large projects haven't gotten going yet as land still needs to be procured. The biggest employment impact was that the 5 trillion prevented the mass bankruptcy of hundreds and perhaps thousands of firms. However, some firms are staying alive by laying off or furloughing workers, like the coal mines.
So, really, when it comes down to it, the 5 trillion bought:
1. some psychological relief
2. some more sales of real estate, thus delaying the bankruptcies of many developers
3. an upbeat stock market, for a while
4. prevented the bankruptcy of numerous state firms, especially in the airline, coal, electricity, and steel sector
The most alarming thing is that these "positive" effects of pumping money into the economy lasts only as long as the money keeps flowing. If for whatever reason, the central government decides to slow down the pace of lending (and there are signs they are thinking of doing so), ALL of the above benefits will collapse relatively quickly. Imagine; if the flow of funds slows significantly, the psychological relief will disappear quickly, as will short-term loans to developers; the upbeat market sentiment will follow as speculative funds withdraw suddenly from the market. SOEs, which are building UP their capacity and inventory as we speak, will face growing losses from depreciation and deflationary pressure on output. Without free flow of bank loans, they will begin to default on their previous loans. Speculative demand for real estate will also collapse, given that inventory is expected to reach over 1 billion sqmtr some time in 2009 (again citing SCB report by Green et al.).
What does this mean? The central government cannot stop or even significantly slow this pace of lending until export picks up in a significant way, else the bubble will burst. This is a race against time. At some point, this pace of lending will lead to a serious NPL problem or inflation, or both. If by that point, export and domestic household consumption remain anemic, I am not sure what options the central government will have.
Posted by Richard at 7:50 PM | Comments (0)April 21, 2009
Another Attorney Scam -- Referral From Non-Existent US Attorney to Sweeten the Pot?
A twist! Here's another attorney scam email I just received, referred from my Chinese language law site, after a brief Skype chat conversation in Chinese with a purported potential client in (or so he/she said) Chongqing:
Dear Counsel,I am sending this email as a mutual introduction (potential representation). Mr Yong Woong Shin is the manager and owner of Dongkuk Refractories& Steel Co., LtdMr Yong Woong Shin entity is a Steels & Chemical trading company in South Korea, Dongkuk Refractories & Steel CO., Ltd has a claim against an American company for a breach of contract. I can not handle this matter at this time because I will be going for a surgery operation.I have represented this company in a different matter, in the past. This matter is in your jurisdiction/region; that is why I am referring him to you, and I do not require a referral fee. Please contact Dongkuk Refractories & Steel Co.,Ltd if you are interested in representing him/his company. Below is his contact information as follows:Yong Woong Shin 411-1, Woogye-Ri Sangdong-Myeon Kimhae, Gyeongsangnam-Do, 621-812 South Korea +82-51-5505050 (Phone) +82-51-5584058 (Fax) yongwoongshin@dkrefcokorea.asiaSincerely, Peter Smith 5553 Bridgetown Rd Cincinnati, OH 45248 1-877-254-5338 psmith_law@yahoo.comIMPORTANT: This email originates from a law firm. The information contained in this message is confidential and subject to various privileges and other legal protections. If you are not the intended recipient of this message, you should take appropriate action to prevent any harm that may arise due to the improper release or dissemination of the information contained herein. You should destroy this message and notify the sender.5553 Bridgetown Rd, Cincinnati, OH 45248 is the address of Bridgetown Hardware and Supply.
View Larger MapThere is no Peter Smith licensed in Ohio. Try it for yourself.
This email offers a new twist -- a proposed referral from a member of the profession. Watch out! They're smart!
Posted by Richard at 4:49 PM | Comments (0)
April 16, 2009
EVENT: CEO of Blackstone Greater China in New York
Event: China and Hong Kong: Post Financial Tsunami, CEO Forum and Lunch
Topic: Antony Leung, Chairman of Blackstone Greater China and former Financial Secretary of Hong Kong will speak on the financial and economic future of China and Hong Kong.
Date: Wednesday, April 23
Time: 12 pm - 2 pm (12 - 12:30pm registration, 12:30-2 luncheon & discussion)
Location: Asia Society, 725 Park Avenue, New York, NY 10021
Event URL here.
RSVP: By phone, (212)-517-ASIA (M-F 10am-5pm), online here.
Posted by Richard at 3:17 PM | Comments (0)
April 13, 2009
Sundry Notes on the Chinese Judiciary
Judicial independence -- that is, making the judiciary an independent decision-making body -- has been a topic for muted discussion in China for over a decade, at least in academic circles. [For more on the ways in which the Chinese judiciary is not independent, read this and this.]
However, the subject may now be seeing rather more of the light of day, apparently drawing inspiration from "international legal principles." As an indicator, an American resident in China who shall remain anonymous graciously allowed this image to be posted:
The resident writes:I visited a law bookstore in Chengdu,the Tianping Falu Shudian 天平法律书店. On a big sign at the entry of the bookstore is an announcement of the Chinese language translations of the Oxford Companion to the U.S. Constitution and of Judge Posner's book "How Judges Think".Of course, the poster may, instead, simply be an indicator of the reach of Lexis Nexis's marketing. But I think it's remarkable that the company would consider it saleable -- very likely, it is selling and Chinese are reading it.
On a related subject, a judiciary which prefers to keep its rationale for many of its decisions opaque reads of calls for greater transparency.
This editorial in the Beijing News (新京报) calls for it explicitly. (By the way, who is its 后台?)
■ 社论正所谓“好事不出门，坏事传千里”。在法制恢复重建的这30年中，即便有优秀的裁判文书，恐怕也已湮没在时间的流水里了。而一些糟糕的裁判文书，却因种种象征意义得以流传。
最新的例子发生在西安市莲湖区法院，在一起继承官司中，某法官“依照《中华人民共和国继承法》第十三条、《最高人民法院关于贯彻执行若干问题的意见》第三十条、第一百七十七条的规定，判决如下……”（4月10日《西安晚报》）但问题是，判决中所援引的《最高人民法院关于贯彻执行若干问题的意见》只有六十四条，所谓“一百七十七条”纯属凭空捏造。
错漏百出的裁判文书屡现报端，已然引起司法系统的重视。杜绝或至少是遏制这些显然有损司法声誉的低劣裁判文书，也确已成为司法制度改进的追求。从十余年司法改革的实践看，最受期待的具体举措莫过于“裁判文书公开”。在颁行不久的法院改革“三五纲要”中，对此着墨颇多并意图推动。
按照审判公开原则的要求，判决书是法官通过对证据质证、认证，从而认定案件事实，并依据相关法律规定作出的实体裁判的载体。黑格尔曾将诉讼的进行和审判的展开，看作是法律在特殊事件中的实现，而“公开的依据在于，首先，法官的目的是法，作为一种普遍性，它就应当让普遍的人闻悉其事；其次，通过审判公开，公民才能信服法院的判决确实表达了法”。自然，也只有判决的公开，才能让当事人和社会公众清晰地看到国家司法权是否在法律和理性的范围内被运用、当事人的诉讼权利和基本人权是否得到了应有的尊重和保护，以及是否存在司法专横、法官擅断乃至司法官贪赃枉法的情形。
随着信息时代的到来，以及公平、正义及法治的理念日益深入人心，裁判文书上网成为近年来引人注目的司法公开成果。近年来，确有不少法院正将本院的裁判文书搬上互联网，以期实现“以公开促公正”之目的。如北京、河南等地法院，已经建立起功能较为完备的裁判文书库，面向社会开庭。截至4月10日，全国各地法院已公布生效裁判文书59744件，共计1.6亿余字。（4月10日《文汇报》）
但是，即便在树为典型的几家法院，裁判文书的上网也远未做到及时、持久、无保留的公开，全国只有不到6万件生效裁判文书上网，和去年各级法院共审结、执结9839358件（尽管生效裁判只占这一数字中的一部分）相比，公开的数量还太少。“公开”的目的不应是“选择性公开”，尤其要警惕“裁判文书公开”被异化为“优秀裁判文书公开”。司法公正应是对每一宗个案的追求，而非某些个案的追求。所谓“以公开促公正”，一是要以公开为预防裁判文书出错的动力；二是要以公开为监督司法的重要手段，让公众“雪亮的眼睛”找出那些问题裁判，并使之得到校正的机会。“裁判文书公开”被推动了十多年，仍然是“进行时”而非“完成时”。
裁判文书公开或上网公开，展现法院愿意主动接受监督的姿态。这一被公众冀望颇多的司法改革举措，不能仅仅停留在“姿态”，而更需要实实在在的成果。若裁判文书公开切实做到及时、持久、无保留，“一百七十七条”式的荒唐裁判才可能成为历史。
[H/t to Joshua Rosenzweig of The Dui Hua Foundation for the editorial.]
Finally, by far the most debilitating aspect of Chinese life, including the judiciary: corruption. In an article touching on both judicial independence, international legal principles as well as transparency, we find this quote and its profound rhetorical question at the end of the paragraph:
在司法大众化和职业化之争的背后，还隐藏着一个更为宏观的“普世价值”和“中国特色”的立场分歧。那些主张大众化的部分人士认为，司法职业化改革盲目崇拜西方主流模式，丢弃了中国过去几十年形成的据说行之有效的传统办法，主张抛弃“西方崇拜”，强化上级对下级的监督和指导。笔者不得不说，这种主张在本质上是要退回到人治时代，不仅违背了法治的基本规律，而且也是和30年改革开放的基本精神背道而驰的。任何人都不能否认，崇尚法治不是崇洋媚外的结果，而是中国人民和政府在饱受人治和政治运动之苦后达成的一致共识。假如革命时代形成的某些政治传统确实如某些人主张的那样对于治理当代社会行之有效，那么中国当年为什么还要改革开放？为什么还要建立市场经济和法治国家？Posted by Richard at 1:41 PM | Comments (0)
April 10, 2009
Counterfeit Check in Attorney E-mail Scam Looks Persuasive
Having never seen one before, and thinking readers have not as well, I was delighted when a fellow attorney showed me a counterfeit check used in an attempt to deceive a law firm in an attorney e-mail scam. Gracious thanks to Utah attorney Randy Birch -- who was not deceived. The Secret Service informed him that it was indeed counterfeit, but looked very much like the real thing.
Aside from the detail, attorneys will note that the check is made out to the law firm's IOLTA account. This should give warning that the people on the other side of the scam are quite knowledgeable about our business. Beware!
Posted by Richard at 2:50 PM | Comments (0)
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