China: Further signs of a strengthening economy

Manufacturing and, more importantly, order volumes from international customers have both risen this month, according to the South China Morning Post. The China HSBC Flash Manufacturing Purchasing Managers Index (PMI) recorded a three-month high in output.

Despite GDP just missing the official government target in Q3, this news is the latest in a string of signifiers that China’s economy is healthy, and that past government stimulus measures have proved generally effective.

Previous signs of steady performance have included higher-than-expected export growth in September (9.9% year on year), Lenovo knocking Hewlett-Packard Co from the top spot as the worlds number 1 PC manufacturer in Q3, and Anoop Singh, director of the Asia and Pacific department, stating that “China is not having a hard landing…[and] will grow this year”.

Although all the signs are positive, China’s performance is likely to be steadily upward rather than a rapid bounce back. This will no doubt be of particular concern to governments in Europe and the US hoping the Middle Kingdom will hold up the global economy.

Speaking to Reuters, Dariusz Kowalczyk of Credit Agricole CIB in Hong Kong said “Markets may be disappointed to realize that the Chinese recovery will be gradual and no new stimulus is forthcoming,”

However, a general consensus is growing that China will avoid a Japan-style bubble, with HSBC suggesting that the Deng Xiao Ping reforms of the late 1970’s could still underpin growth for another decade due to the large parts of China still being left underdeveloped. This is the main thrust of Beijing’s ‘go west’ strategy, which is designed to move manufacturing inland from the coastal regions, as these move up the value chain.

A further asset that China retains, and that has also figured prominently in the US presidential debates, is its control over its currency. As the Asian financial crisis of 1997, which stalled the economies of much of South East Asia, was largely the result of currency speculation, China looks set to not encounter similar issues in the short-term.

 

 

Lhasa, Tibet: Happiest City in China?

Picture: http://english.cntv.cn

Lhasa, the capital city of the Tibet Autonomous Region has topped a survey of the top 10 happiest cities in China.

Surprised?

What with the high profile self-immolations that regularly hit the international press (56 have been confirmed in Tibet since 2009), and the general global awareness of the controversy surrounding Chinese sovereignty over the region, perhaps you should be.

But, then again, perhaps not.

The survey was carried out by CCTV, China’s state-run media Behemoth, and reported by Xinhua, another state run agency reporting to the Communist Party of China’s Propaganda and Public Information Departments. Both these agencies clearly have a vested interest in painting a more positive picture regarding public opinion in Lhasa, and Tibet more generally.

The moral of the story? The boundaries of freedom of speech in China may be being expanded by social media and civil action but, when it comes to state media, a pinch of salt is still advised.

Japan: Chinese tourism and investment still welcome

Picture: difusorapocos.com.br

Behind the muscle flexing, demonstrations and general tension over the ongoing Japan/China islands dispute, there lies a positive fact that none of the players will directly admit: actual conflict would destroy the economies of all involved.

Therefore, it is unsurprising that Harumi Takahashi – Hokkaido Governor – told a recent press conference that

We welcome Chinese tourists and Chinese investment in tourism infrastructure [and hope to] boost relations with China at a regional level at a time when country-to-country level relations are sour

In an attempt to offset the economic damage already being caused by the dispute, her comments come just days after the Chinese navy sailed close to the islands.

In a further sign of caution from Japan, the Japanese armed forces cancelled a joint drill with the US, during which they were to rehearse retaking an uninhabited island from invaders.

Chinese/American Relations – the shape of things to come

Picture: Dan Green/2012

The last week has seen both the US and China flexing their respective economic muscles, as both countries show signs of growing awareness that their relationship will be the most significant defining factor for the geopolitical order for the foreseeable future.

As the last US presidential debate showed, America’s future stance on China is likely to be a key vote driver for candidates Obama and Romney. With Romney’s promise of labelling “China a currency manipulator” and Obama in turn highlighting Romney’s involvement in off-shoring US manufacturing to developing markets, both represent two extremes of the same view among American voters: that China is a growing economic threat.

Also this week, the most recent Pew Global Attitudes China project opinion poll indicated that chinese views on America have also declined. Since the last poll two years ago, the percentage of Chinese who view U.S. relations as cooperative has declined from 68% to 39%. However, many of those polled still expressed positive views about US democracy.

These domestic opinions are becoming increasingly visibility at the international level.

Last week, the US Commerce Department levied steep import duties on Chinese made solar cells and panels, and was joined by Canada in blocking Chinese telecommunication giants Huawei and ZTE from government contracts due to claimed security concerns. As a back drop to these moves, Chinese PC manufacturer Lenovo knocked Hewlett-Packard Co from the top spot as the world’s number one for the third quarter of this year.

The motives and legitimacy of these moves are highly questionable. Not only do they go against free trade, which has underpinned US economic ideology throughout the 20th century, but they have also been based on questionable evidence: the claims of spying by Huawei have since been rebuked by The White House, and it seems that many mutli-national companies operating in China (such as IBM) also have Communist Party committees as part of their operations.

A few days later, the IMF dismissed the notion of a crash for the Chinese economy, regardless of the continuing problems in Europe. According to Anoop Singh, director of the Asia and Pacific department, “China is not having a hard landing. The numbers are clearly recognising that China will grow this year”. This was followed by the announcement that Chinese exports in September had grown much more than expected – by 9.9% year on year.

Such positive news no doubt spurred on the decision by China’s finance minister and central bank chief to miss the current IMF meetings in Tokyo. This move was clearly designed to remind that world that it needs China as much as – if not more than – China needs it.

Now that the China/US relationship is firmly centre stage, this recent sparring between the two is likely to continue as both seek to adjust to relative changes in their relationship. Up until now, China has largely played by America’s rules, as demonstrated by its entry into the World Trade Organization (WTO). However, as its power grows, it is likely to attempt to adjust the international system to one that suits its needs – just like the US did.

Follow all eyes east on facebook

65 percent of parents believe foreign English teachers offer better education

 

Victoria Sung – Contributor

Hong Kong — A survey of 300 households showed that 65 percent of parents believe a foreign teacher of English can offer better education than a local teacher. In response, early childhood education experts have issued statements reminding parents and institutions to check the qualifications of foreign educators during the hiring process. Experts also warn against hiring “traveling” foreign teachers who have no certification or experience.

The survey also revealed that 59 percent of respondents believe having an English-speaking domestic helper at home improves their child’s English language level. Educators have stated there is no evidence supporting claims that foreign domestic helpers improve English levels, although a child’s confidence in the language might be boosted if the helper interacts frequently with the child during the critical learning stage of 3-6 years old. 3 percent of Hong Kong’s population are foreign domestic helpers employed to help with child care and household chores. The majority come from the Philippines, Indonesia, and Thailand. Many speak English, are highly educated, and hold post-secondary degrees.

On average, children in Hong Kong learn three or four different languages, with Cantonese being the main language spoken at home. Although English is a subject taught in all schools, most parents hire a part-time tutor to supplement materials taught in class.

Sansan Ching Teh-chi, Director of the Hong Kong Council of Early Childhood Education and Services, warns against enrolling children in too many language subjects, stating that doing so can weaken a child’s ability to communicate effectively in any of the languages.

Ching instead suggests that biliteracy or trilingualism is sufficient for elementary education.

This post originally appeared at Meanwhile in China. 

China: The End of History?

Picture: Dan Green/2012

Fukuyama’s view of the post Cold War world as “the end point of mankind’s ideological evolution” has been slapped around quite a bit over the last 20 years – and rightly so.

However, not enough people have extended the slaps to the idea that Western international infrastructure – i.e. the WTO, the IMF and the World Bank – is also something that could be relatively short lived. Academics, journalists and Joe Bloggs alike tend to view these things as collectively agreed upon, rather than tools to promote a primarily American agenda. (see Deudney & Ikenberry for example).

However, as the US declines in relative power, more challenges to this system should be expected. Challenges such as China’s boycott of the IMF financial meetings happening in Japan at the moment.

Despite difficult economic times for most, China’s finance minister and central bank chief have not attended these meetings. No doubt spurred on by recent positive projections regarding the state of the Chinese economy, China is essentially reminding the other participants that it is growing more economically confident and capable each day, and that they need to work with it more than it needs to work with them.

Up until now, China has largely played by the rules – seeking entry into the WTO for example. But, as its power grows, it is likely to adjust the international infrastructure to one that suits its needs more directly – just like the US did. And who can blame it? There have been many studies into how UN decisions during the Cold War were overwhelmingly one-sided, and how the ICC tends to focus on Africa alone. Plus the history of prescribing free trade for the developing world while ignoring duties and quotas in the West has been well documented.

The end of history? No. A changing of the guard? It just might be.

China’s economy on the way up

Picture: Dan Green/2012

In a piece earlier this week, I argued that the recent decisions to add import duties to solar power products from China and the blocking of Huawei/ZTE from certain operations were signs that the US was struggling to compete with its rising competitor. In a world of divided opinion regarding China’s trajectory, these moves indicated that the US feels it needs to bend the rules to remain competitive.

Since then, several announcements have appeared that further support this perspective.

First, the IMF dismissed the notion of a crash for the Chinese economy, regardless of the continuing problems in its main export markets. As Anoop Singh, director of the Asia and Pacific department, put it:

China is not having a hard landing. The numbers are clearly recognising that China will grow this year

Then came the announcement earlier today that Chinese exports in September had grown much more than expected – by 9.9% year on year. According to Bank of America Merrill Lynch economists Ting Lu and Marcella Chow, quoted in the South China Morning Post, the outlook remained cautious,but

Markets will surely welcome these robust trade data, which could further dispel the fear of a hard landing

The continued strength of the Chinese economy is likely the result of various stimulus methods undertaken by Beijing since 2008. Standing in stark contrast to the failing austerity project in Europe and the UK, this included setting infrastructure targets for local governments totalling 4tn yuan.

Whether or not this growth can be sustained remains to be seen.

China’s impending collapse? Three little hints

Even the most avid of China watchers – or economists for that matter – could be forgiven for feeling a little confused about whether China is on a route to hegemony or destruction. Almost everyday, articles appear in the media forecasting the inevitable bust and/or the importance of China’s future growth for the world. So, which is it to be?

_
Well, if you ever needed a hint that China’s implosion, flowed by a swift reassertion of US authority, was a view built on shaky foundations, this week gave you three: First, the US Commerce Department levied steep import duties on Chinese made solar cells and panels after a case brought by a US based solar cell and panel manufacturer (free trade is for everyone but the US, clearly); next, Canada joined the US in blocking Chinese telecommunication giants Huawei and ZTE by invoking a ‘national security exception’; thirdly, these moves came on the same day that the Chinese PC manufacturer Lenovo knocked Hewlett-Packard Co from the top spot as the world’s number one for the third quarter of this year.

This, of course, does not mean that many of the concerns raised about China’s growth are not legitimate. However, the argument that it is some how a magic trick built on stealing ideas from the West and slave labour is clearly not the whole picture.

Gary Hamilton (Professor, Department of Sociology and The Jackson School of International Studies, University of Washington) delivered an excellent lecture in Hong Kong back in March which tracked the growth of manufacturing in the Asian Tigers off the back of mall based shopping in the US. He not only showed how growth was built on very straight forward supply and demand, but also how this then moved into China as the Tigers moved up the value chain. China’s growth is a logical step in industrialization that started in the US, progressed to Asia and is now in China.

Perhaps this is why the World Bank has predicted that China’s slowdown (GDP 9.3% in 2011 to 7.7% this year) is connected to global slowdown, and that its GDP will rise again (to 8.1% in 2013).
Whatever the truth, predictions are predictions, and usually with an agenda of some sort. When they vary as much as they do with China, the truth is probably somewhere in middle.

Too many shoppers?

Shoppers in Hong Kong (Picture: Dan Green/2012)

Hong Kong retailers are doing rather well from the ever growing influx of mainland Chinese tourists to the SAR (playing a quick game of spot the ‘Chow Tai Fook’ in TST gives a pretty clear sense of just how well). But, the ever increasing visibility of their 1.3 billion neighbours naturally becomes a proxy for much deeper running concerns among Hong Kongers regarding their relationship with China.

However, the HK government has chosen to again try to sweep the deeper concerns under carpet, opting place an obviously impossible-to-implement plaster over the issue.

The announcement that they will create a ‘mechanism’ to see how many tourists HK can accommodate and then cap numbers – as many have pointed out – is completely ridiculous. Not only are many of the tourists day trippers, but many others are using HK as a more flexible entry point for Macau to avoid the restrictions on the number of times mainlanders can gamble away their new found fortunes. Further, as anyone who have crossed at Shenzhen recently will tell you, there is a huge number of illegal workers from China (Western English teachers, filipino maids etc ) who regularly come to get new tourist visas.

Quite how the government plans to factor in these aspects, it is not clear. But, either way, it is avoiding the deeper cause of the issue, just as it tried to do recently with the national education plans.

A better government strategy would begin by openly discussing the growing public tension between Hong Kongers and Mainland Chinese. It would then probably need to start focusing on the cultural similarities between the two, but without a nationalist agenda. The fact remains that the vast majority of the population can trace their family back to the mainland in just 1 or 2 generations (The first half of the 1950’s alone saw a population increase of 2.2 million), something that could underpin a growth in cultural understanding that would be a good starting point.

Diaoyu – they remember, we forget

Picture: Dan Green/2012

When it comes to firing people up, resources and energy production rarely draw a crowd. Therefore, the current stand off between China and Japan over the Diaoyu islands (or Senkaku islands, depending on your perspective)  needs to be viewed on at least two levels. Yes, the Chinese and Japanese governments have a vested interest in asserting sovereignty, but the protests and passion from ordinary people go much deeper than that. And, as ever, short memories in the West mean that many of us condemn the peacocking without acknowledging our place in its history.

Sovereignty, from the Chinese perspective, has been fundamental to the formation of China as a modern state. The oft cited ‘century of humiliation’  not only provided the context for this formation – the reluctant realisation that it was one state among many (hierarchy to anarchy) – but also led to the creation of a Chinese Self (at state level) based on an idea of ‘victimhood’ (*See Suzuki, 2007). This is often hard for a western audience to get our heads round, with so much of our theory stemming for the US – a country based on the concept of an enemy Other.

However, like it or not, the exploitation, violence, unequal treaties, stealing of territories and massacres that defined China’s brush with colonialism are  recent history for them. It is why Hong Kong and Macau were important issues; it is why Taiwan remains an important issue; it is why Mao, as the figure who brought an end to this experience, is so revered despite his later atrocities (something Justin Rowlatt failed to comprehend in the recent BBC documentary, China on Four Wheels); it is also why the Chinese get so fired up on this issue. Britain, The USA and Japan – along with France and Russia – were the major players throughout this period, the legacy of which underpins the popular reactions we are seeing now. History is very much still alive.

But the West’s role does not stop with China. As Lex Zhao’s excellent article in the scmp today highlighted, one of the key motivations of Tokyo Governor Shintaro Ishihara’s initiative to buy the islands was to “push [Japanese voters] to amend Article 9 of the [Japanese] constitution”. Why? The US wrote the constitution. Further, Article 9 reads “The Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as means of settling international disputes.” Written by the Americans, for everyone bar the Japanese, this is something guaranteed to stir nationalism – just as it would in almost any state.

Short memories in the West are risky, particularly when interference in foreign affairs are the current trend and while military muscle remains a key vote driver for US presidents-to-be. However, if China and Japan can recognise that they the West is something they both have in common, it could form the start of a resolution. We shall see.

*Suzuki, S. (2007) “The importance of ‘Othering’ in China’s national identity: Sino-Japanese relations as a stage of identity conflicts” The Pacific Review, Vol. 20 No. 1 March 2007: 23–47