It’s been a few months since I have written, which has been due to helping my family back in the States with some things, but in that time I have been back and forth between Asia and the U.S. and filled with many thoughts I had hoped to explore here.

It was not until I read Heather Long’s piece in today’s Washington Post about how China is winning the economic war and the U.S. is not doing enough about it that I felt compelled to write. Perhaps it’s also the steady stream of news out of the current administration that seems to day-by-day undermine all the great things about being American and this country that drew me back in. Regardless, while I think Long provides some good analysis and insights from some of our country’s foremost experts on China, the general tone is defensively combative. The case she builds is one in alignment with Bannon’s views on the U.S. – China relationship, which is that we are engaged in a economic war with China in which we must do more to ensure we win. However, the way to “winning” seems to be by launching fusillades against China in the form of punitive trade actions. Gordon Chang, who Long cites in her piece, explicitly calls for the U.S. to “defend” itself against China.

Fundamentally, what is wrong with this viewpoint is that it automatically assumes a zero-sum game of war where one side wins and the other loses. What this viewpoint leaves out, but what Long touches on when she mentions Bannon’s detrimental thoughts on immigration and quotes James Andrew Lewis is all of the things the U.S. can be doing to outperform China. A rational and fair immigration system, increased innovation through investments in R&D and education, meaningful worker retraining programs, a 21st century infrastructure including universal broadband access, universal health care, and pro-growth tax reform would be a few of the things that could help get the U.S. on the right track to come out ahead of China.

Now to be fair, trade rules exist to ensure a level playing field between nations and if China is engaging in unfair trade practices whether by subsidizing SOEs or stealing IP and other trade secrets, then they should be held to task for such anti-competitive behaviors. However, I would argue that such actions represent a defensive posture on the part of the U.S. To truly “win” or ensure that we stay ahead, we must also remember that it’s important to play offense and put in place the policies and conditions necessary for America’s long-term economic well-being that will be able to see off China or any other country with whom it may be competing.

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Steak and Distractions

April 8, 2017

Trump and Xi Jinping just concluded two days of supposedly tough discussions at Mar-a-Lago, Trump’s Florida club where he goes to get away from the troubles of Washington. It’s unclear what exactly came out of the two days’ worth of meetings, but from press reports they allegedly discussed North Korea and the trade deficit, two items Trump had flagged as priorities. And as a delightful welcome around the time they were finishing dinner the first evening, Trump authorized US military strikes on a Syrian airbase in a stunning reversal of his “America First” policy that wasn’t supposed to include such actions. Putting aside whether the strikes were warranted in light of Assad’s horrific attack on his own people using illegal chemical weapons, much has been made about the timing and message that Trump was sending to his guest. Was the rapid reversal in Trump’s approach to Syria merely a reaction to the gruesome images of dying babies or was it also motivated by some bigger picture thinking about the kind of message he wants to send to Xi and others about the US’ future role in conflicts around the globe. It would be generous to think Trump truly understands the implications of his attack and actually has a plan for bringing the Syrian conflict to an end. I mean this was the man who told us throughout the election that he had a plan to defeat ISIS, but it was so good that he did not want to share it before he could implement. Upon taking office, we quickly learned that plan never existed.  It was a similar pattern with health care, though in a rare admission, Trump acknowledged in the midst of the health care debacle that it was “complicated”.  So here we are with Syria, a foreign policy quagmire that has gone on pretty much unabated for six years or so and we’d be naive to think that Trump has an actual plan to bring about a resolution to this seemingly intractable problem.  But I digress.

Back to the Xi-Trump meetings in Florida and the two of them enjoying their Dover sole and steak dinner as missiles were fired at a Syrian air base. It’s curious that this meeting, which was built up quite a bit in the press in spite of all of the other distractions facing Trump, turned out to fade quickly from the front pages of the news. And most of the stories about the meeting were in relation to the Syrian missile strike trying to understand how it would impact US-China relations. It’s clear the chemical weapons Assad used were inhumane and gruesome, but the reaction from a man who earlier in the week said getting rid of Assad was not a priority and as far back as 2013 advised Obama not to bomb Syria seems slightly off. Even attributing it to his unpredictability and penchant for chaos is not enough of an explanation. I think the attack was partially a response to Assad’s chemical attack, but I do think it was a way to both send a message to Xi that he could do the same in North Korea and more importantly (and perhaps a bit cynically), did it to boost his standing among those calling for a more robust response to Syria and already incredibly critical of Trump. Trump is a man who craves popularity and doesn’t particularly care from who he receives it. He is a man who attacks unfavorable polls as fake news precisely because he cares way too much about those polls.  So now with his popularity plummeting and the support he relied on not doing much to boost those numbers, he’s ready to try something to boost the top-line number so he doesn’t go down as the most unpopular president this early on in their tenure. Once again, I get distracted.

So where does that leave this meeting between the leaders of two of the most consequential countries on the planet. We got a pledge to do something within 100 days about the trade deficit, which is about as meaningful to long-term policy as China sending us another panda for the National Zoo. While cute and a good sound bite, it does nothing to constructively deal with the issues affecting relations between the two countries. We heard nothing about North Korea, human rights, Hong Kong, the South China Sea, climate change, or any of the other myriad issues that the countries could possibly work on. Perhaps Xi got a nice photo-op with the palm trees in the background and Trump showed a bit more respect for decorum as he greeted Xi, including an actual handshake, but no tangible progress was made in dealing with problems that are only going to grow in magnitude. I guess it’s not so much of a surprise when many senior roles related to Asia remain unfilled and even when Obama was operating at full capacity, he was unable to do much to move the dial when it came to China and Asia. Unfortunately Americans are not paying enough attention to this part of the world at a time when it’s ever more important that they do and we have a government woefully underprepared to give it the attention is needs and deserves.  It may take a crisis of epic proportions to get everyone to wake up and take the requisite notice, which could be more frightening than anything we’ve seen yet.

Reagan Reincarnate?

February 28, 2017

I have been writing so much about Trump and the follies surrounding his administration that this blog has detoured a bit from my observations on China and the rest of Asia, so I am considering a new site dedicated to that man and his insanity.  While I work that out, I will continue to use this space to call out the absurdity of his policies.

I was heartened to see House Minority Nancy Pelosi calling out Trump for doing nothing on Sunday’s “This Week” on ABC.  While I don’t always think Pelosi is the most effective leader of Democrats in the House, I did like her term “deflector-in-chief” which is the point I was making in a previous post.  The transgender bathroom brouhaha is nothing more than Trump trying to make it appear like he’s doing something when he’s really not done much at all since taking office.

Now we get to see the contours of a Trump federal budget, which calls for increases in military spending on roughly US$54 billion and a similar amount of cuts in programs and departments including the EPA and foreign aid at State.  I’m not sure how another $54 billion in the military budget helps ensure that America “put[s] and will put its own citizens first”, as Trump insisted he was going to do in his CPAC speech.  Perhaps all that extra military is just another way to bring jobs back to America since our defense contractors are presumably manufacturing their wares in the US.  If Trump thinks more military spending is putting Americans first by protecting us from threats from abroad, it makes little sense to cut the State Department budget when diplomacy should go hand-in-hand with any military might.  I also don’t know what conventional military threat we’ve faced on our shores since Pearl Harbor, but perhaps he’s developing some top-secret missile shield, though I am sure that would cost a lot more than $54 billion.  So back to my point – if he wants to put Americans first (whatever that really means), why cut diplomacy when that can be just as effective in keeping the world safe?  Even better, where is his promised $1 trillion infrastructure plan that would truly put Americans first by creating jobs and modernizing our crumbling infrastructure that millions of Americans rely on daily.

What this initial budget announcement really amounts to is an obvious lack of understanding of how government works on Trump and his advisors’ part, as well as a blatant example of the hypocrisy that runs rampant in his administration.  Take Trump’s brilliant realization on reforming the health care system, “Nobody knew health care could be so complicated.”  Have you ever heard anything more insightful?

Reading the news each morning, I more often than not end up with a headache because some of it just makes no sense.  I mean, on one hand we have this crazy opening gambit on a budget while our president comments on the Oscars  (politics was the reason for the Best Picture mistake)  or making comments at the National Governors Association about imaginary tiles falling from the tunnels under NY’s rivers.  The man should focus on running the country rather than weighing in on awards shows or falsely putting down our nation’s infrastructure without coming up with a plan to fix it.

I struggle to understand this man, but a friend of mine had one theory on his behavior, especially in light of his push to increase military spending and our nuclear capabilities. Trump thinks he is the reincarnate of Ronald Reagan and in the process is attempting to resurrect the 80s, which coincidentally is also the time when Trump came anything close to being a baller.  It’s one possible explanation that’s certainly plausible, but doesn’t fully explain the crazy coming out of D.C.

Time For a Divorce?

March 20, 2016

I think back to the Umbrella Revolution protests here in Hong Kong in the Fall of 2014 and how they sparked by Beijing’s unwillingness to grant Hong Kong universal suffrage in the next Chief Executive election slated for 2017.  Since the protests ended, tensions have simmered in the city with occasional outbursts like the Mongkok riots over Chinese New Year and student-led protests at HKU because of the appointment of a new council chairman seen as being a panderer to Beijing.  I often get asked how the city has changed since I last lived here in 2002 and the biggest change aside from the common refrain that the city has become “more Chinese” is the emergence of a Hong Konger identity.  The problem as an expat is that you don’t necessarily feel this change when you’re wandering around SoHo and the Midlevels.  The only way to really tap into it is to read the local papers and even better, wander around some of Hong Kong’s universities.  For this change is not being led by those residents who are well established and living here with families, but by the younger generation that looks ahead and sees a future increasingly limited by China’s goal of total control over the city.  So it’s natural that the student-led magazine, Undergrad, at Hong Kong University (HKU) published a 60-page article the other week about its vision for Hong Kong’s future after 2047, the year the Basic Law and the “one country, two systems” framework expires.  What stood out the most in this vision was seeing Hong Kong as independent after 2047, probably the first time anything has been published in China sounding any sort of call for independence of a part of its territory.  As you can imagine, this sentiment did not go over well with either Beijing or the establishment here in Hong Kong, including its richest man Li Kai-Ching who basically pooh-poohed the idea that Hong Kong could ever go at it alone.  Yet, if you think about it, this call for independence is not as radical as it sounds.  Putting aside whether Hong Kong could be viable as an independent city-state, when you feel like your future is fairly bleak as your freedoms are under assault and your calls for greater self-determination go unheeded, calling for independence to safeguard your own freedoms ceases to be such a crazy idea.  It’s like getting a divorce when you’re in a bad relationship, which can be bad for any number of reasons.  You reach a point in that relationship where you know things are not going to change and it’s beginning to seem hopeless, so breaking away is the only thing that might shake things up.  The threat of breaking away could be the jolt that’s needed to engender change without actually breaking up or it might set off a struggle to actually break away from the partner who is doing most of the harm.  The students at HKU have their whole lives ahead of them.  Many of them were born around the time or after the handover.  They have watched their city decline in importance relative to the rest of China and the city’s collective voice get drowned out by the propaganda in Beijing, as well as the naysayers who make up the establishment in Hong Kong, most the tycoons and politicians who benefit from closer ties to Beijing.  It’s sad that those tycoons who made their fortunes because of Hong Kong being such a special place are now basically in Beijing’s pocket because there is more money to be made on the mainland than at home. I’m talking about you Mr. Li.  A proud Hong Konger you are definitely not.  As for the students at HKU and elsewhere in the city, they are reaching the point where they feel like they have nothing to lose by calling for more wide-ranging action, including independence.  Beijing seems to think that all it takes it a little more engagement by the local government with its youth to bring them into the fold, but what they’re not realizing is that if Beijing couldn’t tame Hong Kong when the mainland’s economy was booming and could use that growth as a carrot to demand fealty, what makes the central government think a slowing (and increasingly unsustainable) mainland economy with an ever shrinking civic space is going to be attractive to the next generation of Hong Kongers? Don’t be surprised if the calls for independence only grow louder in the coming years.

My apologies for being offline the the past three weeks, but I was back in the States for Chinese New Year to see family and friends, as well as take care of some work over there and just returned to Asia this past Monday where I’ve been busy working and setting up my new home in Hong Kong.  So it’s fitting that I am sitting at my beloved Starbucks in the Garden City Mall in Shenzhen about an hour or so before I am due to move out of my room here and bring all of my worldly possessions to Hong Kong, meaning all four suitcases-worth.

Heading home for any extended period of time and then returning to China means that I have some room to process all that’s happened during the time I’ve been here, as well as answer questions from family and friends about what they might have seen or heard about China in the news.  The two topics dominating any conversations I had about China were either the stock market and economy or the continued crackdown on political and civil liberties, including the ongoing case of the missing Hong Kong booksellers.

Having some space from China, I still feel that this is a country heading in the wrong direction at the moment.  It’s not that it can’t or won’t turn itself around, but almost daily there is another news headline that makes me shake my head and wonder what’s really going on here.  The latest was President Xi’s visit to the country’s major news and media organizations in China explicitly telling them to act as a mouthpiece for the party.  This new policy is another attempt to exert greater control over another aspect of Chinese society that has the potential to create social instability.  However, like many previous moves, this one smacks of insecurity and coming at a time when there are questions around China’s ability to manage its economy, it’s clear this is another attempt to mask potential problems that may exist in the system.  If these problems somehow were brought to light, there is a real fear that people would not be happy and social unrest could erupt.  Definitely not a move of a leader in control of his country.

Beyond that, I have been thinking more about Hong Kong, Shenzhen, and other cities that see themselves as other in the context of Greater China.  Hong Kong is probably the most salient example of this trend in light of protests over the years against certain actions taken or policies put forth by the mainland.  The largest of recent memory being the Umbrella Revolution in the fall of 2014 triggered by Beijing shifting the goalposts on universal suffrage for Hong Kong’s Chief Executive.  The alleged kidnapping of the booksellers has only added accelerated this feeling of “other-ness” that seems to run deep among Hong Kongers.  However, more interesting and something that only really hit me this morning as I was being driven around Shenzhen in an area known as the Hi-Tech Park where some of Chinas biggest tech companies have their offices including Tencent, ZTE, and DJI. I saw all these twenty-something tech workers running to work and the scene could have just as easily been one from Silicon Valley.  Shenzhen is a city trying to build its future on technology and finance as it firmly sheds its industrial past.  More interesting is the fact that very few people in Shenzhen are actually from Shenzhen, so the city does not have to hew closely to a long-established culture.  Many people (mainly foreigners visiting or living here, including myself at times) bemoan the lack of a deep-rooted culture.  But my riding partner that morning who has lived here for quite some time even though she is not from here framed this lack of a deep-rooted culture in a positive way that I had not considered before.  She claimed that this lack of culture meant that the city was building something new from the ground up, which made Shenzhen much more open than any other Chinese city that is hemmed in by its past.  You can see it in all the new skyscrapers, shiny shopping malls, and tech companies pushing the Chinese innovation storyline.  But I had not thought about it in terms of what it means for a city and its outlook, as well as its place in the national narrative.  The conversation was sparked by my question about whether Shenzhen was different than other parts of China and upon receiving an emphatic “yes”, I followed up and was presented with this theory.  If Shenzhen can perhaps be added to the “other” category because of its short history, lack of a strong local culture, and welcoming people from all over China with easy access to Hong Kong, I wonder what this means for the future of the city and more importantly, China as perhaps other cities begin to see themselves as different than the rest of the country, which would be a rather backhanded way of unravelling the social cohesion that President Xi working so hard to maintain.  Something to be explored further in another post, but wanted to get it out there because it’s something I feel like I am going to be thinking about for quite some time.  But now I must finish packing and make my way back to Hong Kong.

Surprise, Surprise

January 30, 2016

China is getting on my nerves.  The internet the past two weeks has been particularly finicky and not having an IT background, I just imagine someone sitting in a room sifting through all of my chosen websites to browse to make sure I am not looking at anything all that bad before deciding to release them to my screen.  I am sure it doesn’t work like that, but whatever it is, it has become a definite problem and a real sap on my productivity, not to mention pissing off the powers that be at work because emails seem to get lost in transmission.  I know that we’ve been upgrading our network at work to install a building-wide VPN, but even at home or on my phone, I find that the connections cut in and out and my VPN becomes less and less stable the longer I am here.  Putting these frustrations into sharp relief is the fact that I was in Vietnam and Hong Kong the past week where the internet in both places was blazing fast.  I mean I could download an entire episode of the Real Housewives of Atlanta at the Hanoi airport while waiting in line for 10 minutes to board my flight.  Here in Shenzhen I spend whole evenings trying to get through one episode of many an hour-long show.  I read surveys of corporates operating in China and the challenging IT / internet environment with the Great Firewall is one of the top frustrations that comes along with having operations here.  I see it first hand at work with all the difficulties of linking up to our servers in the States and maintaining an efficient network for everyone to use.  When you think about these problems coupled with the fact that there are whole swaths of the internet off limits to Chinese residents without a VPN, one has to begin to wonder what effect all of this has on the economy. Interestingly, the leadership here is placing great hope on the internet and innovation associated with it to lead the next surge in growth, but can it do so when the national network is running rampant with censors blocking anything and everything deemed sensitive or a threat to national security.  It’s the latter category that’s most worrisome because nearly anything can fall within the ambit of a threat to national security.

It’s this continued crackdown on any dissenting voice that only adds to the worry about what happens next in China.  Seemingly every other day there is another story out of this country about arrests of people promoting human rights or a high-level government official being taken down for corruption.  On the human rights front, it’s easier to understand.  Beijing does not want anyone giving voice to people who may feel disenfranchised or wronged because of government policies.  The anti-corruption campaign seems to have no real rhyme or reason when it comes to its targets as it’s been evenly spread across the country.  Though interestingly, through this handy interactive graphic, you can see that Guangdong province has fared the worst of all the jurisdictions in the country, meaning that it’s had more take-downs than anywhere else.  Without oversimplifying too much, Guangdong may stand out more than other places because as home to both Guangzhou and Shenzhen, two of the country’s largest and most economically open cities, as well as it’s distance from Beijing and proximity to Hong Kong, the province has a history of doing its own thing and identifying more closely with its southern neighbor rather than Beijing due to its shared dialect of Cantonese. Historically, China has always been a hard country to govern with the hinterlands (including Guangdong) demonstrating a tendency to disregard missives from the central government.  Viewed with these ideas in mind, Xi’s anti-corruption campaign could be seen as an attempt to prevent history from repeating itself again by taking out those perceived troublemakers.  But the anti-corruption campaign has had the perverse effect of hampering reforms by leaving public officials both scared to implement new ideas for fear of falling into the crosshairs of the anti-corruption campaign and worse for the long term, removing people who could have provided a constructive counter-opinion to those pushing current policies.  All in all, it’s still too early to tell how much of this anti-corruption campaign is PR and a way to take out dissent within the ranks or a real attempt to clean up the Chinese government at all levels.  However, I would still put my money on the former and venture to say that it’s more of an attempt to consolidate power around Xi and his small circle of confidantes rather than a wholesale clean-up of the Chinese government where no one is above the law.  In the end, it’s probably just going to be a smaller group of people who remain above the law – those who tow Xi’s line and support his policies.

Increasingly, I worry for the future of this country.  When I was younger, I was an idealist and thought China was going to show the world how to develop in a different and better model than what had been done in the U.S. or Europe.  Now I fear that the country is heading in a direction that is unsustainable.  It’s not just about the economy, but also about simultaneously creating a real space for a population that is growing ever wealthier to be able to vent and express their opinions.  At this point in time, the government seems to be unwilling to create that space, or if it does, it’s done so in the same way that it tries to micro-manage the economy, from the top down.  One of these days, something is going to happen from the bottom-up and it’s not going to be as a result of the government’s doing and it’s that moment I am truly fearful of because it’s going to catch a number of people by surprise and one thing this government does not like is surprises.

Hanoi Happenings

January 27, 2016

I’ve been in Hanoi for the past two days on a work trip, but in running around the city have managed to take in and get some feel for what’s going on here.  It’s been nearly 15 years since I was last here, which makes me sound quite old.  Frankly, it’s odd to think I can utter that I did something like come to Hanoi “15 years” ago, but I guess that’s what happens when it feels like the years breeze right by.  But I digress.

Hanoi feels like a bit of a boomtown given all of the changes taking place around the city. When I was here 15 years ago, I was dodging bicycles trying to cross the street.  Now it’s more cars and motorbikes with only the occasional bicyclist pedaling along.  I tend to use the means by which people get around a city in Asia as a proxy for that city’s level of development and this marked upgrade is a clear sign that Hanoi on the up and up.  The other noticeable thing is that the cars are generally brand new and quite nice, meaning a lot of Mercedes, BMWs, and Audis interspersed with the still nice (and probably expensive due to import tariffs) Mazdas, Toyotas, and Lexuses.

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View from elevator in Sofitel Plaza Hotel

Aside from the cars, I noticed all of the new construction around the city.  A lot of is Korean and Japanese financed with Korean brands like Lotte and building names like Keangnam Hanoi Landmark Tower dotting the landscape.  When I was here 15 years ago, the charming French colonial buildings were really all there was to see, but now as you look out at the horizon, one notices more skyscrapers and apartment blocks going up similar to what has happened in many Chinese cities.

And that was the comparison that I found myself making – Vietnam to China.  It’s as if this country is 15-20 years behind where China is in terms of opening up and developing. However, as I sometimes think China is moving backwards as it grows by aggressively going after foreigners and trying to limit investment opportunities, Vietnam seems to be moving in the other direction and reaching out to bring in investment.  Even the relative surface things like being able to by an International New York Times or log onto Facebook or Google are different than in China where the Great Firewall and extreme censorship makes all that impossible.  But it’s not like Vietnam is a thriving democracy.  The government is Communist and wields enormous power, but appears to be less insecure than China’s leadership when it comes to inviting in and letting foreign influences stay in the country.  Perhaps that will change going forward, but right now Vietnam feels like it it is waking up and welcoming in the world and China is increasingly looking to its massive domestic market to spur the economy as the country tries to throw its economic might around to influence and make friends around the world (see President Xi in Iran within the last week).  Another interesting point is that China is pushing boundaries in the South China Sea and Vietnam is none to happy about it, so perhaps in some perverse way, China’s actions are pushing Vietnam onto a path of relatively more openness.  Either way, Hanoi definitely buzzes with an energy that I find quite interesting and look forward to seeing where it takes this city and the rest of the country.

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St. Joseph’s Cathedral . . . another French legacy