ARM Fired ARM China’s CEO But He Won’t Go: A Breakdown
The consumer price index (CPI) rose 1.1% YoY in June, down from a 1.3% in May. The producer price index (PPI) rose 8.8%, vs. a 9% expansion in May. The CPI decline was helped by a 1.7% YoY fall in food prices, while core CPI, which excludes food and energy costs, was stable at 0.9% YoY, suggesting weak non-food inflation. Read full article →
Industrial profits up 83% YoY to $530 billion Jan–May.Profits rose in 39 of 41 industrial sectors. Chemical materials and products – including vaccine inputs – more than doubled profits to $49.5 billion while computer, communication, and electronic equipment increased 49.3% to $39.4 billion. Read full article →
China's livestock feed production in the first five months totaled 114 million metric tons, 21.5% ahead of last year. Monthly feed output is running 4-to-5 mmt ahead of same-month totals from each of the previous three years. Read full article →
Cybersecurity regulators investigating three companies recently listed in the U.S., hinting at concerns that their data could fall into foreign hands. Beijing also said that it would “consolidate the information security responsibilities of overseas listed companies,” helping drive a smaller sell-off of a few percentage points in other U.S.-listed Chinese companies, including Baidu, JD.com, and Alibaba. Read full article →
Government approves merger of state-owned tech giants CETG and Potevio to establish self-reliant supply chains. CETG supplies military IT products while Potevio provides semiconductors and telecoms equipment. The two (of 100) "core SOEs" employ 220,000 workers in 15 publicly traded companies with post-merger revenues of $50 billion. Read full article →
Global investors made their biggest ever purchases of Chinese municipal debt in June, an indication of growing confidence in a market that’s becoming a global asset. Overseas investors added $113 million of local government notes in June, a record gain in data going back to 2018.” Read full article →
Alibaba joins local government to bail out China’s Suning: “Suning’s restructuring this week reflects Beijing’s new strategy of deploying private companies alongside state lenders to bail out debt-laden conglomerates in a bid to soften the risks from financial instability and job losses.” Read full article $→
Trade & Travel
Two days after going public on the NYSE and raising $4.4 billion, ride-hailing giant DiDi Chuxing announced its data infrastructure was under investigation. Cyberspace Administration ordered DiDi kicked off app stores and blocked from registering new users. [Ed: The image, above, represents the standard method for mainland Chinese internet companies to go public, Didi is just the latest in a long line of big companies to use it]. Read full article →
Regulators suspect that Didi-Chuxing's New York IPO was a deliberate act of deceit: "We must not allow any internet giant to become a super database of Chinese people's personal information that is more detailed than what the state possesses, let alone give them the right to use that data at will. Especially for companies like Didi Chuxing, which are listed in the United States and whose largest and second largest shareholders are foreign companies, the country needs to have stricter information security supervision". Read full article $→
China overtook Germany to become the world’s top machinery and equipment exporter last year. Machinery exports from China reached €165 billion, or 15.8% of foreign trade, compared with German exports of €162 billion. Read full article →
A record 6,090 trains passed through Xinjiang inland ports in the first six months of the yearcarrying 6.57 million tonnes of goods in and out of China. Read full article →
Xi Jinping, Angela Merkel and Emmanuel Macron throw support behind EU-China investment deal: “The leaders of China, France and Germany threw their support behind an EU-China investment agreement on Monday, despite the deal’s failure to gain widespread backing in Europe, according to a Chinese summary of a video call between the three countries’ leaders.” Read full article $→
In 2020, economists predicted that China's economy, consumption, and shipping prices would fall. Wrong: China’s exports in January-May averaged $247.5 billion monthly, up 29% from 2019. More goods are going out, supporting container-shipping demand, more raw materials and commodities are coming in, employing tankers, bulkers and gas carriers. China’s imports averaged $206.8 billion/ month, up 25%. Read full article →
China turns on world’s second-largest hydropower dam
Technology & IP
Four years ago, the international AI City Challenge began spurring development of artificial intelligence for real-world scenarios like counting cars traveling through intersections or spotting accidents on freeways. Last year, Chinese companies won three of the four competitions. This year, Alibaba and Baidu beat 40 nations and took first and second place in all five categories. TikTok was second at identifying car accidents or stalled vehicles from freeway videofeeds. Read full article →
Tencent's facial recognition system prevents minors from playing its mobile games between 10 p.m. and 8 a.m. After some minors borrowed adult players’ accounts to play after hours, a new facial recognition system, “Midnight Patrol,” closed this loophole. Players must now scan their faces to verify their identities. Read full article →
Shenzhen broke new ground on consumer data-protection laws. A new set of regulations stipulates that: App-makers may not deny service to users who do not consent to “over-collection” of their personal information; Users may specifically refuse consent for data-driven behavioral profiling; Apps may not make personalized recommendations to children under the age of 14; Users may not be forced to submit to facial recognition. Read full article →
Tsinghua wins Student Supercomputer Challenge, outperforming 300 teams from universities around the world. The team won for second straight time by solving problems in artificial intelligence, pulsar searching, and quantum computer simulation. Read full article →
UST Shanghai's 56-qubit quantum computer completed a random quantum circuit sampling task 100 times harder than that solved by Google's Sycamore, in 1.2 hours. “Our experiment unambiguously demonstrated a computational task that can be completed by a quantum computer in 1.2 hours but will take an unreasonable time for any supercomputer”. Read full article →
Tianhe provides astronauts a working and living space of about 50 cubic meters. Each astronaut has his own bedroom and, “Astronauts (can) adjust their mood and have fun, while watching movies, listening to their favorite music as well as reading books. We’ve also developed a virtual reality-based system via which astronauts can see their families, familiar life scenes and beautiful landscapes.” Read full article →
Shenzhou-12 urine treatment saves $$. The system has recycled 66 liters of urine and treated it into distilled water to support the crew. The system will save $15 million over six months, since delivery of cargo to the orbiting spacecraft is about 140,000 to 350,000 yuan per kilogram. Read full article →
China launched a data relay satellite Tuesday, its third launch in four days. A Long March 3C placed the Tianlian-1(05) communications satellite into geosynchronous transfer orbit. The launch was China’s 22nd of 2021, including one failure of a commercial rocket. Read full article →
A national Social Credit System? Really? Jeremy Daum, at the Paul Tsai China Center; Dai Xin, at Peking University Law School, and Vincent Brussee at MERICS, mythbust the social credit system.
The first scientists to speak out against the theory that the pandemic could have started from a laboratory leak have again disputed the idea. In The Lancet, two dozen prominent international scientists backed a recent call from G7 nations for further inquiry into the origins of the virus that causes Covid-19, and urged the WHO to “expeditiously” continue a study with experts in China and the Chinese government. Read full article $ →
1.318 billion vaccine doses delivered to date – up from 1.207 billion doses a week ago, for a daily average of 16 million doses, – down from 22.42 million doses last week, a drop of 5.5 million doses per day. Read full article →
Large-scale real-world data covering 10.2 million participants, revealed that Sinovac's vaccine, CoronaVac, is 65.9 per cent effective at preventing symptomatic cases, 87.5 percent in the prevention of hospitalization, 90.3 percent against ICU admission, and 86.3 percent against coronavirus diseases-related deaths. Read full article →
Rural school meal programs have greatly reduced malnutrition, but rural children’s nutrition is still lower than that of urban kids, vitamin deficiencies are more common, and obesity is increasing. All the evidence shows that school meal programs are one of the smartest long-term investments any government can make. The return on investment can reach $9 for every $1 invested. Read full article →
Night Scene: Ocean Flower Island, Hainan
In 2018, village-born Jin Guowei was knee-deep in debt and peddling fruit to tourists in the streets of Lijiang, Yunnan. Now he’s Brother Pomegranate, an Internet sensation with 7.3 million followers and 300 million yuan ($46 million) of sales in 2020. He once sold 6 million yuan worth of pomegranates in 20 minutes. Revenues generated by rural content creators on Douyin have grown 15-fold year-on-year. Douyin says 54% of its rural influencers are ‘fanxiang qingnian,’ returning youth. Read full article →
Family with 8 kids gets fine reduction: The family kept having children until they had two boys. One daughter was given away because they could not afford to support her. The fines were reduced from $402,370 to $13,928 after years of negotiation with the family. Read full article →
Surveys in Chinese cities show 4% of urban families want a third child: Experts suggest that increasing the supply of quality education resources, promoting the fair and balanced development of education, improving social security and medical care systems and keeping prices down, and improving the maternity leave policy and protecting women's rights may encourage families to have more children. Read full article →
China has laid out its strategy to tackle its looming pensions crisis over the coming five years as a rapidly aging society and a shrinking workforce threaten the sustainability of the existing system. The government will further expand the coverage of the basic state pension insurance system managed by provincial-level governments, encourage the growth of the occupational pension and private pension sectors, and delay the legal retirement age, according to the 14th five-year work plan (link in Chinese) released by the Ministry of Human Resources and Social Security last Tuesday. Read full article →
Of 11,590 grain crop varieties planted in the country in 1956, only 3,271 varieties remained in 2014, so the government has bolstered its system of national gene banks and issued policy recommendations. These are making positive steps towards large-scale conservation; however, there has been relatively little attention given to the role of the country's 260 million farmers who have saved, used, and contributed to the evolution of diverse, local crops for centuries with positive implications for climate resilience, improved farmer livelihoods, and increased food security. Read full article →
Universities compete for top gaokao scorers, many sending elaborate acceptance letters. Nankai University included two lotus seeds to commemorate the founding of the CPC. East China Normal sent a video entirely of hand-drawn cartoons depicting the story of a child from birth to adulthood. Lanzhou University sent a mini-movie of students designing laser radars. National University of Defense Technology sent a wordless, 27-second clip of students wearing pilot uniforms soaring thousands of meters in the air, holding a sign, "You're welcome to apply." Read full article →
The wine subsidiary of the world's biggest liquor company, Kweichow Moutai launched a dry red wine, Qingluan–at $510 per bottle. The justification being that there are only 9,999 bottles. A launch event was held at Moutai’s Phoenix Estate winery in Changli in Hebei province, close to the east coast, where the company has 330 hectares of vineyards planted with Cabernet Sauvignon, Shiraz and Chardonnay. Read full article →
Hong Kong beverage maker Vitasoy is the latest target of Chinese netizen calls for boycotts after an employee circulated a memo online offering condolences to the family of a worker who stabbed a Hong Kong police officer. Read full article →
Facebook, Twitter, and Google have privately warned the Hong Kong government that they could stop offering their services in the city if authorities proceed with planned changes to data-protection laws that could make them liable for the malicious sharing of individuals’ information online. The American firms last year warned they were suspending the processing of requests from Hong Kong police following China’s imposition of a national security law on the city. Read full article $→
Half of companies inspected by regulators had multiple air pollution issues, with those in the building materials and chemical and pharmaceutical sectors among the biggest culprits. Of the 1,582 companies inspected in 30 cities in May, 882 had “1,940 issues related to air pollution of the environment”. The inspections targeted companies in highly-polluting “key industries” including iron and steel, petrochemicals and building materials.Read full article $→
25% of land under ecological protection. The area covers major ecological functional zones, regions that are ecologically sensitive and vulnerable, as well as key biodiversity regions. By the end of 2019, China had 11,800 nature reserves of various types, accounting for 18 percent of the country's land area, protecting 17 percent of terrestrial areas ahead of schedule. Read full article $→
Beijing's goal of educational equality includes cutting private school enrollment from 10% to just 5% within three years. This means eight million more children in public schools and hundreds of billions of yuan added to the education budget. The plan includes banning new private investment in primary and middle schools; cutting down enrollment in existing private schools; converting some private schools into public institutions; building new public schools. Read full article $→
The State Council's targets for a “green and low-carbon circular economy” include increasing resource productivity by 20%; reducing energy intensity by 13.5%; reducing water intensity by 16%. It sets targets for better utilizing waste including: Crop waste, Construction waste, Wastepaper, Scrap steel, Non-ferrous metals. Goals: Improve recycling of electronic products and batteries; Ensure management of some products – like automobiles and plastics – throughout their entire lifecycle; Make e-commerce packaging greener. Read full article →
Newt Gingrich, former speaker of the U.S. House of Representatives, said the contrast between Chinese progress and American paralysis is growing greater and greater, "As I watched the long, stale vaudeville-like performance over the US infrastructure bill, I kept noticing the amazing steady progress of the Chinese Communist Party as it continued to build. While we debate, impeach and campaign for office, they build. The contrast between Chinese progress and American paralysis has been growing greater and greater. And it's a serious problem," he said. Read full article $→
Above: Richard Wolff on US anxiety at China's Rise. "There is developing in the West, a deep anxiety..."Watch the video→
The Guardian:Outrage over shutdown of LGBTQ WeChat accounts in China BBC:China divided as WeChat deletes LGBT accounts from platform Chinese professor: "I, myself, monitor a very active LGBTQNB+ WeChat Channel that is still operating in China as I write, and which has never suffered any CPC interference despite occasionally criticising the Chinese government! Of course, most people in the West are not members of WeChat and cannot see for themselves about whether the AP is ‘lying’ when it asserts that the CPC has ‘closed-down’ gay chat-rooms and channels on WeChat. Despite the terrible behavior of the Western colonialists – modern China is still developing a rapprochement with the LGBTQNB+ community and has every intention of pursuing this objective". (The professor is an HCC subscriber).
“What the lab-leak theory’s new credibility means for social media!” (CNN headline). “Biden orders closer review of Covid origins as U.S. intel weighs Wuhan lab leak theory” (CNBC headline). “Like Russiagate, US intelligence has run with an entirely unsourced narrative that conveniently pins blame on another country for domestic ills and labels that country a ‘national security’ threat. … The lab leak conspiracy is an effective psychological operation because it is difficult to imagine evidence that could disprove or prove the claim.” (Black Agenda Report).
America's True Goals and Upcoming New Propaganda Push
China a ‘welcome friend’ in Afghanistan. Taliban spokesman Suhail Shaheen says the group welcomes Chinese investments in reconstruction and would guarantee the safety of investors and workers. The US withdrawal from Afghanistan has emboldened the Taliban and there are growing concerns about the Kabul government’s ability to stay in power. Read full article →
Beijing to extend $62 billion BRI flagship to Afghanistan. The first, crucial step will be the construction of the Kabul-Peshawar motorway – through the Khyber Pass and the current border at Torkham. That will mean Afghanistan de facto becoming part of CPEC. Kabul-Peshawar will be one extra CPEC node that already includes the construction of the ultra-strategic Tashkurgan airport on the Karakoram highway in Xinjiang, only 50 kilometers away from the Pakistani border and also close to Afghanistan, as well as to Gwadar port in Balochistan. Read full article →
Haiti assassins arrested inside Taiwanese embassy. Haiti is one of 15 countries to recognise Taipei, after Haitian police find 11 men believed to have been involved in the killing of president Jovenel Moise. Read full article $→
Narratives of China’s lending to Africa are often oversimplified, focusing on the Belt and Road initiative writ large, and leveling accusations of “debt-trap diplomacy.” One such story is that of the first phase of a Cameroonian highway construction effort intended to link the country’s political capital, Yaoundé, to its economic center, Douala, by way of another major metropolitan hub in Edéa. Read full article →
West aims to collapse Myanmar’s government, dismantle its powerful, independent military, and leaving a divided and destroyed failed state unable to function as a constructive partner to its neighbours and main trade partners, China and Thailand. A concerted effort by alternative media, the UN, and Myanmar’s allies will be required to stave off the implementation of the ‘Libya Model’ playing out in Southeast Asia. Read full article →
A majority of Australians do not want their country involved in a military conflict between China and the US. 57% chose neutrality and 21% of those aged 18-29 support the US. A poll of 14 EU countries found 24% of Poles supporting Washington, while 54% chose neutrality. Just 19% of Czechs, 17% of Romanians, 13% of Hungarians, 18% of French respondents, 20% of Italians, and 10% of Germans chose solidarity with the United States against the PRC. Read full article →
China urged the U.S. to reconsider its denial of study visas to more than 500 Chinese science and engineering graduate students. Most of the students, who are planning master’s or doctoral studies, applied for their visas after U.S. President Biden took office in January, according to the state-run media outlet’s report, which cites an unnamed source familiar with the matter. Read full article →
Chile joins the AIIB. Chile's entry into the Asian Infrastructure Investment Bank reaffirms the country's commitment to the Asian region, the main destination for the country's exports. In turn, it allows the Treasury to access a new source of financing and participate in connectivity projects between the Americas and Asia, explained the head of the Treasury. Read full article →
US Pacific Fleet Commander Says He Has a Duty To Prevent Seizure of Taiwan. “China is a pacing threat,” Adm. Sam Paparo said. “I worry about China’s intentions,” Paparo said. “It doesn’t make a difference to me, whether it is tomorrow, next year or whether it is in six years. At Pacific Fleet and Indo-Pacific Command we have a duty to be ready to respond to threats to U.S. security.” Read full article →
Retired Chinese military personnel would be a top priority for conscription in wartime, according to draft regulatory changes released by the Ministry of Veterans Affairs on the weekend. The proposed changes to the country’s conscription regulations spell out for the first time how authorities would enlist veterans and other conscripts while the country was on a war footing. Under the regulations, the State Council or the Central Military Commission would issue mobilisation orders and hand responsibility for drafting soldiers to government and military agencies at various levels. Read full article $ →
The US-China contest will be fought in America's heartland
The demonisation of China has gained momentum in the American body politic. Not a day goes by without some major figure warning about the China threat. In April, a 281-page bill entitled “Strategic Competition Act of 2021” was tabled in the US Congress. All this cacophony would give the casual observer the impression that the United States is not underestimating the China threat – but, actually, it is.
The real danger of this demonisation is that it leads even thoughtful Americans to believe that an open society such as the US has many natural advantages over a closed, autocratic system such as China’s. By framing it in this way, Americans cannot even conceive of the possibility of losing out to China, meaning they are seriously underestimating the challenge they face.
Having recently experienced the most painful century in their history – the century of humiliation unleashed on China by Western and Japanese forces – the Chinese believe that the American assault was the last effort by a Western power to keep China down and prevent it from occupying its rightful place in the world.
Joe Biden’s America needs to learn from the world, not vice versa
The biggest conceptual mistake that American policymakers are making is a simple one. They assume that their strategic competitor is the Chinese Communist Party, which explains the American confidence that American democracy will triumph. Yet the strategic competitor of the young American republic is a 4,000-year-old civilisation.
China is not challenging American prosperity. It is not a threat to American security, nor is it a threat to American values. On values, this would be true if China were either threatening to export its ideology to America, or threatening to undermine the electoral process there.
Neither is happening. Yet, an amazing number of Americans – even those who are thoughtful and well informed – believe China is on a mission to undermine American values. South China Morning Post.
Summers on China
Larry Summers on China
Will China's growth slow?
Overrated-Underrated on SOEs, industrial policy, the China Card, and Wolf Warrior diplomacy. Plus, how should US academia relate to a changing China?
The following is a transcript of a podcast Jordan recorded with Larry Summers last week. Dr. Summers is a professor at Harvard, and previously served as Clinton’s secretary of the treasury and Obama’s national economic director. Co-hosting with me was Logan Wright, Director for China Markets Research at Rhodium.
Summers: Underrated in many cases. Some of them are actually state-of-the-art, successful, entrepreneurial in funding venture capital. There’s a tendency to see them in a bit overly ideological terms in the West.
Schneider: America pursuing industrial policy in the 2020s?
Summers: Currently excessively in fashion. We’re not going to be able to do it very well in many cases. The objectives are unattainable. Trying to raise (in a large-scale way) the fraction of American workers who were doing production work in manufacturing is futile for the same fundamental reason that trying to raise the fraction of people who work on farms is futile. There’s a tremendous productivity increase coupled with a relatively inelastic demand.
Schneider: Using China as your main way to politically drive domestic regulation.
Summers: Overrated. Declaring enmities can too easily become a self-fulfilling prophecy. I’m comfortable with advocacy that suggests that we’re very much engaged in a global struggle where the power of our example is going to be essential. But where it is suggested that we need to pursue certain kinds of domestic policies in order to confront an adversary, I worry about the internationally polarizing consequences of that approach.
Schneider: Wolf warrior diplomacy.
Summers: I think it’s a grave problem. I think that for those of us who believe that the major problems of the 21st century are issues like climate change, global health and pandemic risk ... for those of us who see those challenges as central, we also see being able to cooperate with China as central in meeting them. We would therefore like to see our relationship with China more oriented toward cooperation on those issues than on ideological point-scoring having to do with political issues. Wolf warrior diplomacy, because of the outrageous things that are said, renders fostering cooperation much more difficult. So I think it’s very pernicious.
Schneider: And we got a big one to close: America’s political system.
Summers: I think it’s underrated. I think that the lesson of American history is a lesson of self-denying prophecy: that John Kennedy believed that Russia was surpassing us; that at the end of the Carter administration it was generally believed that we were suffering a malaise and our constitution might need to be amended; that many believed and suggested that Roosevelt needed to take dictatorial powers in 1932; that in 1792, Patrick Henry said that the spirit of the revolution had already been lost.
I think the narrative of American history is the American people’s and their leaders’ capacity for alarm and for that alarm to lead to renewal and rejuvenation. I think that is the process that is being set in motion right now. So I am ultimately an optimist about the United States.
I believe Winston Churchill did not actually say what is often attributed to him, but I do believe the statement is correct that America tends to do the right thing, but only after exhausting the alternatives. And I think in many areas, people will look back at this moment and that’s what they’ll see.
Schneider: One last one because I can’t help myself: What are your biggest outstanding analytical questions about China that you’d love to learn more about or try to get answered?
Summers: I’d like to understand the questions around the demographic changes that China is going through, both the obvious in terms of a declining labor force, but also the less obvious in terms of the consequences of rural-to-urban migration of those who can be productive in urban areas being largely exhausted.
I’d like to better understand how China has nurtured a cutting-edge set of venture-type companies despite being a relatively poor country. I’d like to understand better the questions of a transition of power and the possibilities of wrenching change from the current system in China. History tells me that protracted continuity for fifty years is unlikely, but I don’t have a good feeling for its likely discontinuity.
And I’d like to understand better the attitudes of ordinary Chinese people towards the United States and towards the rest of the world, because I think it is a mistake to assume that authoritarian states are not responsive to the popular will. Often authoritarians who lack the legitimacy of democratic election have even more need to cater to the popular will in order to maintain power. So understanding the weltanschauung of Chinese citizens towards the rest of the world seems to me profoundly important.
Schneider: I guess I have the agenda for the second half of 2021 ChinaTalk episodes.
Favorite Bureaucracies and Why China Lost Faith in the West
Schneider: Is there a historical bureaucracy you’d really like to have been a fly on the wall for or to have worked in?
Summers: I’d have liked to have seen what it was like when the Marshall Plan was being conceived and implemented, because I think that was the most profound success of economic foreign policy that the world has ever seen.
I would have also liked to be a fly on the wall in the early years of Chinese economic reform planning, after Deng Xiaoping effectively took power in 1979.
From a very different perspective, I’d liked to have been present in the foreign ministries of Europe in the thirty-nine days before World War I, so that I could better learn the negative lessons that were to be learned from that experience.
Schneider: Let’s stick with Chinese economic policymaking. How has your estimation of China’s policymaking changed since Deng?
Summers: I think for better or for worse—and it’s some combination—China has become less receptive to Western influence. I think the China of the 1990s was a China that believed that a great deal of economic wisdom was present in the West. It believed in the remarkable power of markets, was more open to the idea that free societies and free markets were things that went together.
Three things have probably contributed to some substantial loss of admiration for Western economic practices or respect for the American capitalist example. I think that it’s always the case that as young people succeed and gain strength, they become more determined to set their own path rather than to follow the path of those who have gone before. And as Chinese incomes increased manyfold between 1990 and 2010, China became more confident in its ways.
The second thing that happened was this: for those who thought the West had it all figured out, the combination of the 2009 financial crisis, the election of Donald Trump, and the failure in initially containing Covid-19 just gave less of the sense that this was a place to learn how to architect a society.
And I think the third thing is that the rising tension and sense of competition between the West and China inevitably led to an emphasis, in China, on defining its own greatness in its own way.
For all these reasons, I think Chinese economic policymaking has become more distinctively Chinese and less an evolution towards models akin to those of the United States or Europe.
Another piece of this is a big change in thinking—of a kind which I certainly did not foresee—about the relationship between information technology and political openness. I was very given, in the early1990s, to remarking on the fact that during the 1980s countries like the United States or Japan or the UK had many more telephones than televisions—perhaps three times as many telephones as televisions. But in Russia, there were twice as many televisions as there were telephones. And my explanation for that had to do with a preference for one-way communication over two-way communication.
It was my belief during that period that some of the success of the much-derided Star Wars strategy came from the fact that delivering the kind of information technology that was necessary to compete was inconsistent with being a completely closed society in the way that Russia was.
I did not anticipate the ways in which information technology—through things like social-credit mechanisms and the ability to monitor and manage social networks—can be reinforcing of authoritarian models rather than undermining of authoritarian models. But it is probably important in terms of understanding the current architecture of economic competition.
How Harvard Should Handle China
Schneider: There are lots of recently retired or current senior officials of the CCP who’ve spent a month hanging out at HKS, and I feel like the next generation are probably not going to have that on their résumé, both because the CCP is warier and wants to learn less from the West, as well as some fundamental challenges that are wracking American academia as they think about engaging with the Chinese government and mainlanders in general. How do you think that American universities should think about navigating this relationship?
Summers: I think it’s a very profound question. When I was president of Harvard, it was my general view that American universities needed to remember that they were in a sense institutional citizens of the United States. I was appalled by Harvard’s policy, for example, on ROTC. I yield to no one in the strength of my conviction in gay marriage, but I did not think it was appropriate for Harvard to refuse to be part of ROTC because it didn’t like the policies of our elected officials in that realm.
I was also sympathetic to the idea that, under certain circumstances, law enforcement to prevent terrorist incidents, with appropriate search warrants, might need to have access to academic records.
So I think it is reasonable to ask American universities to be concerned with American interests. At the same time, I think we need to be very careful about the ways in which we limit interchange and interconnection.
Two stories about American universities and the former Soviet Union have always stayed with me. One has to do with a man named Alexander Yakovlev. He functioned as Gorbachev’s ideological adviser, and it is widely believed that he was the progenitor of the terms perestroika and glasnost. When he was asked, “Where did this all come from? Where did you, a long time party apparatchik, come forward with these concepts?,” he referred to the year he had spent in the late 1950s in Columbia University’s political science department and all that he had seen in the United States. This all deeply affected his thinking. And I thought to myself that whatever program paid for that—
Schneider: —is worth more than Star Wars.
Summers: Absolutely. The other story, which is a bit closer to home for me, was some years ago there was a Russian submarine that was sitting on the ocean floor that needed to be rescued. All aboard would perish if it was not rescued.
The reason it was ultimately rescued was that Russian admirals on the submarine had attended a program at the Kennedy School that brought together naval officers from the US and the Soviet Union. So they knew each other and had a personal rapport that enabled them to be in touch with each other to make that rescue possible. That program increased, for a time at least, the extent of goodwill between the countries.
I’ve certainly heard stories of influence activities by Chinese authorities in American universities, and it seems to me we can’t tolerate this and need to be very attentive. But I think we would make a serious mistake of the national interest to avoid American universities engaging with Chinese students and Chinese scholars.
But I think it’s entirely right that questions be asked. And I think when universities say that the idea of export controls is something that should be applied to companies but not to universities as a matter of absolute principle ... I don’t actually think that’s a tenable position.
So I think there’s a scope for a lot of thinking within the American academy about these questions.
Secular Stagnation in China
Wright: Obviously we’re aware you’ve been heavily involved in the debate over US economic conditions, but we wanted to ask your thoughts about how those theories apply to China’s economy as well. Let’s start with secular stagnation. How does the secular stagnation argument apply in your view to China’s economy? Is it different from conditions in developed economies, or are the same forces fundamentally at work?
Ten years of secular stagnation in the Eurozone [Source]
Summers: I think it’s odd to apply the concept of secular stagnation in the form that I have talked about it to an economy that’s grown more rapidly than almost any other economy in the world. On the other hand, I think the issues pointed out by the secular-stagnation theory are very relevant to China.
What secular stagnation directs attention to is the question of how an economy absorbs saving. In the American context, or the industrial-world context at large, secular stagnation is basically a concern that private saving is excessive relative to the demand for private investment, even at very low interest rates.
As a consequence, you have very low interest rates, shortfalls in demand, and a tendency to asset bubbles because those saving flow into existing assets. The way that has manifested itself in China over time, which has an extraordinary savings rate, is increased pressure to absorb all of that saving.
And that pressure to absorb saving has a central economic problem, which is what defined secular stagnation, has defined two aspects of the Chinese experience over time: it has defined the enormous emphasis on public investment and infrastructure investment. It’s basically the avoidance of secular stagnation that explains why in four years of the previous decade, China laid more concrete than the United States did in the entirety of the 20th century.
So the first way in which secular stagnation theory explains Chinese performance is it points to those very high levels of public investment. It also explains the pattern of China’s international accounts. One might normally expect that a country that had tremendous growth prospects, that was industrializing extremely rapidly, that was seeing vast labor exit from rural agriculture, would be a country that would be importing capital on a substantial scale. But the level of saving in China is so great that it actually has been exporting capital on a substantial scale, particularly up to the last several years.
That savings absorption problem is the key to understanding the mercantile tendency in Chinese policy. If there had been an open capital market, it might not have been mercantile policy, it might simply have been substantial capital outflows coupled with a relatively weak exchange rate. In the presence of capital outflow controls, however, it manifests itself in a mercantile approach directed at maintaining the level of demand. The logic of secular stagnation theory helps to explain two of the very striking characteristics of Chinese economic performance.
In a way there’s a resemblance between China in the first part of the 21st century and Britain at the end of the 19th century. In both cases, there were substantial pressures for saving that led to very substantial external investment. Some of the economics of the British Empire parallel some of the economics of belt and road.
Is Chinese Mercantilism a Global Problem?
Wright: Over the course of the pandemic, we’ve seen a huge expansion in China’s current account surplus, with that surplus of savings over investment as a continuation of this mercantilist behavior. We can compare China’s stimulus efforts to those of developed economies.
Is the persistence of that current account surplus a concern, and if so, how much of a concern should it be to developed economies, particularly the United States attempting to create a more sustainable post-pandemic recovery.
Summers: From a global point of view, saving absorption is a problem.That’s why we are living in a deflationary era (in most places outside the United States, that is). That’s why the world economy is currently defined by extraordinarily low real interest rates.
From that point of view, what is problematic is China’s decision to focus less on the promotion of domestic demand and more on the promotion of exports, and the decision to not take bold and dramatic steps to lift the share of consumption in GDP. To the extent that one believes that the liquidity trap, the zero lower bound, and extremely low neutral real interest rates are different words for a similar phenomenon involving an excess of savings ... if China were reducing its level of domestic saving or doing more to channel that domestic saving into investment, those would be smaller problems in the global economy.
Wright: At the same time, we’ve seen this phenomenon where the Chinese financial system has been less efficient over time at intermediating savings into investment. So we can see different sorts of concerns.
On the one hand, you have a financial system that’s expanded very fast relative to the size of its economy overall, which could lead to financial spillovers if credit growth continued at that pace. On the other hand, we have this idea that even if China did stimulate investment, it still might not necessarily reduce the current account surplus over time.
Which of these concerns is bigger for developed economies?
Summers: I’m not sure I completely share your indictment of the Chinese financial system. The fact that China has cutting-edge technology companies in as many areas as it does despite having 25 percent of US per capita income and PPP and probably 18 percent at exchange rate measures can be attributed to the fact that the finance-entrepreneurship ecosystem in China is doing something very valuable. The fact that China has been more successful in the field of software than Europe has is some kind of positive reflection of what’s going on in China.
It’s not my impression that all those investments are being made by the public sector—many are being made by a flourishing venture capital industry. So I think one has to be careful in condemning everything in Chinese finance. I do think that it’s probably the case that there are many continuing instances of financial repression in China, and that does lead to a fair amount of investment channeled into relatively efficient uses.
That may catch up with China at some point. That’s one of the suspicions I have as to how the mean reversion, which I’ve worried about with respect to China, will manifest itself.
Is Chinese Growth Mean Reversion Inevitable?
Wright: I wanted to ask you about the paper you wrote in 2014 with Lant Pritchett on mean reversion. What we found interesting was the argument that continuity of growth should not really be the prevailing assumption. The more dominant characteristic in history was this reversion to the global mean growth rate. In that context, are there still good arguments in your view why China’s growth should deviate from the global mean growth?
Summers: I suspect that a fair-minded Chinese observer could legitimately have a bit of an I-told-you-so moment with respect to what we wrote, in that Chinese growth has reverted towards a global mean less rapidly than we had supposed might be the case.
I think we were always careful to frame our analysis as a statistical tendency rather than as an iron law. I think the rather disappointing performance of India in the last few years, which was something we also predicted, means that as predictors the relationships that Pritchett and I applauded look a bit more realistic.
It’s always very hard to know about Chinese growth. It’s clear that there is enormous technological capacity, enormous entrepreneurial potential, enormous capacity for hard work in China. It’s also clear that there are substantial demographic headwinds, that there are substantial environmental headwinds, and that there are substantial issues of political economy.
On the one hand, the maintenance of loyalty to the Communist Party is seen as essential, and the selective dispensation of favors is the best-known way that mankind has to maintain loyalty, whether it’s Tammany Hall in turn-of-century New York or whether it’s the Chinese Communist Party.
On the other hand, corruption, which is very much like the selective dispensation of favors, is inimical to legitimacy, and the eradication of corruption was a very focal point of the early years of Premier Xi’s rule.
So I think it’s very difficult to know. My own suspicion is that while it is hard to call the timing with precision and while it may not apply to every sector, in the same way that the Kennedy era’s fears about Russia surpassing us look silly today, and the same way the profound alarm in the 1980s that the Cold War was over and Japan won today looks silly, I think that some of the more overheated views of China as an economic threat to the United States and some of the more dramatic projections of continued extraordinarily rapid Chinese growth look excessive.
Schneider: So will it take a financial crisis for the world to recorrect its assumptions about the future Chinese trajectory? What happens once the world realizes we’re not in a Japan 1980 scenario?
Summers: I’m not sure what the answer to that is. I can imagine scenarios that have the character of changed assessments of the Soviet Union, where there was no discontinuous event. Rather, there was the exaggeration of initial success followed by decay of performance, followed by belated recognition. There was no dramatic moment.
In the case of Japan, people felt that the most bubbling market was Japan. The prevailing position of people who played in markets was this: short Japan, long the rest of the world. The 1987 crash happened and Japan was more insulated from the crash than other countries—its markets recovered more rapidly than other countries. Two years later, the Japanese bubble burst. That was not just a financial event, but a sign of a kind of profound change in growth in prospects of Japan, which took years to be fully recognized. The Nikkei peaked in late 1989, and the early Clinton administration at the beginning of 1993 was in high alarm about Japan, and took it just about as a given that the Japanese productivity growth rate would significantly exceed the American productivity growth rate.
I think these things are likely to take time, and I would not expect some kind of seismic collapse in China that shakes the world. I would expect that historians will look back and find that the current view of Chinese economic prospects to have been overly benign in important respects.
But let me say that’s just my best guess, but it’s not a view I hold with anything like complete confidence. The degree of shiny strength—the variety of cutting-edge technology in particular—gives me some pause in making these judgments.
"If there’s a Darth Vader in the minds of Chinese national security hawks in Washington worried about China’s rising tech power, it’s Huawei founder, Ren Zhengfei. Bloomberg, 2018.
The plane flew through Tokyo, across the Pacific Ocean and the continental United States, and arrived in Boston on the side of the Atlantic Ocean. I got sick as soon as I left China and started vomiting at the Hong Kong airport, and with the jet lag lasting for more than 20 hours, I kept tossing and turning until the central city of Dallas.
Boston is a beautiful city and is the birthplace of the Civil War, but also the window for Europe to the exploration and development of the American continent. The old houses were neatly tidied up and painted with rustic paint. The beauty of the city lies in the small patches of forest that are preserved everywhere in the city.
Along the streets are green grass, grass on which broad-leaved trees are planted. From these maple trees and oak trees, the leaves are going to fall completely in winter. Now it was autumn, the leaves were red, green, yellow, yellow-green, brown, crimson ......, in the sunlight, they were transparent and picturesque. Some leaves have floated down and spread over the green grass as if a colorful carpet.
When we were young, we were attracted by the reputation of Xiang Shan (in Beijing) and traveled thousands of kilometers to see the red leaves. This time we took Greyhound for thousands of kilometers, and everywhere as wonderful as Xiang Shan - the natural scenery was even more beautiful than Xiang Shan.
The American people have been protecting the environment for hundreds of years, which is amazing. In the trees along the streets of New York, small squirrels run around. In front of some hotels, hundreds or thousands of birds descend on trees in the evening, and it is only natural that the birds fly into the crowds and houses.
Our country’s land is roughly equal to that of the United States. Tibet and Xinjiang take up a lot, and the mountains of the Yunnan-Guizhou plateau take up a part, leaving less than half of the country housing 1.2 billion people. The lack of funding for education, the low quality of education, and the blind growth of the population require that even the edge of the farmlands have to be cultivated [for food], how can there be mountains, forests, and meadows left.
Our educational conditions are still very difficult, the population is growing day by day, (but) access to education and the level of education are lower than in developed countries. In a fast-developing information society, low literacy is dragging down the entire economic development.
Developed countries use some silicon wafers in exchange for a large number of our peanuts. We often consider this an unequal exchange. This time, we generally come to believe that the United States has a high level of education and knowledge, its science and technology are more developed. The underdeveloped countries could only exchange a lot of primary products for a small number of high technology products from the developed countries. The former is available everywhere and the price follows some patterns, the latter is unique and the price can be set (by the developed countries) to repay the risky investment in development and production and the premium for talent. This is not exploitation.
Of course, in this way, the more educated people get richer, and the richer they have more access to education, exacerbating inequality. If developing countries do not realize that having fewer children and better children and developing education is the real solution, then this gap will be unbridgeable in the 21st century.
Lamentation aside, I think back to the 1920s and 1930s when our countrymen called for using education to save the country, but they were not understood by society and their patriotism was misinterpreted. In the 1960s and 1970s, nobody even dared to mention education for national salvation anymore, and still, no one understood it. What was believed at the time was the more you read, the dumber you are. As we have seen this (in the U.S.) and begin to think, we call out loudly for using education to save the country. Our company's policy of gathering talents and increasing the concentration of talent is correct, although it temporarily increases the cost of production.
Our trip to Boston was to visit a company called CP that specializes in power supplies. We visited and were briefed on ceramic-based, aluminum-based modular power supplies, which were more advanced, smaller, and more efficient. CP described that they were sold at about $2 per piece. There were several similar manufacturers in the U.S. that are larger and more technologically advanced than CP.
CP is considered a small company in the US. From this window, I saw the very persistence in research and the seriousness of the American people, and I saw the orderly and well-organized management just like a gentleman's manners. All kinds of documents were very clear, accurate, and well-covered. It was a successful system.
During the whole tour, we deeply felt that Americans are practical, very dedicated, and serious. They had the work style of seeking excellence and were not conservative in their academic researches. That is worth learning for us.
Americans do not have as many lofty ideals as the Chinese, nor do they have the empty ambitions for the motherland and the world in mind, nor are they as full of illusions as we are.
This nation's practical, indomitable spirit of working hard is worth learning for us. The space shuttle, large-scale silicon wafers, super-large computers, super-miniature terminals, developed and excellent telecommunication equipment, and testing instruments were created by the hard work of the American people. These things do not come from looting or plundering.
We stayed in CP for more than a day and a half, and we would leave Boston tomorrow, and it was raining for the remaining half day. In the rain, we visited the campuses of Harvard University and MIT, which had produced many heroic figures for the world. More than 1/4 of the students were Asian. They said the 18th century was the century of Spain, the 20th century was the century of America, and the 21st century is the century of Asia.
This is exactly a ray of light. With the implementation of the market economy policy from the 14th National Congress [of the Communist Party], the competition for talent will happen on Chinese soil. Only when knowledge has a price, there will be a thirst for talent. When there is a thirst for talent, education will be valued.
The bell of Project Hope, ringing over and over again, is shattering people's dreams of money. Without revitalizing education, it is impossible to revitalize China. However poor we are, we must give money to education.
Taiwan and South Korea are our role models. The large number of scholars who have returned to work in Taiwan has added much impetus to the Taiwanese economy.
We (then) left Boston, took a six-hour bus ride to New York, and stayed at the Chinese Consulate. A few meals of corn mush were so delicious. The biggest problem in the U.S. is that I can't get used to the food. Americans eat very simply.
New York is the largest and most prosperous city in the United States, but also the dirtiest one with the worst social order, but the order was still much better than our city of Shenzhen. Because we were passing by, we only had a quick glance. We visited Central Park and the American Museum of Natural History. It is hard to understand that in such a busy city center, there is such a big piece of primitive forest-like central park. The forest was so beautiful, the birds were clinging to people, and the squirrels were teasing people. Everything is so harmonious and lovely.
Central Park is so big, we walked for half a day, and when we looked at the map, we realized that we had walked past just a small corner. In order to know how big it is, we rented a cab and asked the driver to take us around it. Because the driver was afraid of riots from some African Americans, the cab ride cost us the equivalent of more than 100 yuan.
With only one hour left, we visited the American Museum of Natural History and wanted to run through it in a hurry to get a glimpse. We knew we were wrong as soon as we entered. The exhibits inside are so superb and so lifelike that in some places it is like rejoining nature and the primitive society.
The world's various rare and exquisite products, collected and arranged according to the laws of nature were so harmonious and so rich. No wonder people used to say that their doctoral thesis was written in the museum. It is really the best classroom for studying the development of society and nature.
Seeing the visit of hordes of American children, my heart was infinitely emotional, I wonder how many more of them are growing up to be the talents who would invent tomorrow's atomic bombs and space shuttles - the United States will prosper forever.
For one hour, we were running in a bid to see more of the museum, but we did not even finish one corner of the first floor of the five-story building. It would take a month to see the whole museum.
The more prosperous one country is, it emphasizes the development of science and technology; the more emphasis one country puts on the development of science and technology and education, the more talents it will produce; the more talents the country produces, the more prosperous the economy becomes, realizing a virtuous circle.
Thinking of the vast majority of rural schools in China are still in dilapidated buildings, thinking of Project Hope in China is not yet highly recognized by the people, and worrying about the country and the people, a shadow was cast on our hearts.
We passed through Philadelphia and saw the family of a Chinese student (who was already working) with an annual income of about $40,000. It was very cold in winter and they would not turn on the heat. The young wife told me: this way they can save $100 a year. The relatives at home wanted them to send $10,000. They didn't dare to go back to China. The food and appliances were very simple.
The Chinese are frugal and saving for future generations, while the Americans spend wildly and make friends. Chinese people are always trapped in the circle of Chinese friends, never jumping into the ‘money nest’; even in the rich United States, the Chinese were still poor. Americans make more friends, then have better opportunities, and go on to make more money. 80% of success in life is in opportunity.
On Monday we flew into Dallas, the home of Texas Instruments, a 60,000-acre headquarters. Once we arrived, we proposed to visit the factory. Its Asia-Pacific manager told us that there was no factory here, the factories were scattered in more than 100 places around the world to package integrated circuits.
The headquarters mainly housed the research and sales teams. We noted that their president and chairman of the board of directors were working in a relatively simple one-story building with a relatively dilapidated periphery, but the regional sales managers were working in a tall glass-walled building, which was very clean and quiet.
Texas Instruments was very hospitable to our visit and introduced us to many high-speed devices that we had never heard of before. The company's presentation was very structured, mainly using projection equipment, film, and technical descriptions that were logically edited. From morning to evening, we were introduced to the company, and we learned a lot about Texas Instruments. The Americans usually finish work at 4 p.m., and they worked so many extra hours for us, which was rare.
We visited the DMOS silicon wafer manufacturing, which was very advanced. The United States has begun to retain manufacturing in its own territory for the most core part of its industry and transferred the rest of the manufacturing to their branches across the world, in order to reduce costs and enhance competitiveness.
This was felt even more strongly after visiting Silicon Valley. Dallas is a city in central Texas, which was originally a grassland, similar to Inner Mongolia of our country. Originally poor, Texas became a rich state in the United States because of the discovery of oil, and the development of science and technology was triggered by oil. The high-tech development zone in Daqing, China, called on scientific and technology workers to “go to sea” [leave state organizations to start businesses in the market] and establish all kinds of businesses away from oil. In a few decades, when Daqing runs out of oil, China will have a Texas technology zone. Any leader has to look longer.
We purposefully went to Las Vegas for the CES. There were about half a million people attending. There were few Chinese and even fewer Chinese mainlanders. If the Chinese don't get out and see what's going on, and instead divorce from reality, not only are we unlikely to catch up with others, but we may fall off the train of the times.
We are already in the delicate period of entry into the World Trade Organization and should maintain a good understanding of the market and technology. The company [Huawei] will arrange for colleagues to go out and have a late, one batch after another.
The city of Las Vegas is a vast sea of sand. The entire city has no buildings except hotels and international convention centers, and the lobby of the hotel is a casino, so it has the ability to accommodate nearly a million people at once. Especially at night, it is perhaps the most beautiful city in the United States. Buildings like Caesars Palace are jaw-dropping, so beautiful, and opulent. There is also a tropical rainforest in the hotel lobby.
Visiting this international exhibition [CES], we only had one day. So we scrambled through the halls and barely managed to go through one hall. After that, we learned that there were seven halls and it would take at least seven days. It was an eye-opener to the development of the computer industry internationally. We found the feeling that our computer industry would go down, and that if we do not put everything into developing the technology we will eventually lose all the market.
Huawei has taken the right path in the past few years. It is not enough. It should boldly go forward and forward. Only by visiting this exhibition, we could appreciate what is a technology crisis and market crisis. Wang Laboratories, which three years ago had annual sales of $3.5 billion, had now declared bankruptcy. Japan's Mitsubishi, such a powerful group, withdrew from computer production. This strong sense of crisis drives the whole world forward. Huawei is placed by history in a position of either advance or retreat. The sea of science is boundless, there is no shore to turn back to, and if one misses the opportunity to develop, everything will be lost.
Our last stop was Silicon Valley. Santa Clara is a small place in California with 4.8 million people and surprisingly no industry. The electronics and cutting-edge industries of the United States have their research facilities here, and IBM's headquarters is said to cover an incredible 400 square miles. We rented a cab and went inside at least 6 to 7 kilometers in diameter, but it was still unclear how big it is.
HP, NS, AMD, INTEL ...... are all here. Therefore, when visiting the United States, one can learn about electronics technology in the whole country just by being in Silicon Valley.
If independently calculated, California's economy is in eighth place in the world. We visited NS (National Semiconductor). It has over 6,000 researchers and no factory in Silicon Valley. After listening to their presentation on a series of new devices such as optical devices, we saw the rise of the world's third-generation switching network and the emergence of new technologies that will change the world market in a big way.
[In tech development] We started late, and others had been going for several years, and we were just starting. We spend money to buy these devices, so we get to the world’s level as soon as possible; of course, there is still a lot of software to do.
In Silicon Valley, what we felt most deeply was that as if every pulse was very strong. We saw that our research methods were still very backward, our research management was still very low, our efficiency was still far from the developed countries.
Thankfully, the capacity of our employees is no worse than that of American companies. Therefore, to catch up with the United States, a very important one is to improve management. Silicon Valley is the most expensive in the United States due to labor costs, land, and whatever else is available. That's why companies only keep their research and sales organizations in Silicon Valley, while industries move to the United States or other parts of the world.
Some Chinese media reports that ‘Silicon Valley is deteriorating’ or that ‘Sunset over Silicon Valley’ is wrong. Silicon Valley is still undergoing a new takeoff in the information industry, not a decline. Therefore, our company decided to buy a house in the central area of Silicon Valley and set up a development center to optimize half-finished products and results of scientific researches. After that, we would move them back to Shenzhen for manufacturing. We applied for registration of a Huawei wholly-owned 兰博 Lanbo Technology Co. Lanbo is a transliteration, which means the head of the goddesses of the sea. [The spelling may be incorrect.]
Via Los Angeles, we started to return to our home country. On the plane, I watched a movie about the development of the West of the United States. It depicted a rich English lady who did not want to depend on her parents for a quiet life. With a newspaper that said every explorer in the West could have 160 acres of land for free, she was ready to run to the United States. She attempted to make an appointment with a hired man who had been arrested by her father. The man refused. The next morning she escaped in a private car, passing through the penal colony, pulling the man into the car, and running. The young man had to follow her to Boston. Boston at that time was poorer than the rural parts of China's Shaanxi.
The lady on the ship (to America) trusted a con man and entrusted him to sell the silver cutlery she had brought with her. As a result, she was cheated and left without a penny. The lady and the man then both began to be on equal footing of poverty in America.
In order to save money for going to the West, the young man went to the boxing ring, and the young lady went to wash clothes. After all the hardships, they finally sprang into love. The human hardship described in the film was more real and touching than all our films.
When they were hungry, they broke into an unoccupied home and ate desperately. But they were taken as bad guys and the lady was shot. When the lady was dying, the young man carried her to the inn of her lover (a military officer who came pursuing her from Britain). Because he was penniless, he could not save her. They parted in a hurry. The man walked while repairing the railroad and finally reached the west. After the lady recovered from her wound, she also went to the West with her husband [supposedly the military officer from Britain]. When they saw each other, they were both sad and happy.
At that time, there was not so much land in the West. The local government had to decide on the distribution of land by small flags on each piece of land and decreed that on a certain day, whoever ran first and planted his or her flag first, the land would go to him or her.
The young man bought a very strong horse for this purpose. Before the run (to claim the land), someone fouled and ran first, and the judge could not call the person back for a re-run, so the judge ordered the musketeer to shoot the person who had broken the rule.
Once everyone set off, there was wind and smoke, and some carts ran apart and overturned. The lady's husband [supposedly the military officer from Britain] fell in the river and died. The young man finally ran to the land, and the lady also came, but the fiery horse tripped the man into a serious injury. The lady went to rescue him, forgetting to plant the flag. Only when everyone else came up, she went to plant the flag. The man was already unconscious and only opened his eyes slightly when the flag was planted. And that’s the end of the film.
It makes you think about what they achieved. When the lady gets the land, all the people she cared about were probably all gone. In a desert without love, desperate land reclamation led to the prosperous West today.
The hardship of developing the West in America back then far exceeds the hardship we have today. America's prosperity has been the result of generations of sacrifice. The American people are overwhelmingly hard-working and eager to learn. We should learn from their indomitable spirit of working hard and make our due efforts to revitalize China.
I have been to the United States and Japan many times since then, and I felt more deeply every time. The only way for a nation to save itself is to have an indomitable and meticulous spirit of working hard, and “We want no condescending saviors to rule us from a judgment hall.” The only way to revitalize our Chinese nation is to be practical and face our weaknesses. The shattering of generations of dreams of prosperity has made us feel more deeply the profound meaning of learning from the United States in technology and Japan in management. [Also: Ren Zhengfei’s My Father and Mother]. Follow Zichen Wang's translations here..
China vs Oz
What Did Australia Do To China?
Half of Australians reckon China is responsible for improving our relationship, and two-thirds of us say its interference in our affairs is a major problem and DFAT flatly refused to address their grievances, “The fourteen items identified by the Chinese embassy document are seen by the Department of Foreign Affairs as key to Australia's national interest and non-negotiable.. the government makes sound decisions in our national interest and in accordance with our values and open democratic processes”.
The Chinese, as the UN voting chart above suggests, see a pattern of bad-faith dealings, negative discrimination, and unprovoked hostility, pointing to Australia's consistent opposition.
Along with their invasion of four of China’s neighbors, Australia was the first non-littoral country to make a UN statement critical of China in the South China Sea, and outdid the US in demonising it in Xinjiang and Hong Kong. Our media’s incessant, unfounded allegations about Hong Kong, Xinjiang, and cyber attacks–generated with lavish funding from anti-China think tanks–continually poison public opinion.
Though Covid-19 was endemic in Europe and the US before reaching China, PM Morrison loudly demanded a weapons-style inspection into its Chinese origins but, when China signed the UN proposal to investigate the source of the virus and the US did not, he was silent. When the WHO praised China’s coronavirus response as exemplary and Shaoquett Moselmane praised it, Mark Latham called his response ‘disgusting’.
Since 2018, Canberra has rejected a dozen Chinese investments, citing ambiguous, unfounded ‘national security concerns,’ and put infrastructure, agriculture and animal husbandry off-limits while launching a hundred anti-dumping and anti-subsidy investigations of Chinese products. Since 2018, we have rejected a dozen Chinese investment programs on the pretext of ‘national security concerns,’ rejections that led directly to large Chinese losses.
Given China’s pride in becoming a high tech exporter, our decision to ban Huawei was particularly cruel. Not only is there no legitimate technical reason for our decision, but our alibi–that China can compel companies to supply it with any information–ignores identical American, European and Australian laws. Malcolm Turnbull led the charge against domestic adoption of Huawei, then lobbied the UK against it. We revealed our transparent insincerity when we ignored Huawei’s offer to base its network security division here–an asset of considerable intellectual value.
Politicizing and stigmatizing normal cooperation and imposing restrictions like the revocation of Chinese scholars’ visas. Intimidation like predawn searches and reckless seizures of Chinese journalists' homes and properties without charges or explanations. Incessant, racist attacks against Chinese and Asian people.
On June 26, 2020, forty police arrived at the MP’s home, staying from 6:30 am until 1:30 am the next morning. They informed Shaoquett he was not suspected of any wrongdoing yet brought sniffer dogs, took hair and dust samples from his car, searched the car engine and door rubbers, had a helicopter hovering and raided his parliamentary office, freezing the Moselmane family bank accounts. Commenting on the action, Peter Dutton told Ray Hadley, “You can’t have an allegiance to another country and pretend to have an allegiance to this country at the same time,” despite Dutton’s public allegiance to the United States
Outrageous condemnation of China’s governing party by Australia-based NGOs like US defense front ASIS. We targeted China with one-third of our ongoing WTO actions and two-thirds of current measures (despite the Productivity Commission finding ‘no convincing justifications for the measures’) and imposed hefty duties on their steel (144%), aluminium and chemicals. We initiated one-hundred six anti-dumping and anti-subsidy investigations of Chinese products yet complained bitterly at China’s first resort to the WTO, its current barley and wine tariffs. Although Canberra politicized Chinese trade and investment and violated market principles for decades, between 2015-2020 China consistently lowered tariffs on our products to the point that ninety-five percent of our exports enjoyed zero duties.
Australian Ministers toured the world, loudly lecturing on free trade, while Trade Minister Simon Birmingham refused to admit Australia's status as the world's largest users of anti-dumping measures.
China accomplishes more each week than do the US or Australia in a yea, and is on course to overtake the US diplomatically, economically, financially, socially, scientifically, technologically, and militarily by the end of this year–if it has not already done so.
China will become self-sufficient 28 nanometer ICs this year for example, in 14 nm next year and will indigenize 7-10 nm production in 2023. As P&I readers know, the PRC need not fear America’s military and its economy is unrivalled for size, stability, depth, and breadth. Its banks are the largest on earth and its national unity and morale are unequalled.
On its current course, Australia's future seems bleak. Our politicized broadband and 5G decisions have shackled us to second-rate technologies for decades and we bound our fortunes to a crippled, declining superpower. Our combination of hypocrisy and antipathy to rising China have alienated us from our regional neighbors in the world’s premier growth region. We are led by amoral, heartless, cunning self-promoters, uninterested in our common wealth and focused solely on personal advancement, most of whom know nothing about China. How many know or care that there are more hungry children, drug addicts, suicides and executions, more homeless, poor, and imprisoned people in America than in China? Or–more pertinently–that China will generate half of global economic growth this year? How many care?
Yoko Choy:In your preface, you write: “There is probably not a single Chinese architect who has not become a devotee of modern architecture after studying French master Le Corbusier’s collection of essays Vers Une Architecture (Towards a New Architecture).” Architecture in China has been developing rapidly over the past few decades; in your opinion, what is the “new architecture” in a Chinese context and how will it develop in the future?
Wang Shu: The question should be seen from multiple perspectives, especially since the “new architecture” that we refer to nowadays is quite different than it was 20 to 30 years ago. At that time, we were determined to pursue something extremely new and disruptive of the status quo because we were so dissatisfied with our reality. However, the concepts of “extremeness” and “disruptiveness” were based on Western architecture’s modernity. Since then, I have been asking the same question – what “new architecture” should we have in contemporary China?
One of the typical debates among architects from as early as the 1930s, as I recall, was about whether we should add a traditional Chinese roof to a new building. These debates are still ongoing, reflecting conflicting values between tradition and modernity. However, I believe the most crucial and urgent question for Chinese architects is spatial typology, which determines the relationship between culture, lifestyle, and space. The 20th century was a turbulent one for China, as society experienced drastic changes under an extreme ideological background. As a result, some architects concluded that past typologies were no longer relevant to the pursuit of “new architecture.”
Whether from the Soviet Union, Western Europe, or the US, the core practice of architecture built at that time was merely copied from the West; it was imported from abroad. We no longer have a typology of our own based on our cultural roots. This serious issue remains unresolved. I believe that an investigation of architectural typologies in a contemporary Chinese context is the starting point for any further development in our current architectural practices. The key question is how to establish a typology that inherits our longstanding traditions while adapting to China’s contemporary lifestyle. More.. Amazon.
The first–and only–book to explain all three elements of China's success:
Talent at the Top: Only the brightest, most idealistic people are are admitted to politics–a policy unchanged in 2200 years.
Data in the Middle: policies are implemented, tracked, and optimized based on terabytes of data. The PRC is the world's largest consumer of public surveys.
Democracy at the Bottom: ordinary people, all unpaid amateurs, assemble twice a year to check the stats and sign off on new legislation. Policies need a minimum of 66% support to become law. That's why 95% of Chinese say the country is on the right track.
The proof?There are more hungry children, more poor, homeless, drug addicted, and imprisoned people in America than in China.
Why China Leads the World investigates why the epidemic accelerated the change of global leadership from America to China and examines China’s bigger, steadier economy, its science leadership, stronger military, more powerful allies, and wider international support.
Crammed with charts, footnotes, and lengthy quotes, Why China Leads the World is a profoundly disturbing book that helps readers understand the tectonic shift and adapt to this new era–and even thrive in it.
The size of China's displacement of the world balance is such that the world must find a new balance. It is not possible to pretend that this is just another big player. This is the biggest player in the history of the world. Lee Kuan Yew: The Future of US-China Relations. The Atlantic.
The Coronavirus accelerated the pace of change of global leadership from America to China. There are now more hungry children, more poor, homeless, drug addicted, and imprisoned people in America than in China.
Suddenly, China's larger, steadier economy, its leadership in science, its stronger military, more powerful allies, and wider international support have handed it a lead that widens every day. Crammed with direct quotes from its movers and shakers, charts, and footnotes, Why China Leads the World tells a remarkable tale, explains a tectonic shift, and helps you adapt to this new era, and even thrive in it.
If we could just be China for one day we could actually authorize the right decisions. Thomas L. Friedman. The New York Times
The report’s release in September, 1952, brought a withering international attack. It was roundly denounced by American and British politicians of the highest rank, ridiculed by four star generals, accused of fraud by celebrated pundits, misquoted by notable scientists, and scorned by a compliant Western press. Charges were made against the quality and truthfulness of its science. Its “unstated” political agenda was denounced. The ethics of interviewing captured US pilots was excoriated and its authors were publicly flayed as communist dupes. The report was red baited in the US halls of Congress and deemed unpatriotic to read, and therefore went unread and deliberately forgotten over the years, which has been the fate of Korean War history in general. In subsequent decades, volumes placed in American university library collections were quietly and permanently removed from circulation.
When the rare copy came up for auction, it was discretely purchased and disappeared from public view. This critical 67 year old truth commission document from the Korean War was slipping towards oblivion. For these very reasons, historians and truth seekers should exalt the wondrous rebirth of the ISC Report from near extinction with the publication of this new electronic edition. We welcome the sunshine that re-publication brings to a shadowy and suppressed chapter of American Cold War history. (from the introduction by Thomas Powell) 800 pages. $9.99.
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