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Stop the “Chindia” Talk

By almost any measure – GDP, life expectancy, literacy, exports and more – India has fallen far behind China since 1978 T.N. Ninan The debate in a small group earlier this week was about how far India is behind China.

The quick numbers tossed out varied all the way from 10 to 25 years and more. Figuring out the gap between the two “rising giants of Asia” is in fact an instructive study. For instance, China’s GDP in 2011 was $6.99 trillion, or nearly four times India’s $1.84 trillion. If the Indian economy were to grow at an annual average of 7.8 per cent (the rate for the past decade), it would take 18 years to get to China’s current size. If growth were to accelerate to nine per cent, it would still take 15 years. Could India have avoided falling so far behind China? After all, when China began its Four Modernisations in 1978, the two economies were of roughly the same size ($145-148 billion). Even in 1991, when India began its reforms, China’s economy was only 40 per cent bigger than India’s $268 billion.

The answer is that, in many ways, India in 1991 was already two decades and more behind China on key indicators, and it has not closed the gap. For instance, China’s literacy rate in 1991 was 78 per cent, whereas India’s was just 52 per cent. Even today, India’s literacy rate, at 74 per cent, is short of where China’s was in 1991; meanwhile, China has moved ahead to 94 per cent literacy. Ditto with life expectancy; China’s in 1991 was 70 years.

Twenty years later, India had a tally of only 64 years. Of course, China’s life expectancy has improved slowly in the last two decades, and is at 73; still, it will take India two decades and more to get to that figure.  Some seemingly large gaps might be closed more quickly.

Thus, China’s goods exports are about six times India’s. However, India’s exports have multiplied nearly seven-fold in the last decade (from $43.8 billion to an expected $300 billion this year), so it could conceivably replicate China’s current export figure in less than 10 years. No such hope can be applied to industry, where too China’s is more than six times India’s. Move to research, and China has a citation index that is twice as good as India’s. In the space programme, China sent its first man into space in 2003; India hopes to do it in 2015, but is likely to take longer. As for infrastructure, China has more than 30,000 km of expressways on which traffic speeds go up to 120 kmph; India has a few hundred kilometres. China has a whole inter-city network of high-speed trains, five times as many Internet users, and nearly a million MW of power generation capacity. India has only fractionally increased its train speeds since the first Rajdhani Express of 1969, and even if the country doubles power generation capacity every decade, starting from 150,000 MW in 2010, it will take more than a quarter century to get to where China is today. As for agriculture, China applies fully three times the fertiliser per arable hectare that India does.

The smallest gap is in the mobile phone population. And the largest gap perhaps in the quality of political leadership — China is able to produce a new crop of top-rung leaders every decade, in Beijing and in the provinces and large cities, whereas India’s political parties offer little beyond an upper crust. China’s project execution is of course in a league of its own. As for sport, India got one gold medal in the last Olympics, China got 51.

The cold message to all Indians: stop talking of the two countries in the same breath, and dump the “Chindia” coinage. For why does India not bracket itself with Iran, whose economic size in relation to India (1:4) is broadly the same as India’s to China?    

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Stop the “Chindia” Talk

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Davos: StanChart Bullish on China, India

Davos: StanChart Bullish on China, India

From WSJ’s Davos blog:

Bloomberg News
Jaspal Bindra

Standard Chartered PLC remains bullish on the major Asian economies of India and China, encouraged by the policy outlook for the two countries this year, the bank’s Asia chief executive said.

The U.K.-based lender, which focuses almost exclusively on Asia and emerging economies, also sees European rivals retreating from those markets as they are beset with challenges at home, Standard Chartered Asia Chief Executive Jaspal Bindra said in an interview on the sidelines of the World Economic Forum.

In India last year, Standard Chartered confronted a range of challenges including slowing growth, rising interest rates and a depreciating rupee. Revenue from the bank’s India unit fell by 12% in the first half of 2011 and by the “mid-teens” in the third quarter, Group Finance Director Richard Meddings said earlier.

Mr. Bindra blamed higher interest rates. “Interest rates went up almost 400 basis points in a short period, and it is very difficult, if you do wholesale business with the best clients in the country, to pass on a 400 basis point increase at any one time.”

But the central bank’s surprise move to loosen monetary policy this week has sent a “clear signal” that there will be no further rate hikes and the government is shifting its focus to promoting growth, Mr. Bindra said.

The Reserve Bank of India Tuesday held its key lending rate steady for a second straight policy meeting but cut the minimum cash reserve requirement by 0.50 percentage point to ease liquidity.

“The government has for a long time shown a huge preference to manage inflation through monetary policy,” he said. But following the RBI cut, “I think we will see a more balanced approach.”

Mr. Bindra also said that the recent “normalization” of the rupee exchange rate — it is up 6% against the dollar so far this year after declining 15.1% in 2011 — will encourage renewed foreign investment.

In China, Mr. Bindra believes authorities will be successful in guiding the economy to a “soft landing” ahead of a leadership transition at the end of the year.

“The priority for all of 2012 and beyond is going to be ‘how do we keep things stable,’ as they have this transition of power at the top,” he said, adding that not just the top political leadership, but also the leaders of major financial institutions and regulators are all due to be reshuffled. “It is quite a massive-scale change of power.”

As European banks regroup and retreat from Asia, Standard Chartered sees an opening. The trend is especially pronounced in industries including shipping and commodities and in markets like Indonesia and India where dollar liquidity is scarce, he said.

“It gives us an opportunity to scale up market share, and second, it gives us a little bit of pricing advantage.”

– Aaron Back. Follow him on Twitter @AaronBack.

In recent years, China has re-invigorated its support for leading state-owned enterprises in sectors it considers important to “economic security,” explicitly looking to foster globally competitive national champions.

In 2009, China announced that by 2020 it would reduce carbon intensity 40% from 2005 levels.

The government has also focused on foreign trade as a major vehicle for economic growth.

The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978.

The disparities between the two sectors have combined to form an economic-cultural-social gap between the rural and urban areas, which is a major division in Chinese society.

The technological level and quality standards of its industry as a whole are still fairly low, notwithstanding a marked change since 2000, spurred in part by foreign investment.

China’s increasing integration with the international economy and its growing efforts to use market forces to govern the domestic allocation of goods have exacerbated this problem.

The growth in both outbound investment from, and inbound investment to, China reflects the nation’s rising economic power and attractiveness as an investment destination.

” Although the figure is already “quite amazing,” the volume is “not large enough” considering China’s economic growth and local companies’ expanding demand for international opportunities, Shen said.

It also aims to sell more than 15 million of the most fuel-efficient vehicles in the world each year by then.

Although China is still a developing country with a relatively low per capita income, it has experienced tremendous economic growth since the late 1970s.

Since the late 1970s, China has decollectivized agriculture, yielding tremendous gains in production.

China is the world’s largest producer of rice and wheat and a major producer of sweet potatoes, sorghum, millet, barley, peanuts, corn, soybeans, and potatoes.

China ranks first in world production of red meat (including beef, veal, mutton, lamb, and pork).

Growing domestic demand beginning in the mid-1990s, however, has forced the nation to import increasing quantities of petroleum.

China’s leading export minerals are tungsten, antimony, tin, magnesium, molybdenum, mercury, manganese, barite, and salt.

Major industrial products are textiles, chemicals, fertilizers, machinery (especially for agriculture), processed foods, iron and steel, building materials, plastics, toys, and electronics.

Brick, tile, cement, and food-processing plants are found in almost every province.

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PM to Meet Leading Businesspeople at World Econ Forum

PM to Meet Leading Businesspeople at World Econ Forum

The prime minister is attending the World Economic Forum in Switzerland and meeting with leading business people to clarify Thailand’s flood recovery plan. Prime Minister Yingluck Shinawatra is in Davos, Switzerland today to take part in the 42nd World Economic Forum. She’s scheduled to take part in a round-table luncheon with leaders and leading business people to discuss sustainable economic growth.

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A severe drought and a decline in rice prices in early 2010 do not bode well for agricultural production and consumption, although increased employment in manufacturing will partly offset the impact to agriculture.
All in all, a more favorable external environment should help boost real GDP growth to 6.2 percent in 2010. After this year, slower growth in developed countries, emerging capacity constraints as capacity idled during the crisis is quickly put to use, and the weight of the ongoing political turmoil on new investment, should likely keep growth below Thailand’s historical average of 5.1 percent. On the whole, Thailand’s fiscal and financial picture remains solid

The relative strength and power of sovereign wealth funds is massively increasing, and the money has to go somewhere.
But another factor is likely the presence of larger, institutional investors in large-cap stocks who are more concerned about long-term performance than short-term market movements.

In 1972 the Government took a further step in this direction by amending the “Announcement of the Executive Council No. 58 on the Control of Commercial Undertakings Affecting Public Safety and Welfare”. The changes extended Government control and regulation over the operations of finance and securities companies, which until then had operated fairly freely. Following these amendments, in May 1974, long-awaited legislation establishing “The Securities Exchange of Thailand” (SET) was enacted. This was followed by revisions to the Revenue Code at the end of the year, allowing the investment of savings in the capital market. By 1975 the basic legislative framework was in place and on April 30, 1975, “The Securities Exchange of Thailand” officially started trading. On January 1, 1991 its name was formally changed to “The Stock Exchange of Thailand” (SET).

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Thailand to expand trade and investment with India

Thailand to expand trade and investment with India

New Delhi business newspaper economic times says that India and Thailand will sign a free trade agreement by the middle of this year, according to Thai Prime Minister Yingluck Shinawatra.

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Thailand to expand trade and investment with India

Sectors linked to external demand (namely, manufacturing, hotels and transport) have been the main contributors to growth since the 1997-98 Asian financial crisis, and have also determined the dynamics of the economy in 2008-09. These sectors have accounted for almost all of the annual changes in real GDP.
Overall, domestic demand should provide a positive but limited contribution to growth: vulnerable households lost ground in 2009 and risks are substantial in 2010, as falling agricultural output due to the current drought may offset opportunities from the improved overall economic environment. Household consumption levels, which are highly correlated with the poverty rate, contracted in 2009 despite the rebound in the last quarter of the year, suggesting a likely increase in the poverty rate compared to 2008, especially when compounded by the loss in purchasing power from the food and fuel crisis of 2008. The outlook for 2010 is uncertain : average wages are likely to increase, thanks to the reallocation of labor from agriculture to manufacturing. Although labor markets appear very tight, with unemployment below 1 %, the data do not account for the large number of workers who moved to lower-productivity jobs in agriculture and informal services due to the crisis. Many of these workers are now returning to manufacturing, which offers higher wages than agriculture.

Total shareholder returns (TSR) for 2009 are calculated by assuming that investors reinvest all cash received over the course of the year to determine a total return from one’s investment. The 2009 analysis covers 505 companies from the Stock Exchange of Thailand and the Market for Alternative Investment and is based on share valuations as of Dec 31 and dividend payments made over the 2009 calendar year.
The TSRs for the two groups are similar.

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What Next for Taiwan’s Opposition?

What Next for Taiwan’s Opposition?

Agence France-Presse/Getty Images
Tsai Ing-wen, the presidential candidate of Taiwan’s opposition Democratic Progressive Party, waves to supporters at her campaign headquarters in New Taipei City on January 14, 2012 after losing her bid to challenge incumbent Ma Ying-jeou.

Taiwan’s opposition Democratic Progressive Party leader Tsai Ing-wen made history by being the island’s first female presidential candidate, but her wider-than-expected defeat last Saturday to incumbent Ma Ying-jeou of the Kuomintang has raised questions about the future of her moderate approach.

Ms. Tsai finished with 45.6% of the vote to Mr. Ma’s 51.6%, a loss that prompted her to say she would resign as DPP leader.

A professor before she became a politician, Ms. Tsai is often credited with lifting the pro-independence DPP out of the mire after former president Chen Shui-bian’s rocky and scandal-ridden tenure at the helm.

“She brings gentleness and sensibility to the party,” Joseph Wu, a former Taiwan envoy to the U.S. and a top advisor to the DPP, said shortly after the election. “She is also very capable in facilitating talks between the factions in the party and consolidating opinions.”

That conciliatory leadership style and approachable personality were what drove her surging popularity both within and outside the party, he added.

But Ms. Tsai also won support by dialing back the DPP’s pro-independence rhetoric, analysts said. An example of that more moderate China policy was her appeal for further dialogues with Beijing and her promise to accept all 16 cross-strait trade agreements signed under Mr. Ma’s leadership.

Although she adamantly rejected the 1992 Consensus—a tacit understanding between the KMT and the Chinese Communist Party that Taiwan and China are one country but each is free to define the term as they see fit—her proposal of a new “Taiwan Consensus” did not completely shut out the option of an eventual unification, a sharp detour from the policy pursued by Mr. Chen.

Despite that softening, Ms. Tsai’s candidacy still did not appear sit well with leaders in Beijing, who warned that any deviation from the 1992 Consensus would compromise the growing harmony on the Taiwan Strait. During the campaign, the “Taiwan Consensus” became one favorite points of attack for Mr. Ma and the KMT, who pointed to it as evidence that Ms. Tsai was naïve to the realities of cross-strait relations.

Yet some analysts said they expected Beijing might still be open to dialogue with a Tsai administration — a notion considered far-fetched during the previous DPP regime.

What effect Ms. Tsai’s loss will have on the party’s platform remains to be seen. The fact that she lost by six percentage points – late polls had her losing by between 3% and 5% — is already being interpreted by some as an indictment of her decision to emphasize social equality and her deviation from the party’s anti-China orthodoxy.

“Obviously, a campaign focused on social justice was not enough to excite the traditional DPP supporters,” said Wu, adding in the future, the party should incorporate more of the possible threats to Taiwan’s sovereignty under the KMT such as China’s continual interference in Taiwan’s quest for more international participation.

Shelley Rigger, a professor of political science at Davidson College expressed similar views, saying that while Ms. Tsai should be lauded for restoring burnishing the DPP’s image, she might have overlooked a key constituency – the “green” pro-independence die-hards—who might constrain the DPP from moving to the center.

“[Tsai] did as well as anyone could have done at pacifying the deep greens, by refusing to accept the ’92 consensus, and at the same time minimizing the role of those ideological issues in the elections, by trying not to talk about that anymore than she had to. The result was still hitting that 45% ceiling,” she said.

Ms. Tsai’s tenure as party leader will officially terminate on March 1, the DPP said, and it’s unclear what she plans to do next. She has said she plans to maintain an office and rumors suggest she may take the reins at a think tank she helped set up.

Analysts say Beijing is concerned less about Ms. Tsia’s future and more about who her successor might be and whether that person will continue the moderate stance she has championed.

“Beijing takes a great interest in the DPP’s leadership because there is always a chance that the DPP might return to power. But I think no matter who becomes the next DPP chairman, the party will retain the more moderate stance,” said Shih Cheng-feng, a dean at National Dong Hwa University.

Party heavyweights Frank Hsieh and Su Tseng-chang are widely speculated to be vying for the seat, though some political commentators on the island say the party should allow up-and-coming stars, such as some of the current DPP county magistrates, to have a shot.

Whether or not Ms. Tsai tries her luck again in 2016, her contribution to the DPP seems likely to be remembered as revolutionary, in a moderate way.

– Jenny W. Hsu

Measured on a purchasing power parity (PPP) basis that adjusts for price differences, China in 2009 stood as the second-largest economy in the world after the US, although in per capita terms the country is still lower middle-income.

In 2009, the global economic downturn reduced foreign demand for Chinese exports for the first time in many years.

The People’s Republic of China is the world’s second largest economy after the United States by both nominal GDP ($5 trillion in 2009) and by purchasing power parity ($8.77 trillion in 2009).

Available energy is insufficient to run at fully installed industrial capacity, and the transport system is inadequate to move sufficient quantities of such critical items as coal.

The two most important sectors of the economy have traditionally been agriculture and industry, which together employ more than 70 percent of the labor force and produce more than 60 percent of GDP.

A report by UBS in 2009 concluded that China has experienced total factor productivity growth of 4 per cent per year since 1990, one of the fastest improvements in world economic history.

The market-oriented reforms China has implemented over the past two decades have unleashed individual initiative and entrepreneurship, whilst retaining state domination of the economy.

China now ranks as the fifth largest global investor in outbound direct investment (ODI) with a total volume of $56.5 billion, compared to a ranking of 12th in 2008, the Ministry of Commerce said on Sunday.

In 2009, global ODI volume reached $1.1 trillion, and China contributed about 5.1 percent of the total.

China reiterated the nation’s goals for the next decade – increasing market share of pure-electric and plug-in electric autos, building world-competitive auto makers and parts manufacturers in the energy-efficient auto sector as well as raising fuel-efficiency to world levels.

In large part as a result of economic liberalization policies, the GDP quadrupled between 1978 and 1998, and foreign investment soared during the 1990s.

Even with these improvements, agriculture accounts for only 20% of the nation’s gross national product.

In terms of cash crops, China ranks first in cotton and tobacco and is an important producer of oilseeds, silk, tea, ramie, jute, hemp, sugarcane, and sugar beets.

Horses, donkeys, and mules are work animals in the north, while oxen and water buffalo are used for plowing chiefly in the south.

Coal is the most abundant mineral (China ranks first in coal production); high-quality, easily mined coal is found throughout the country, but especially in the north and northeast.

There are also deposits of vanadium, magnetite, copper, fluorite, nickel, asbestos, phosphate rock, pyrite, and sulfur.

China also has extensive hydroelectric energy potential, notably in Yunnan, W Sichuan, and E Tibet, although hydroelectric power accounts for only 5% of the country’s total energy production.

Other leading ports are rail termini, such as Lüshun (formerly Port Arthur, the port of Dalian), on the South Manchuria RR; and Qingdao, on the line from Jinan.

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China’s Stats Bureau in Odd Ownership Spat Over Important Index

China’s Stats Bureau in Odd Ownership Spat Over Important Index

European Pressphoto Agency

As if the reputation of China’s economic data wasn’t shaky enough already, an odd bureaucratic tug of war is casting new doubt on one of the country’s more closely watched indicators.

China’s official Purchasing Managers Index (PMI), a gauge of the nation’s manufacturing activity, has been jointly released by the National Bureau of Statistics and an industry association called the China Federation of Logistics and Purchasing (CFLP) since 2005. Now, however, each body is trying to claim the data for itself.

The dispute originated with a statement posted on the Bureau of Statistics website on January 6 (in Chinese) saying it was the bureau that conducted the manager surveys that underpin the index conducted by the bureau. According to the statement, the CFLP merely published the survey under the authorization of the bureau.

The statement also quoted Pan Jiancheng, deputy director of the bureau’s China Economic Monitoring & Analysis Center, as saying the bureau planned to integrate all economic climate surveys and publish them as a group because “whoever conducts the survey should be the one to publish it.”

Three days later, the federation said in a statement on its own website (in Chinese) that PMI would not be part of the official climate surveys to be published by the statistics bureau.

“Somebody from the Bureau of Statistics is unhappy that we are doing such a good job with the PMI and decided to get tricky,” Cai Jin, deputy director of the CFLP, told the Shanghai-based Oriental Morning Post this week (in Chinese). “This has very negative influence on China’s PMI data.”

CFLP said in its statement that it submitted a request to establish the index in 2004 and that the NBS said it supported the proposal but asked the federation can make use of bureau’s existing enterprise survey resources to avoid redundancy. “Our federation is responsible for the release, analysis and interpretation of the survey,” CFLP said in its statement, adding that it is common practice for independent organizations to publish PMI to ensure objectivity.

According to its website, the CLFP, which claims to have thousands of purchasing manager members, is the only purchasing industry association approved by the State Council, China’s cabinet.

In the days since the Bureau of Statistics published its statement, Mr. Cai said, financial institutions and news media have pelting the CLFP with questions, expressing concern that the bureau might manipulate PMI based on other macroeconomic data.

“That’s why we have to clear things out,” Oriental Morning Post quoted Mr. Cai as saying.

China’s Purchasing Managers Index rose to 50.3 in December compared with 49.0 in November, indicating an increase in manufacturing activity. The rise came after HSBC Holdings PLC’s survey of purchasing managers showed manufacturing activity contracting in December, though at a more moderate pace than in the previous month.

The HSBC PMI has showed contractions in manufacturing in all but one of the past six months, painting a significantly less optimistic picture than the Chinese government’s competing PMI. Analysts say the HSBC PMI has been weaker because it surveys more purchasing managers from smaller firms, which have had difficulty accessing loans from banks.

– Liyan Qi

Reforms started in the late 1970s with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, the foundation of a diversified banking system, the development of stock markets, the rapid growth of the non-state sector, and the opening to foreign trade and investment.

In 2009, the global economic downturn reduced foreign demand for Chinese exports for the first time in many years.

China is the world’s fastest-growing major economy, with an average growth rate of 10% for the past 30 years.

Available energy is insufficient to run at fully installed industrial capacity, and the transport system is inadequate to move sufficient quantities of such critical items as coal.

Agricultural output has been vulnerable to the effects of weather, while industry has been more directly influenced by the government.

China has acquired some highly sophisticated production facilities through trade and also has built a number of advanced engineering plants capable of manufacturing an increasing range of sophisticated equipment, including nuclear weapons and satellites, but most of its industrial output still comes from relatively ill-equipped factories.

China’s ongoing economic transformation has had a profound impact not only on China but on the world.

Both forums will start on Tuesday.

But “this is just a beginning.

It also aims to sell more than 15 million of the most fuel-efficient vehicles in the world each year by then.

Although China is still a developing country with a relatively low per capita income, it has experienced tremendous economic growth since the late 1970s.

Agriculture is by far the leading occupation, involving over 50% of the population, although extensive rough, high terrain and large arid areas – especially in the west and north – limit cultivation to only about 10% of the land surface.

Except for the oasis farming in Xinjiang and Qinghai, some irrigated areas in Inner Mongolia and Gansu, and sheltered valleys in Tibet, agricultural production is restricted to the east.

China ranks first in world production of red meat (including beef, veal, mutton, lamb, and pork).

Oil fields discovered in the 1960s and after made China a net exporter, and by the early 1990s, China was the world’s fifth-ranked oil producer.

China is among the world’s four top producers of antimony, magnesium, tin, tungsten, and zinc, and ranks second (after the United States) in the production of salt, sixth in gold, and eighth in lead ore.

China also has extensive hydroelectric energy potential, notably in Yunnan, W Sichuan, and E Tibet, although hydroelectric power accounts for only 5% of the country’s total energy production.

There are railroads to North Korea, Russia, Mongolia, and Vietnam, and road connections to Pakistan, India, Nepal, and Myanmar.

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The Wukan Protests and the Rule of Law

The Wukan Protests and the Rule of Law

Associated Press

By Stanley Lubman

The recent Wukan protest has faded from the media, but one issue continues to percolate in its wake: the role of Chinese law, which some protesters invoked.

Two Chinese intellectuals have since spoken up about the need to strengthen the rule of law around property rights and, more importantly, about the need for a “paradigm shift” in the way officials think about rights and handle related disputes.

Some of the Wukan protesters were indeed conscious of their rights, as evidenced by one villager’s exclamation that “we must use the weapons provided by the legal system to fight corruption to the end.” Another protestor said he was confident that the central government would assist villagers who had lost land due to the corrupt actions of local officials because “the country is ruled by law.”

The protest was resolved, not by law, but by the administrative actions of provincial Party officials. It’s possible that the village officials responsible for the land transaction that sparked the protests will be accused of corruption, tried and punished, but even that legal process, if it occurs, would likely be a fait accompli following a prior Party decision on their punishment.

The protests nevertheless prompted some interesting commentary on Chinese legal issues, including from economist Hu Deping, the son of former CCP General Secretary Hu Yaobang.

In a commentary posted to a forum discussing a People Daily’s editorial on Wukan, Hu observes that rural land is often treated as if it belongs to the state rather than by collectives as provided by law — an erroneous conviction that helps justify forced demolitions. Disregard for rural collective rights, he writes, “is enough to change the character of reform.” In a single powerful sentence – all the more powerful because it comes from a princeling — he declares his hope “that the Wukan incident can push society into establishing a system that takes democracy and the rule of law as its foundation.” He ends with the hope that similar issues will be solved “using rule of law and negotiations.”

A lengthier and even more provocative commentary was posted to the same forum by Wu Si, editor of the party history magazine Yanhuang Chunqiu.

In analyzing the protests, Wu contrasts two “modes of thought” that appeared in Wukan. One was a hostile “us-versus-them” mentality that assumed a zero-sum conflict. Wu argues that such thinking is common in situations like Wukan’s owing in part to the failure of the courts, which are generally reluctant to take up cases involving land and “the political regime.” He notes that the Party Secretary of Shanwei, the prefectural city in which the village of Wukan is located, was ready to blame outsiders and the media for deepening the conflict.

Wu’s second “mode of thought,” which he proposes as an alternative approach to social conflict, is the ”civil rights mode of thinking,” or rule of law. This, he argues, should be the only basis for the government’s approach, and ought to lead to decision by an independent court without the government being “disturbed” by administrative agencies. He goes on to note that the provincial working group that eventually negotiated an end to the process promoted five principles for resolving the crisis, two of which were “total transparency” and “rule of law.” Wu argues the weakness of China’s courts makes the involvement of administrative working groups necessary. That, in turn, invites administrative interference. In the future, he writes, there must be “independent court rulings” and constitutional government.

Wu traces the “us-versus-them mentality” to the historical emphasis placed by the CCP on class warfare. He argues that shifting the emphasis to other CCP principles — serving the people and putting the people first — would expand political rights and economic freedom and lead to a prosperous society that would be “relatively stable” and “harmonious” as well. Wu concludes by urging the property rights must be clarified, village elections improved and laws enforced.

Wu offers no sure path to attain the goal he advocates, but his conclusion is most dramatic: “To solve problems with civil rights and the rule of law in mind, there must be a paradigm shift for cadres,” who need to change the way the way they “mediate crises.” In solving social conflicts, he writes, new ways of thought “will open a new road” for Chinese society.

Invocation of the rule of law has been a ritual for some years in China, but it is usually only activists and law reformers who are willing to suggest it is an entirely distinctive approach to ordering society. The call for a “paradigm” change in a party magazine suggests something more radical than the usual slogans and formulas.

Some Western observers, including this writer, have tried to incorporate into their analyses of Chinese law the idea of “legal culture” — the way people in a society, from top to bottom, think about where law comes from, its aims and its methods. That is what Wu Si touches on when he suggests that cadres rethink about how they address social conflict. He is proposing that in practice they consciously place a much greater reliance on law and on legal institutions, which could become “a force for reform” leading to “systemic changes.”

Wu also suggests that Guangdong and Shanwei might initiate reforms. In recent years, a number of important reforms have been initiated locally. Among them is the 2003 adoption in Guangzhou of an open government law, which preceded adoption of a similar law by the central government. Even more important was the adoption by Sichuan Province of China’s first provincial-level administrative procedure law in 2008, followed by Shandong’s adoption of a similar law that became effective on January 1, 2012. There is hope that these two laws will also eventually provide a model for reform of existing national legislation.

If thoughtful reflections like those discussed here inspire local reforms, the Wukan villagers will deserve credit for having struck a chord that could continue to resound.

Stanley Lubman, a long-time specialist on Chinese law, is a Distinguished Lecturer in Residence at the University of California, Berkeley, School of Law and is the author of “Bird in a Cage: Legal Reform in China After Mao,” (Stanford University Press, 1999).

China’s economy during the past 30 years has changed from a centrally planned system that was largely closed to international trade to a more market-oriented economy that has a rapidly growing private sector and is a major player in the global economy.

One demographic consequence of the “one child” policy is that China is now one of the most rapidly aging countries in the world.

The country’s per capita income was at $6,567 (IMF, 98th) in 2009.

The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978.

Its mineral resources are probably among the richest in the world but are only partially developed.

China has acquired some highly sophisticated production facilities through trade and also has built a number of advanced engineering plants capable of manufacturing an increasing range of sophisticated equipment, including nuclear weapons and satellites, but most of its industrial output still comes from relatively ill-equipped factories.

By the early 1990s these subsidies began to be eliminated, in large part due to China’s admission into the World Trade Organization (WTO) in 2001, which carried with it requirements for further economic liberalization and deregulation.

The growth in both outbound investment from, and inbound investment to, China reflects the nation’s rising economic power and attractiveness as an investment destination.

“China is now the fifth largest investing nation worldwide, and the largest among the developing nations,” said Shen Danyang, vice-director of the ministry’s press department.

China is aiming to be the world’s largest new energy vehicle market by 2020 with 5 million cars.

In large part as a result of economic liberalization policies, the GDP quadrupled between 1978 and 1998, and foreign investment soared during the 1990s.

Even with these improvements, agriculture accounts for only 20% of the nation’s gross national product.

In terms of cash crops, China ranks first in cotton and tobacco and is an important producer of oilseeds, silk, tea, ramie, jute, hemp, sugarcane, and sugar beets.

Sheep, cattle, and goats are the most common types of livestock.

Coal is the most abundant mineral (China ranks first in coal production); high-quality, easily mined coal is found throughout the country, but especially in the north and northeast.

China is among the world’s four top producers of antimony, magnesium, tin, tungsten, and zinc, and ranks second (after the United States) in the production of salt, sixth in gold, and eighth in lead ore.

China’s exploitation of its high-sulfur coal resources has resulted in massive pollution.

After the 1960s, the emphasis was on regional self-sufficiency, and many factories sprang up in rural areas.

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Measured on a purchasing power parity (PPP) basis that adjusts for price differences, China in 2009 stood as the second-largest economy in the world after the US, although in per capita terms the country is still lower middle-income.

In 2009, the global economic downturn reduced foreign demand for Chinese exports for the first time in many years.

The People’s Republic of China is the world’s second largest economy after the United States by both nominal GDP ($5 trillion in 2009) and by purchasing power parity ($8.77 trillion in 2009).

Nevertheless, key bottlenecks continue to constrain growth.

The country is one of the world’s largest producers of a number of industrial and mineral products, including cotton cloth, tungsten, and antimony, and is an important producer of cotton yarn, coal, crude oil, and a number of other products.

A report by UBS in 2009 concluded that China has experienced total factor productivity growth of 4 per cent per year since 1990, one of the fastest improvements in world economic history.

China’s ongoing economic transformation has had a profound impact not only on China but on the world.

On top of this, foreign direct investment (FDI) this year was set to “surpass $100 billion”, compared to $90 billion last year, ministry officials predicted.

But “this is just a beginning.

It also aims to sell more than 15 million of the most fuel-efficient vehicles in the world each year by then.

Although China is still a developing country with a relatively low per capita income, it has experienced tremendous economic growth since the late 1970s.

Agriculture is by far the leading occupation, involving over 50% of the population, although extensive rough, high terrain and large arid areas – especially in the west and north – limit cultivation to only about 10% of the land surface.

In terms of cash crops, China ranks first in cotton and tobacco and is an important producer of oilseeds, silk, tea, ramie, jute, hemp, sugarcane, and sugar beets.

Horses, donkeys, and mules are work animals in the north, while oxen and water buffalo are used for plowing chiefly in the south.

Coal is the most abundant mineral (China ranks first in coal production); high-quality, easily mined coal is found throughout the country, but especially in the north and northeast.

China’s leading export minerals are tungsten, antimony, tin, magnesium, molybdenum, mercury, manganese, barite, and salt.

Hydroelectric projects exist in provinces served by major rivers where near-surface coal is not abundant.

Coastal cities, especially in the southeast, have benefited greatly from China’s increasingly open trade policies.

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