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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

From WSJ’s Davos blog:

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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Davos: StanChart Bullish on China, India

Author: Doan Hong Quang, World Bank

Consensus-based policy making is a salient feature of Vietnam, where important decisions are collectively made.

Consensus is needed not only for the formulation of a reform vision but also for the elaboration and implementation of this vision. Doi Moi, the most successful economic reform to date, would certainly not have occurred in 1986 if no consensus were reached at the VI Party Congress.

A series of events in 2011 indicate that a vital consensus for the acceleration of economic reforms has been attained. Vietnam’s first major economic event for 2011 was the Communist Party Congress held in January, which set out Vietnam’s development strategy for the next 10 years. Like its predecessor, the 2011–2020 Strategy adopted at the Congress places great emphasis on rapid economic growth, with a target of 7–8 per cent average annual GDP growth over the next decade. The strategy puts increased attention on the quality of growth, including targets on macroeconomic stability and requirements for clarifying the role of the state in a market economy. Nevertheless, the ambitious quantitative growth target suggests a continuation rather than a fundamental break with previous strategies.

But events took a significant turn just a few weeks after the Congress. In late February the government issued Resolution 11, aiming to restore Vietnam’s macroeconomic stability and cool down an overheated economy. Specifically, the resolution sought to address high levels of inflation, tension in the foreign exchange market, high nominal interest rates and declining foreign exchange reserves. The implementation of Resolution 11 remained a top priority in the government’s agenda throughout 2011, and reviews of its implementation continue to take place regularly. Resolution 11 represents a decisive switch from growth to stability. For the first time, there is an official government policy document that completely neglects the term ‘growth’ in its targets. Its longevity signals a significant change in the mindset of Vietnam’s policy makers.

Signs of a radical shift in economic strategy became more evident when the new administration came into power in July. Several workshops and focus group discussions were held to facilitate policy dialogues regarding the restructuring of Vietnam’s economy to improve efficiency and competitiveness. From this process, consensus was reached on Vietnam’s strategic development priorities, identifying major areas for reform in the coming years. This consensus argues for radical transformation in three areas: state-owned enterprises (SOEs), the financial sector and public investment. The need for reform was also officially documented in the Socio-Economic Development Plan (SEDP) for the period 2011–2015, which was approved by the National Assembly in November.

Following these events, Vietnam recorded good economic growth in 2011, with an estimated rate of GDP growth at 5.8 per cent. Exports performed very well, increasing by 33 per cent despite a significant decline in global demand. This robust GDP and export growth prevailed over a significant contraction in fiscal and monetary policy, and Vietnam’s strong export performance contributed notably to the reduction of trade deficits and the foreign exchange market’s stabilisation. The rate of inflation also slowed in the last four months, largely due to the implementation of Resolution 11.

The adoption of Resolution 11 and the SEDP in particular indicate that Vietnam has achieved consensus on accelerating market-based reforms in ‘difficult’ reform areas, namely SOEs, the financial sector and public investment. The recent release of an ambitious proposal for SOE reform through to 2020, developed by the National Steering Committee for Enterprise Reform and Development, provides further evidence of this consensus. According to the proposal, about 44 per cent of the remaining 1300 full SOEs will be equitised in the next four years.

In this context, 2012 will be a very challenging year for Vietnam. The country still has to deal with an overheating economy, and inflationary pressures remain a genuine threat to the country’s economic stability. The banking sector is vulnerable, with a rising share of non-performing loans resulting from a long period of extraordinary credit growth. Challenges also lie in transforming the SEDP’s vision into specific actions. The plan calls for a fundamental restructuring of the economy, and while many agree on the vision of the reform, the formulation of a feasible action plan will take time, owing to the likelihood of resistance from economically strong interest groups.

The Vietnamese government is developing a detailed action plan for its ambitious restructuring strategy. It is expected that this plan will be approved by the end of the first quarter of 2012. The timeframe looks very ambitious as consensus for detailed actions still needs to be built. But there is a significant factor which may speed up the implementation process: while the market economy was an unfamiliar concept in previous times, it now receives strong support from the vast majority of Vietnamese people.

Dr Doan Hong Quang is a Senior Economist at the Poverty Reduction and Economic Management Unit, World Bank, Vietnam. This is part of a special feature: 2011 in review and the year ahead.

1. Malaysia’s economic transformation
2. Managing the risk of inflation during economic recovery – the case of Vietnam
3. Vietnam sails through the crisis but needs reform to sustain the growth

Read this article:
Vietnam: the beginning of another economic transformation?

Mumbai: Reserve Bank of India Deputy Governor KC Chakrabarty on Friday said efforts were being made to explore ways to pay for oil imported from Iran, which has been subjected to international sanctions. Chakrabarty termed the issue as one arising purely out of international sanctions on Iran and not a financial one. “We are finding, something is happening,” he said when asked about the way ahead to pay Iran for the crude which the country imports. When asked about the recent visit by an Indian team to the Gulf nation for settling the issue, he said, “They have to find a way out. “It is very difficult. It is international diplomacy. It has nothing to do with finance,” Chakrabarty said, speaking on the sidelines of an event here this evening. “The problem is we are not able to route the transactions through some banks because of international sanctions,” he added. Iran is the country’s second largest supplier of crude after Saudi Arabia. Earlier, payments for crude were made through multi-lateral settlement mechanisms which stopped about a year ago due to UN-imposed sanctions. Later, a novel way of payment was worked out wherein the Iranian Central Bank opened rupee accounts with Indian commercial banks, but that also is reportedly in trouble. US President Barack Obama on December 31 signed into law measures that deny access to the US financial system to any foreign bank that conducts business with the central bank of Iran. A report earlier this week said Iran was exploring the idea of increasing imports from India to compensate for its export of oil.

Read the rest here:
India trying to find ways to pay for Iran oil: RBI

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.

Read more here:
What Next for Taiwan’s Opposition?

Thai police led Atris Hussein, a 48 year-old Lebanese man with suspected links to a Hezbollah to search a commercial building in Samut Sakhon province, adjacent to the capital, where they discovered chemical substances which could be used in making explosives.

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Terrorism in Thailand: the Swedish connection

On the demand side, the importance of external demand can be fully appreciated by recognizing that the bulk of inventories in Thailand are primarily inputs and finished goods for the export-oriented manufacturing. In the fourth quarter of 2009, for example, net exports and the change in inventories contributed 44 percent of the quarterly growth.
The continuation of certain government policies, especially the pension to the elderly and free education should also support higher consumption levels for the poor. The longer-term goal of reducing reliance on external demand will take time, especially given political uncertainties that hinder the government’s ability to implement not only its investment program but also needed structural reforms.

Chinese investment funds, Middle Eastern petrodollars — there is a huge amount of new money being channeled into the Asian capital markets.
The 2009 market rally reflects the perception that valuations are about long-term potential, and that political crises in Thailand rarely have a dramatic impact on the fundamentals of the economy. If we look at the EV/EBITDA multiples of the oil and gas sector, for example, valuations are still low compared to regional peers : this is partly a reflection of regulatory risks and political instability in Thailand.

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.

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

Author: John West, MrGlobalization

How does a Cold War organisation like the OECD respond to the end of the Cold War? Does it try to hang on to its former identity? Or does it embrace the new ‘age of globalisation’?

The end of the Cold War in 1989 represented a victory of values and ideology — the triumph of pluralistic democracy, respect for human rights and the market economy — for the OECD and its member countries. At the time, Asian economies were also emerging rapidly, based on a complex cocktail of export promotion, strong state intervention and non-democratic politics. Before the fall of the Berlin Wall, a number of these Asian economies were ‘economically qualified’ for OECD membership in terms of GDP per capita. But politically, there was never any suggestion that they might join.

Politics has always trumped economics at the OECD, even though economics is its core business. In the 1990s, for example, four central European countries were rushed in as members (following Mexico’s 1994 membership), while they were still fledgling market economies and democracies. They were the lost sheep of the North Atlantic community, having been occupied by the Soviets, and Western Europe and the US strongly supported their membership ambitions.

But Korea’s membership was very much a different case in point. It was economically better qualified, with a GDP per capita more than 60 per cent higher than the other five new members. It was perhaps even more qualified politically. Nevertheless, it is widely recognised that the OECD went soft on Mexico and the central European countries during the membership process, and went much tougher on Korea.

By 2007 when it came to inviting other countries to join the OECD, none of the most interesting possible members — Brazil, China, India, Indonesia and South Africa — had expressed interest in joining. They were offered and accepted a program of ‘Enhanced Engagement’, which was designed to prepare them for possible future membership.

Today the OECD finds itself with 34 members, with some 24 from Europe and only two from Asia. In contrast, the WTO’s list of the world’s 34 leading exporters includes 10 Asian economies. Many of these Asian countries are also internationally significant in areas such as investment, finance and carbon emissions — and school students from Shanghai now outperform all OECD countries in the organisation’s Programme for International Student Assessment, which measures literacy, numeracy and scientific ability. But while the Enhanced Engagement countries participate in a wide array of OECD activities, none of them are interested in membership. A very senior OECD official once described this program as a ‘one-way love affair’.

So the OECD, which has sometimes called itself a ‘hub of globalisation’, seems destined to have a membership which accounts for an ever-declining share of the world economy. It stands at a crossroads, bypassed by Asian-led globalisation at a time when the G20 has more member countries from Asia than Europe.

What are the main problems and solutions?

Even though it is essentially an economic organisation, the OECD has retained a strong North Atlantic political identity. This is partly because it is governed by foreign ministries and also because of the US’ dominant role. And as the recent UN vote on Libya showed, there are still vast political gulfs between the Enhanced Engagement and OECD countries.

New members are also forced to accept and align their policies with a now vast array of instruments and conditions they had no role in creating. From an OECD point of view, this means becoming a ‘responsible stakeholder’. From an emerging country point of view, it means being a ‘rule-taker’, that is, swallowing an OECD agenda now increasingly questioned in light of recent financial crises.  The OECD also has too many European members.  Something must be done about this ‘eurocentricity’, such as establishing constituencies, to improve the organisation’s effectiveness.

Overall, the OECD must adapt much more radically to the changed world and offer a more flexible and pragmatic approach to the application of its values and instruments through its membership. It must then launch a major campaign to recruit the Enhanced Engagement countries as members. The OECD Secretariat and its membership have not yet managed to convince emerging Asian economies of the organisation’s manifest benefits. But the OECD is still in many ways the best idea in town, with its excellent analysis and opportunities for policy dialogue. And emerging Asia has much to learn from the OECD experience in many areas, like developing social safety nets, economic upgrading, dealing with ageing populations, and public-sector reform.

As well as revitalising the OECD, this strategy could contribute to improving relations between the two major blocs which divide the world today — the OECD countries and the Enhanced Engagement countries.

John West is Editor-in-Chief at MrGlobalization.  This article is based on his paper ‘The OECD and Asia: Worlds Apart in Today’s Globalization’, published in Revista de Economia Mundial No. 28 (2011), 67–92.

1. OECD policy brief on emerging economic giants
2. Engaging Central Asia: the EU-Shanghai Cooperation Organisation (SCO) axis
3. The South Asia Cold War ‘quadrilateral’ redux?

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The OECD and Asia: a Cold War organisation in the age of globalisation