Siam News Network

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

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Vietnam: the beginning of another economic transformation?

The Philippine energy and natural resources department last week gave the thumbs down to the application of Sagittarius Mines Incorporated (SMI) for environmental clearance for its planned commercial production of copper and gold in the Tampakan, South Cotabato. The department of energy and natural resources (Denr) cited the ordinance of South Cotabato which banned open pit mining  in the province as the basis for rejecting the application. “We are returning herewith the application documents with instruction to deny the same without prejudice to resubmit until the issues and concern on the use of open-pit mining method shall have been clarified and resolved by the company[SMI] with the provincial government of South Cotabato,” Denr secretary Ramon Paje said in a memorandum dated last January 3, copies of which were obtained by the local Catholic Diocese in South Cotabato. Juan Miguel T. Cuna, director of the Environmental Management Bureau, then ordered Sagittarius Mines “to refrain from undertaking any development activity in the areas mentioned in the application for ECC” until it will be able to obtain the necessary permit. The order was dated January 9 this year, several days after Paye issued his memorandum denying SMI’s ECC application. The ECC is a mandatory requirement before any mining project could proceed. To appeal SMI president Peter Forrestal said they were disappointed by the Denr decision but said they will seek reconsideration. “SMI intends immediately to file an appeal for a reconsideration of the decision as permitted under the ECC application process,” he said even as he claimed the decision “was not made on the merits of our Mine Project Environmental Impact Statement (EIS), which fully complies with the requirements of the DENR’s own ECC process and is backed by a world-class environmental impact assessment study.” SMI’s minority partner Indophil Resources, which only in December said it was confident the company will get an ECC, also confirmed the ECC rejection in a disclosure to the Australian bourse. SMI held several public scopings and at least five public hearings during the last two years in a bid to obtain an ECC.  These hearings drew partisan reactions from both pro-mining and anti-mining groups The Bishop Dinualdo Gutierrez of the Diocese of Marbel hailed the decision, however. Gutierrez, along with two other bishops in the areas where SMI planned to operate, is a strong advocate against open pit mining. The militant Bagong Alyansang Makabayan (New Patriotic Alliance) said the rejection was a triumph for the people who opposed and rejected SMI’s bid to mine 2.4 billion tonnes at a grade of 0.6 percent copper and 0.2 grams per tonne gold and contains 13.5 million tonnes of copper and 15.8 million ounces of gold, using a 0.3 percent copper cut-off grade. SMI earlier announced it intended to pour in US$5.4 billion in capital and cash investments for the project. National mining policy Forrestal said the Denr decision “sets a precedent that contradicts the publicly stated views of the Aquino Administration.” The Aquino government however said it is yet to come up with a comprehensive policy recommendation on the mining industry following increased environmental concerns from several sectors. Meanwhile, the Chamber of Mines in the Philippines today said “the denial of the application for an Environment Compliance Certificate (ECC) for the Tampakan Mine Project underscores the urgent need for a national mining policy that would resolve conflicts between the national government and local government units as regards minerals development.” The Philippine mines chamber also warned that the denial of SMI’s ECC application may send mixed signals to the investment community.” The Denr decision came just days after a local trial court restrained the provincial government of Zamboanga del Norte from enforcing its own open pit mine ban which affected the ongoing operations of Canadian-owned TVI Resources Development. SMI however has refused to challenge the provincial ordinance saying that it was just a contractor under the Colombio Financial Technical Assistance Agreement which holds the Tampakan Copper and Gold Project. Aside from the Catholic Church and environment groups, the communist-led New People’s Army is also against mining large-scale mining operations. In October last year, some 200 NPA guerillas raided Taganito Mines and two other sister companies in Surigao del Norte torching over US$20 billion of equipment and properties.

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Philippines govt rejects SMI mining bid

Your start-up may have crossed the threshold to viability. Now, the tough part begins. At the onset of 2012, many start-up executives around the world are sticking their copy of Lean Start-Up on the shelf, leaning back, and bemoaning the fact that they have a new set of challenges ahead of them. Although there is a plethora of advice now being given about how to find product-market fit for your fledging start-up, there’s a dirty little secret out there: Once you’ve achieved product-market fit, the hard work really begins. Scaling is hard. After three or four years of jamming on your start-up, you’ve finally crossed a few million in revenue, gotten north of 10-20 employees, and it’s all starting to click. Now the pressure really begins. Your employees start doing what I call “phantom equity math” (if this company were worth a billion dollars, I’d become a multimillionare!), your VCs shift you in their mental models from “too early to tell” to “high return potential” and your spouse starts asking about when all that hard work is going to really pay off. Yet, the hard scaling challenges and decisions that will enable true value creation, not just interim progress, are all ahead of you. Here are four of the top ones that I see start-ups wrestle with once they start seeing their initial revenue projections finally come to fruition: 1. Product strategy: Stay focused vs broaden the footprint The initial product is working well and now the question is how broad a product strategy should you pursue? If you think the total available market (TAM) for the existing product is large enough to satisfy yours and your investor’s ambitions, stay focused. But, typically, the allure of pursuing the bigger win draws founders into ambitious efforts to broaden their product footprint through organic development efforts or even M&A. My partner, Chip Hazard , likes to refer to the broadening efforts as the “lily-pad strategy”: Focus on jumping on to a lily pad next to you rather than across the entire pond. By pursuing natural adjacencies, a company can increase its TAM—ideally by leveraging existing customers (meet their needs more broadly), channels (given them more things to sell), or products (extend the current prodcut footprint with natural adjacent add-ons). I’m often surprised that companies don’t think through the basics of competitive strategy when evaluating these adjacent opportunities. At the risk of getting some eye rolls for evoking Michael Porter , I encourage start-up CEOs to think carefully about the new lily pad’s competitive intensity, entrance threats, threats of substitute products, as well as the power of suppliers and customers when evaluating the adjacent opportunities. 2. Financial strategy: Exit vs raise additional capital Once things are working well, there is a magnetic power that demands pouring more fuel onto the fire. If the customer acquisition costs (CAC) are proving out to be $1 and the customer’s lifetime value (LTV) are $2, why not raise millions of dollars to acquire more customers? Obviously, it’s not that easy a decision. Raising capital can be a hugely distracting, draining process, and the dilution implications, as well as the choice of investors, has deep repercussions on your future options. On the other hand, pursuing an early exit can be appealing, particularly if the entrepreneur has never had a win before, but there are many difficult considerations here as well, which I touch on in a blog post ( Walking Away From Liquidity ) as does Roger Ehrenberg ( To Sell or Not To Sell ). 3. Human capital strategy: Hire grownups vs stay young There is a certain charm and many benefits to the founding team sticking together and scaling with the start-up. The culture remains true to the founding core, the young talented employees get growth opportunities, and there’s an appeal to minimizing the disruption that outsiders bring. Yet, frequently, the talented founding team that gets you to the point of scaling is not the right team to lead the scaling process. I refer to the three stages of a start-up’s life as “the jungle,” “the dirt road,” and “the highway”. The team that is skilled at hacking its way through the jungle is often not as well-suited to accelerate rapidly once a dirt road has been discovered. Yet when more senior, experienced executives arrive, preserving the founding culture, and maintaining alignment is critical. The best companies build teams for scale early on (e.g., hiring great VPs who can be both effective players and coaches as their department grows) and work hard to select for cultural fit (Google’s top recruiter, Mike Junge, had a great interview on hiring best practices in PE Hub, Why It Pays To Be Nice ). 4. Founder’s dilemma: Bring in a professional CEO? Ultimately, one of the biggest decisions a scaling young company makes is: Who should be the CEO? The founder may be one of the uniquely talented individuals who can scale from the jungle all the way through the highway, but more often than not, a senior, professional CEO is hired to help take the company to the next level. This decision is truly make or break. It rests on the founder’s desires as well as the board’s confidence in his or her ability to transition from a product-centric, pre-product-market fit world to a sales-and-marketing execution-centric, post product-market-fit world. Investors would always prefer to see the founder make that transition, but if the skillset isn’t there, having an orderly transition with open communication is key. HBS Professor Noam Wasserman has written a series of cases on this topic that show some of the do’s and don’ts of navigating this transition. It’s never an easy one to embark on. Each of these decisions can be gut-wrenching, bet the company moves. There’s a nasty image I hear used in the boardroom about snatching defeat from the jaws of victory. If things are going well, you want to let them evolve naturally and achieve some measure of victory, albeit a small one. This may mean sticking with a founding leadership team, a niche product strategy, and selling early. Why should each of these decisions sound limiting? Because great entrepreneurs are competitive, ambitious types who attract ambitious management teams, advisors, and investors. There’s a natural allure to moving aggressively to scale once the initial product-market fit assumptions become validated. Just scale wisely. Going from $1 million to $10 million in revenue is no easier than achieving that initial $1 million. And getting to $100 million and beyond, well now you’re really in the rarified air that gets the people around you—and sets expectations soaring higher.

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Scaling A Business Is Hard

Some sales stars are master manipulators who can rack up big numbers–but at the cost of long-term growth. I recently read a blog post giving the following characteristics of “ quota-crushing sales pros ”: “They have no time for anything that is not their deal.” “Charming one minute, in-your-face the next, pros will use all emotional tools to win.” “They save the charm for the prospects and clients and the venom for your company.” “They’re never satisfied … ever.” This list was presented as if these were desirable characteristics, justified by the fact that such individuals could consistently “crush” their quotas, presumably making them more productive than their peers. Unfortunately, the presence of this kind of person on your sales team is generally a huge mistake. Yeah, he’ll book lots of revenue, but it’s probably because he’s 1) shafting your customers, or 2) shafting your company. Or more likely both. Let’s talk about customers first. While aggressive selling can win new customers, it seldom builds long-term relationships. Customers end up feeling manipulated into buying things that they neither want nor need, and consequently decide to buy elsewhere in the future. Companies that depend upon “quota crushers” to make revenue generally end up with little or no customer loyalty. As a result, they are forced to constantly acquire new customers. While the “quota buster” is good at this, it costs a lot more money to get a new customer than to sell to an existing one. And eventually word gets around, making new sales harder and harder to achieve. Sales superstars can also be a huge productivity drain on the rest of your company because often their success lies not in superior sales technique but in a superior ability to manipulate their own company’s resources, according to research by Arun Sharma at the University of Miami. In some cases, the superstars (who tend to account for 20% of a typical sales team) consumed as much as 50% of the firm’s internal resources. Since those resources would otherwise be supporting the rest of the team, the superstar’s revenue could be chalked up to “robbing Peter to pay Paul.” This is why sales superstars are often unpopular among their peers. While management may be convinced that their success is the result of great sales skills, the rest of the team suspects that the superstar is simply hogging resources. (A common complaint: “He gets all the easy leads.”) The operative word here is “manipulate.” Some sales superstars (and the managers who enable them) truly believe that selling is the process of manipulating people: customer and fellow-employees alike. To that way of thinking, selling is something that you do to people, not something you do for people. And while that may result in “quota crushing”, it’s not a long-term strategy, except for con men working in boiler rooms. Does this mean that every sales superstar is bad for business? Of course not. There are definitely salespeople who can make big sales numbers without manipulating people. But these “superstars” have none of the characteristics identified in the original post. Instead: They always have time for their customers, even when it’s not strictly business. They are committed to doing the right thing, even if it means losing the sale. They treat both customers and fellow employees with respect and consideration. In the short term, they might not make as many sales as the “quota crushers”–but when they’re done selling, your company has a loyal customer base, not a hundred furious (and probably vocal) customers who think they got the shaft. And your employee morale won’t be in the toilet. Note: Over the next few weeks, I’ll be posting columns to help you locate the kind of “superstar” that’s not bad for business. So stay tuned.

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Beware of Sales ‘Superstars’

North Korea is among the poorest nations in the world, enduring government mismanagement that emphasizes military spending, which leads to repeat famines and manipulated relief efforts. With the announcement of Kim Jong Il’s death, North Koreans engaged in a massive display of rote grief, orchestrated, filmed and released to western media and analyzed by Philip Gourevitch for the New Yorker. “To the outside world, it has always been easier to mock North Korea’s craziness than to fathom its horror, even as an estimated two to three million people died there of starvation in the late [1990s], and a generation of children were stunted by extreme malnutrition,” Gourevitch writes. Like members of a cult or abused children, North Koreans have every reason to grieve, he concludes, because the irrational regime continues under a new Kim, with military support, and the most powerful countries in the world are helpless, standing by to speculate and watch. Ending the Stalinist-style regime and the suffering would carry great cost. – YaleGlobal The international community mocks the Kim regime, but can do little to stop the mismanagement of North Korea and widespread suffering Philip Gourevitch The New Yorker, 22 December 2011 Rights:The New Yorker © 2011 Condé Nast Digital.

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Unreality Check: From Kim to Kim in North Korea

Author: Bradley O. Babson

At the moment of his accession to power, Kim Jong-il inherited the devastating impact of the collapse of the Soviet Union, the subsequent trade shock to North Korea’s economic output, the onset of the worst famine in modern history, and a humanitarian crisis that required a direct appeal to the outside world for help.

By the late 1990’s, he was forced to accept the realities of dependence on international aid, the rise of farmers markets as a grassroots response to the famine, and the introduction of capitalist notions such as ‘profits’ in the Constitution itself. Kim even briefly entertained the notion of establishing relationships with the International Monetary Fund, World Bank, and Asian Development Bank, attracted by the prospects for international finance, but balking at requirements for transparency, conditionality, and rules-based relations. Throughout his leadership tenure he only half-heartedly and grudgingly accepted the growing role for markets in the North’s economy and maintained a deep ambivalence to the prospect of economic empowerment of the North Korean people. His desire to maintain highly-centralised control over all aspects of North Korean society was sharply at odds with the decentralisation of information and decision-making needed for a market economy to replace a failed socialist economic management system. As a result, economic policy in the Kim Jong-il era was more shaped by events and forces for change than used as a tool to guide a managed process for national development.

Experiments in economic reforms were not accompanied by policies or the institution-building that would have been needed for recreating the economic success stories of China and Vietnam. Rather, the guiding light of economic policy for Kim Jong-il was mobilising resources for his purse from both domestic and foreign sources.  He was quite creative in devising ways to achieve this, such as demands for ‘loyalty’ payments, structuring of foreign exchange earning activities to send the cash to the top, negotiating with foreigners to get goodies for concessions, and pursuing illegal and internationally-sanctioned revenue-raising ventures.  At the end of the day, the North Korean economy under Kim Jong-il remains highly vulnerable to shortages of food, energy, and foreign exchange, with pressures for transformation of the economic system coming from both internal and external dynamics of change at work in North Korea.

Looking ahead, the key question is not whether there will be changes in economic policy but whether changes will be in the direction of building a market economy or governed by a new dynamic of competition for resources among contending parties for power.  The more the new regime leans towards the Worker’s Party, the more likely it will follow Chinese supported policies of developing a market economy under the guidance of the Party and gradually shift to funding defence needs from a centralised budget rather than the military having its own economic organs such as trading companies and banks that service them. The more the regime tilts towards the military, the more likely that competition for resources will trump incentives for pursuing systemic change.

While there may be an inclination to perpetuate the patronage practices of the elites by the Kim family, it is not likely that loyalties will transfer simply to the new leadership through such patronage alone. New incentives for supporting the regime will need to be pursued.  Key metrics of such changes will be in: 1) the ownership and transferability rights of assets; 2) the restructuring of the financial system including banking supervision, monetary-management policies, and development of the tax system and public expenditure policies to accommodate a market economy; 3) the support for decentralisation of economic decision-making and empowerment of traders and entrepreneurs; 4) the willingness to follow rules-based international practices in commerce and finance; and 5) the legal reforms to protect rights of parties in a market economy. This is a tall order, but one that might lead to a new dawn for North Korea.

Bradley O. Babson is a consultant on Asian affairs with a focus on Korea and Northeast Asia economic cooperation. He is retired from a career at the World Bank, with a concentration in East Asia. In the early 1990s he worked on the opening up of Vietnam and was the first World Bank Resident Representative in Hanoi.

1. Kim Jong Il’s death: continuity plus opportunity to engage
2. North Korea: new opportunities in a post-Kim Jong-il landscape
3. Kim Jong-il’s visit to China: What should we expect?

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After Kim Jong-il: will there be change or continuity in North Korean economic policy?

The Apple Investor is a daily report from SAI.

Sign up here to receive it by email . AAPL Still Battling XOM For Market Cap King Last week was good to Apple, which closed above $400 for the first time since early November. But the stock gained little ground in its running battle with Exxon Mobil for the market cap championship, as the rise in crude prices has pushed the oil giant up as well. Catalysts for Apple include iPhone upgrade cycles and adoption; update to the iPad in early 2012; continued market share growth of the Mac business line; penetration in China and emerging markets; the evolution and potential re-conception of Apple TV ; and platforms such as Siri, mobile advertising (iAd), books and publishing, gaming, mapping and social ( Ping ).

Shares of Apple trade at 8.9x Enterprise Value / Trailing Twelve Months Free Cash Flow (including long-term marketable securities). Will Apple Make The Perfect TV While Google TV Continues To Disappoint? (The Perfection Paradox) The single biggest reason Google TV didn’t work was it didn’t solve any of the biggest shortcomings of our living room television viewing experience. Apple, meanwhile, will approach the market with the aim of making TV simple again, by making the “perfect” TV. Henry Blodget at Business Insider says that TV users just want to press “on” and watch what they want to watch .

That’s it.

Steve Jobs probably figured out how to allow TV users to press “on” and then say, “The Jets game,” or “Addams Family” or “The next Sopranos episode” or “our Hawaii vacation videos” and have the TV just play them. If Apple can do that, they will have a massive hit. iOS Mobile Devices Accounted For Over 90% Of December Mobile Retail Sales (RichRelevance) iPads and iPhones accounted for over 92% of online retail sales not originating from a desktop device for December, according to RichRelevance, easily beating out Android .

Shoppers on Apple devices were also willing to spend more, with an average order value of $123 versus Android’s $101 (that’s 19% more). Mobile shopping is still a drop in the bucket compared to desktop shopping, with just 3.7% of total online retail dollars spent in the U.S. Goes to show that the browsing experience is key to mobile commerce. Why Isn’t Safari Growing Like Chrome? ( TechCrunch ) Remember Safari ? While Google’s Chrome has skyrocketed from obscurity in 2008 to over 25% last month, Apple’s web browser lingers somewhere between 5-8%. But Why? Windows ? But Safari has actually been available for Windows quite a bit longer than Chrome has been.

Speed? Chrome is know for being the fastest browser available in terms of both page rendering and JavaScript performance. Promotion? Or lack thereof. Google does quite a bit of promotion for its browser. However, Safari being bundled by default with iTunes should have helped it gain massive Windows market share. Extensions? Safari has had them as well since mid-2010.

That said, Chrome’s extensions are better and much more plentiful. Neglect? Apple is more inclined to throw resources at native work rather than web work. Of course, this could all change if devices like the iPad really are the future of general purpose computing. A New Era Is Coming For Apple In 2012 (paidContent) Apple will remain the most compelling story in tech not just because of the iPhone and its cousin, the iPad, but because of the immense pressure on CEO Tim Cook and Apple’s management team to live up to the standard set by a legend.

This quarter will be the first full quarter that Cook and his lieutenants will have been in charge of Apple. And the company has never been stronger, and Cook has been auditioning for this job for several years.

The company could make or break mobile payments this year and revolutionize the way we watch TV. It’s hard to imagine Apple losing steam in 2012. Get Ready For Apple’s Monster Quarter, And The Stock To Soar (Seeking Alpha) Apple is unique among America’s mega caps due to the company’s ongoing rates of revenue and earnings growth.

That said, the rate of Apple’s share price appreciation has fallen behind the rate of earnings growth over the past four quarters. Despite the 83% growth in earnings per share in fiscal 2011, at Apple’s closing price of $403.33 last week, the share price has risen only 25% year-over-year.

There’s a disconnect between the perceived limits to Apple’s continuing strong growth and the reality of the company’s potential for growth. Please follow SAI on Twitter and Facebook . Join the conversation about this story » See Also: Here’s Why The Apple TV Might Be Awesome And Google TV Will Continue To Suck…

THE MICROSOFT INVESTOR: Stagnant Shares Are No Reason To Ignore In Microsoft THE GOOGLE INVESTOR: Why Google+ Is Now A Must For Businesses

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THE APPLE INVESTOR: 2012 Will Usher In A New Era For Apple (AAPL)

A list of what The Wall Street Journal’s reporters in China are reading and watching online. (NOTE: WSJ has not verified items in the ‘News’ section and doesn’t vouch for their accuracy.)

News:

* The former CCTV official blamed for a deadly and costly fire almost three years ago gets more years added to his term. (Xinhua)

* China plans new taxes on vehicles (China Daily)

* China should reduce reliance on overseas credit-rating companies by pushing its own, PBOC Gov. Zhou Xiaochuan said. (Bloomberg)

* Sudan’s unrest represents a minefield for oil-thirsty Beijing. (Washington Post)

Analysis and Commentary:

* Mao’s past mistakes show the need for an open government. (Global Times. Yes, that Global Times.)

* China is too big to support continued heady growth through exports, Gordon Chang argues. (Forbes)

* The Wukan revolt: A harbinger of things to come? (New York Times)

Just Because

Marilyn Monroe plans an appearance in Harbin. (Xinhua)

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

The government vowed to continue reforming the economy and emphasized the need to increase domestic consumption in order to make China less dependent on foreign exports for GDP growth in the future.

China has emphasized raising personal income and consumption and introducing new management systems to help increase productivity.

Some economists believe that Chinese economic growth has been in fact understated during much of the 1990s and early 2000s, failing to fully factor in the growth driven by the private sector and that the extent at which China is dependent on exports is exaggerated.

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 ministry made the announcements during a press conference held in Xiamen on the upcoming United Nations Conference on Trade and Development (UNCTAD) World Investment Forum and the 14th China International Fair for Investment and Trade.

“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 expected to have 200 million cars on the road by 2020, increasing pressure on energy security and the environment, government officials said yesterday.

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

Despite initial gains in farmers’ incomes in the early 1980s, taxes and fees have increasingly made farming an unprofitable occupation, and because the state owns all land farmers have at times been easily evicted when croplands are sought by developers.

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.

China is one of the world’s major mineral-producing countries.

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.

The largest completed project, Gezhouba Dam, on the Chang (Yangtze) River, opened in 1981; the Three Gorges Dam, the world’s largest engineering project, on the lower Chang, is scheduled for completion in 2009.
Beginning in the late 1970s, changes in economic policy, including decentralization of control and the creation of special economic zones to attract foreign investment, led to considerable industrial growth, especially in light industries that produce consumer goods.

The iron and steel industry is organized around several major centers (including Anshan, one of the world’s largest), but thousands of small iron and steel plants have also been established throughout the country.

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China Watch: CCTV Sentence, Car Taxes Planned, Marilyn Monroe at Harbin