Friday, September 26, 2008

Topsey Turvey Economics

funniest news piece about the economy on Sina Finance. Translated into English, it reads:

President of SoHo China, Pan Shiqi, in pleading for government help in the real estate market, warns that suffering of developers would lead to higher housing prices, not lower. Houses, he says, like coal, pork, and baby milk formula, will have higher prices when supply shrinks.

I have to solute him for not mention just one non-durable product, but three as comparison; I'd also solute him for understanding concept of higher price with negative supply sift. However, before doing that, he needs also assume the market for housing, a durable good, is in equilibrium - then why the hell he cries for government again? China has been worrying about an American style meltdown originated from real-estate market, and this quote can be viewed as an empty threat from the troubled developers.

Don't ask Chinese real estate tycoon about economics.

It reminds me of a research paper by Chicago economist. The gist of that thesis is that inequality isn't as bad as previously believed when measured in real consumptions because the rich buys differently. While the poor has enjoyed steady or declining prices as a benefit of Chinese exports, the rich has not been as lucky - the price of luxury cohort of the same goods don't decrease as much.

The consumers of China's contaminated diary products, because they can not afford the more expensive foreign brands, would surely disagree.

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Saturday, September 20, 2008

Cows on the Street

What do China's milk incident and America's financial turmoil on Wall Street have in common?

A lot, actually. For starters, we are in a era of having to pay for someone else's responsibilities. The well behaved financial companies would have to pay for overly aggressive firms; if Washington's proposed bail-out, amounting to hundreds of billions of promised money, was to carry out, taxpayers are expected to pay for the greed of the money managing industry. The government would in effect control a huge stake in the financial industry, and in turn control a large chunk of the economy. Who says the U.S. is capitalist and China is socialist again? In China, well behaved milk producers are suffering the same as corrupt and negligent firms turn public confidence toward mil product to historical low. Diary farmers are also in a bind. As government rush to sort out the mess, for now, their daily output are only to be trusted to feed the flowers and plants.

Let's play the blame game. Washington blames greed on the Street. Traders blame stupid quants giving the wrong model. Quants blame business people feed their computer with the wrong data, and business people naturally blame banks. As banks blame on hapless people like you and me, you blame on your stupid neighbor who brought houses he couldn't really afford. The folk would undoubtedly point back to politicians in Washington. Oh, Merry go around. On the other side of the globe, consumers want to slaughter the diary giants. The diary producers would point fingers at farmers. After all, that's a easy target and it has always been first instinct of firms and officials caught red-handed to blame on them. The farmers would blame on the market and milk collectors that squeezed their profit, or everybody else who made their lives equally hard. Or, as the joke goes, they would blame on the cows, and let cows blame on grass feeds.

But you get the sense something systematically is wrong, in both cases. Oh, you can always point to greed for an answer - that's always there, but you also get the sense that the game wasn't set up right.

I read somewhere that mainstream Chinese economists - "mainstream" is a negative word in China when associated with experts - argue that China has established a bright, ideal system of localized competition, provinces, counties, and municipals competing against each other with their own industries and resources. That sounds fine and dandy, like a theory, at first glance; until you realize it involve the madness of competition of political power in the market place. Firm behavior when backed by local governments are like throwing two boxers into the ring with no judges. They would scratch and scrawl, taking turns to be judge themselves. When competition intensifies, they could literally choke babies - see the milk incident, and until then would central authority step in for a fix. Speaking of central authorities in China, they are finding out the new realities quick. Their usual ways to fix and control are lagging in this information age, so they always find a step behind the public's expectations.

The same can be said of the government in Washington.

After the dust settles, the too-big-to-fail firms on the Street will live on, the too-much-government-asset-to-fail dairy producers of China will have a happy new life. The market was up Friday, but don't mistake cows as bulls. If the Wall Street were raising cows, the situation would be described in Chinese joke parlance as "The cows remained calm," a joke with similar connotation of wacky Iraq minister in denial.

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Monday, September 15, 2008

Say Cheese

Antonioni's film Chung Kuo was shot in 1974, under special approval from the then Chinese government. It was subsequently banned for "negative portrait" of China, the ban was lifted after 30 years in 2004.

Those days in Antonionno's film are long gone. You can hardly identify the scenes in the film of today's Tian'anmen Square, or Shanghai, except maybe the ritual way people taking pictures - in wedding photography boutiques. Zhang YiMou would later make a name for himself in the west depicting the rural China - before he resurrected himself directing the Olympics Ceremonies, that is, those days are gone too. But the film remains particularly interesting, you can see the pace of life, the innocence on people's faces of that time.

I am interested in photography, as a way to capture reality, and present perceived reality. Susan Sontag's comments about the film in On Photography provided some interesting perspective beyond the film. Frankly, both "They are trying to bring us down" crowd and "You are either with us or against us" crowd will benefit reading it. As ESWN comments, this is hardly about this particular movie but extends to the rest of life. Of course, no one should take everything said in an art critique as literal truth, so no need to boil your blood over:

Nothing could be more instructive about the meaning of photography for us -- as, among other things, a method of hyping up the real -- than the attacks on Antonioni's film in the Chinese press in early 1974. They make a negative catalogue of all the devices of modern photography, still and film.

While for us photography is intimately connected with discontinuous ways of seeing (the point is precisely to see the whole by means of a part -- an arresting detail is a striking way of cropping), in China it is connected only with continuity. Not only are there proper subjects for the camera, those which are positive, inspirational (exemplary activities, smiling people, bright weather), and orderly, but there are proper ways of photographing, which derive from notions about the moral order of space that preclude the very idea of photographic seeing.

Thus Antonioni was reproached for photographing things that were old, or old-fashioned -- "he sought out and took dilapidated walls and blackboard newspapers discarded long ago"; paying "no attention to big and small tractors working in the fields, [he] chose only a donkey pulling a stone roller" -- and for showing un-decorous moments -- "he disgustingly filmed people blowing their noses and going to the latrine" -- and undisciplined movement -- "instead of taking shots of pupils in the classroom in our factory-run primary school, he filmed the children running out of the classroom after a class."

And he was accused of denigrating the right subjects by his way of photographing them: by using "dim and dreary colors" and hiding people in "dark shadows"; by treating the same subject with a variety of shots -- "there are sometimes long-shots, sometimes close-ups, sometimes from the front, and sometimes from behind" -- that is, for not showing things from the point of view of a single, ideally placed observer; by using high and low angles -- "The camera was intentionally turned on this magnificent modern bridge from very bad angles in order to make it appear crooked and tottering"; and by not taking enough full shots -- "He racked his brain to get such close-ups in an attempt to distort the people's image and uglify their spiritual outlook."

Besides the mass-produced photographic iconography of revered leaders, revolutionary kitsch, and cultural treasures, one often sees photographs of a private sort in China. Many people possess pictures of their loved ones, tacked to the wall or stuck under the glass on top of the dresser or office desk. A large number of these are the sort of snapshots taken here at family gatherings and on trips; but none is a candid photograph, not even the kind that the most unsophisticated camera user in this society finds normal -- a baby crawling on the floor, someone in mid-gesture. Sports photographs show the team as a group, or only the most stylized balletic movements of play: generally, what people do with the camera is assemble for it, then line up in a row or two. There is no interest in catching a subject in movement.

This is, one supposes, partly because of certain old conventions of decorum in conduct and imagery. And it is a characteristic visual taste of those at the first stage of camera culture, when the image is defined as something that can be stolen from its owner; thus Antonioni was reproached for "forcibly taking shots against people's wishes," like "a thief."

Possession of a camera does not license intrusion, as it does in this society whether people like it or not. (The good manners of a camera culture dictate that one is supposed to pretend not to notice when one is being photographed by a stranger in a public place as long as the photographer stays at a discreet distance -- that is, one is supposed neither to forbid the picture-taking nor to start posing.) Unlike here, where we pose where we can and yield when we must, in China taking pictures is always a ritual; it always involves posing and, necessarily, consent. Someone who "deliberately stalked people who were unaware of his intention to film them" was depriving people and things of their right to pose, in order to look their best.

Antonioni devoted nearly all of the sequence in Chung Kuo about Peking's Tien An Men Square, the country's foremost goal of political pilgrimage, to the pilgrims waiting to be photographed. The interest to Antonioni of showing Chinese performing that elementary rite, having a trip documented by the camera, is evident: the photograph and being photographed are favorite contemporary subjects for the camera. To his critics, the desire of visitors to Tien An Men Square for a photographic souvenir is a reflection of their deep revolutionary feelings. But with bad intentions, Antonioni, instead of showing this reality, took shots only of people's clothing, movement, and expressions: here, someone's ruffled hair; there, people peering, their eyes dazzled by the sun; one moment, their sleeves; another, their trousers. ...

The Chinese resist the photographic dismemberment of reality. Close-ups are not used. Even the postcards of antiquities and works of art sold in museums do not show part of something; the object is always photographed straight on, centered, evenly lit, and in its entirety.

We find the Chinese naïve for not perceiving the beauty of the cracked peeling door, the picturesqueness of disorder, the force of the odd angle and the significant detail, the poetry of the turned back. We have a modern notion of embellishment -- beauty is not inherent in anything; it is to be found, by another way of seeing -- as well as a wider notion of meaning, which photography's many uses illustrate and powerfully reinforce. The more numerous the variations of something, the richer its possibilities of meaning: thus, more is said with photographs in the West than in China today.

Apart from whatever is true about Chung Kuo as an item of ideological merchandise (and the Chinese are not wrong in finding the film condescending), Antonioni's images simply mean more than any images the Chinese release of themselves. The Chinese don't want photographs to mean very much or to be very interesting. They do not want to see the world from an unusual angle, to discover new subjects. Photographs are supposed to display what has already been described. Photography for us is a double-edged instrument for producing clichés (the French word that means both trite expression and photographic negative) and for serving up "fresh" views. For the Chinese authorities, there are only clichés -- which they consider not to be clichés but "correct" views.

In China today, only two realities are acknowledged. We see reality as hopelessly and interestingly plural. In China, what is defined as an issue for debate is one about which there are "two lines," a right one and a wrong one. Our society proposes a spectrum of discontinuous choices and perceptions. Theirs is a constructed around a single, ideal observer; and photographs contribute their bit to the Great Monologue. For us, there are dispersed, interchangeable "points of view"; photography is a polylogue.

The current Chinese ideology defines reality as a historical process structured by recurrent dualisms with clearly outlined, morally colored meanings; the past, for the most part, is simply judged as bad. For us, there are historical processes with awesomely complex and sometimes contradictory meanings; and arts which draw much of their value from our consciousness of time as history, like photography. (This is why the passing of time adds to the aesthetic value of photographs, and the scars of time make objects more rather than less enticing to photographers.)

With the idea of history, we certify our interest in knowing the greatest number of things. The only use the Chinese are allowed to make of their history is didactic: their interest in history is narrow, moralistic, deforming uncurious. Hence, photography in our sense has no place in their society.

The limits placed on photography in China only reflect the character of their society, a society unified by an ideology of stark, unremitting conflict. Our unlimited used of photographic images not only reflects but gives shapes to this society, one unified by the denial of conflict. Our very notion of the world -- the capitalist twentieth century's "one world" -- is like a photographic overview.

The world is "one" not because it is united but because a tour of its diverse contents does not reveal conflict but only an even more astounding diversity. This spurious unity of the world is affected by translating its contents into images. Images are always compatible, or can be made compatible, even when the realities they depict are not.

Photography does not simply reproduce the real, it recycles it -- a key procedure of a modern society. In the form of photographic images, things and events are put into new users, assigned new meanings, which go beyond the distinctions between the beautiful and the ugly, the true and the false, the useful and the useless, good taste and bad. Photography is one of the chief means for producing that quality ascribed to things and situations which erases these distinctions: "the interesting." What makes something interesting is that it can be seen to be like, or analogous to, something else. There is an art and there are fashions of seeing things in order to make them interesting; and to supply this art, these fashions, there is a steady recycling of the artifacts and tastes of the past. Clichés, recycled, become meta-clichés. The photographic recycling makes clichés out of unique objects, distinctive and vivid artifacts out of clichés. Images of real things are interlayered with images of images. The Chinese circumscribe the uses of photography so that thee are no layers or strata of images, and all images reinforce and reiterate each other. We make of photography a means by which, precisely, anything can be said, any purpose served. What in reality is discrete, images join. In the form of a photography, the explosion of an A-bomb can be used to advertise a safe.

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Saturday, September 13, 2008

The Election and Baby formula

The presidential election has attracted many eyeballs, including many from China. To many Chinese, it's a political show, not unlike Chinese contest of Supergirl. To be a good onlooker, basic terminology is a must. So many learn Republicans are conservative and "right", Democrats are liberal and "left". But, they may not realize, by Chinese standard, both parties are conservative.

People on the GOP side may charge the liberals with cynicism; conversely, people on the left may charge conservatives of hypocrisy. And their policies and view about the role of government may differ. But Americans are united by American value that is largely based on Cristian value. However people on the left detest "religious right", or the first African American, Barrack Obama, my be elected TPOUS, the simple fact is no non-religious (i.e. Christian) person can be expected to win the presidency.

To many Americans, it is unthinkable to place the greatest power of the country in the hands of non-believers. The prospects of evil with power are simply too frightening. All the check and balances of a modern nation can potentially fail, the belief, and character of the man will become the last and ultimate defense against the prospect of horror. (Not that Bush has registered a high score, but that's another matter.) Therefore, American presidential contest inevitably will have elements of characters contest, with "just-like-me" mixed in. Some on the left don't understand what makes people vote Republican? As this excellent essay explains, it is the moral simplicity that people prefer.

If China were to install an American style presidential election, I imagine China would split right along the Beijing latitude line, with coastal provinces to the east being the "red state", preferring a freer economic policy, and inland provinces to the west being the "blue state", preferring more government welfare to neoclassical policy - quite different from the American demography. Social moral issues like stem cell research and abortion would never enter the main debate.

I'm about to enter the main point of this blog post. Before I do that, I'd like to point to an online poll I just encountered when perusing SINA. The poll asks, "how do you consider the various naked/nudity incidents?" - nudity, as a way to catch attention, has been encroaching from the online world to Chinese daily lives. To my slight surprise, the top choice is "It's nothing but a result of an open society", followed by "getting naked is the freedom of who possesses the body". "It's morally wrong and need to be curbed" is in the last place. Moral judgment aside - morality itself has no right or wong, it shows China has become more socially liberal than the U.S. This also reminds me I usually detest Chinese websites, even big internet gateways. A lot of content would be crammed into tight page space, with suggestive pictures and popups to the taste of no-eighteen-and-under spreaded here and there. It seems eye-catching, and the money behind it, is the only criteria of those websites.

If getting naked is a harmless moral issue, then the tinted baby formula issue is life or death issue.

I was telling my friend of the tinted baby formula story. She had a hard time to believe social functionaries would all break down to prevent much a thing from happening. It was harder for her to imagine melamine pollution was originated from someone trying to enhance the protein reading in food, all for some extra money, or someone would try to hush the story. Her eyes almost welled up. She can tolerate the corruption of money grabbing, but not this. But that's what happens when social conscientious being replaced by a money-first value system. Someone would have slipped melamine into glutton protein, and with a money-weaken monitoring system it eventually found its way to the baby formula. The ultimate deterrence should comes from sever legal punishment of an established legal system, or the moral belief of the economic agent. Unfortunately, China hasn't perfected the former, but the latter seemed to be already shattered.

There are many debates about China's economic future. But my biggest concern isn't what they teach in economics classes, it's whether and how China can regain her core social values. The failure would pose the biggest risk toward China's economic future. My friend, like myself, is no Christian, but she can now better understand why nonbeliever would find a hard time into the White House, given the historical role of Christian religion in providing the core American social values.

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Wednesday, September 10, 2008

Behind the Juicy Story

Who would have thought juice would make headline story. An potentially important news that slipped through last few days was that Coke is bidding the takeover of HuiYuan, a dominant Chinese juice make for $2.4B, potentially making it the biggest takeover bid of Chinese firms to date.

The outcome of this take over bid will have much to say about the direction of Chinese global economic policy. Internet opinions, especially those have promoted for domestic name brands, have seen plenty of displeasure of yet another multinational takeover. Do not discount the importance of beverages either; America has been through an similar episode of foreign bid, by a Belgium beer maker, of maker of Budweiser. That deal ended in veil. Chinese fruit juice groups were considering joint opposition to the deal, arguing the proposed takeover, which if successful would give Coke a dominant share of the market, would put them at a competitive disadvantage and threaten their survival. Market awaits to see if the deal can get pass regulator overhang.

But, what is the deeper revelation of this juicy story? The coming takeover touches a nerve of the public, not only the business communities, because foreign capital has permeated many Chinese businesses, many of which, the public believe, have been sold under value. A criticizer would point to high dividend payouts, higher than the IPO take-home of Chinese state banks. Complicating matter is that China is a transition economy from a socialist system, and a lot of the assets sold was accumulated while other parts of the economy was making sacrifice. So, possibly of "sell-out" is always on people's mind.

Yet, such takeover scenarios are inevitable. In particular, current economic structure precisely dictated that, even when Americans are mounting historical deficit against the Chinese. The comparative advantage of the American economy is no longer in manufacturing. In stead, it's more and more in corporate financing, even when its financial markets are in turmoil at home. On the Chinese side, the financiers, mainly banks, have their own bigger moral hazard problem; and for firms, the prospect of property right protection would be higher with foreign capital involvement. It thus creates incentives to sell assets to U.S. capitals seemingly undervalue. Therefore you get the current financial structure. Capital flows from China to the U.S. for low-risk, un-intermediated investments, mainly government bonds, keeping the interest low. Capitals then flow back to China for intermediated investments, snatching up assets. So, for China, the biggest concern is the American inflation; and for American investments, the biggest concern is Chinese growth.

It is a convenient and attractive setup for both sides right now. The real test comes when Chinese economic growth gets stalled, thus amplifying the asset risk. There is a lot of riding, of both sides, on the Chinese economy.

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Saturday, September 6, 2008

The Other Opening Ceremony

NBC didn't broadcast it, but you can check out the opening ceremony of Paralympics Game online here. It's smaller in scale, but equally spectacular, and in parts warm and moving. Twelve-year-old ballet student Li Yue, who lost her left leg in the devastating Sichuan earthquake earlier this year, captivated the crowd, dancing from her wheelchair.

The best part of watching an online stream is that you can skip forward the parts about lengthy athlete entering procession and official speech. You won't be bothered by CCTV's cheesy line or NBC's overbearing interpretation either. And you can watch as many times as possible.

Do watch the lighting of the torch at the end. It's uplifting idea and fits para game perfectly.

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Tuesday, September 2, 2008

West Wing Hopefuls

I feel like watching episodes of West Wing. Actually I don't watch a lot of that TV show, but it ought to be more melodramatic than the real thing, or does it?

A young, energetic and eloquent black president-hopeful (move over Morgan Freeman) delivers a forceful speech. A man in well-tailored suit, with pristine hair that rivals the God Father, rises every two minutes, or five syllable, to applaud. His beautiful wife smiles on, trying to catch the applauding action in unison.

If election were to be decided on looks, Democrats had a thundering punch. Even Michele Obama, ever so slightly pouty-mouthed however hard she tries, has a genuine sparkle in her eyes with wifely admiration and motherly love that makes her shine. The republicans after all have only Cindy McCain to hold the court.

Enter Shara Palin.

Pageant score: R2:D1. She not only evens up casting eye-candy-ness on the Republican side, but also ups dramatic scale of the usually blandish party. She is immediately suspected of claiming her daughters baby as her own. Before you know it, her 17-year-old daughter's knocked-up is front page news. She is then questioned from the way she delivered her baby to her high school basketball team uniform. There is even rumor of tape of her daughter getting drunk available. (Do we really need to know?)

If you think paparazzi in Hollywood are sneaky, think again. I doubt West Wing writers have enough imagination to outdo the script either. I'm less convinced of vast policy difference, I just want a good show. But to prevent the show from degenerating to Beverly Hill 90210, I have an idea for future West Wing hopefuls: call Geena Davis.

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