Silicon Hutong

Congress Watching - The National People's Congress Website

In the Hutong
Fasting before the physical
1938 hrs.

For those of you keeping an eye on the National People's Congress sessions and want a break from all of that hard journalistic coverage, the official website of the NPC is here.

Not much there as of this writing, but the public proceedings should be available. Check out the NPC's main site as well.

And for those of us in Beijing, get ready for two weeks of traffic jams.

Cross-post: The Plural of Anecdote

In the Hutong 
Waiting for a Skype Call 
2004 hrs.

Listening to a podcast of a lecture on UChannel not long ago I was pleased to hear a respected researcher suggest to his audience that "the plural of anecdote is data."

Since then I have had some interesting discussions with people who collect data for a living, and it is clear that the more orthodox of the researchers are not happy with that definition.

With many things in China, however, we are faced with a lack of data in the form of scientific evidence or peer-reviewed research. Even when we do have access to those things, they are of questionable reliability, out of date, or incomplete. Let's face it, this is a lousy environment for private data collection, and if government statistics are any indication, public data is not much better.

While all of us would love to be able to make our day-to-day decisions based on hard data that was collected using methodologies that would pass muster with our b-school statistics professors, that kind of data in most cases simply does not exist.

We must then, I'm afraid, fall back on a far less scientific means of operation, which is to rely on the collected anecdotes we have that are relevant, being as careful and thoughtful about the credence we give them as we would when critiquing an expensive bit of research.

In a market like China, where data is hard to come by and the pace of change is so fast that it outruns research at any rate, in most cases we need to rely on what Lily Tomlin once called our "collective hunch" about the world as it is.

Does that excuse us from being as informed as possible and collecting as much data as we can? Of course not.

But I have seen too many opportunities squandered in this market by people who "need to see more data." Some days, it's a good day to rely on a series of reliable anecdotes as your data, provided they capture what you and your team know in your guts to be the real situation on the ground.

Cross-post: China and International Pressure: Keeping the Laundry Indoors

In the Hutong 
Enjoying a post-prandial food coma 
1816 hrs. 

A source of constant entertainment for those of us living in China is the growing stream of armchair diplomats who believe that the Beijing Olympics is somehow a lever to bend China to the will of the West.

While one has no problem with a little punditry now and then - even with wonks who challenge one's own beliefs - one would hope that said pundits would think through their positions with care. This applies in particular to those who speak from the more visible pulpits of The New York Times, The Washington Post, The Times of London, The Independent, CNN, and similar outlets.

A current example is Roger Cohen, speaking in the Gray Lady about the goings-on in Myanmar. He calls upon China to press for an end to the Junta's rule in Myanmar. Citing the example of Mia Farrow's criticism of China's "complicity" in Darfur atrocities, and suggesting that said criticism yielded modest movement, he calls upon someone (it is not clear whom) to "shame China into shepherding Burmese reform, beginning with the release of Aung San Suu Kyi."

Wordcraft, not Statecraft

This brings up several interesting issues.

First, as mentioned, he is vague about who should do the shaming. The State Department? George Bush? Ms. Farrow? The University of California class of 2012? A polemic is fine as far as it goes, but if one is to call for action, shouldn't one be specific about who is to do the acting?

Second, he calls upon China to press for a rapid end to the Junta's rule. Wonderful idea. Unfortunately, Mr. Cohen is also vague about the lever China would use. With the case of North Korea (which he cites as an example of China's power in the region), the dual levers of food and fuel to an isolated economy were powerful. What, exactly, would China use as a lever with Myanmar? Trade and economic sanctions with pariah nations have a pathetic record of producing change - they tend only to increase repression.

At the other end of the spectrum, armed force on the part of the PLA would make China's leaders queasy, and the rest of the world would hardly welcome the emergence of the PLA as an expeditionary force. (Chinese tanks in Rangoon, anyone?.) Statecraft - particularly when the ends include regime change - is a very tricky and - as the current U.S. administration has discovered - often bloody business. But again, why ruin a good polemic with details?

Third, Mr. Cohen notes he is neither in favor of a boycott of the Olympics, nor of a breakdown in Chinese-American relations. Once again, though, he fails to suggest what lever the U.S. or self-appointed citizen-diplomats like Ms Farrow might use to convince China to do whatever vague something he is urging. If you want to threaten to boycott the Olympics, you had bloody well better be prepared to do just that - and endure the damage to Sino-American relations - before you sit down at the table. And if not that, what?

Finally, Mr. Cohen is quite keen on dumping the junta, but he is again without the support of detail when it comes to what should replace it - and how.

Statecraft, not Wordcraft

The problem, of course, is that Mr. Cohen is one of those people who feel the only way to deal with China is with the most accessible blunt instruments of statecraft. In this he exposes his lack of understanding of how to work with the leaders of the world's largest countries.

One need neither kowtow nor threaten to get China to work with the U.S. or the international community on issues of mutual interest. One need merely make a clear, cogent case to China's leaders that their bests interests are served by finding a mutually acceptable way of inciting change, and do so in a way that addresses the domestic political realities of all involved.

Want China to bring about regime change in Burma? Explain to the nation's leaders exactly how China will benefit by the change (domestically and internationally), how it will benefit by being seen as the catalyst, and how whatever will replace the junta will be better for China than the current situation. Sound easy? I can assure you, it is not.

Oh, and by the way - make sure before you do all of this that you have thought through the long-term implications of a China prepared to use its growing muscle in defense of its own interests.

Once astride the tiger, the Chinese saying goes, dismounting is difficult.

Cross-post: Why China Might Be Playing the Blame Game

China Law Blog referred me over to a superb post by Will at ImageThief that explains that China's entire PR strategy around the recent food and drug export tainting scandals has been abysmal - or worse.

Will points out that AQSIQ and other government organs blaming Panamanian traders, the USDA, foreign reporters, former drug chief Zheng Xiaoyu, and each other - basically doing everything but take responsibility.

To outside eyes, that's bad, if not pathetic. Here is the government of one of the most powerful nations on earth abjectly refusing to take responsibility for something that, conceivably, it could have had a hand in preventing.

Whenever I see inexplicable situations in China, rather than lash out or go postal, I stop imbibing caffeine and sit back for a moment to reflect on some of the reasons this could be happening.

I think the spate of denials and blamestorming that is going on are probably driven by some deeper issues.

• First, it is entirely possible that Zheng Xiaoyou's recent death sentence for his dereliction of duty is having the perverse effect of scaring the living hell out of everybody in the food and drug inspection business, and thus causing them to play the blame game out of sheer fear for their own lives, facing the possibility that they may be next, rather than having them come clean with any issues they are already finding.

• Second, there is the very real possibility that out in the provinces there is some horribly deep rot in the inspection system. As good as things might be on top, it is entirely possible to imagine that a number of individual government inspectors have been turned, that the concerned bureaus know or suspect that, and they're worried it will wind up on their plates.

• Third, let's remember for a moment the enforcement challenges China faces on everything from traffic laws to intellectual property protection. It is quite easy to see how local political pressure to go easy on hometown enterprises could make real enforcement impossible, even for the most intrepid and honest inspector. Even in this case, the blame for failing to enforce would land on the enforcer.

Independently, any one of these would be sufficient to explain the knee-jerk posterior-covering going on. If the problem is a combination of these factors, serious action is required.

What has to happen to stop all of this is an enlightened approach at the highest levels of the Chinese government. Somebody very senior has to say "I'm not out for somebody's head - I'm out to solve this problem. People will be evaluated in this process by the vigor with which they help us find and implement workable solutions."

That's a de facto amnesty, but the serious pain this situation is set to cause to some critical export sectors in China justifies it.

Once we've made it through this crisis, though, China needs to dig deep into its inspection systems to find out how to avoid this in the future. 99% safe is not anywhere near enough when lives are at stake.

Cross-post: News from the BSA - Underneath the bluster, China feels insecure

"Perspective: What China thinks about China," by Robert Holleyman, CNET News.com, October 5, 2006

Robert Holleyman, president and CEO of the Business Software Alliance, appears to be trying to give his Global IPR Stormtroopers a kinder, gentler face by doing a survey about how Chinese people feel about China. The survey chose to go deep with a group of influential respondents rather than a wide survey of the nation's sentiment (a wise approach - YOU try doing a statistically significant sampling of China's heterogeneous population.)

I give Holleyman an "A" for effort - I know what surveys like this cost (anywhere from $500 to $1,000 per respondent, if done well) and it could not have been easy for Holleyman to talk his members out of that kind of wampum when all they want the BSA to do is work for stronger IPR regulation and vigorous rights enforcement.

But based on what the BSA is telling us, I have to give him a "B-" for insight and a "D" for actionable intelligence.

What did the BSA find?

• Chinese elites feel that the rest of the world misunderstands China. This is only a story to people who do not deal with China regularly, and I think most of us would fess up to being limited in our understanding of the Middle Kingdom - even those of us who live and work here. What would have been a far more interesting issue to probe is the extent to which these elites understand (or misunderstand) the rest of the world.

• China sees India as more of a competitor than the U.S. This needs to be probed - do they feel this way because they see the U.S. and Japan as being so far out ahead - or because they see the U.S. and Japan as declining in their global economic and political power? Or because they have a different perception of competition for inputs and markets?

• Chinese have a "sober appreciation" of the challenges that face them. That's good. The bigger question is "what are they doing about those challenges, and what do they see are the barriers keeping them from addressing them?"

All interesting, none of it earth-shattering, and none of it likely to get the BSA pegged as a thought leader.

Now, I haven't seen the report, only Holleyman's op-ed on CNET. I checked the BSA website, and apparently the report is not public. That's a shame, because I have to believe there is more to all of this than what the BSA has chosen to tell us. But I also suspect the juicy bits are being held back for the members. I also suspect that one of the real motivations for this survey was to have a pretext to engage opinion leaders in China on a topic that was less confrontational than the BSA's normal desk-banging focus on getting China to enforce its IPR laws.

All pretty disappointing. Whatever BSA garnered for its members in this process, it has done little to advance the public debate about China's rise and shed light on issues critical to those of us doing business here.

Originally posted 8 October 2006

Cross-post: An economist and a gentleman

"China Names Economist as Central Bank Adviser," by Rick Carew. The Wall Street Journal, Beijing, August 14, 2006 (Subscription Required)

I had the rare and humbling honor of sharing a podium with Professor Fan Gang, head of the National Economic Research Institute, at a Singapore confab for Strategic Intelligence about six years ago. He is every bit (and more) the worldly and sophisticated an economist as Steve Green at Standard Chartered gives him credit for being, but he is also extremely engaging, easy to talk to, and as comfortable in a salon full of western businessmen as he is in a hall filled with party cadres.

It is this combination of intellect and social ambidexterity that makes him such a positive addition to the monetary policy committee at the People's Bank of China. I can only hope this is a stepping stone to a more official position.

If nothing else, China could use his talents to mange the fairly hawkish rhetoric coming out of U.S. Treasury Secretary Henry Paulson's office. After Snow had backed down a bit, Paulson's debut in office has been marked by increase demands to adjust the yuan. I think Fan Gang is the kind of economist that can help PBOC and Treasury build a clearer mutual understanding based on the economics rather than the rhetoric, both because he fundamentally agrees with some adjustment, but also because he can clearly and intelligently articulate (in terms U.S. economists would get) why it can't go any faster.

Originally posted 14 August 2006