The study examines defining characteristics of the evolving Chinese innovation and standards system and explores possible impacts for China as well as the global economy. China considers standardization to be an essential tool for improving its innovative capacity, yet very little is known about this critical building block of China’s innovation system.
More than half of Chinese infrastructure investments have “destroyed, not generated” economic value as the costs have been larger than the benefits, according to researchers at Oxford university, a finding that will fuel debate over the viability of China’s infrastructure-heavy growth model.
A fascinating article, and a reasonable proposition. Except for three things.
First, China remains short of infrastructure in key areas. A few examples: freight rail remains in desperate need of an upgrade; highways are groaning under the load of China’s car-crazy masses; and the power grid needs a switch to sustainable energy sources before coal chokes the country. As such, spending on new infrastructure per se is not necessarily misdirected.
Second, much of the infrastructure that has been built over the last thirty years is either worn out or was poorly built in the first place. The Chinese slang term “tofu construction” refers to just this phenomenon, and news reports offer discouragingly regular examples of underbuilt architecture.
Finally – and perhaps most important – most infrastructure (at least, the bits not made out of “tofu,”) is designed to last for a long time, often dozens of years. Any ROI calculation taken soon after completion is likely premature. By design, infrastructure should precede development, and is often the impetus of wider economic activity. Thus the effect of any given project on the wider economy is often impossible to gauge until long after construction.
Waste and graft permeate infrastructure development in China, and the government would do well to avoid dependence on infrastructure spending for growth. That said, more well-managed and thoughtful investment in infrastructure is needed, and will be for a long time.
And one last thought: better for reasons both economic and political that the government’s Keynesian spending goes into infrastructure that is ahead of its time than into military hardware and facilities.
“The Urbanization Solution”
Government Designed for New Times
McKinsey & Co.
China is on the back end of the largest and most rapid urbanization in the history of mankind. In the past 30 years, the nation’s population has gone from being 80% rural to over 60% urban. Lu Mai, Secretary General of the China Development Research Foundation and an expert on rural affairs, pens a forthright essay saying that China should stay the course: the more people you move to the cities, the more manageable China’s problems will be.
At the same time, Lu doesn’t want forced relocations. The market is the best mechanism to drive the process, he says. The appropriate role for the government is to serve as an enabler, making the process of integration into the cities as smooth as possible, and ensuring that migrants are provided the necessary services and statuses to make their shift from the countryside as smooth as possible.
Lu is wise enough not to call for the outright elimination of China’s hukou household registration system. Doing so would touch politically sensitive nerves, come across as slightly wild-eyed, and anyway would miss the point. Lu’s focus is on outcomes: get people into the cities, and anticipate and address the challenges this is going to create for municipal governments and the migrants themselves.
A quick read, but a good one.
This is a superb recent series of papers from CIGI about the evolving geopolitics of the arctic, this article focuses on the ambitions of East Asian nations like Japan, Korea, and China in the Arctic.
Sovereignty in the Arctic has been a latent issue, and international practice has been that the countries that have lands in the Arctic have essentially divided the region among them. Climate change, and the alterations that it is making to Arctic geography, are turning the region from a frozen wasteland to a shipping channel and a storehouse of natural resources seemingly begging for exploitation.
That change is also changing the attitudes of nations outside the club of countries with Arctic lands, and the countries of East Asia are making a more assertive case that they have interests in the arctica as well.
The entire series is superb, but Kai Sun’s “China and the Arctic: China’s Interests and Participation in the Region” will be of particular interest to Peking Review readers.
A Trilateral Dialogue on the United States, China, and Africa
May 13, 2013
There is a massive literature on China in Africa, and over the next few weeks I am going to be posting links to some of the better, more interesting resources in that regard. This particular Brookings conference paper, which frames a “trilateral” dialogue between the US, China, and Africa, is thought-provoking piece. Africa’s challenges are certainly large enough that they must be addressed by the locals and the world’s two largest powers, and even then, there is no guarantee that they would be addressed.
Despite points of light like South Africa, the continent seems to have fallen into something of a holding pattern. Progress remains, well, moderately paced. Poverty, AIDS, environmental degradation, and politics that put Byzantium to shame offer China a fertile field for political and commercial engagement, but the problems that hold the continent down remain intractable.
You could start a good fight at a cocktail party in Beijing by suggesting that China is just the latest boot on the collective neck of the people in Africa. Yes, the assertion is hyperbolic, but it raise the question of whether Beijing’s engagement has been any better for the people of Africa than colonial exploitation or the misguided foreign aid regime promulgated by the US since the 1960s. Indeed, a read through this paper offers the unappealing suggestion that just as we in the west are questioning the value of aid, China is doubling down on handouts. China, it seems, has not learned much about what works in Africa since its own ill-fated ventures there in the 1960s. If what China is practicing in Africa is not some variety of mercantilist neocolonialism, I would be pleased to know what to call it.
And the US is no white hat, here. In fact, it is starting to look like we have already passed the high-water mark of engagement with Africa beyond the ongoing terrorist hunt. The Obama-Hegel review of defense spending makes it apparent that the Department of Defense will gut the Africa Command (AFRICOM) in the coming years, and I would bet on the DoD standing down the command before 2020. As it must be: given the resources available the US is arguably best off returning to a hemispheric strategy, allowing Beijing (and possibly Delhi) to fall into the Imperial Overreach trap.
As recent events in Libya and Mali demonstrate, Europe remains better positioned historically and otherwise to engage in Africa than the US. But ongoing economic issues – and Russia’s growing adventurism – means that the focus of European defense will most likely shift east again, even if the economies of Europe and Africa become increasingly interlocked through immigration and trade.
The real story for Africa will be how to balance the growing influence of China with that of India. The Middle East, while the destination of many African exports, is (as Europe) set on its own Via Dolorosa as the politics of the region evolve. India and China, with robust economies and growing competition, look to be the next players in the African Great Game.
The question now is what form that great game will take. Brookings is appropriately concerned that the continent will become increasingly dependent on its emerging market trading partners. The nations of Africa need political stability, economic growth, and a population able to spend money. Those things will not happen if Africa once again finds itself on the wrong end of a mercantile economy, in particular if corrupt elites and bureaucracies can lean on their opportunistic Chinese and Indian patrons for support.
The Role of Economic Development Zones in National Development Strategies: The Case of China by Wang Xiao is a doctoral dissertation submitted to the Pardee Rand Graduate School. The author takes a methodical, data-driven approach to determine the extent to which economic development zones actually helped China’s development, when they did so, when they were less helpful, and what makes for more effective zones. The conclusions offer a hint as to the prospects for Shanghai’s much-ballyhooed Free Trade Zone to help in China’s search for an economic second wind.
Lessons from Department of Defense Disaster Relief Efforts in the Asia-Pacific Region
Jennifer D. P. Moroney, Stephanie Pezard, Laurel E. Miller, Jeffrey Engstrom, Abby Doll
If there is a unifying thread across the string of natural and human disasters that have torn across the Asia-Pacific region in the past eight years, it is that in each instance large chunks of the U.S. military dropped what they were doing at the time and placed their resources in the service of the governments trying to save lives, save property, recover the dead, and lay the groundwork for a speedy recovery.
There has to now not been an assessment of the effectiveness of that work, nor of the lessons learned. The RAND Corporation has taken on the task of making that assessment, and the results are now available in this concise volume. Taking into account four cases – that of Cyclone Nargis in Burma in 2008; the Padang earthquake in Indonesia in 2009, the monsoon floods in Pakistan in 2010, and the Tohuku earthquake, tsunami, and nuclear disaster in Japan in 2011 – the study offers some thought-provoking conclusions.
It will come as no surprise to anyone that, left on its own to conduct operations, the US armed forces show a remarkable degree of improvisation and can-do spirit that often overcomes the lack of preparation, and provides the basis for the kind of flexibility that evolving disasters demand. What the study suggests is that not all of this improvisation is necessary, and that with the proper salting of expertise and experience, time and lives could be saved when lessons don’t have to be relearned by different units and personnel in similar situations.
The RAND experts also note that the military needs help playing nicely with others. In this, they echo the oft-repeated entreaties of grand strategist Thomas P.M. Barnett. While the military has learned to overcome its parochial service-first thinking at lower and lower levels of command, this process took over 60 years. Now, however, the military must start thinking not just “mulit-service,” but also “multi-agency” and “multi-national.” The military may be alone on the battlefield, but when the mission is saving people and property, they work best when they work smoothly with the UN, with the Red Cross, local governments, and the Department of State, to name a few.
To the credit of our people in uniform, that stuff is hard, and it is even hard when civilian agencies try to play nice. This is exactly what the study argues. It’s hard, but we have to do it, and better we start now training leaders and operators at every level of the armed forces how to work in an environment like this.
That conclusion seems intuitive to civilians. But to someone in the military – especially someone who has to train people in the face of tightening resources and limited time – it seems like another unfunded mandate from “experts” who have no idea of the challenges in the field. Cross-training a medic is easy. Cross-training a 19 year-old airman third class who specializes in operating a helicopter sonar how to conduct humanitarian tasks is a lot more time-consuming. And what should the military do? Spend more time getting that kid proficient at his highly technical job, given they’re only likely to have him for another couple of years? Or interrupt that time to teach him how to perform technical rescues?
The RAND study, to its credit, doesn’t try to overtask the military, but offers some simple and clever solutions to the problem.
This book is a great read, a must for disaster geeks (I admit to being one) and to anyone with an interest in how we can all get better at saving people after “the Big One.” And for those of us with an interest in China and soft power, it is a silent reflection on how far China must come before its aircraft carriers mean more than menace in Asia.
- Disaster preparedness: lessons from cyclone Nargis (guardian.co.uk)
- USARPAC, Bangladesh military kick off Disaster Response Exercise & Exchange (dvidshub.net)
- Q&A: BBC’s Becky Palmstrom on role of media in disasters (scidev.net)
- Christchurch quake used as case study for global military (nzherald.co.nz)
- Disaster preparedness: lessons from cyclone Nargis (armageddononline.org)
- New shocking footage of Japan’s 2011 mega-tsunami (treehugger.com)
“Global Technology Sourcing in China’s Integrated Circuit Design Industry: A Conceptual Framework and Preliminary Findings”
Dieter Ernst and Barry Naughton
For nearly a decade, Chinese policy-makers have been on a seemingly Quixotic quest to turn the nation’s low-cost manufacturers into innovation-driven firms. The question that has plagued that effort from the start is whether Beijing’s “indigenous innovation” drive isn’t just a form of techno-protectionism, and if not, whether and how policy might actually aid in the emergence of world-class innovative firms.
That question remains largely unanswered, but Dieter Ernst and Berry Naughton have gone looking for answers in China’s integrated circuit design business. What the paper reveals is an example of how innovation is taking place outside the purview of government industrial policy, calling into question the value of centrally-driven strategic emerging industries.
A growing body of evidence suggests that the ship of state capitalism will founder on the rocks of innovation. The emergence of the new and the novel from overlooked quarters offers a reminder of the agrarian entrepreneurialim that emerged in 1980s China when Deng Xiaoping simply lifted the heavy hand of central planning. Ernst and Naughton’s study seems to points the nation toward a more productive approach to industrial innovation, yet one that would sorely test the natural interventionist urge of Party aparatchiks.
- Do companies REALLY want their employees to drive innovation? Eh,no. (whiteboardmag.com)
- Does Going Public Affect Innovation? (entrepreneurshipmatters.com)
- Creating Innovation Value: Four Key Drivers to Success (innovationmanagement.se)
- Why innovation is so hard (management.fortune.cnn.com)
- China – Hotbed of Innovation for our Planet in the 21st Century? (innovationmanagement.se)
Understanding the Pattern of Growth and Equity in the People’s Republic of China. Liu Minquan of the ADBI explains why some of the factors that drove growth in China during the first 30 years of reform and opening cannot help the country in the long run.
“China Still has a Long Way to Go” by Jonn Lee; Asia Pacific Bulletin No. 134; East-West Center, Washington, D.C. October 24, 2011
The University of Sydney’s Lee offers us a number of reasons why we should not be worried about China taking on America for the world…yet.
Tip of the hat to Andrew Erickson for catching this excellent essay in Jane Golley and Ligang Song’s new Rising China: Global Challenges and Opportunities (PDF). Kennedy’s chapter focuses on the China’s growing dependence on imported energy, and stands out in this excellent compendium.
As for the book, Golley and Song have made it downloadable, and it is well worth it. Arguably, the most vexing challenges China faces are domestic, but Rising China focuses on the international points of friction that are likely to be exacerbated by domestic politics.
The list of international challenges generated by this work is by no means comprehensive: such an inventory would require a bookshelf, and a full review of China’s security challenges would occupy a wall. Nonetheless, the authors – both Chinese and foreign – have created a catalog of the most critical issues, and one that lacks the demagoguery and angst of less scholarly studies.
- China must let yuan rise, lower barriers: Treasury (marketwatch.com)
- China’s Economic Growth Slows (online.wsj.com)
- China’s Me Generation: China’s Me Generation (time.com)
- China’s refuses to play the Good Samaritan (telegraph.co.uk)
- For Chinas wealthy, their fondest wish is to leave (theglobeandmail.com)
In a new special report, Wharton and the Boston Consulting Group explore how companies need to figure out how to operate in a world where their core markets are developing at radically different paces.
This is an interesting thesis, and will be of varied value depending on the industry, but for any company in the internet and technology businesses trying to bridge the BRIC countries on the one hand and the developed economies on the West on the other, this is an essential read.
My only quibble with the thesis would be the question “is this a two speed world or ten speed world.” Certainly China and the UK are now growing at two different speeds. On the other hand it could also be argued that the pace of market development varies widely among the BRIC countries, to say nothing of the differences among the BRICs, the West, and Africa.
In short, Wharton is taking the first steps in an important direction with this report, helping companies rethink and restructure to address this emerging challenge of globalization. Expect to see more debate along these lines in the future.
An interesting read that calls on the United States and the African Nations to work together to address the problem of AIDS in Sub-Saharan Africa.
While the book is ostensibly US-Africa in the way it focuses on solutions, the authors make frequent reference to a need for the US to build a consortium of major emerging nations, in particular given growing challenges to US government budgets. The subtext is clear: while the US has a major role to play in addressing global diseases, it can no longer do so unilaterally.
Food security, the question of where and to whom food is available in the world, is becoming one of the touchstone issues in the entire debate about sustainability and population. This USDA report looks at the issue over the next 10 years, and sees regional improvements – and disturbing regional declines.
Anyone interested in Africa – or China’s policy there – would do well to peruse this pdf book, particularly as China starts looking to Africa to potentially provide foodstuffs for Asia.
A pdf book that offers a loose (not causative) link between greater freedom and higher corporate profits. After reading Richard McGregor’s The Party it is not hard to see how strong states can lead to reduced corporate profits, even for favored enterprises.
A Council on Foreign Relations report on the development challenges facing Africa’s largest nation. And this pdf book makes clear that not everything is the fault of the Belgians.
A pdf book on how the developing world can prosper in the face of Asia’s rise as a nexus of innovation.
A pdf paper examining each of the four emerging economies – Russia, China, India, and Brazil – to discern the true environmental cost of high speed growth.
A pdf book.
A pdf book that looks at the other side of the oil problem: what happens to the petro-economies when the oil runs out. This is not an academic question in places like Nigeria or the Arabian gulf, and is a major driver of the strategy Dubai is pursuing. This book looks at their options, and they aren’t pretty.
The positive aspects of encouraging entrepreneurship are a common theme among academics and development consultants. This study takes a step back and documents how some entrepreneurial activity helps an economy not at all, and some is downright destructive.
What I like about this study is that it gives proof to something I’ve been saying for some time: that Chinese companies turning themselves into conglomerates is part of what is undermining their competitiveness.