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  • East Asia Forum

    Will Myanmar’s military exit the political stage?

    Author: Adam P. MacDonald, Halifax, Canada Over three million Burmese have signed a petition by Myanmar’s main opposition party, the National League for Democracy (NLD), urging immediate constitutional revision. A significant cause for protest has been the political powers afforded to the country’s military, the Tatmadaw, by the constitution. Although the petition demonstrates the direction in which many want the country to go, such actions are unlikely to force the generals’ hand. Aware of the dramatic changes to the state and society that the military has introduced over the last five years, and their subsequent new role in the political architecture, the generals remain unwilling to fully relinquish control. What will promote the military’s withdrawal from p...more

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  • East Asia Forum

    Indonesia has to make hard decisions on debt

    Author: Peter McCawley, ANU Indonesia’s next president will need significant funds to fulfil election promises. But both candidates Joko Widodo (Jokowi) and Prabowo Subianto have expressed caution about international borrowings. So should Indonesia undertake the risks of borrowing from overseas? There is little consensus among Indonesian policymakers. The issue is a difficult and sensitive one, but what is the right course of action? The case for government borrowing from overseas seems straightforward and persuasive — international capital markets are awash with liquidity and interest rates are at record lows. Also, Indonesia urgently needs funds to support new investments. But how much should Indonesia borrow? The answer, in principle, is simple. Indonesia should...more

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  • China Matters

    Ukraine, MH 17, and the Charge of the Atlanticist Brigade

    The bloody farce in the Ukraine took another ugly turn with the shootdown of MH 17.And to be ugly about it, if the rebels shot the plane down, it shouldn’t matter very much except as a horrible and unexpected catastrophe in a war zone and an overwhelming tragedy to the survivors of the victims on board.  Call it an accident, collateral damage, manslaughter, there is no credible version of events in which it was intentional mass murder or terrorism, either by the rebels or Russian technicians that, according to the Ukrainian government, possessed the ability to operate the elderly but complex anti-aircraft systems fingered in the attack.Recall the US shootdown of Iran Air Flight 655 in 1988 by the USS Vincennes.  It was also an ugly business.  The Iran ...more

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  • East Asia Forum

    Village democracy shrugs in rural China

    Author: Bryan Ho, University of Macau Lauded as one of the most significant political reforms in post-Mao China, village elections in rural China have received considerable attention since the promulgation of the Organic Law of Villagers’ Committees. The law, first trialled in 1988–1998, is an attempt to allow villagers to elect their own local leaders in China’s lowest-level political unit. The village is beyond the government’s sanctioned institutional establishment, which stops at the town and township level. However, the Party retains strong influence over village deliberations and politics through village party committees. With Deng Xiaoping, Peng Zhen and other reformers at the helm, the law underwent a ‘tug-of-war’ with conservatives through the 1980...more

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  • Ajay Shah's blog

    What does socialism do to ethics

    Marginal Revolution has a post about the moral effects of socialism. In this, we are pointed to a fascinating new paper. Ariely, Garcia-Rada, Hornuf, Mann have a new paper where they analyse the natural experiment of one Germany that was arbitrarily sub-divided into communist GDR and capitalist FRG. They find that people with a greater exposure to socialism are more likely to cheat.And, a paper by Al-Ubaydli et al on PLOS One in March 2013 finds that the framework of markets and trade increases trust in strangers. I have heard similar concerns about low ethical standards in China as the outcome of many generations of communist rule. Was it just a matter of stamping out religion? Is the causal chain composed of destroying organised religion that leads to cheating...more

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  • The Peking Duck

    Is Falung Gong a dangerous cult? Is it a cult at all?

    I’ll admit it right at the beginning: I’ve always found there to be something creepy about the Falun Gong. I remember seeing practitioners in Taipei sitting with their eyes closed meditating endlessly. I remember their anti-CCP literature. I remember meeting a group of practitioners at the local annual China celebration day in Phoenix and finding them generally icky. But just because I find them creepy doesn’t mean they are a cult, let alone a dangerous one. This excellent article presents the argument of one of the best informed China Hands I’ve ever read, Ian Johnson, who argues that the FG is not a cult. In “Wild Grass: Three Portraits of Change in Modern China,” Ian Johnson writes that the “cult” label was designed to “[cl...more

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  • Health Intel Asia

    Hospital Privatization in China It is Not

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  • Atanu Dey On India's Development

    Mises on Bureaucracy

    “The characteristic feature of present-day policies is the trend toward a substitution of government control for free enterprise. Powerful political parties and pressure groups are fervently asking for public control of all economic activities, for thorough government planning, and for the nationalization of business. They aim at full government control of education and at the socialization of the medical profession. There is no sphere of human activity that they would not be prepared to subordinate to regimentation by the authorities. In their eyes, state control is the panacea for all ills.” Ludwig von Mises. “Bureaucracy”. Page 4. Yale University Press. New Haven. 1944. ...more

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  • China Matters

    Debunking America's Scarborough Shoal Dolchstoss Meme

    ... or “Goodbye Honest Broker” Whoever is rolling out the new US maritime strategy for East Asia apparently regards the Financial Times as his or her chosen instrument.  The FT, for its part, appears to believe that it completes its journalistic mission by reporting the US position, and sees no need to examine the US claims in detail, a shortcoming I intend to remedy in this piece.In recent days two backgrounded FT articles have expressed US frustration with Chinese salami-slicing and cabbage wrapping in the South China Sea.  From the first piece, Pentagon plans new tactics to deter China in South China Sea:In recent months, the US has come to two broad conclusions about its approach to the South China Sea. The first is that its efforts at deterrence...more

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  • Michael Pettis' CHINA FINANCIAL MARKETS

    Bad debt cannot simply be “socialized”

    Once again I am going to discuss debt, and my discussion will be mainly conceptual. I suspect that many of my regular readers might wonder why I keep returning to this subject – and, often enough, keep saying the same things. The reason is because while debt plays a key role in understanding the recent evolution of the Chinese economy and the timing and process of its upcoming adjustment (as it also does for all if not most major economies), there seems to be a remarkable amount of confusion as to why debt matters. In much classical economics debt, or more generally the structure of the liability side of an economic entity, doesn’t even fundamentally matter to the growth of that entity. The liability side of the balance sheet is treated mainly as the way in whi...more

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  • China Matters

    China Hand Has Whooping Cough

    Apologies for the paucity of new material on the site in recent weeks.  For the last month I have been wrestling with an acute and fatiguing case of whooping cough (pertussis) caused by the bacterium Bordetella pertussis.I would like to tell readers that immunization will protect them from this disease...but I can't.Pertussis vaccine simply doesn't work very well.  The acknowledged failure rate for pertussis vaccine is about 20%.  However, misdiagnosis and under-reporting of pertussis cases is a major problem, especially for adults.  In my state of California, currently in the midst of a declared whooping cough epidemic, it is estimated that cases are underreported by 10:1.  In Poland at one time, it was estimated that cases were underreported b...more

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  • Health Intel Asia

    Vietnam Healthcare Comparison 1 – Is it like Thailand?

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  • Ajay Shah's blog

    Economic Survey chapter 2

    Chapter 2 of the Economic Survey is worth reading.

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  • Ajay Shah's blog

    Raghuram Rajan's criticism of FSLRC

    I wrote a response in today's Indian Express.

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  • North Korean Economy Watch

    Aid to DPRK drops in H1 2014

    According to Yonhap: International humanitarian assistance to North Korea tumbled nearly 50 percent in the first half of this year from a year earlier, a U.S. radio report said Wednesday. Citing the United Nations Office for the Coordination of Humanitarian Affairs (OCHA), the Washington-based Voice of America said North Korea received US$19.6 million of humanitarian aid in the January-June period, down 45 percent from the same period last year. The report, however, gave no reason for the on-year plunge. Six countries offered aid to the impoverished country during the six-month period, down from 10 a year earlier. Switzerland led the pack with $3.82 million, followed by Sweden and Canada. No data was available on aid from Australia, Germany, Italy and Ireland, which pr...more

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  • North Korean Economy Watch

    Farewell Choco Pie?

    News media reports claim that the DPRK has banned the use/possession of Choco Pies in the Kaesong Industial Complex. According to the Washington Post: By some estimates, as many as 2.5 million Choco Pies were traded monthly — though it’s unclear who exactly was so assiduously following Choco Pie markets. Regardless of its volume, the trade will now surely be shrinking. According to recent reports in the South Korean press, North Korean authorities have now banned the South Korean-produced Choco Pie at the Kaesong Industrial Complex following a lengthy crackdown on the chocolate treat that has made it scarce in Pyongyang. Before, workers could pocket as many as 20 pies every night of work. But now, South Korean factory staff said they’ll instead get sausages, inst...more

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  • All Roads Lead to China

    Foxconn Moving Direct to Consumer

    I remember having conversations years ago about what Foxconn would do going forward, and whether or not they would be happy as the manufacturer to brands.   The WSJ article, Amid Margin Squeeze, Foxconn Designs Its Own Fate, puts this question to rest. Recently, the $130-billion-a-year in revenue company has ventured into handset accessories under its own brand, and sales and distribution of mobile phones. It also plans to offer telecommunications services in Taiwan. For me, this has always been a bit of a no brainer.  Foxconn has an amazing amount of talent in the firm that is not just managing the supply chain and assembling gadgets for their customer, but have for years also been bringing designs to the brands that they feel would sell well in the market. Partner ...more

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  • North Korean Economy Watch

    Bank of Korea on DPRK economy in 2013

    The South Korean central bank, the Bank of Korea, publishes an annual summary of the DPRK’s economic performance the previous year. The 2013 report is out. You can also download it on my DPRK Economic Statistics Page. Here is a summary in Yonhap: The Bank of Korea (BOK) estimated that the country’s economy expanded 1.1 percent in 2013, slowing from a 1.3 percent on-year expansion in the previous year. In 2012, the North Korean economy was estimated to have grown at the fastest pace in four years, after contracting 0.9 percent and 0.5 percent in 2009 and 2010, respectively. A BOK official explained that while the North’s construction sector shrank last year, its agricultural output improved on favorable weather conditions. An expansion in production of...more

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  • Atanu Dey On India's Development

    PM Modi’s Letter on Completion of 1 Month in Office

    Prime Minister Narendra Modi wrote “A few thoughts as we complete a month in office.” I came across it in QUARTZ. QZ requested annotations. Someone named Vincent Lee did a fine job of summarizing the letter. Here are the annotations: I’m your pal. I love that people love me. My job is hard. But I have confidence in myself. I like my new colleagues, here’s hoping we’ll get on. Here’s also hoping the state heads will get along with me. Did I mention my job is hard? I can use some slack… Let’s remember how bad the previous dynasty was. I’ll be using that memory as a mandate. Thanks again for loving me, you won’t be disappointed. If the first month sets the tone for the remaining, I am afraid that significant need...more

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  • Atanu Dey On India's Development

    Indira Gandhi Imposed “Emergency” on June 25th, 1975

    Thirty-nine years have passed since that day when Indira Gandhi decided that Indians had enough of “democracy” and it was time that she dictated to them. Indians did what they have always been good at: they obeyed. Instead of resisting, they obeyed. Our problem, as Howard Zinn used to say, is not civil disobedience; our problem is civil obedience. Emergency ended on 23rd March, 1977. Did the people learn much? No. She won a landslide victory and once again became the prime minister in January 1980. She was right: the people did not deserve freedom. The people believed that they were free but in truth it was — and still is — an illusion. Frank Zappa said it best. “The illusion of freedom will continue as long as it’s profitable to continue...more

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  • Health Intel Asia

    Let’s Talk About That Financial Times Article …

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  • Michael Pettis' CHINA FINANCIAL MARKETS

    The four stages of Chinese growth

    From the early 1980s until now China has grown at a pace not matched since the four decades Argentina enjoyed before the First World War. In spite of some fairly goofy attempts a few years ago, however, to characterize China during this period as having followed a set of policies called the “Beijing Consensus”, these decades did not involve a unified set of policies, or a set of related polices, that Beijing implemented consistently. It is far more useful, I would argue, to think about the past 3-4 decades as consisting of four very different periods, the last of which we are, with great difficulty, just starting. The idea of a Beijing Consensus has probably help to prevent or postpone an understanding of the vulnerabilities in the current growth model and the steps...more

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  • All Roads Lead to China

    Bites of China. Finally a Show Worth Watching!

    A couple of weeks back, while riding the G train back from Nanjing, something caught my eye.  An advertisement by CCTV for what I believe could be one of the best produced shows China has put together.  At first, I had no idea what the advertisement for, but what was clear was that it was celebrating the various food flavors of China, and those who are tilling the fields and preparing the dishes. The show is called Bite of China, and I cannot recommend it enough. Sure, China is known for its fair share of food failures, including recycled oil, but watching this show has restored a bit of my love for the flavors here.  Flavors that were actually the basis for one of my earliest posts, and have provided a never ending hunt for me and my wife as we look to try new thin...more

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  • The Peking Duck

    Twenty-five years later

    I never before saw all the raw video footage of “Tank Man’s” defiance against a column of army tanks until today. It is remarkable, how one nameless man entered all of our living rooms for just a moment and is remembered so vividly a quarter of a century later. And for good reason. Let’s keep the hundreds of murdered innocents in our thoughts today, and keep alive the fight to let the Chinese people know all who died during the crackdown. Let’s remember the Tiananmen Mothers, and let’s even hope for the day when the CCP admits the demonstrations were not an act of “counterrevolutionary” treachery inspired by foreign subversives, but an expression of the Chinese people’s yearning for a say in their government, for t...more

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  • The Peking Duck

    Return of Liu Di, the “Stainless Steel Mouse”

    Those of you who have been reading this blog for ten years or more (if any such reader exists) might remember an array of posts I wrote in 2004 regarding a “cyberdissident221; Liu Di, who posted pro-democracy essays on the Internet under the moniker Stainless Steel Mouse. Posts like this or this, and several more. She also participated in study groups that discussed freedom and government reform, and saw herself and her colleagues arrested. I remember how angry I felt when another cyberdissident who lobbied for her release was himself arrested. Still, she has never been silenced. Even as recently as last month she was taken into custody for participating in a seminar about June 4th. A reader brought to my attention the availability of three of Liu Di’s n...more

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  • Michael Pettis' CHINA FINANCIAL MARKETS

    Some things to consider if Spain leaves the euro

    It might seem almost churlish to wonder what would happen if Spain were to leave the euro. The official European position is that the battle of the euro has been pretty much won, and anyone who argues otherwise will be accused of being a euro hater, an Anglo-Saxon or, even worse, a writer for the Financial Times. But there is more than one “battle” around the euro. While the battle of liquidity seems to have been won, the solvency and the unemployment battles (the latter of which is really a battle of unbalanced demand) have not even been addressed. Every sovereign debt crisis in modern history has been preceded by assurances that it was only a liquidity crisis, but as I see it there were three separate problems that erupted in the 2008-09 euro crisis: A liquidity ...more

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  • All Roads Lead to China

    What Do China’s Millennials Want ?

    For a number of years, I had it pretty good.  I had a number of teams that were under me, were stable, and were producing.  It was at a time when a lot of questions were being asked about the post 80s generation in China, but for whatever reason I was immune. But, those days are over, and just yesterday I had another millennial go AWOL on me.  So, it was perhaps interesting timing that CNBC put up the article Millennials may be more like boomers than we realize highlighting how several studies point to a generation that is looking for meaning in their job, in their company, and for balance: A new study from Deloitte also found differences in workplace attitudes between millennials and older generations, saying that the former “want to work for organizations tha...more

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  • China Rises: Notes from the Middle Kingdom

    Postcards from the National People's Congress

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  • Patrick Chovanec

    Twins!

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  • ChinaBizGov

    China's Green Car Sales in 2012

    Just a few years ago, pretty much everyone (except Chinese auto industry insiders whom I interviewed) thought China was about to take ownership of the global green car market. (Here's just one example from the excitable Tom Friedman of the New York Times.)In 2009 China's industrial planners announced plans to have 500,000 green cars ("New Energy Vehicles" or "新能源汽车" -- a combination of electrics and hybrids) on Chinese roads by the end of 2011. That obviously didn't happen, so last year, that same target of 500,000 was pushed out to 2015.So how did green car sales fare in 2012? Overall, hybrids plus electrics grew a respectable 52 percent.So while sales grew pretty well in percentage terms, it is clear that overall numbers are still inconsequential when you co...more

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  • Patrick Chovanec

    What Causes Revolutions?

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  • Patrick Chovanec

    Enter the New Year

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  • China Rises: Notes from the Middle Kingdom

    China, school violence and official reaction

    I wrote yesterday about growing questions in China about the differences between the U.S. reaction to the tragedy in Newtown and that of the tragedy in Henan Province, where, on the same say as the shooting in Connecticut, a man stabbed and slashed 23 students at a primary school. (All survived in Henan, where the weapon was a knife, not an AR-15.) As a commentary piece in the state-controlled Global Times noted: “The Chinese public has focused on the slow official response and the level of social reflection. Many are furious that while the Americans have started mourning nationwide, the Chinese appear insensitive to the Henan case.” Another story today, carried by China Daily, caught my attention. It describes an example of how profoundly off-key propaganda can ...more

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  • China Rises: Notes from the Middle Kingdom

    Postcard from a snowy Beijing

    The smell of roasting sweet potatoes in a city covered with snow put me in the mood to take a detour on my walk to work today  ...

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  • ChinaBizGov

    Comparing Corruption in China and the US

    Today's WSJ China Realtime reports on a study by a George Mason University economist who attempts to compare corruption in the US and China.  His conclusion is that corruption in America's Gilded Age (1877-1893)* was worse than corruption in China today.Perhaps the conclusion is correct, but the methodology used by this professor is flawed.  US corruption is measured by mentions of corruption in US newspapers 1870-1930.  China corruption is measured by mentions of corruption in US (not Chinese!) newspapers 1990-2011.So he is measuring corruption in two countries by the number of times the newspapers of only one of the countries mentions the word.  Even if the researcher had used Chinese newspapers, the study still would have been flawed due to Commun...more

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  • ChinaBizGov

    GM and SAIC: Trouble in Paradise?

    General Motors (GM) and Shanghai Auto (SAIC) announced in December of 2009 that they were deepening their partnership beyond their joint venture in China.  Together they created a 50:50 joint venture, registered in Hong Kong, for expansion outside of China.  Now that partnership appears to be coming apart.Initially, the plan for the HK JV was for the two sides to work together in India and possibly elsewhere in the future.  (For further insight into this particular deal, please see Chapter 4 of Designated Drivers.) As for the India venture, GM would contribute two existing factories in India, along with its Chevrolet brand, and SAIC would contribute cash -- something that GM had been seriously lacking as it had emerged from bankruptcy earlier that same ye...more

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Otaviano Canuto

Otaviano Canuto is Senior Advisor on BRICS Economies in the Development Economics Department, World Bank, a new position established by President Kim to bring a fresh research focus to this increasingly critical area. He also has an extensive academic background, serving as Professor of Economics at the University of Sao Paulo and University of Campinas (UNICAMP) in Brazil.

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