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  • Ajay Shah's blog

    Work on the 7th Pay Commission

    Background In a resolution dated 28th February, 2014, the Government of India has appointed the Seventh Central Pay Commission. Headquartered in Delhi, this Pay Commission has been given 18 months from date of its constitution to make its recommendations. Two full time researchers are required to support these ongoing activities. The selected candidates will provide support the work of the Commission on research, data analysis, and critical policy and legal literature reviews. Competencies The ideal candidate shall have the following competencies: Functional competencies Ability to use databases and handle large data sets. Ability to conduct secondary research through the use of databases (such as Elsevier, JSTOR, Emerald Research and other journal da...more

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  • East Asia Forum

    Why Japan’s collective self-defence is so politicised

    Author: T J Pempel, Berkley On 1 July, the Abe Cabinet issued a reinterpretation of Japan’s longstanding self-imposed ban on the right of collective self-defence. It was justified as a minimalist countermeasure to the increasingly severe security environment posed by a rising China and an unpredictable, nuclearised North Korea. But the reinterpretation fell well short of Prime Minister Shinzo Abe’s long-cherished goal of formally amending the constitution and eradicating what he and others criticise as the Japan’s over-reliance on US security guarantees as well as its collective naiveté ‘about the minimum necessary measures for our self-defence’. Japan, Abe argues, must prepare to share security burdens commensurate with that of a ‘responsible’ global an...more

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  • Ajay Shah's blog

    What does algorithmic trading do to market quality?

    by Nidhi Aggarwal and Susan Thomas. Electronics unsettled the world of organised financial markets when the trading floor and dealers became obsolete. In the late 1980s and early 1990s, this was the subject of great debate. `Program trading' and `portfolio insurance' were believed to have exacerbated the crash of October 1987. Many people believed that human market makers did things that computerised order matching could not. Millions of jobs were on the line. When DTB won back the long bond contract from LIFFE by replacing the trading floor, the writing was on the wall. For some time, it was still claimed that electronic order matching exchanges are good for some things like equities and derivatives, but not for the bond ...more

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  • East Asia Forum

    Laying down the law at the Communist Party plenum

    Author: Carl Minzner, Fordham Law School On 29 July, Chinese authorities announced the long-expected news that former security tsar and Politburo Standing Committee member Zhou Yongkang is under investigation for Communist Party disciplinary violations. Simultaneously, it was revealed that the party plenum in October would — for the first time — focus on ‘ruling China according to law’ (yifa zhiguo). Of course, Chinese authorities have little intention of building up legal institutions as a truly independent check on party power. Like his predecessors, President Xi Jinping remains committed to one-party rule. He has looked at Tiananmen Square, he has looked at the Arab Spring, and he has drawn his conclusion: weaken the political control of the Communist Party,...more

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  • Michael Pettis' CHINA FINANCIAL MARKETS

    What does a “good” Chinese adjustment look like?

    I have always thought that the soft landing/hard landing debate wholly misses the point when it comes to China’s economic prospects. It confuses the kinds of market-based adjustments we are likely to see in the US or Europe with the much more controlled process we see in China. Instead of a hard landing or a soft landing, the Chinese economy faces two very different options, and these will be largely determined by the policies Beijing chooses over the next two years. Beijing can manage a rapidly declining pace of credit creation, which must inevitably result in much slower although healthier GDP growth. Or Beijing can allow enough credit growth to prevent a further slowdown but, once the perpetual rolling-over of bad loans absorbs most of the country’s loan creatio...more

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  • East Asia Forum

    Securing Pakistan’s democracy?

    Author: Peter Drysdale, Editor, East Asia Forum The two-week-old political crisis in Pakistan took a sharp new turn over the past few days as the military leader, General Raheel Sharif, positioned to mediate the stand-off between Prime Minister Nawaz Sharif and opposition demonstrators on the streets of Islamabad, led by cleric Mohammed Tahir-ul-Qadri and his ally cricketer-turned-politician Imran Khan. Whether Prime Minister Sharif or Tahir-ul-Qadri and Khan initiated the move to military mediation and how the military has played into the development of the crisis itself are questions that are at this stage difficult to determine. But senior politicians and constitutional experts have denounced it as a national disgrace that reflects badly on the commitment to genuin...more

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  • China Matters

    Najibullah’s Prophecy

    Decisions have consequences.  I wonder when there will be a Global Truth & Reconciliation Commission to deal with the ruinous decision of the United States to partner with Saudi Arabia and the Gulf nations to cultivate, employ, exploit and/or unleash jihadism and religious sectarianism to destroy unfriendly or unhelpful secular/socialist regimes in Afghanistan, Iraq, Libya, and Syria.Butcher’s bill so far: maybe 300,000 dead in Afpak & Iraq, another 200,000 dead in Syria.  Using a conservative wounded to killed ratio of 3:1, at least 1.5 million lives shortened or physically shattered.  Add another 8 million or so refugees for whom the social and economic fabric of their lives has been torn apart.  Judging by first impressions—that ...more

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  • Health Intel Asia

    China’s Pursuit of a Domestic Life Science Sector

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  • Atanu Dey On India's Development

    Ganapati Vighana Haran Gajanana

    It’s that time of the year once again — the time of Ganesha’s visit and therefore this annual post which is a tradition on this blog. He is invoked at the beginnings of all endeavors. I recently bought a Chromebox. What better than having Ganesh grant his protection to the little computer? Last time I was in India, I had picked up a few small brass Ganeshas. So I placed one of them on the computer. Here’s the Vighana Haran, the Defeater of Obstacles, ensuring that the computer works fine. He looks quite comfortable, don’t you think? Ganesh is associated with the finer things of life. Learning, good food, wisdom, writing, knowledge. I approve of them all. So it is natural that he is one of my favorite gods. As part of Ganesha’s wor...more

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  • Health Intel Asia

    Podcast: A Yelp! for China’s healthcare consumers

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  • Ajay Shah's blog

    Consumer protection in Indian finance: Going from ideas to action

    by Renuka Sane and Ajay Shah. Financial regulation in India, at present, is oriented towards product regulation. While protecting the interest of customers is part of the mandate of all existing financial agencies, the present regulatory strategy is weak. The evidence on mis-selling is building up. The main focus of policy discussions has been prevention (e.g. ban on entry loads) with little work on enforcement (where orders are issued that impose penalties upon firms that have misbehaved). Many piecemeal changes of regulations are underway. The Reserve Bank of India (RBI), for example, has recently published a Draft Charter of Customer Rights, which include: the right to fair treatment, the right to transpa...more

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  • China Matters

    Cauldrons, Kessels, Pockets, and Ukraine

    There is a lot of talk on the pro-Russian side of the Ukrainian question about “cauldrons” in which hapless Ukrainian troops are trapped and doomed to destruction or surrender.Perhaps the use of “cauldron” is meant to evoke memories of the mother of all cauldrons, the trap that encircled and annihilated the German Sixth Army at Stalingrad and signaled the turning of the military tide against Hitler.However, as a point of interest, it might be pointed out that the “cauldron” (in German, “kessel”) was originally a clever and successful tactic employed by the Wehrmacht in its retreat from Leningrad, in order to slow down, tie up, and otherwise confound the advancing Red Army.The Ur-kessel, I believe, was at Demyansk, in the Novgorod Oblast just south of Le...more

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  • China Matters

    China as an EEZ Outlaw in the South China Sea

    A think tank called CNA recently issued a 140 page report titled China versus Vietnam: An Analysis of the Competing Claims in the South China Sea authored by Raul (Pete) Pedrozo.  It provides a further legal rationale for growing US efforts to inject itself into South China Sea EEZ disputes on behalf of Vietnam and against the PRC.A few reasons why attention should be paid.First, the institution.CNA is described as a non-profit corporation.  A fuller description would be a “US Navy analytic division dating to 1942 that works exclusively for and is funded exclusively by the US government but was corporatized in the 1990s so it could dip its beak into non-DoD government work through a division called the Institute for Public Research”.You could say that “C...more

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  • Health Intel Asia

    Aging2.0 Pitch Event

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  • North Korean Economy Watch

    4th Rason International Trade Fair (UPDATED)

    UPDATE 3 (2014-8-21): KCNA reports on investment forum at the trade fair: Investment Forum Held in Rason of DPRK Pyongyang, August 21 (KCNA) — A forum on investment in the Rason economic and trade zone of the DPRK took place on the spot on Aug. 19. It draws companies from Russia, China, Italy, Thailand and other countries taking part in the 4th Rason International Trade Exhibition. The participants in the forum viewed a video on the natural and geographical conditions of the zone and its development situation and long-term plan. They were also briefed on the legal guarantee for the zone development, business establishment and management regulations for foreign investors, the situation of foreign companies which have already invested in the zone, the vitalization ...more

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  • North Korean Economy Watch

    DPRK replaces 5,000 won note

    UPDATE 2 (2014-8-18): According to the Daily NK: Daily NK has learned that the recent 5000 KPW note exchange has prompted an overall apathetic response from residents in North Korea. As Daily NK first reported here on July 31st the North Korean authorities informed residents that the largest denomination monetary unit would be replaced with a new bill. US Dollars and Chinese Yuan being the currencies of choice in the markets, the recent collection and exchange of the highest denomination bill “doesn’t really affect people’s lives.” A source in the capital reported to Daily NK on August 14, “A new [5000 KPW] note has been issued, but the exchange of old to new notes hasn’t made much headway.” This is hardly a nuisance to most residents, who are used to ad...more

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  • North Korean Economy Watch

    KCTV updates news introduction

    Click above to watch the news introduction (Youtube) On August 14 North Korea’s KCTV launched a new video introduction for its evening news broadcast. The introduction begins with a global map that zooms in on the Korean peninsula followed by scrolling news clips and ending with “보도” (News). The appearance of the evening news was last changed in 2012. Thanks to Martyn Williams for technical help with this post! ...more

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  • Michael Pettis' CHINA FINANCIAL MARKETS

    Can Pedro Sanchez save the PSOE?

    Last month Pedro Sánchez Castejón was chosen to be the new leader of Spain’s center-left Socialist Party (PSOE).  El Pais called his appointment a “renewal” of the PSOE, although Sánchez seems to have been chosen mainly because he is too young and unknown to suffer from the revulsion most Spaniards feel towards the political establishment. But as the PSOE’s new leader, and without much of the baggage carried around by the older generation of leaders, Sánchez has an important choice facing him. If he expects to lead Spain and his party out of its current crisis, he must recognize that the crisis is fundamentally a conflict between the interests of Europe’s bankers and of Europe’s workers, and he must reengineer PSOE’s policies in favor of the Spain’s...more

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  • Atanu Dey On India's Development

    Whose money is it anyway?

    Milton Friedman used to elegantly distinguish between four ways of spending money. First, when you spend your own money on yourself, you are very careful to get the most benefit for your buck. After all, it is your money and you know what you want for yourself. Second, when you spend your own money on someone else. Here too you carefully economize to meet your objective but since you don’t know the other person’s needs as well as you do your own needs, your spending may not be as optimal for the other person. Third, you spend other people’s money on yourself. In this case, your incentive to economize is certainly blunted. You are much more concerned with getting the best and less with what it will cost. Finally, when you spend other people’s mone...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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  • 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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  • 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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  • 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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  • 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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  • 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 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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