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| +Shaun Rein |
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| +Wei Gu |
So far this year, Chinese individuals and companies have bought almost $230 million in commercial real estate, more than triple the amount from last year, according to data from Jones Lang LaSalle. British luxury property developer Grosvenor Ltd., owned by the family trust of the Duke of Westminster, is betting the influx of rich Chinese investors will help boost demand for its refurbished apartments in Tokyo’s upscale Roppongi area.
“One upside scenario for Japan is its relationship with China,” said Nicholas Loup, chief executive of Grosvenor Asia. “There are huge amounts of money flows between both countries. That’s currently below people’s radar screen.”
The Japanese currency has fallen 25% against the yuan over the past five years, outstripping its 15% fall against the U.S. dollar in the same period.
Chinese tourist arrivals in Japan hit a record high this year, partly due to the weak yen, spurring investment in vacation homes. Japan has emerged as the most desired travel destination for Chinese this year, according to Travelzoo Asia Pacific. There’s also talk about making it easier for Chinese to apply for multiple-entry visas, which would further spur interest.
Rich Chinese are among the biggest foreign buyers in New York and Sydney. But other formerly popular investment destinations like Hong Kong and Singapore are becoming more costly due to taxes on nonresidents. In Hong Kong, Chinese buying is one reason real-estate prices have soared, causing social frictions with local residents.
Foreign buyers see value in Japan. On a square-foot basis, Tokyo property prices in U.S. dollar terms are about half of the levels of comparable areas in Hong Kong, and similar to prices in Beijing and Shanghai. Rental yield can be as high as 6%, compared with 3% in Hong Kong, and about 1% in Beijing.More at the Wall Street Journal.
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| +Sara Hsu |
China’s current economic slowdown, including weaker factory growth and the bursting of the property market bubble, has led some analysts to argue that China may be in for a “hard landing.” A recent report by Naoki Kamiyama and David Cui of Bank of America-Merrill Lynch even argues that China’s economic position today is even worse than that of Japan just before the “Lost Decade,” in which Japan lost competitiveness and even the ability to recover. So, what does this mean for China: Does it imply that the exceptional Chinese growth model of a Communist government coupled with a market economy doesn’t work in the long run? If China is indeed in for a hard landing, is its market-state juggernaut grinding to a halt?...
The dependence of the market economy on the legitimization by the state is also illustrated by the relatively low level of consumer spending in China. Consumer spending is low because residents save money to cushion themselves from financial shocks resulting from, in large part, high out-of-pocket medical care expenditures. Insufficient health care coverage by the Chinese state has resulted in high out-of-pocket expenditures by patients; therefore, individuals often find themselves responsible for many medical expenses. While private health care may offer better medical care and lower out-of-pocket expenditures for patients, Chinese citizens are unused to market-based social services, and are reluctant to make use of private health insurance, which, again, lacks legitimization by the state. Therefore, until the health care question can be resolved, consumer spending remains constrained.
The market economy may better contribute to growth if state legitimacy is not required. The trust sector, if expected and allowed to self-police, may have performed far better. Risks could have been more tightly controlled, trust company management structures could have been improved, and monitoring and auditing could have been implemented. Private health insurance, if trusted by Chinese citizens, could help reduce or at least stabilize out of pocket costs, resulting in an increase in the consumption of other goods. The fact is that there are very real financial and human resource constraints to the government’s involvement in the economy that are now constraining growth. The only long-term solution to bringing about continued growth is to reduce the role of the state, not just in terms of ownership, but also in terms of legitimacy, and promote market-based economic solutions.
So in answer to the questions posed, it appears that the market-state juggernaut is grinding to a halt at least in the short run, as the focus of growth is transferred to other sectors, and possibly in the long run, if the state’s presence in reformed sectors also persists. While there are other potential sources of growth, the current sources of growth have been offset to a large degree by the need for the insertion of government power – somewhere, somehow, the power of the state must be reduced to allow China’s economy to expand. Only in this way can the cycle of growth be made persistent.More in the Diplomat.
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| James Farrer |
More in the Atlantic.Why would Chinese women demonstrate a greater propensity for adultery than women in France, where sexual attitudes are often portrayed as remarkably liberal? Or than American women, who are bombarded by infidelity in TV shows and movies, not to mention among the celebrities that star in such entertainment?“China is a society that has emphasized women’s independence and women’s equality,” says Farrer. “Socialism was not a passing thing. It had a big impact on the way that women saw themselves. So Chinese women feel as though they have a right to the things that Chinese men have a right to. And when you talk to women about infidelity in China, they will often say, ‘Well, men do it. Why can’t we?’”...Another phenomenon associated with infidelity in China involves women married to partners whose income is modest. These women are sometimes interested in “trading up” should the chance arise. “I would say that working-class women who are not happy with their marriages are sometimes actually looking for a better deal rather than just trying to enjoy themselves,” Farrer says.“And then there is the phenomenon of women who are married to men who have money but are not available, are not around, and they are looking for affection,” Farrer adds. “And there, I think it is more looking for some kind of sexual or romantic fulfillment rather than just trading up.” For Chinese women, opportunity may come in the form of participation in the country’s labor force. “One thing that China has is very high rates of female labor-force participation,” Farrer says. “So women work, and women who are out in the labor force have more chance to meet men, and therefore far more chance to hook up with somebody, and women sitting at home have less chance.” According to World Bank statistics, 70 percent of China’s female population (aged 15-64) participated in the country’s workforce in 2012, compared to 84 percent of the male population. Some of these young women are working far from their hometown and their parents’ disapproving gaze, away from the responsibilities of children, and sometimes separated from their romantic partner. In China, Farrer says, sex has traditionally been seen as something that comes later in life and is earned. “In the West and even in Japan, sex is seen as sort of like child’s play. It is something that young people get up to, a thing people do for amusement,” he notes. “In China, it is seen as something that adults do.” “It is more legitimate for a guy who has already made a lot of money to indulge himself in this kind of stuff because he has already made it, whereas young people, who don’t have any resources, any money or social status, should be working hard to get that stuff and shouldn’t be fooling around,” Farrer continues.
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| +Wei Gu |
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| Wendell Minnick |
Both China and Japan’s air defense zones include the disputed Senkaku or Diaoyu islands as they are known in China. Japan annexed the islets in the late 19th century. China claimed sovereignty over the archipelago in 1971, saying ancient maps show it has been Chinese territory for centuries.
Wendell Minnick, Asia editor for Defense News said Beijing’s move is a response to Japan’s actions three years ago to expand its zone.
Coming on a weekend before the U.S. Thanksgiving holiday, Minnick said the move by Beijing was clearly calculated to catch Washington off guard. “China’s announcement appears to be an attempt to salami slice as they call it. China has a tendency to take territory or enforce new rules at a time when the U.S. is very friendly to them. The U.S. has been working very hard to improve military to military relations with China,” he stated.
Minnick said the overlap of the two air defense zones raises some challenges for both Tokyo and Washington. However, he said it remains to be seen just how much China engages with Japanese and American jets in the area.More in the VOA.
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| Wendell Minnick |
What appears to be a crisis in the making, China’s Ministry of National Defense (MOD) has established the East China Sea Air Defense Identification Zone (ADIZ) effective as of 10 a.m. on Nov. 23.
The zone covers the disputed Diaoyu/Senkaku Islets claimed by China, Japan, and Taiwan. The islets are under the administrative control of Japan. China has been flying unmanned aerial vehicles into the area of the islets and Japan has threatened to shoot them down.
China launched two aerial patrols, one Tu-154 and one Y-8, over the area the day of the announcement and Japan deployed two F-15 fighters to intercept.
China’s ADIZ overlaps Japan ADIZ by approximately half, causing concern the overlap could start a war. The Chinese ADIZ also overlaps Taiwan (Republic of China/ROC). According to a Nov. 24 statement by Taiwan’s Ministry of Foreign Affairs, Taiwan will “adhere to the principles set forth in the East China Sea Peace Initiative [set forth by President Ma Ying-jeou on Aug 5), with the aim of resolving disputes peacefully, while taking appropriate measures to ensure the safety of ROC airspace.” Ma’s five-point peace initiative urges all “parties to refrain from antagonistic actions; not abandon dialogue; observe international law; resolve disputes through peaceful means; and form a mechanism for exploring and developing resources on a cooperative basis.”
US Secretary of State John Kerry issued a statement on Nov. 23 urging China not to impose a “unilateral action” that “constitutes an attempt to change the status quo in the East China Sea.” Further, the US is “deeply concerned” about the announcement and “escalatory action will only increase tensions in the region and create risks of an incident.”
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| Howard French |
Howard French, author of the forthcoming “China’s Second Continent: How a million migrants are building a new empire in Africa” (2013), and a former New York Times bureau chief in Tokyo and Shanghai who recently conducted a series of interviews here, believes there is, “a growing anxiety in Japan about its relationship with the United States.
“Japan seems to be thinking seriously for the first time, albeit quietly still, about how far Washington will go to back it in a clash with China. The basic question is whether the U.S. would sacrifice its relations with China on the altar of what seems from afar like a relatively minor territorial dispute. The flip side of this question, of course, is whether, if push comes to shove, the U.S. would sacrifice its alliance relationship with Japan in order to preserve relations with a country that one assumes will sooner or later possess the world’s largest economy.
“There is a lot of strategic uncertainty embedded in all of this, and this has forced Japan to think in unaccustomed ways about assuring much more of its own defense and even contemplate eventually going it alone, if need be.”
Improving relations with China, he argues, requires Japan, “taking bold steps to put the ‘history issue’ to rest, once and for all. This is far more essential to becoming a ‘normal nation’ than constitutional reform.”
He adds, “For a conservative leader like Abe, proper, definitive treatment of the history question, one that accommodates both self-respect and atonement, would be a breakthrough equivalent of (President Richard) Nixon in China (in 1972).”More in the Japan Times.
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| Janet Carmosky |
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| Kaiser Kuo |
Some time back, Baidu CEO Robin Li declared that he wanted Baidu to be a household name in 50% of the world’s markets. The company has already started taking baby steps to realize this goal. According to Kaiser Kuo, Director of International Communications at Baidu, “Today we are the number two search engine in the world. The core technology for searches in a way can be applied (elsewhere), so there’s some scale that you can leverage from existing platforms.” To go global, Baidu is looking at emerging markets which are underserved by the dominant players. These markets are still evolving from an internet user perspective.
Baidu believes that having roots in China will help as it globalizes. “In China we really are in two markets at the same time,” says Kuo. “We have the developed world market in these first-tier cities and we are very much in the mainstream of technological developments globally. We also serve very much a developing world market already with a relatively unsophisticated user base with relatively unsophisticated consumers. So we’ve gotten really good at developing technologies and products that are appropriate for those sorts of markets.”
So far Baidu has chosen to dip its toes in Japan, Egypt, Vietnam, Thailand and Brazil (and has plans for other markets as well). So Baidu went in with Japanese language search in Japan, it took a Portugese language version of Hao123 (a directory of weblinks) to Brazil (and a similar local-language version of the same site in Thailand), and an Arabic version of Baidu Knows in Egypt. “These products were chosen in part because of their ability to help us understand the terrain and to connect us with other players,” says Kuo.
The choice of countries is somewhat surprising. Take Egypt for instance, which doesn’t rate very high on many companies’ globalization plans. But Baidu has thought this through. “Egyptian Arabic has now become sort of standard from the Maghreb all the way through to Iraq, and Egypt is the culturally dominant country in the Middle East. It has the highest output of literature, film and so forth. There’s a huge group of very well trained engineers in Egypt,” says Kuo. “It makes the most sense from a lot of perspectives.”
Baidu’s strategy is simple: go where English is not the dominant language, build capabilities in that market—and then expand.More in Knowledge CKGSB.
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| Zhang Lijia |
During our tour, the word ‘China’ kept popping up and not always in positive light. During an excursion to a cave in Ha Long Bay, our young, well-informed guide Diep talked about how the locals used the cave as a shelter during the bombings by the Americans. He went on talking about the stories of sufferings by the Vietnamese people during the war. I asked him how the locals now view the Americans – we were with our friends from America, Diep said people no longer hold grudges against America. The war was over and they are now trading partners. Many do hold grudging against China – the biggest threat to the country. China and Vietnam have disputed borders and many worry that one day that China may invade again, just like 1979. I guess China’s aggressive attitude over the disputed Diaoyu Island with Japan doesn’t really put Vietnamese at ease.
I hope my Chinese compatriots holding hawkish nationalist views over Diaoyu Island would look back and learn exactly what happened in 1979 – not just from the official source. And think about these shattered lives, broken dreams, grieved parents and lost lives. No island, uninhabited or otherwise, is worth any spilling of blood and the negative impact that would surely to follow. To rise peacefully means to build harmonious relationships with our neighbours and respect them. Only in this way, there’ll be long term stability in the region.More on Zhang Lijia's weblog.
