Does Alibaba's merchandise deal with Pokemon makes sense? - Shaun Rein/Jeffrey Towson

Shaun Rein

Alibaba Pictures has expanded its merchandise market with a new deal for the successful Japanese Pokemon. But experts differ on the question such a more makes sense for Alibaba Pictures. A diversion from its core business, says business analyst Shaun Rein. But Beidu business professor Jeffrey Towson lauds the effort for a comprehensive approach of the total value chain, he tells the 6th Tone. 

The Sixth Tone:

Alibaba Pictures estimated that the total sales of licensed Pokémon products on Tmall will surpass 20 million yuan ($2.9 million) in 2017. 

However, the move might be “dangerous” for Pokémon because collaborating with Alibaba means they will give away the power over quality control in China, Rein said. If manufacturers produce poor-quality products, consumers will naturally associate the bad quality with Pokémon, he added. 

Whether the strategy will bode well for Alibaba Pictures’ overall business development also remains a question. The deal is the film company’s latest expansion into licensing after suffering economic losses amounting to 976 million yuan last year. Alibaba Pictures has established partnerships with several foreign companies such as the classic arcade game “Pac-Man” and the American animated television series “The Powerpuff Girls” to sell licensed merchandise on its e-commerce platforms. 

Jeffrey Towson

For a company whose core business is movie production and distribution, tapping into licensing might prove distracting, Rein said. 

But Jeffrey Towson, a professor of investment at Peking University, regards the move as part of Alibaba’s strategy to build an integrated online and offline marketing capability across the entire entertainment value chain. 

“They have Tmall, [e-commerce platform] Taobao, [video-platform] Youku, and so on, and they can push not just movies, but also merchandise, online streaming, and other derivative products,” Towson told Sixth Tone. The movie arm “is becoming a data-driven movie studio with a unique suite of integrated marketing capabilities,” he added. “It’s basically what you would get if Amazon and Walt Disney had a baby.” 

With all the data collected from consumers across Alibaba’s myriad online services, the e-commerce giant is becoming the “must-have partner” to content companies in China and around the world who hope to succeed in the Chinese entertainment industry, said Towson.

More at the Sixth Tone. 

Shaun Rein and Jeffrey Towson are speakers at the China Speakers Bureau. Do you need them at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Chinese tourists prefer Europe and SE-Asia - Rupert Hoogewerf

Rupert Hoogewerf

Luxury outbound travel by Chinese tourists keeps on booming, with Europe and SE-Asia as their favorite destinations, says the latest report by the Hurun or China Rich List, tells its chief researcher Rupert Hoogewerf to the Shanghai Daily.

The Shanghai Daily:

Europe and Southeast Asia were the most preferred destinations among the country's super wealthy last year, accounting for 45 percent and 44 percent of respondents, respectively, according to "The Chinese Luxury Traveller," which was released in its seventh year and covered 334 samples from 12 Chinese mainland cities including Beijing, Shanghai, Nanjing and Chengdu. These high-end tourists averaged 42 years of age with per capita wealth of nearly 22 million yuan (US$3.23 million). 

Notably, Southeast Asia, in just two years, has successfully surpassed the Americas to become Chinese luxury traveller's new choice, displaying a shocking 34 percent increase in millennial favor and jumping from last year's fourth place to take the crown this year. 

"In the past year, Chinese luxury travelers have gone abroad an average of 3.3 times and stayed for an average of 27 days, with tourism increasing 5 percent to reach 69 percent," said Rupert Hoogewerf, Hurun Report Chairman and Chief Researcher. "And 60 percent of high net worth Chinese families are now willing to pay 3,000 yuan for a night on hotel accommodation and fly business or first class, impossibly high figures compared with a decade ago." 

By vocation theme, leisure, at 41 percent, was still the most popular among the rich while polar exploration and outdoor adventures have gained further momentum from the past two years, ranking the second (31 percent) and fourth (20 percent) respectively. As a new option in this year's study, island holidays, at 23 percent, were the dark horse and surpassed both cruises and self-drive holidays to rank the third. Interestingly, island holidays were especially popular among the Post-80s generation and ranked first with 46 percent. 

Looking forward, Around World travel, polar exploration and outdoor adventures will be the trend in themes for the Chinese luxury travelers in the next three years, with the Post-80s generation displaying an increased interest in Africa and the Polar regions, according to the report.

More in the Shanghai Daily.

Rupert Hoogewerf is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Why advertising does not work in China - Tom Doctoroff

Tom Doctoroff

China's consumers have always been very suspicious of any top-down broadcasting, says marketing guru Tom Doctoroff. Anything that looks like spoon-fed propaganda does not work. Advertising can work, but it is a trick country, and easy to get it wrong, he says.

Tom Doctoroff is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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How baseball is slowly conquering China - Jeffrey Towson

Jeffrey Towson

Soccer has been catching most headlines in trying to conquer China. But the long term strategy to root baseball into the country might offer more chances for success, writes Beida business professor Jeffrey Towson at his weblog. "Major League Baseball (MLB) Is Copying the NBA in China – And It Might Work."

Jeffrey Towson:

The NBA has long provided free public access to its games in China. Starting in 1987 state broadcaster China Central Television began showing weekly game highlights that the NBA sent on video tapes to Beijing. This was particularly good timing as CCTV then had little competition for viewers and Michael Jordan was becoming a big draw. The NBA has continued to provide free access since, most recently via a deal for online streaming with Tencent Holdings. 

MLB has put in place a similar free mass dissemination strategy. Since around 2008, MLB games have been shown on more than 10 government TV channels, reaching most of the population. Under a three-year deal signed in January, Le Sports, an affiliate of online streaming company Leshi Internet Information & Technology, is streaming 125 live games in China per season. 

These are the early moves in a long-term strategy. The Chinese Baseball Association was only formed in 2002 and MLB did not have a China office until 2007. According to Leon Xie, managing director of MLB China, there were then only three real baseball diamonds in all of China. 

MLB is very unlikely to create a phenomenon as big as Yao Ming but it is working to develop Chinese players. MLB opened its first training camp in the country in 2009, in the eastern city of Wuxi. Training centers have also opened in Changzhou and Nanjing. Some younger players have gone to the U.S. to play in elite high school leagues. In 2015, Xu Guiyuan became the first player trained in Wuxi to sign with an MLB club, joining the Baltimore Orioles. 

Players at the training centers are now playing over 100 games a year and often moving directly onto Chinese university baseball teams upon graduation. The number of baseball diamonds in China has grown to over 50. And the official Chinese Baseball League, which had gone dormant, was relaunched in 2014 in partnership with property developer Hengda Lianghe Investment. 

As shown by the success of the NBA’s Jeremy Lin, Chinese consumers can also become very enthusiastic about Asian-American athletes. Given that baseball is popular in the U.S. and Taiwan, these could be sources for high-profile ethnic Chinese players. For example, Chinese-American Ray Chang, born in Kansas City, has been playing for minor league teams for more than a decade and is now on a team affiliated with the Cincinnati Reds.

More at Jeffrey Towson's weblog.

Jeffrey Towson is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Jason Ma discusses Chinese diaspora on 9th World Chinese Economic Summit

Jason Ma

Renowned speaker Jason Ma will join two sessions of the 9th World Chinese Economic Summit on 13 and 14 November at the Shangri-La in Hong Kong. He will discuss entrepreneurship and the global Chinese diaspora. The meeting will focus on “Managing Global Uncertainty: Exploring New Opportunities”, and will host a range of famous participants, including politicians and business leaders.

Ma is a Member of both the Employment and Education Taskforce and the SMEs Cross-thematic Group at the Business 20 (B20), the global business advisory council for the G20, the world’s leading economic forum led by the top 20 economies’ heads of state.

He is one of the few influential business and education leaders from the G20 economies appointed perennially as a B20 member through the G20 in Australia, Turkey, China, and currently Germany.

Vincent Lo of the Shui On Group, Ronnie Chan of the Hung Lung Group and H.E. Susilo Bambang Yudhoyono, former president of Indonesia are some of the participants. The full program you can find here. (pdf)

Are you interested in having Jason Ma as a speaker at your conference or event? Do get in touch or fill in our speakers' request form.  

Women in China's market economy - Zhang Lijia

Zhang Lijia at the BBC

The Times Literary Supplement reports on an evening with author Zhang Lijia of Lotus: A Novel on prostitution in China recently in London. One of the subjects: how did Chinese women fare under the market economy, introduce by Deng Xiaoping. About the government as a big boys' club.

TLS:

Zhang commented that since the Cultural Revolution, changes may have enabled corporate growth, but haven’t done much for social welfare or social equality: “Deng Xiaoping’s reforms afforded some opportunities for educated, urban women. But the market economy has undermined gender equality. The government retreated from its role and let the market take over, but the market doesn’t always treat women kindly. Women are bearing the brunt of the shift from the planned economy to the free-market economy: women have to attain higher grades to be admitted to universities, women are the ones who are laid off first, women over forty-five are sacked from companies, companies can stipulate that they want only young and pretty women”. 

Zhang’s research showed that prostitutes are not just vulnerable to violent men, but also to police harassment and abuse. Although prostitution is considered a social evil,  Zhang added, “it’s placed under administrative law, not criminal law, so it’s dealt with through fines and sanctions. The police interpret the laws themselves. They beat up the women and extract ‘confessions’, put them in detention with no legal representation. They have leeway for corruption, abuse and a violation of the women’s rights”. Meanwhile, she argued, measures to curb prostitution “don’t tackle fundamental social problems. The root of the problem is the growing gender gap and a thin social safety net”. 

Will gender equality improve in this fascinating and rapidly transforming country? When it comes to change driven from the top down, Lijia Zhang isn’t hopeful: “Female political participation is low – women make up less than a quarter of the National People’s Congress and well under a fifth of the Standing Committee. And the top level of government is just one big boys’ club”.

More in the TLS.

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The link between climate and Daoism - Ian Johnson

Ian Johnson

China is assuming global leadership on climate, now the US is backing out. But how is that related to the grassroot feelings of its citizens? ChinaDialogue asks author Ian Johnson of The Souls of China: The Return of Religion After Mao on the links between the environment and the emerging Daoism.

ChinaDialogue:

IJ: On the more abstract level there is this idea that the body is a microcosm of the universe. You can recreate the universe in your body through different cultivation techniques. When Daoists meditate in a cave they talk about going back to the womb of the earth, trying to resync with the earth on some symbolic level. On the other hand I think it's a mistake to translate the traditional Daoist concept of ziran (自然, nature) in a modern ecological way. It's more of an idea that you should be part of the cosmos (顺其自然). 

Concretely there are moves by Daosim to position itself as a green religion. But in my view it seems to be an effort to rebrand itself because people have a hard time understanding what Daosim is. The so-called ‘world religions’ like Islam, Christianity and Buddhism, all have clear stories. Shakyamuni was a prince. He went outside and saw the world suffering. Then he discovered the solution to suffering was to end desire. Daoism is more of a folk religion which doesn't really have a clear story, even though it is inside so much of Chinese culture, from Tai Chi to Fengshui. Marketing Daoism proves to be difficult. For historical reasons, it was also socially marginalised by the Manchurian rulers of the Qing Dynasty who were Buddhists. 

The result is that even today the educational level of Daoist priests tends to be low. Almost nobody has a university degree. Buddhist temples would have monks with doctoral degrees who are much more able to tell stories and convert people. So Daoism is faced with a crisis and turns to ecology as a re-marketing opportunity. I don't mean it's disingenuous or that it's fake. But whether it will succeed or not is debatable. 

CD: Do you think Chinese religions have the potential of forming the foundation of a new environmental awareness and to contribute to the global conversation about conservation? 

IJ: There is potential in the sense that most of the temples are in the countryside and in mountainous areas. They used to have large land holdings. And some of them present themselves as stewards of these areas. I know some Daoist temples around Maoshan outside of Nanjing have organic tea and organic herbal products. The challenge for them is again the educational level of the priests who have difficulty marketing themselves successfully to the better educated urban elites. They even have trouble writing the promotional materials. Nowadays there are local governments that assist Daoist temples in marketing and attempts to elevate the level of sophistication of Daoism in general. 

I think overall, Chinese are thinking about the same issues as other people around the world. These ideas that societies are not organised fairly, that there is a lack of justice and transparency which led to great political upheavals in the West concern Chinese society as well. If there is one idea that unites all the faith groups I’ve followed, it is the idea of justice, and of "tian" or heaven. I think that's a very strongly Chinese idea that society should be just. And justice is not something given by a party or a political campaign but it is divinely given. In Miaofengshan, these pilgrimage groups all perform stories of righteousness as part of their rituals. 

The spiritual revival shows that Chinese people are participating in this global conversation. And it would be interesting to see if China through Daosim or other religions could contribute something unique.

More on ChinaDialogue.

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Japan's IKEA might not sell in China - Shaun Rein

Shaun Rein

Japan’s discount-furniture king, Akio Nitori, dubbed the country's IKEA, now wants to export its success into the region's largest market: China. Business analyst Shaun Rein doubts whether their Japan success can be copied into China, he tells Bloomberg.

Bloomberg:

At 73, (owner) Nitori said he’s not ready to retire, but he handed day-to-day control to longtime lieutenant Toshiyuki Shirai while he concentrates on expanding in countries such as China, where he’s opened 11 outlets since 2014 and plans to double that number this year. 

“It’s going to be a lot harder than he thinks,” said Shaun Rein, founder of Shanghai-based consultancy China Market Research Group who offers Ikea’s travails as an example of how difficult the market is to crack. Ikea’s stores are packed with people -- but they come to take naps on showroom beds and enjoy a bit of free air conditioning, rather than to buy. 

For Nitori, the challenge will be building brand cache, Rein said. “You can’t compete on price in China.” 

Still, Nitori is betting he can replicate his success in the world’s most populous nation, a market 10 times the size of Japan’s. It’s key to meeting his current 30-year target: 3,000 stores by 2032. 

“I’m absolutely confident we’ll make it, as long as you don’t hold me to the deadline,” he said with a laugh. “The demand is endless.”

  More in Bloomberg.

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Manufacturing trends: automation and ethics - Ben Cavender

Ben Cavender

Manufacturing is changing fast in China, says business analyst Ben Cavender to the Fast Company. Factories phase out labor for automation, and stick to more ethical standards. Although some of the less ethical producers move to countries outside China.

The Fast Company:

According to Benjamin Cavender, a principal at the China Market Research Group, which advises brands doing business in China, factories are also increasingly automating their production lines, which means fewer labor-intensive tasks for workers. “The market was fairly low-tech, run by small operators,” he explains. “There’s been a hell of a lot of consolidation over the last couple of years. Since most of the smaller factories did not have the margins or the cash to be able to update their operations, they’ve closed down.”

Big international brands are also increasingly applying pressure to factories they partner with to make their buildings more environmentally sound and to ensure workers are treated fairly. “There’s been a push by a lot of the international brands to force the Chinese [manufacturing] companies to clean up their act,” Cavender says. “If you’re Nike, for example, you don’t want to get attacked in the U.S. because consumers are unhappy that you’re being unethical about how you source product.”... 

Unfortunately, the movement toward more ethical factories in China does not signal a global trend. Increasingly, Chinese companies are themselves seeking out cheap labor in other parts of Asia and the rest of the world, perpetuating the standards that once ruled in Shenzhen. The collapse of the Rana factory in Bangladesh in 2013, which killed 1,129 people, was a brutal reminder of how low those standards can be. 

“The major factory owners in China that have scale–the big guns–have moved all the low-value manufacturing offshore,” Cavender says. “They’ve started buying factories in Vietnam, India, Malaysia, or Sri Lanka. They’re having the cheaper production done there, then reimporting the product back to China to do the high-tech finishing.”

More in the Fast Company.

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How new rules will kill soccer transfers to China - Rowan Simons

Rowan Simons

China has been a financial paradise for many top European soccer players. But a new rule by the China Football Association, with a 100% tax on transfers by clubs who are losing money, might kill this track, says Beijing-based soccer expert Rowan Simons to Tribal Football.

Tribal Football:

Rowan Simons, a writer on Chinese football, and also Chairman of China Club Football, the country's biggest grassroots football network, explains how the rule will work. "If implemented in it's current form and based on the fact that all of the Chinese clubs lose money, then all future imports of foreign players will be subject to the 100% tax. So, in effect doubling the cost of player transfers. " 

And the number's have been huge: So say with €60m with 100% tax, that becomes €120m. 

"This means, for example, the €60m Shanghai SIPG paid Chelsea for Oscar would in fact cost them – if they were in debt – €120m with the new rule in place. 

Footballers plying their trade in Europe have flocked to the Far East in recent years – and not only in the twilight of their careers, as the aforementioned Oscar can attest. 

According to Steve Price from The Guardian, the combination of just four transfers alone – Oscar, Carlos Tevez, Ramires and Jackson Martinez – cost a combined total of £175 million. 

As well as the European clubs being rewarded with hefty transfer fee's, so too are the players with astronomical wages, with players like Tevez set to make £64m over two years. However, that will all change soon according to Simons. " 

(The rule) changes the dynamics of the professional league here in all kinds of ways - certainly in terms of investors ability to attract top players. 

"I mean the sponsors, which have been attracted to the league because of the star players, the gate receipts which have been increasing, all can be impacted by this policy." 

The tax will come into effect on June 16 when the Super League's transfer window opens, which is two weeks before the European windows opens.

More at Tribal Football.

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Religious revival after 100 years of self-doubt among Chinese - Ian Johnson

Ian Johnson

Journalist Ian Johnson, author of The Souls of China: The Return of Religion After Mao explains at the acceptance of the Shorenstein for journalism award how after 100 years of self doubt and insecurity, religion revived. Folk religion, more than internationally established ones, has become a vibrant new source of inspiration.

Ian Johnson is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form?

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Why China's health care apps are failing - Jeffrey Towson

Jeffrey Towson

Thousands of mobile apps have tried to tap into the poorly organized health care system in China. They failed, despite massive funding, says Beida business professor Jeffrey Towson at his weblog, because the developers knew more about mobile phones than about health care. Health care is modernizing, he writes, but government supervision hampers speed.

Jeffrey Towson:

More than a thousand Chinese healthcare apps have been launched in the past five years. These startups, targeting the seemingly super-hot intersection of booming smartphone usage and modernizing healthcare, were supposed to be the next big thing. And many have been backed by top venture capitalists and leading Chinese companies such as Alibaba Group Holding, Tencent Holdings  and Ping An Insurance Group. 

But as of yet, there have been few real successes in Chinese mobile health. In fact, most health apps have failed to generate significant numbers of active users, let alone produce much revenue. And forget about profits. 

Now as investor sentiment in the idea cools, many of these startups are cash poor and heading towards a painful shake out. Chinese healthcare appears to have defeated China’s smartest entrepreneurs. 

There are lots of reasons for this. But at the simplest level, investors just knew a lot more about China’s smartphone market than its healthcare system.... 

In my opinion, absent big, immediate changes in the core structure of SOE hospitals and government insurance, the best target for Chinese health apps is consumers and consumer-facing businesses. They should essentially bypass the core hospital system and go direct to consumers. Focus on ancillary services such as dentistry, medical tourism, optometry, beauty and aesthetics, and health and wellness. Do e-commerce for OTC products – and for prescription products when that becomes allowed. Basically, sell directly to Chinese consumers who have money and smartphones and want better healthcare now. 

Looking at the big picture, it is clear that Chinese healthcare is in fact modernizing. And the changes that have been happening have been quite dramatic. But this is modernization under government direction and with a mix of business, political and social objectives. So the speed of China’s healthcare modernization is slow and step-by-step. And this has created a mismatch with the rapid pace expected by mobile health app startups and their venture capital investors. This difference in pace is the fundamental problem for these apps. And it will probably not end well for most of these startups.

More at Jeffrey Towson's weblog.

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Chinese: the world's smartest shoppers - Tom Doctoroff

Tom Doctoroff

Chinese belong to the smartest shoppers of this planet, says branding guru Tom Doctoroff. They do not mind to pay a premium, as long as there is a good value proposition. "They seek both reassurance and inspiration" from brands, he says. And if a brand like Apple does not offer a new phone this year, they will just wait, hurting Apple in its revenue.

Tom Doctoroff is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Trump cannot win over Pyongyang by pushing China - Arthur Kroeber

Arthur Kroeber

President Trump's rather simplistic views on foreign affairs have waken up many observers. Trump's approach to push China on North-Korea might be just an example where easy solutions do not work, tells political analyst Arthur Kroeber, author of China's Economy: What Everyone Needs to Know® at the South China Morning Post.

The South China Morning Post:

China’s reluctance to increase pressure on North Korea amid the country’s continuous testing of ballistic missiles is setting up a clash with US President Donald Trump over economic issues that the US cannot win, according to Arthur Kroeber, managing director of Hong Kong-based financial services firm, Gavekal Dragonomics. 

“Trump has, against the advice of pretty much everyone in the traditional foreign policy establishment, now created a direct linkage between the security issues and the economic issues and the problem with that is that it’s most unlikely that the Chinese will deliver anything material in terms of constraining North Korea,” Kroeber said at an investor seminar in New York. 

“When it becomes obvious later this year that the Chinese are basically paying lip service to that issue, that then creates an incentive to get tougher on China on the economic issues.” 

The US does not have enough leverage against China to force Beijing’s hand on either the security or economic issues, making it unlikely that failure to agree on an approach to North Korea will lead to a trade war, Kroeber said. 

“If the US does decide to get more aggressive with China on economic and trade issues, China has plenty of stuff to fight back with, and I think ultimately the loser from that confrontation would be the US.”

More at the South China Morning Post.

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One Belt, One Road initiative needs a more positive take - Kaiser Kuo

Kaiser Kuo

Western analysts have been criticizing China's One Belt, One Road initiative with loads of negative comments. Time to take a more positive approach, says China veteran and rock star Kaiser Kuo, after discussing the issue with many former US leaders, at SupChina. 

Kaiser Kuo:

There are, of course, reasons for skepticism. But there’s no danger, at least among pundits in the West, that anyone has been so beguiled by Xi Jinping’s grand plan that they believe it to be rooted in altruism. 

Some fret that the debt burden on recipient countries will be crippling. Others see China’s inroads as the thin edge of a neocolonial wedge. Most agree that the Belt and Road brand — and it is, very clearly, a kind of branding exercise — is so capacious that it’s nearly meaningless, and that local officials and SOE bosses can slap the B&R label on any old project. And many Chinese are wary of this largesse when China itself hasn’t even joined the ranks of middle-income countries on a per capita basis. And then there’s the propaganda around the initiative, most of which has been downright silly, some of it risibly so (see this compilation of videos for a few examples). 

Skepticism is healthy, until you pile on so much of it that any fair appraisal becomes impossible. My worry is that the U.S. is nearing that point. Already, we’ve blundered in our approach to what might be the most important of the Belt and Road initiatives: the Asia Infrastructure Investment Bank (AIIB). A number of our recent guests on Sinica, including Nye, former U.S. trade representative Charlene Barshefsky, Acting Assistant Secretary of State for East Asia and Pacific Affairs Susan Thornton, and former deputy assistant secretary of state for East Asian and Pacific affairs Susan Shirk, have all spoken of the U.S. effort to dissuade allies from joining AIIB as a mistake. Concerns over governance and lending standards may have been well founded, but the Obama administration’s negativity toward AIIB foreclosed a chance for constructive participation and proved to be a diplomatic embarrassment. 

In a recent interview with Nathan Gardels of The World Post, the former Singaporean diplomat Kishore Mahbubani addressed the inevitability of an end to American primacy, urging the U.S. to accept its eventual fate with more grace than it’s shown, and to “abandon its destructive policies of unilateralism and start a new era of constructive policies of multilateralism.” Xi Jinping’s signature initiative offers an opportunity for just such multilateralism. “If the U.S. wants to be really cunning,” Mahbubani said, “it should seize the many business opportunities that the ‘One Belt, One Road’ initiative will eventually offer. Pragmatism and common sense should replace ideology and pride in American thinking of China.” 

Sure, Belt and Road might not end up being a “Marshall Plan without a war,” as one analyst called it. Marshall Plan comparisons, though, are ubiquitous — and they are not coming from China. Indeed, China’s official Xinhua News Agency has bluntly rejected the comparison, noting that the Marshall Plan was about Cold War–era containment of Soviet power, whereas China’s Belt and Road initiative “aims at achieving the common development of all countries rather than seeking spheres of political influence.” Perhaps those who have praised Belt and Road as an ingenious way for China’s bloated SOEs to fob off their excess capacity are underestimating the scale of overcapacity, or overestimating Asia’s appetite for new infrastructure. It’s possible, if not indeed likely, that some of the many projects lumped under Belt and Road may prove to be costly boondoggles. 

With Charles Kindleberger’s warning firmly in mind, the best response on the part of the U.S. and its allies should be neither to sneer nor to blithely cheer, but to offer constructive guidance and encouragement — and to make sure that, to the highest extent possible, all the roads, rail lines, ports, and pipelines do indeed function as public goods. 

Belt and Road would have fared better, as my colleague Jeremy has pointed out, under its original moniker — the “New Silk Road.” That name would have carried a positive historical valence that evokes in particular a historical period from which contemporary China could take real inspiration: the Tang dynasty. Ask any educated Chinese person about that dynasty — one that likely ranks at or near the top of the list of great epochs of Chinese history — and they’ll tell you that the reason for the Tang’s greatness was its openness and cosmopolitanism. Tang is a way for Chinese to reconcile national greatness with internationalism, with globalization. I’m told that this formulation worked for a certain Chinese heavy metal band. 

Now if there were only such a period that American leaders could invoke…

More at SupChina.

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How a powerful Xi Jinping changes China's policy making - Victor Shih

Victor Shih

Since Deng Xiaoping China's leaders did have relatively limited power. But all that is changing under current president Xi Jinping, writes policy analyst Victor Shih at the Policy Forum, and that might not be good news. "The policy-making environment has changed completely."

Victor Shih:

The latest plenum in China further shored up President Xi Jinping’s personal authority in the party by labelling him the “core” of the central leadership. Furthermore, the plenum called on all party members to “raise their core awareness and awareness for unity,” – essentially that everyone in the ruling party should act strictly in accordance to the instructions of Xi Jinping. But is that necessarily good for policy-making in today’s China? 

During the previous Hu Jintao administration, although Premier Wen Jiabao had jurisdiction over economic affairs, he always had to be mindful of other members of the Politburo Standing Committee, who were at least his equal, criticising his policies. This power dynamic provided incentives for the technocrats in the State Council to propose a variety of policy objectives, as well as policies. 

As a result, policy discussions were lively as technocrats and experts from the various ministries and think tanks appealed to different elite audiences. To be sure, the debates likely delayed decisions in some cases, but the more decentralised decision-making model also led to a greater variety of ideas, as well as an important self-correction mechanism. 

When bad outcomes emerged from a given policy, a subset of technocrats quickly pointed out the mistake, even if it meant offending Premier Wen. Because Premier Wen was checked by other elites and because he did not have unilateral authority over mid- and high- level appointments, even more junior technocrats dared to criticise his policies in the belief that the higher-level elites could shield them from any retaliatory action. 

With Xi’s consolidation of power and the extension of his jurisdiction to include economic affairs through his chairmanship of the Leading Group on Comprehensively Deepening Reform (LGCDR), the policy-making environment has changed completely.

More at the Policy Forum.

Victor Shih is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

 Are you looking for more political experts at the China Speakers Bureau? Do check out this list.  

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