Online Financing: Ponzi Scheme or Engine for Growth?

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By Bill Lee

China’s 1.4 billion people are reportedly sitting on US$16 trillion of personal assets. The problem for the people is how to maximize gains from those assets, and for the government how to utilize that cash hoard for the economy. China’s ingenious answer: online financing, or, as it’s called in China, Internet finance.  

People want the highest returns on their investments, and with many individual investors stung by the rollercoaster ride of China’s stock markets, they are looking for other roads to riches. Online financing companies post offerings for private-sector SMEs looking for investment on the Internet. With only a smartphone, an individual can read information about the company, including the company’s credit history, and with only a few clicks, invest in it. The fin-tech companies promise returns of up to 30%.

For the government, wishing to rid China of the label as the “world’s factory,” online financing provides a way to channel much-needed capital to private-sector SMEs such as steel subcontractors, which have been hit by the glut of Chinese steel. Banks are normally supposed to function as conduits for providing capital to companies to grow the economy — the Lehman shock in America showed what happens when banks ignore that function and get greedy — but China’s banks have their hands full financing huge SOEs. It all seems an elegant solution for all.

The main pitfall of course is the Internet finance companies scamming their investors. Up to a third of these companies have reportedly received complaints, not the least of which involve the president of the company pulling up stumps and leaving town. Though not as big as the Bernie Madoff scandal, the Ezubao online finance company duped more than $7.5 billion from investors in a Ponzi scheme. Although these scandals are what always generate the headlines, they don’t give an accurate picture. It may have problems, but online financing has made China a venture capital superpower.

Photo: Andrew Erickson via Flickr

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The Handshake That Changed The World

                                by David Parmer

The photo above captures forever the moment when Richard M. Nixon, 37th President of The United States extended his hand to China’s premier, Zhou Enlai. President Nixon called his trip “the week that changed the world” and this handshake was the start of that week.

For more than 20 years the US and the PRC had not been talking. The US backed the Republic of China (ROC) during the bloody civil war following the defeat of Japan. The US had also fought Chinese troops in the Korean War. So, in short, there was no love lost. Americans were imperialists and the PRC were “Red Chinese.”  What’s more, during his long political career, Richard Nixon had made no secret of his strong anti-communist convictions.

Later, some said that, precisely because of those anti-communist credentials, only Nixon could have made this gesture and this trip. While Mr. Nixon spoke of making a safer world and a world of peace during the public ceremony in Washington before his departure on February 17th, deeper political realities were underneath, particularly an attempt to gain leverage on the Soviet Union by making peace with the PRC. Some commentators suggest that the US also hoped to get some leverage on the North Vietnamese with the aid of Chinese help.

China itself had had border disputes with it colossal neighbor to the north, and just a few years before had engaged in a drawn-out shooting incident along their Ussuri River border. So perhaps both the US and China  saw some tactical advantages in their relations with the Soviets in addition to other hoped-for benefits.

No sooner had Nixon and his party arrived at their guesthouse on that February day than Chairman Mao sent Premier Zhou to tell the president that the chairman would see them. Now. Mr. Nixon, Henry Kissinger, Winston Lord and one Secret Service agent motored over to see the chairman for a two-hour meeting. (The minutes of the meeting as taken by Mr. Lord can be read here.) Nixon and Mao had a frank discussion, but Mao was in turn philosophical, jovial and obscure. The aging and frail Mao had made his point, and now it was up to Premier Zhou to work out the details (and keep Chairman Mao updated on the proceedings.)

In the week that followed there were predictably speeches and toasts and meetings and sightseeing for the Nixons and their party. They went to West Lake in Hangzhou, to the Beijing Zoo, and to the Great Wall outside of Beijing. At the Great Wall, it was Mr. Nixon who waxed philosophical, giving the opinion that it was a great people who built the Great Wall. He also noted his party had travelled 17,000 miles, to get to China, but he felt that “it was worth coming.”

For the final stop on the trip the president’s party returned to Shanghai, and there, at the Jin Jiang Hotel, the Shanghai Communiqué was written and agreed upon. The document pointed out areas of agreement between the two countries and laid out a roadmap for normalization of relations.

Of particular note was the statement concerning Taiwan that became the “One China Policy.” This could be seen as the second most important outcome of Mr. Nixon’s visit coming very close to the sheer audacity of making the trip at all.

In his closing remarks the president said, “generations will look back and thank us.” It is now 45 years later. Does this generation realize the significance of February 1972, or will more time have to pass before there is clarity on this game-changing event?

Photo: Richard Nixon and  Zhou Enlai February 21, 1971.  Beijing/Public Domain

His Universe in Seven Days

by Bill Lee

Like God, US President Donald Trump tried to create his own world in seven days. Did he succeed? He signed executive orders — thunderbolts from God — paving the way for construction of the Dakota XL pipeline — bury my heart at Wounded Knee — starting construction on his beloved border wall — “I’ll get Mexico to pay for it” — and pulling the United States out of the TPP. He also made an odd speech at the CIA, making false claims about the size of his inauguration crowd, and on and on. It is difficult to remember it all since there was such a torrent of news. He and his minions succeeded in doing what they apparently do best — creating chaos. But was it gross incompetence, or cunning calculation? Is there method in his madness? Is the flood of action meant to keeps his opponents off balance and distract them from the more important minutiae of change, the fine print, like what he’s actually going to do with Obamacare? His order banning — “extreme vetting” as they tried to recast it — anyone from his designated Muslim-majority countries entering the US ignited virulent protests, but the ban could very well be a precursor to greatly escalated military action by the United States in Iraq and Syria. Trump knows that such action would trigger waves of more refugees, and so he wanted to put a ban on refugees in place to prevent any from fleeing the increased violence. Trump and his advisors had two months to plan their program after entering the White House, and perhaps they are playing it out just the way it was planned.

Photo: antefixus21 via Flickr

2017 The Dawn of a New Year

Soon the year 2017 will dawn and we will all face a new year filled with promise and hope and many challenges. Opportunities for new advances in science and technology and new ideas and creativity in the arts will flow. At the same time we will be faced with the prospect of wars and tensions worldwide. Global warming, poverty and a global environment under constant threat are all issues that will persist in 2017. So we are faced with both challenges and hope in the coming year. Please log in and give us your thoughts on what will happen in 2017, and what is important to you.

Photo: Jerryang via flickr

When it Comes to North Korea, No News is Good News

                              by David Parmer

It is December 2016 and all is quiet in the DPRK. No rockets, no nukes, no shelling of the South, and no threats. Maybe it is because the instability in the ROK is so unprecedented and no one is sure how things will develop in the post-Park era. Add to this the uncertainty around the world, not just in the DPRK, as to what Donald Trump will do once he is in the seat of power. We already have some indication that Trump with be tough on China, but how will he deal with the DPRK? It is still a mystery, and Trump himself is a mystery. So maybe the Supreme Leader, KJU is taking a “wait and see” attitude. Or…maybe he is planning something to rattle everyone. Will it be a quiet New Years’ holiday, or will the pot boil over in the DPRK? Please log in and give us your thoughts.

Photo: Rodong Sinmun

 

 

 

Tensions Heat Up At The Top of the World

A BBC report on 14 November 2016 quoted Pakistani sources as saying seven Pakistani soldiers were killed in the disputed Kashmir region. The clash occurred on Sunday13 November. The Times of India reported on 15 November that for its part, India is only responding to Pakistani provocations, and that India does not initiate such confrontations. The Times also noted that the conflict has begun to escalate in that both sides are employing heavy weapons such as artillery, heavy mortars and missiles.

The Kashmir region has been in dispute since the India-Pakistan partition in 1947. An Islamist insurgency emerged in 1989 to further complicate the situation. There has been no real progress in negotiations between the Indians and the Pakistanis in the recent past. The situational stalemate continues, and this autumn sporadic fighting like Sunday’s action has occurred. The question is: will these two nuclear-armed powers keep the uneasy status quo, or will they allow tensions to escalate to a wider war? Please log in and give us your thoughts.

Photo:India Today

WHO IS YOUR CHOICE FOR PRESIDENT?

Hillary Clinton

The US Presidential Election is just seven days away. This is one of the most hard-fought elections in most people’s memories, and one of the nastiest. One week away and the outcome is still uncertain. So who do you think will win the election, and who do you think should win?  Please log in and give us your thoughts. Every vote counts.

Trump

Photo: Aaron Edwards via flickr

Candidate photos from their respective FaceBook pages

 

 

 

 

U.S. & Philippines – Breaking Up Is Hard to Do

             by David Parmer/Tokyo

In the US, when a couple in high school or college is about to break up, one partner often says, “I think we need to start seeing other people.” And this is what Philippines President Rodrigo Duterte is metaphorically saying to America. Duterte says no more steady dating; he is going to play the field with China and Russia. In China he told his hosts, “America has lost.” And he then announced his separation from the US.

Well, both countries have been together for a long time, and in any relationship there are long-standing grievances on both sides. The US was pretty much in the driver’s seat from 1899 to 1942, and the Philippines was a virtual colony of Uncle Sam. The way that the US got there was to kick out another colonial power, Spain.

While many Filipinos have a warm regard for the US, favor English as their second language and have family or relatives in the States, Mr. Duterte is not one of them. The memory of US involvement in the Philippines past and present rankles with him, making him sensitive to any criticism of his policies. This became apparent in his very strong emotional reaction to recent US and EU criticism of his of War on Drugs.

The US and the Philippines are intertwined in matters of defense with the Philippines getting logistic support, training, weapons and intelligence from the US. Realistically, it would be extremely difficult (but not impossible) to change to all Chinese or Russian systems and doctrine. Moreover, the president has said that a recent joint military exercise will be the last, and that in maybe two years the US will be asked to leave.

And about the breakup: Duterte said that he only meant that this applies in areas of foreign policy. The US continues to stress that relations with the Philippines are good and the countries have a long and warm relationship and that the US has not received any official notice of a change in relations. So what will happen remains to be seen. The real question is whether Mr. Duterte’s policy is in the Philippines long-term interest and whether his actions will add more tensions and uncertainty to the situation around the choppy waters of the South China Sea.

What do you think about this question? Please log in and let us know.

 

 

 

Photo: U.S. Dept. of State via flickr

Columbia’s President and the Search for Peace

On October 7, 2016 the Norwegian Nobel Committee announced that Columbia’s president, Juan Manual Santos had been awarded the Nobel Peace Prize for his efforts to bring an end to his country’s bloody civil war that had claimed 220,000 lives.

However, just five days before, on October 2, the country voted in a referendum to reject the peace accord with the Revolutionary Armed Forces of Columbia, FARC. In awarding the prize, the Norwegians noted the decision of the referendum, but stated that it felt that the people were rejecting a particular deal, and not the peace process itself.

President Santos, representing his government is involved in a three-way negotiation. He is dealing not only with the FARC, but also with the opposition. The opposition is lead by the former president Alvaro Uribe, while the FARC is represented by Rodrigo Londono, AKA Timochenko.

The ceasefire was set to expire on October 31, but on October 13 President Santos extended the period until December 31.

The question now is what will happen in 2017? Will there be a new accord that may not be perfect, but that is agreeable to all parties, or will the war which nobody wants start again? Please log in and give us your thoughts on this matter.

Press Release: Nobel Peace Prize

Photo: World Economic Forum via flickr

Taiwan – 10/10 and All’s Well…Sort of

Taiwan’s 10/10 holiday commemorating the Wuchang Uprising on October 10, 2011 is over, and all is quiet on the island. 

The hoopla of Tsai Ing-wen’s election and inauguration has passed. Dire warnings about secessionist talk have faded into silence. There have been no moves toward Taiwan independence, or even a whisper thereof. The ROC (Republic of China) has tried to join a couple of international organizations but has been rebuffed (many believe due to pressure from Beijing). Outside of that, President Tsi gave a rather bland interview with the Wall Street Journal that she could have sent in by email. So things seem stable, and there is business as usual as the KMT sits in opposition.

President Tsai laid out an ambitious plan for the reform of Taiwan society at her inauguration, and perhaps that is slowly moving forward–results take time, and results are not seen overnight after all. However, both Greek and Chinese philosophy tell us things are always in flux, and moving. And the clock is always ticking.

The question is: What about Beijing’s clock? Is there a time by which the Taiwan Question must be “solved”? So far, there is only the existence of the clock, but some day it will be time for resolution–one way or another. Without doubt.

When do you think that time might be, and what do you think will happen? Please log in and let us know.

Wall Street Journal Interview with Tsai Ing-wen

Photo:spawnbleed via flickr