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Photo: Theo C. via flickr
(Photo: ADB)
by David Parmer
The Silk Road-just the name brings to mind images of camel caravans crossing vast empty spaces bringing trade goods from one civilization to another. The total distance of the ancient trade routes connecting East, South and Western Asia with the Mediterranean world and North Africa is estimated to be about 8,000 km, or about 5,000 miles. From the second century BC, goods crossed those vast distances and connected civilizations. Then, in the sixteenth and seventeenth centuries with the rise of global navigation and the opening of sea lanes, these ancient trade routes fell into decline and disuse.
Things stayed pretty much the same with little but historical interest until around the turn of this century, when things again began to heat up. Interest in the revival of the Silk Road came from two major sources, the United States and the Asian Development Bank.
The United States needed to supply its forces and coalition forces in Afghanistan after the closure of its Pakistan supply route. In 2009, it created the Northern Distribution Network (NDN) which was a logistics chain that stretched from Europe down to Afghanistan. At the same time the U.S. proposed a new Silk Road. The problems inherent in this venture included complicated customs procedures and the widespread existence of bribery. The US initiative was rated as having mixed results. Meanwhile, the Asian Development Bank had its own vision of a new Silk Road to accelerate growth and reduce poverty in central Asia. To facilitate this vision, it created the Central Asian Regional Economic Cooperation Program (CAREC) back in 1997. Countries involved were Afghanistan, Azerbaijan, The PRC (China) Kazakhstan, Kyrgyz Republic, Mongolia, Pakistan Tajikistan, Turkmenistan and Uzbekistan. To date, it has spent $USD 38 billion to build road, rail logistics and border facilities. Its aim is to develop new road and rail links between central Asia, China and South Asia.
China has long looked west, and seen Urumqi in its western end as the logical jumping off point. And once again, Chinese made goods are headed toward Europe overland. The prime mover this time is not the camel caravan, but is rail transport, a nineteenth-century technology that is still very much with us. Manufactures in China both domestic and foreign are looking to rail as their shipping means of choice. While rail can be up to 25% more expensive than sea transport, the time efficiency is greater. Time by rail is estimated to be 20 days, loading dock to loading dock, a savings of 10 days over sea transport.
Rail is not without its problems. One of the biggest being rail gauges, i.e. track size. China, Turkey, Iran and Afghanistan use standard gauge, while Georgia, Armenia, Azerbaijan and Russia use the wider Russian gauge. This causes delays including off loading and on-loading of China cargo in Kazakhstan were gauges change. Other problems include complicated customs procedures and corruption as mentioned. Of note was a simple customs union set up by Kazakhstan, Russia and Belarus in 2012 which resulted in the elimination of lengthy inspections and the reduction in the amount of theft.
The new Silk Road is already beginning to have far reaching effects. For example, many manufacturers, including computer giant Hewlett Packard have moved to Chongqing in Southwestern China and now ship overland from China to Europe via Kazakhstan, Russia, Belarus, Poland, and Germany. HP’s precedent will clearly inspire others to test the waters and export west along the new/old Silk Road.
(Photo: ConzNL/flickr C.C.)
by David Parmer
The numbers do not look good. Depending on the source, China-Japan trade for the first half of 2013 is down either 8.8% or 10.8%. Politics plays a part, but other than that, it is just business as unusual.
Reporting an 8.8% slump in its trade with Japan, a spokesman for China’s Ministry of Commerce, Shen Danyang, was quoted in China Daily on 23 August 2013 as giving three reasons for the downturn.
Even more dour was the estimate by Japan’s JETRO which reported on its website that the total of Japan’s trade with China dropped 10.8% in the first half of 2013. More bad news included a drop of 16.7% in exports to China and a trade deficit of $24.4 billion USD, which is an increase of 1.4 times over the previous year.
JETRO’s outlook for the overall year, 2013, is gloomy, with exports stagnant at best. The only glimmer of hope is seen in the weak Yen, which may give a boost to exports of electronic parts and automotive components.
China Daily 23 August 2013: http://www.chinadaily.com.cn/china/2013-08/23/content_16917587.htm
JETRO Trade Survey: http://www.jetro.go.jp/en/news/releases/20130820558-news
(Photo: wikimedia)
by David Parmer
So what is interesting about Zhang Xin? Her storied rise in post-Maoist China has become the stuff of legend. Raised during the Cultural Revolution she moved to Hong Kong at 14, worked in factories, saved enough money for a one-way ticket to England for English study, graduated from Sussex University and went on to Cambridge. After graduation, she joined Goldman Sachs, who eventually sent her back to China where she met and married real-estate developer Pan Shiyi. Fast forward: business picks up, she is now CEO and co-founder of property-developer SOHO China. She has a net worth of $3.6 billion and she is one of the richest women, not just in China, but in the world.
That’s the story. She seems willing to repeat it again and again to journalists who generally focus on the same range of questions about her life and wealth. (Warren Buffet and Bill Gates are probably no strangers to the same questions.) It appears that she neither seeks nor shuns the limelight, but rather treats it as if it is her duty to be interviewed. She is both gracious and forthcoming in her interviews. Perhaps this is because, in a sense, she IS the SOHO brand, much as Richard Branson IS the Virgin brand. And if appearances are what they seem, she is immune to the high-octane ego rush of fame and fortune.
So what is interesting about Zhang Xin? Her statements show a keen concern for the future of her country, and a firm belief in its inevitable extended democracy. In a BBC Hard Talk interview she notes the tremendous power of social media in China as a force for good and an antidote to corruption. Millions of Chinese are on now on Weibo, China’s Twitter. She describes social media like Weibo as the: “single most powerful tool pushing the Chinese society becoming more open, more progressive more transparent.”
As for transparency, SOHO puts it into practice. It its 2012 Annual Results, SOHO’s, co-founder Pan Shiyi states:
“Honesty is the most powerful guarantee to our development. Honesty is our determination to ensure that every matter is subject to transparency. Only transparency can deter and prevent corruption…In 2012 we undertook two endeavors. The first was to ensure that all our sales prices and rental prices are public and transparent prices without even one cent of discount offered. We have persevered in this process and results are favorable. Each of our clients is treated equally…Only transparency can ensure true fairness and equality.”
So what is interesting about Zhang Xin? The rags-to-riches story? The woman of immense means? The charming interview subject? Or a Chinese woman with a vision of twenty-first century China that is dynamic, democratic and transparent?
BBC Hard Talk, Zhang Xin: http://www.youtube.com/watch?v=7as_ZfQkyo0
SOHO China 2012 Annual Results: http://www.youtube.com/watch?v=woaQkrmGzIk
Soho China Website : http://www.sohochina.com/
Photo: Mark Veratt, flickr (CC)
by David Parmer
Political and Business Leaders Head to Bali, Indonesia October 5-8, 2013
Political and business leaders from the 21 APEC economies will be meeting on the tropical island of Bali,Indonesia from October 5-8, 2013. World leaders attending will include China’s president, Xi Jinping, U.S. president Barack Obama, Australia’s new PM Tony Abbot and Russian president Vladimir Putin. U.S. Secretary of State John Kerry will also be present.
The leaders’ meetings will be preceded by the APEC CEO summit from October 5-7. This year’s theme is “Towards Resilience and Growth:Reshaping Priorities for Global Economy.” Attending will be 1,000 business delegations from Asia-Pacific including China, the USA, Japan, Southeast Asia and Indonesia. Such participation is to be expected as APEC is the number-one forum for economic growth, trade and investment in the region.
On September 11, 2013, the Jakarta Post reported that Bali Governor Made Mangku Pastika stated that all venues, the airport, and Bali’s roads were ready for the event. Increased security is in place-reports indicate Indonesia will deploy up to 15,000 security personnel as well as 12-15 warships and air force units.
APEC CEO Summit: http://www.apec2013ceosummit.com/index.html
(Photo by Sarmu, Panaramio, CC)
by David Parmer
In July 2013, China’s State Council announced the formation of the Shanghai Free Trade Zone (SFTZ), a Hong-Kong like free trade area. Tentatively set to open around September 29, the SFTZ will cover an area of some 29Km (11square miles). Reports say this project is the special interest of premier Li Keqiang, and could lead to a rapid replication of FTZs in other Chinese ports.
Changes in policies and services in the FTZs will include:
CCTV reports China’s big five banks have all set up branches in the SFTZ. Chinese banks may offer offshore services while under the new regulations qualified foreign banks may set up branches or joint ventures. Foreign financial institutions mentioned as participants include Citigroup, Standard Chartered and HSBC. The PayPal division of Internet market eBay has also been mentioned. Meanwhile, Focus Taiwan reports that Taiwan Offshore Banking Units (OBUs) have been invited to participate in the plan.
The South China Morning Post reported that Shanghai Vice-Mayor Ai Baojin will head the new commission to oversee the development of the SFTZ. The City of Shanghai has already sent officials to Singapore for training to learn from Singapore’s experience as a free-trade port and financial and shipping center.
Some observers see the establishment of the Shanghai Free Trade Zone as an advance equal to the creation of the Shenzhen FTZ under Deng Xaioping in the 1980s, or China’s joining of the World Trade Organization in 2001.
(Photo: China Daily)
Only July 18, 2013, the Ministry of Commerce of the People’s Republic of China issued announcement No. 48,2013 which laid out the results of its year-long anti-dumping investigation into imports of solar-grade polysilicon originating in the U.S.A. and the Republic of Korea. The report concluded that:
It is preliminarily ruled by the Investigation Authority that, during the investigation period of this case, the products under investigation were involved in dumping and the solar-Grade polysilicon industry of China was materially injured, and there was causality between the dumping and injury. (Ministry of Commerce Website)
New tariffs range from 53-57% for U.S. companies and from 2.4-48 % for South Korean companies. The new tariffs are aimed at solar-grade polysilicon; electronic-grade polysilicon is not covered. Solar market research and analysis organization, Solarbuzz states that in 2012 China accounted for 76% of the world’s solar wafer production, and produced 40% of the world’s polysilicon. Sources say falling prices of foreign- produced product forced Chinese manufactures to seek protection under anti-dumping regulations. Polysilicon, due to its semiconductor-like properties is used as a basic material in most solar energy applications.
PRC Ministry of Commerce Announcement No. 48 http://english.mofcom.gov.cn/article/policyrelease/buwei/201308/20130800224101.shtml
Background from Solarbuzz: http://www.displaysearchblog.com/2012/05/growing-polysilicon-imports-and-falling-prices-provide-chinese-solar-manufacturers-with-anti-dumping-fodder/
(Photo: Toronto International Film Festival)
by David Parmer
Chinese director Chen Kaige has been tapped to act as Jury President at the 26th Tokyo International Film Festival to be held from October 17- 25, 2013 in Tokyo’s Roppongi Hills complex. Chen, a member of the so-called “fifth generation” (1980s) of Chinese filmmakers is best known for his films “Raise The Red Lantern,” (1991) and “Farewell My Concubine” (1993), both films having received wide international recognition. “Farewell My Concubine” was nominated for two academy awards and received the Palme d’Or at the 1993 Cannes Film Festival.
In a piece published online in the Hollywood Interview, Chen was asked about working with talent from Japan, Korea and China during the filming of The Promise, a 2005 wuxia (martial arts) film:
“It wasn’t that difficult. It’s always been my dream to work with the best talents from different countries in Asia. I don’t mean that politically, but if you look at the history of these three countries, it’s very complicated. I think at least that if we show we can work together as artists, when the politicians are fighting against each other, we’ll show what we can do. We’ll show our dream of a peaceful future for Asia.”
The 26th TIFF will open with “Captain Philips” and close with “The Kiyosu Conference.”
TIFF Official website: http://tiff.yahoo.co.jp/2013/en/
Hollywood Interview-Chen Kaige: http://thehollywoodinterview.blogspot.jp/2008/03/chen-kaige-hollywood-interview.html
Dinh The Huynh-Liu Qibao meet on July 26, 2013
by David Parmer
Summer 2013 has seen a series of high-level meetings between China and Viet Nam. China’s Xinhua New Agency reported on June 20 that Chinese President Xi Jinping in meetings with visiting Vietnamese President Truong Tan Sang on June 19th said that China and Viet Nam should “unswervingly march together along the path of friendly cooperation.” Both presidents agreed to strengthen bilateral strategic cooperation by:
A second round of high-level meetings was held in Beijing on July 26. Viet Nam News published a report on July 27 that the head of China’s Central Committee’s Propaganda Department Liu Qibao met with the head of the Communist Party of Viet Nam’s (CPV) Central Committee Commission for Popularization and Education Dinh The Huynh. Both parties agreed to work to “cement cooperation between the two sides to enhance understanding, mutual trust and friendship between the two peoples.
And finally, on August 6, 2013, a Than Nien News story said that the Minister of Foreign Affairs of Viet Nam, Mr. Pham Binh Minh met with his Chinese Counterpart Wang Yi in Hanoi on August 4. Minister Minh was quoted as saying both sides should persist in addressing disputes “on the basis of the Viet Nam- China agreement on basic principles guiding the settlement of sea-related issues” and on international law.The report also said the two FMs also discussed measures to speed up the implementation of agreements, especially the action plan to realize a Viet Nam-China comprehensive strategic co-operative partnership.
(Photo: Office of the President, Republic of China, Taiwan)
by David Parmer
On July 20, 2013, Taiwan’s president, Ma Ying-jeou was re-elected as president of Taiwan’s ruling KMT (GuoMinDang) party. Ma ran un-opposed, but the heavy voter turnout was taken by some as a sign of approval for the job he is doing in his second term as president. Elected in 2008 and re-elected in 2012, Ma has had a steady and ever-advancing rise to power.
Some highlights:
President Ma is known, and will probably be remembered for his pragmatic handling of relations with the Beijing government. While standing his ground on areas where there are basic differences, he has taken a long-term and pragmatic approach toward relations with the mainland.
Since 2003 the mainland has been Taiwan’s chief trading partner. Bloomberg reported that Chinese tourists spent an estimated $9.8 billion from 2009 to the present. Direct flights which eliminated the necessity of circuitous routes required in the past have certainly positively impacted cross-strait relations and trade.
In a Foreign Press Center briefing on July 22, 2013 in Washington, U.S Assistant Secretary of State for East Asia and the Pacific Daniel Russel observed:
“…we respect and admire the progress that has been made in cross-straight relations under President Ma Ying-jeou’s tenure. We think that the dialog that he has fostered provides benefits to people on both sides of the strait as well as to the region and others in terms of promoting stability and promoting prosperity.”
When President Ma was re-elected to the KMT presidency last week, he was congratulated by Xi Jin Ping in his capacity as head of the Communist Party of China and not as her President. And this underlies the problem, for a meeting to take place between the two leaders, President Ma would have to be recognized as a head of state, and officially Beijing sees Taiwan not as a state, but as a breakaway province. Diplomats have artfully resolved more thorny issues than this with subtle artifice and carefully-worded statements, so maybe before his term is over in 2016, Ma Ying-jeou might meet the president of the PRC in Beijing.
Whatever the outcome, he will surely be remembered as the KMT leader who did the most in 60 years to bring Chinese on both sides of the strait closer together.
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