Pacific News Service, Commentary, George Koo, Posted: Jun 16, 2005
Editor's Note: Blaming China for U.S. economic ills doesn't make sense, the writer says.
SAN FRANCISCO--U.S. Congress, led by Sens. Charles Schumer (D-NY) and Lindsey Graham (R-SC), appears headed on a collision course with China over trade. Ironically, the senators see imposing a tariff duty on inbound Chinese goods as a solution to U.S. economic woes, contrary to the spirit of global free trade.
Any student of economics should be able to skewer the contradictions of this logic with ease. Here are some data to facilitate their exercise.
When Beijing pegged their currency, the Renminbi, to the dollar more than 10 years ago, it was considered a fair peg.
Some three years later, the Asian financial crisis struck and neighboring countries devalued their currencies to keep their economies from drowning. They were most fearful that China would devaluate the Renminbi in step, thus canceling any relief gained in devaluating.
Instead, Beijing hung onto the peg and rode with a subsequently strengthening dollar all the way up -- and then all the way down. To accuse Beijing of artificially weakening its currency, or of manipulation, is to give Beijing credit for knowing more about the twists and turns of the U.S. economy than even Alan Greenspan.
Even though the U.S. trade deficit with China continues to increase and has reached enormous proportions, so has the U.S. deficit with the entire world. The deficit with China now represents 25 percent of the total deficit. In earlier years, the deficit with China was as high as 27.5 percent of the total, but nobody made a fuss then because it was part of a much smaller overall deficit.
This would suggest that the problem lies with us and not in any policy of China.
A decade ago, Japan was accused of being the cause of American economic woes. Now China is being painted with the same brush, even though China is clearly not practicing mercantilism.
China has open borders and encourages foreign investments. Japan never has. China's world trade is actually in reasonable balance, around 95 cents of import for every dollar of export, the U.S. imbalance notwithstanding.
Annually, China buys about twice as much from the European Union and from Japan than they do from the United States. The problem is not an unwillingness on the part of China to buy, but seems to be our unwillingness to sell.
The United States is content to be the dominant supplier of wheat and soybeans to China, but it is reluctant to take maximum advantage of its strengths in high technology.
Washington is very adept at applying the "dual use" label to restrain technology export. Dual use means any conceivable potential non-civilian alternate use. Any hypothetical use represents a threat to the U.S. and could outweigh any economic gain in the sale. Hi-tech sales face tons of red tape effectively hogtying the high tech industry.
Nearly 60 percent of China's exports come from foreign invested enterprises -- in other words, from many of the U.S.-based multinationals. The manufacturer, the distributor and the retailer in the United States are all making money from China's ability to make quality goods at low prices.
The proposed 27.5 percent duty on China-made goods will hurt the bottom lines of American companies and certainly discourage spending by the American consumer, but it will have questionable effect on restoring American jobs. Virtually all of these manufacturing jobs moved offshore decades ago, and are now moving from those places -- Taiwan, Korea, Mexico, Singapore et al. -- to China.
The good senators seem to believe that if the yuan is allowed to float, our economic woes will be over. Actually, a stronger yuan will not do much to close the huge wage rate gap, as much as 20 to 1, between the U.S. and China.
In fact, over the most recent decade, China suffered job losses on an order of magnitude greater than the United States. Over the same period, China's wage scale increased by 300 percent, while the United States showed an increase of 30 percent.
China seems to have faced the challenges of its fast-growing economy better than we in the United States have managed our massive one. Of course, China does not have to contend with continuous billion-dollar hemorrhages like an Iraq war.
In a few years, China will be poised to challenge leading-edge efforts in stem cell research. By then the United States will be the world's leading authority on creationism and intelligent design.
Annually, China is already turning out more than seven times more graduates in engineering and other technical disciplines than the United States. They are amassing the human resources to move up the value chain of manufacturing. We are trying to leave no child behind.
Instead of looking for easy political solutions, we need to address the many systemic problems gnarling the insides of the American economy.
Thursday, June 16, 2005
Wednesday, May 25, 2005
A Full Apology Though Painful Benefits Japan in the Long Run
Recent opinion-editorials and analysis of the tension between China and Japan tend to trivialize the World War II atrocities committed by Japan’s Imperial army and attribute the root of tension to geopolitical power struggle between the two nations.
Overlooked by these western analysts are historical facts. They also fail to notice that anti-Japan protests are coming from all over Asia, not just China, and even among Asian American communities in Los Angeles and San Francisco.
Imagine a serial rapist and mass murderer who suddenly became a model citizen, even a wealthy individual known for community service and philanthropy. Can any length of exemplary conduct expiate his past criminal behavior?
If the statue of limitations can never expire for individuals that committed capital crimes, then why are American commentators so willing to dismiss the World War II atrocities Japan committed? Is it because they fail to comprehend the intensity of Asian feelings on this forgotten Holocaust? Asians can not forget.
The Japanese troops slaughtered innocent civilians at random without provocation and with extreme cruelty. They used live civilians tied to posts and infants tossed in the air for bayonet practice. Officers held contests to see who can behead more prisoners with their Samurai swords.
Women in Nanjing China and elsewhere in Asia were gang-raped and then butchered. Rampaging soldiers derived sadistic jollies by slitting the bellies of pregnant women and extracting the fetuses. Women from occupied countries were forced into sexual slavery to satisfy the lust of the troops.
A Colonel Ishii ran Camp 731 near Harbin China to conduct biological experiments on prisoners that included injection of live bacteria, surgery without anesthetics, and breaking limbs after subjecting victims to extreme cold. Even though victims of Camp 731 experiments included American prisoners of war, Colonel Ishii was never tried for war crimes. The American authorities let him go in exchange for his amassed biological data.
Downed American flyers captured near Chichi Jima towards the end of the war were ritually executed and their livers barbequed and eaten by the troops defending the island. This was reported by Jim Bradley in his book, Flyboy.
These were not isolated acts of violence but results of a deliberate edict from the top and implemented on a massive scale.
The government of Japan has always been quick to point to Hiroshima and Nagasaki in portraying Japan as victim of the war. Their textbooks and official documents do not portray Japan as the aggressor and described none of the atrocities committed during the war, not even those acts photographed by their own troops as take-home souvenirs.
Perhaps not by design, but Japan instigated the latest flare-up in tension by approving another set of textbooks containing the same denial of events in WWII. At the same time, the government actively campaigned for a permanent seat at the UN Security Council.
The reaction from the people of Asian ancestry is visceral. To say that the Beijing government is behind the protest or that this is mere manifestations of power play directed towards Tokyo is patently nonsense.
Since the conclusion of WWII and the adoption of the so called “peace” constitution, Japan has been a phenomenal economic success and a generous donor to the developing nations. They can indeed make a strong case for a permanent seat on the Security Council except for their unwillingness to apologize and make full restitution to their WWII victims. This is akin to the reformed criminal refusing to express regret for his past.
Every decade or so, one of Japan’s prime ministers would express remorse, the latest being Junichiro Koizumi while attending an international forum in Indonesia. But his “heartfelt apology” is not enough. It is not the same as an official act accompanied by a law that mandates the restitution of damages to victims and the introduction of the truth of Japan’s dark past into the textbooks. One has to wonder about his “heartfelt-ness,” when his foreign minister immediately proposes to examine China’s history textbooks for inaccuracies on their depiction of Japan and the war.
China supports Germany’s application for a permanent seat and Japan can learn from Germany’s example. Immediately after WWII, Germany apologized and paid billions in restitution. Germany made no attempt to deny the existence of the Holocaust against the Jews but incorporated that history into their curriculum.
Germany’s action leads to healing and forgiveness. Japan’s inaction leaves a festering wound. The world is reminded of Japan’s past whenever another leftover poison gas canister is uncovered in China, or when Japanese leader makes another visit to the Yasukuni Shrine, or the Ministry of Education approves another textbook with the cover up.
To earn the trust and even affection of their neighbors without reservations, the people of Japan must renounce their past. They can’t renounce their past if they don’t know what happened. By making a full admission of the misconduct of WWII along with full restitution, the government of Japan will finally earn the respect and honor a great nation deserves, a nation that can face the truth and not resort to cover up.
Overlooked by these western analysts are historical facts. They also fail to notice that anti-Japan protests are coming from all over Asia, not just China, and even among Asian American communities in Los Angeles and San Francisco.
Imagine a serial rapist and mass murderer who suddenly became a model citizen, even a wealthy individual known for community service and philanthropy. Can any length of exemplary conduct expiate his past criminal behavior?
If the statue of limitations can never expire for individuals that committed capital crimes, then why are American commentators so willing to dismiss the World War II atrocities Japan committed? Is it because they fail to comprehend the intensity of Asian feelings on this forgotten Holocaust? Asians can not forget.
The Japanese troops slaughtered innocent civilians at random without provocation and with extreme cruelty. They used live civilians tied to posts and infants tossed in the air for bayonet practice. Officers held contests to see who can behead more prisoners with their Samurai swords.
Women in Nanjing China and elsewhere in Asia were gang-raped and then butchered. Rampaging soldiers derived sadistic jollies by slitting the bellies of pregnant women and extracting the fetuses. Women from occupied countries were forced into sexual slavery to satisfy the lust of the troops.
A Colonel Ishii ran Camp 731 near Harbin China to conduct biological experiments on prisoners that included injection of live bacteria, surgery without anesthetics, and breaking limbs after subjecting victims to extreme cold. Even though victims of Camp 731 experiments included American prisoners of war, Colonel Ishii was never tried for war crimes. The American authorities let him go in exchange for his amassed biological data.
Downed American flyers captured near Chichi Jima towards the end of the war were ritually executed and their livers barbequed and eaten by the troops defending the island. This was reported by Jim Bradley in his book, Flyboy.
These were not isolated acts of violence but results of a deliberate edict from the top and implemented on a massive scale.
The government of Japan has always been quick to point to Hiroshima and Nagasaki in portraying Japan as victim of the war. Their textbooks and official documents do not portray Japan as the aggressor and described none of the atrocities committed during the war, not even those acts photographed by their own troops as take-home souvenirs.
Perhaps not by design, but Japan instigated the latest flare-up in tension by approving another set of textbooks containing the same denial of events in WWII. At the same time, the government actively campaigned for a permanent seat at the UN Security Council.
The reaction from the people of Asian ancestry is visceral. To say that the Beijing government is behind the protest or that this is mere manifestations of power play directed towards Tokyo is patently nonsense.
Since the conclusion of WWII and the adoption of the so called “peace” constitution, Japan has been a phenomenal economic success and a generous donor to the developing nations. They can indeed make a strong case for a permanent seat on the Security Council except for their unwillingness to apologize and make full restitution to their WWII victims. This is akin to the reformed criminal refusing to express regret for his past.
Every decade or so, one of Japan’s prime ministers would express remorse, the latest being Junichiro Koizumi while attending an international forum in Indonesia. But his “heartfelt apology” is not enough. It is not the same as an official act accompanied by a law that mandates the restitution of damages to victims and the introduction of the truth of Japan’s dark past into the textbooks. One has to wonder about his “heartfelt-ness,” when his foreign minister immediately proposes to examine China’s history textbooks for inaccuracies on their depiction of Japan and the war.
China supports Germany’s application for a permanent seat and Japan can learn from Germany’s example. Immediately after WWII, Germany apologized and paid billions in restitution. Germany made no attempt to deny the existence of the Holocaust against the Jews but incorporated that history into their curriculum.
Germany’s action leads to healing and forgiveness. Japan’s inaction leaves a festering wound. The world is reminded of Japan’s past whenever another leftover poison gas canister is uncovered in China, or when Japanese leader makes another visit to the Yasukuni Shrine, or the Ministry of Education approves another textbook with the cover up.
To earn the trust and even affection of their neighbors without reservations, the people of Japan must renounce their past. They can’t renounce their past if they don’t know what happened. By making a full admission of the misconduct of WWII along with full restitution, the government of Japan will finally earn the respect and honor a great nation deserves, a nation that can face the truth and not resort to cover up.
Monday, December 20, 2004
Poll Defeat Sinks Taiwan's Leader's Independence Agenda
Pacific News Service, News Analysis, Goerge Koo, Posted: Dec 20, 2004
Taiwan president Chen Shui-bian's failure to capture a majority for his Democratic Progressive Party in the recent parliamentary election was a big blow to his professed goal of taking Taiwan towards independence.
Chen's loss also signals that the time is ripe for serious cross-straits dialogue between Taiwan's leadership and that of the mainland.
Had Chen and his independence-leaning coalition seized control of the parliament they would have struck a historic first. But instead of gaining enough seats to dominate the 225-seat body, Chen's coalition gained just one, for a total of 101 seats.
The opposition led by the Kuomintang (KMT), the Nationalist Party originally from the mainland, held on to a slim majority--115 seats. Independents hold the remaining seats.
Given the momentum of Chen's re-election last March, most observers, including the opposition, believed that control of the parliament was within his grasp. Instead, he got only a 34-percent approval rating, an all-time low.
Throughout his first term, Chen blamed opponents as the root of his ineffectiveness. In the parliamentary campaign, he pledged to step down in two years if given a majority. To no avail.
Chen erroneously assumed that his popularity depended on his taking Taiwan towards independence and downplayed bread-and-butter economic issues.
He tested the idea that Taiwan's people should consider Dr. Sun Yat-sen, founder of modern China, a foreigner. The idea didn't resonate among the public, and he back-pedaled.
He also proposed replacing Mandarin with the local Taiwan dialect as the official language. Mandarin Chinese's importance as a global language is now second only to English. Chen's proposal would have deprived Taiwan's future generations of a built-in edge while pursuing careers on the mainland.
Chen suggested the use of "Taiwan" either in addition or in place of "Republic of China" to mark a clear break from the one-China concept.
He also announced plans to rewrite the constitution in time for a referendum before 2008, obviously aiming to hold hostage the 2008 Olympics in the mainland, as leverage in dealing with Beijing.
Even the Bush administration grew weary of Chen's antics. In late October, Secretary of State Colin Powell went to Beijing and publicly declared: "There is only one China. Taiwan is not independent. It does not enjoy sovereignty as a nation, and that remains our policy, our firm policy."
Powell's hinted support for reunification, shocked the Taipei government. Followed by the failure to capture parliament, Chen had to resign his party chairmanship and promise to focus his remaining term on the general good of Taiwan.
Chen clearly misunderstood the significance of his March re-election, when he won with only a margin of 30,000 votes out of 13 million cast, and under a cloud of suspicion.
The most controversial accusation of wrongdoing was the alleged staging of an assassination attempt on Chen on election eve. "Homemade" bullets (or bullet) mysteriously grazed both Chen and his vice presidential running mate, creating instant sympathy for the alleged victim/candidates.
Crying "foul," the opposition demanded a complete investigation. To date, only the alleged makers of the bullets have been identified. No explanation of the incident has been made.
Periodically, Chen publicly declares his willingness, even eagerness, to establish dialogue with Beijing, only to repudiate such intention with contrary actions and statements days later.
I met President Chen in the winter of 2001 during his first term. He gave me assurances that he wanted to establish ties with Beijing and that he had no intention to move Taiwan toward independence. He fooled me then.
Thanks to Chen and his predecessor, Lee Teng-hui, a whole generation of young people in Taiwan has an increasingly vague appreciation of their Chinese heritage, a confused sense of their ethnicity and an ignorance of their cultural roots.
Now Chen is a lame duck without a parliament in his hip pocket. Perhaps he is finally sincere about wanting to begin talks with Beijing.
Taiwan enjoys an ever-increasing trade surplus with the mainland, reaching $50 billion last year. Even closer economic ties can only help Chen leave a positive legacy. The challenge now is to convince a wary Beijing of his sincerity.
In the meantime, Beijing has announced plans to enact an "anti-secession law" as a deterrent to any attempts of Taiwan to move towards independence. I'm not convinced such a law will resolve the cross-straits impasse.
Whatever Chen's true intentions, I believe a cross-straits dialogue under any auspices is essential. To avoid duplicity or any appearance thereof, the so-called Track II "unofficial" venue would be the best way to begin a genuine dialogue.
Washington could be the ideal host of such private, out-of-public-limelight talks between responsible representatives from both sides of the straits.
Taiwan president Chen Shui-bian's failure to capture a majority for his Democratic Progressive Party in the recent parliamentary election was a big blow to his professed goal of taking Taiwan towards independence.
Chen's loss also signals that the time is ripe for serious cross-straits dialogue between Taiwan's leadership and that of the mainland.
Had Chen and his independence-leaning coalition seized control of the parliament they would have struck a historic first. But instead of gaining enough seats to dominate the 225-seat body, Chen's coalition gained just one, for a total of 101 seats.
The opposition led by the Kuomintang (KMT), the Nationalist Party originally from the mainland, held on to a slim majority--115 seats. Independents hold the remaining seats.
Given the momentum of Chen's re-election last March, most observers, including the opposition, believed that control of the parliament was within his grasp. Instead, he got only a 34-percent approval rating, an all-time low.
Throughout his first term, Chen blamed opponents as the root of his ineffectiveness. In the parliamentary campaign, he pledged to step down in two years if given a majority. To no avail.
Chen erroneously assumed that his popularity depended on his taking Taiwan towards independence and downplayed bread-and-butter economic issues.
He tested the idea that Taiwan's people should consider Dr. Sun Yat-sen, founder of modern China, a foreigner. The idea didn't resonate among the public, and he back-pedaled.
He also proposed replacing Mandarin with the local Taiwan dialect as the official language. Mandarin Chinese's importance as a global language is now second only to English. Chen's proposal would have deprived Taiwan's future generations of a built-in edge while pursuing careers on the mainland.
Chen suggested the use of "Taiwan" either in addition or in place of "Republic of China" to mark a clear break from the one-China concept.
He also announced plans to rewrite the constitution in time for a referendum before 2008, obviously aiming to hold hostage the 2008 Olympics in the mainland, as leverage in dealing with Beijing.
Even the Bush administration grew weary of Chen's antics. In late October, Secretary of State Colin Powell went to Beijing and publicly declared: "There is only one China. Taiwan is not independent. It does not enjoy sovereignty as a nation, and that remains our policy, our firm policy."
Powell's hinted support for reunification, shocked the Taipei government. Followed by the failure to capture parliament, Chen had to resign his party chairmanship and promise to focus his remaining term on the general good of Taiwan.
Chen clearly misunderstood the significance of his March re-election, when he won with only a margin of 30,000 votes out of 13 million cast, and under a cloud of suspicion.
The most controversial accusation of wrongdoing was the alleged staging of an assassination attempt on Chen on election eve. "Homemade" bullets (or bullet) mysteriously grazed both Chen and his vice presidential running mate, creating instant sympathy for the alleged victim/candidates.
Crying "foul," the opposition demanded a complete investigation. To date, only the alleged makers of the bullets have been identified. No explanation of the incident has been made.
Periodically, Chen publicly declares his willingness, even eagerness, to establish dialogue with Beijing, only to repudiate such intention with contrary actions and statements days later.
I met President Chen in the winter of 2001 during his first term. He gave me assurances that he wanted to establish ties with Beijing and that he had no intention to move Taiwan toward independence. He fooled me then.
Thanks to Chen and his predecessor, Lee Teng-hui, a whole generation of young people in Taiwan has an increasingly vague appreciation of their Chinese heritage, a confused sense of their ethnicity and an ignorance of their cultural roots.
Now Chen is a lame duck without a parliament in his hip pocket. Perhaps he is finally sincere about wanting to begin talks with Beijing.
Taiwan enjoys an ever-increasing trade surplus with the mainland, reaching $50 billion last year. Even closer economic ties can only help Chen leave a positive legacy. The challenge now is to convince a wary Beijing of his sincerity.
In the meantime, Beijing has announced plans to enact an "anti-secession law" as a deterrent to any attempts of Taiwan to move towards independence. I'm not convinced such a law will resolve the cross-straits impasse.
Whatever Chen's true intentions, I believe a cross-straits dialogue under any auspices is essential. To avoid duplicity or any appearance thereof, the so-called Track II "unofficial" venue would be the best way to begin a genuine dialogue.
Washington could be the ideal host of such private, out-of-public-limelight talks between responsible representatives from both sides of the straits.
Friday, November 12, 2004
A Personal Lament: Remembering Iris Chang
When death claims someone young, already accomplished and clearly on a trajectory that promises much more, we feel a sense of irreconcilable regret. When the end of life is self inflicted, we are overcome by unbearable sorrow and ponder questions that have no answers. This is how I feel about the passing of Iris Chang.
I regret I didn’t know her better. Our paths crossed at Committee of 100 conferences and at the book signing I organized for her. I saw in her a person driven and passionate about rectifying social injustices that really bothered her.
I had not met Iris when she wrote her first book, Thread of the Silkworm, the story about Qian Xue Sen. Qian is the brilliant physicist, a founder of the Jet Propulsion Lab, who was hounded and persecuted by the hysteria of McCarthyism in the ‘50’s. I never asked her why she wrote the book, but I suspect she was motivated to tell the story of the injustice done to Qian.
The Rape of Nanking was an international bestseller for Iris. The contents were too intense and disturbing for me, but I was gratified that she so effectively brought this atrocity, a forgotten chapter of World War II, to the world’s attention. Her indignation resonated with the resentment all Asians share towards Japan.
Perhaps her crusade to persuade the Japanese government to finally and officially apologize for the many atrocities the Imperial Army committed against humanity in WWII drove her to her next project, the treatment of prisoners of war in Philippines at the hands of their Japanese captors. The victims of the Bataan death march were American soldiers. By the retelling and enlarging her inquiry beyond Nanking, it is as if Iris is saying to the world, “See, the Chinese may have bored the brunt of Japanese barbarism but the Japanese behaved with universal cruelty.”
I learned so much from her last book, The Chinese in America. Reading her chronicle of more than 150 years of history of Chinese Americans, one can see her reason for the deliberate choice of the book’s title. Our lives in America have its ups and downs but to this day we are still treated as foreigners living in a foreign land. I was delighted and proud when Iris selected an excerpt of my review for the jacket of her soft cover edition.
Those of us who have never suffered from the illness of depression can never appreciate the depth of irrational hopelessness the patient experiences. My father had bouts of depression so that I have some inkling of its potential to destroy. I wish I could have told Iris how grateful we are to have had her as our spokesperson, our literary standard bearer.
Despite her short life, she has left us a more meaningful and more lasting legacy than most of us could ever hope to achieve. Dear Iris, may you rest in peace.
I regret I didn’t know her better. Our paths crossed at Committee of 100 conferences and at the book signing I organized for her. I saw in her a person driven and passionate about rectifying social injustices that really bothered her.
I had not met Iris when she wrote her first book, Thread of the Silkworm, the story about Qian Xue Sen. Qian is the brilliant physicist, a founder of the Jet Propulsion Lab, who was hounded and persecuted by the hysteria of McCarthyism in the ‘50’s. I never asked her why she wrote the book, but I suspect she was motivated to tell the story of the injustice done to Qian.
The Rape of Nanking was an international bestseller for Iris. The contents were too intense and disturbing for me, but I was gratified that she so effectively brought this atrocity, a forgotten chapter of World War II, to the world’s attention. Her indignation resonated with the resentment all Asians share towards Japan.
Perhaps her crusade to persuade the Japanese government to finally and officially apologize for the many atrocities the Imperial Army committed against humanity in WWII drove her to her next project, the treatment of prisoners of war in Philippines at the hands of their Japanese captors. The victims of the Bataan death march were American soldiers. By the retelling and enlarging her inquiry beyond Nanking, it is as if Iris is saying to the world, “See, the Chinese may have bored the brunt of Japanese barbarism but the Japanese behaved with universal cruelty.”
I learned so much from her last book, The Chinese in America. Reading her chronicle of more than 150 years of history of Chinese Americans, one can see her reason for the deliberate choice of the book’s title. Our lives in America have its ups and downs but to this day we are still treated as foreigners living in a foreign land. I was delighted and proud when Iris selected an excerpt of my review for the jacket of her soft cover edition.
Those of us who have never suffered from the illness of depression can never appreciate the depth of irrational hopelessness the patient experiences. My father had bouts of depression so that I have some inkling of its potential to destroy. I wish I could have told Iris how grateful we are to have had her as our spokesperson, our literary standard bearer.
Despite her short life, she has left us a more meaningful and more lasting legacy than most of us could ever hope to achieve. Dear Iris, may you rest in peace.
Monday, November 8, 2004
Bush's Re-election May Improve U.S.-China Ties
Pacific News Service, Commentary, George Koo, Posted: Nov 08, 2004
Editor's Note: The economies of the U.S. and China are simply too intertwined for the United States to support Taiwanese calls for independence, the writer says.
The re-election of George W. Bush, bodes well for the future of the bilateral U.S.-China relations. This is not because Bush finds in Hu Jintao, China's leader, a bosom buddy like he has in Russian leader Vladmir Putin.
Rather, part of the reason for closer ties is the increasing U.S. dependence on China to resolve the impasse with North Korea. Even though the United States and the North Koreans still talk pass each other and not at each other, at least the six-country talks, hosted by China, give the parties an opportunity to find resolution.
Secondly, China is now the second-largest holder, next to Japan, of U.S. national debt. A recent offering of treasury notes, when met with lack of foreign participation, sent a distinct chill down the spine of intermediaries that handle such transactions.
From the U.S. perspective, deliberate belligerence toward a major financier of the American government would not seem prudent nor in our national interest.
Deterioration of the dollar is also contrary to China's national interest, and thus China is constrained to prop up the U.S. economy by continuing to buy U.S. treasuries. Mutually assured destruction of the two major economies is not a prospect anyone could contemplate with equanimity.
The bilateral relation could have been in for a much tougher sledding had John Kerry been elected, not because John Kerry is a dedicated China basher but because the China bashers from the Republican right wing would have been unleashed.
As they did in the Clinton years, the China bashers in Congress used real and imagined grievances against China to find fault with the administration in power. With Bush returning to power, the right wing will stay tethered. The left wing bashers will find China bashing, without the connivance of the right, like firing duds.
Just before the election, Secretary of State Colin Powell, went to Beijing. He surprised everyone by declaring, "There is only one China. Taiwan is not independent. It does not enjoy sovereignty as a nation, and that remains our policy, our firm policy."
Needless to say, this caused a great deal of consternation and anguish in Taiwan Chen Shui-bian's government. The senior American official in Taipei, Douglas Paal, tried to assuage Chen's anxiety by clarifying that Powell really meant "peaceful resolution" and not "peaceful unification."
Actually according to the transcript released by the State Department of an interview with CNN International Powell used "reunification," which is the first time ever an American official has directly suggested such an outcome.
Is the Bush administration giving a signal that it is ready to depart from its past position of "strategic ambiguity"? Or is Colin Powell seeking to leave a personal legacy? Most observers do not expect Powell to serve a second term.
After Powell's return to the United States, the administration seemed to have reverted to ambiguity as various spokesmen tried to overlay different spins on what Powell really meant.
China is not above practicing some ambiguity of its own. Just before Election Day, former vice premier and minister of foreign affairs, Qian Qichen blasted Bush's "doctrine of unilateralism" on the front page of China Daily.
Since Qian, now retired, is a private citizen, his views are not supposed to reflect Beijing's official position. Officially, President Hu Jintao congratulated Bush on his re-election and expressed desire for even closer cooperation.
Of course, no one is as masterful at conveying ambiguity as President Chen Shui-bian of Taiwan. In his recent national day speech, he again expressed the desire to hold dialogue across the strait.
His speech did not surprise the White House since Chen was thoughtful enough to send an advanced copy to Bush for review -- action not exactly becoming of someone claiming to be head of a sovereign state. Chen, it seems, understood the limits of his independent stance.
Naturally, the White House and Powell applaud Chen's overture to the mainland. Unfortunately, Beijing flatly rejects Chen's gesture as lacking in sincerity. Beijing's distrust is grounded in Chen's insistence that Taiwan is an independent nation.
The solution to the cross-strait tension is really quite simple. The White House need only to tell Chen to behave and that any talk of independence is inflammatory and not in the U.S. national interest.
The threat of withdrawal of American support will help Chen focus on the benefits of discussing cross-strait integration rather than continuing the rhetoric for independence, which can only lead to tragedy.
Editor's Note: The economies of the U.S. and China are simply too intertwined for the United States to support Taiwanese calls for independence, the writer says.
The re-election of George W. Bush, bodes well for the future of the bilateral U.S.-China relations. This is not because Bush finds in Hu Jintao, China's leader, a bosom buddy like he has in Russian leader Vladmir Putin.
Rather, part of the reason for closer ties is the increasing U.S. dependence on China to resolve the impasse with North Korea. Even though the United States and the North Koreans still talk pass each other and not at each other, at least the six-country talks, hosted by China, give the parties an opportunity to find resolution.
Secondly, China is now the second-largest holder, next to Japan, of U.S. national debt. A recent offering of treasury notes, when met with lack of foreign participation, sent a distinct chill down the spine of intermediaries that handle such transactions.
From the U.S. perspective, deliberate belligerence toward a major financier of the American government would not seem prudent nor in our national interest.
Deterioration of the dollar is also contrary to China's national interest, and thus China is constrained to prop up the U.S. economy by continuing to buy U.S. treasuries. Mutually assured destruction of the two major economies is not a prospect anyone could contemplate with equanimity.
The bilateral relation could have been in for a much tougher sledding had John Kerry been elected, not because John Kerry is a dedicated China basher but because the China bashers from the Republican right wing would have been unleashed.
As they did in the Clinton years, the China bashers in Congress used real and imagined grievances against China to find fault with the administration in power. With Bush returning to power, the right wing will stay tethered. The left wing bashers will find China bashing, without the connivance of the right, like firing duds.
Just before the election, Secretary of State Colin Powell, went to Beijing. He surprised everyone by declaring, "There is only one China. Taiwan is not independent. It does not enjoy sovereignty as a nation, and that remains our policy, our firm policy."
Needless to say, this caused a great deal of consternation and anguish in Taiwan Chen Shui-bian's government. The senior American official in Taipei, Douglas Paal, tried to assuage Chen's anxiety by clarifying that Powell really meant "peaceful resolution" and not "peaceful unification."
Actually according to the transcript released by the State Department of an interview with CNN International Powell used "reunification," which is the first time ever an American official has directly suggested such an outcome.
Is the Bush administration giving a signal that it is ready to depart from its past position of "strategic ambiguity"? Or is Colin Powell seeking to leave a personal legacy? Most observers do not expect Powell to serve a second term.
After Powell's return to the United States, the administration seemed to have reverted to ambiguity as various spokesmen tried to overlay different spins on what Powell really meant.
China is not above practicing some ambiguity of its own. Just before Election Day, former vice premier and minister of foreign affairs, Qian Qichen blasted Bush's "doctrine of unilateralism" on the front page of China Daily.
Since Qian, now retired, is a private citizen, his views are not supposed to reflect Beijing's official position. Officially, President Hu Jintao congratulated Bush on his re-election and expressed desire for even closer cooperation.
Of course, no one is as masterful at conveying ambiguity as President Chen Shui-bian of Taiwan. In his recent national day speech, he again expressed the desire to hold dialogue across the strait.
His speech did not surprise the White House since Chen was thoughtful enough to send an advanced copy to Bush for review -- action not exactly becoming of someone claiming to be head of a sovereign state. Chen, it seems, understood the limits of his independent stance.
Naturally, the White House and Powell applaud Chen's overture to the mainland. Unfortunately, Beijing flatly rejects Chen's gesture as lacking in sincerity. Beijing's distrust is grounded in Chen's insistence that Taiwan is an independent nation.
The solution to the cross-strait tension is really quite simple. The White House need only to tell Chen to behave and that any talk of independence is inflammatory and not in the U.S. national interest.
The threat of withdrawal of American support will help Chen focus on the benefits of discussing cross-strait integration rather than continuing the rhetoric for independence, which can only lead to tragedy.
Monday, October 4, 2004
A Liberal View of Neoconservatism and Vice Versa
This summer, my wife and I sailed the Aegean Sea while on vacation and went to see the famous Roman ruins at Ephesus on the coast of Turkey. When we stood before a broken statue of a Roman hero with one foot on a globe, the local guide explained that from the inscription on the pedestal, we can tell that the Romans already knew the earth was round by 200 AD. Whereupon I experienced an epiphany--or as President Bush might say, Ah nearly pee’d in mah pants.
Standing on the main street of a once great Roman port, I finally appreciated the hurt inflicted on human progress by religious dogma. After Constantine converted to Christianity and became supreme emperor of the Roman Empire early in the 4th century, Christianity became the accepted religion of the realm, and the western civilization plunged into the Dark Ages. It wasn’t until Copernicus and Galileo came along in late 16th century and early 17th century did we again understand that God did not put us in the center of universe and the earth really is round.
During the interim thousand years, human kind lived in misery, forgetting or forsaking the technical advances made by civilizations that preceded them. This backsliding took place, because the all-powerful church forbade free inquiry, open discussion and any departure from religious dogma. To enforce orthodoxy, the church wielded threats of excommunication, inquisition, declaration of heresy and burning at the stake. No lines of reason were accepted except the official line from the church. With no thinking out the box, there was no innovation. Improvement in living standards crawled until the Age of Renaissance.
Today it is happening again. This time it’s not so much the organized church as the doings of the bible quoting, gun toting neoconservatives. The Rush Limbaughs, Ann Coulters, Bill O’Reillys and other fellow travelers are so glib with their sound bites that they are succeeding in convincing America that earth is again flat and Darwin is evil reincarnate for bad mouthing the ‘science’ of creationism.
Scarier still are the neoconservative zealots who have emerged inside the power infrastructure and assume senior positions inside the Bush Administration--or as Pat Buchanan says on the jacket of his latest book, they have hijacked the administration. These neocons include Dick Cheney, Vice President of the U.S., Donald Rumsfeld, Secretary of Defense and Paul Wolfowitz, Deputy Secretary of Defense. They think the United States has reached the point where we have the power to impose democracy on any other country. They think only a world of democracies can lead to peace and security. They chose Iraq as their first project.
Alas for the neocons, and for America and for the world, they have grossly miscalculated the power of “shock and awe.” While the U.S. high tech weaponry can blast the enemy to smithereens, ultimately no smart bombs can replace the soldiers needed to take control on the ground. We don’t really know if the neocons even considered the challenge of post-war occupation. It is clear that if they did plan for the occupation, they did it badly. Based on reported incidences of insurgent attacks on the so-called coalition forces over a 30-day period in September and assuming 12-hour days, I estimate that the (~ 90% American) coalition forces experienced one attack every ten minutes somewhere in Iraq--hardly the warm welcome for liberators of Iraq that the neocons have in mind. Since then the frequency of attacks has increased.
In addition to losing over 1000 American lives in Iraq, we are also winning no friends. Even the Iraqi people see no advantage to the American presence. Many are comparing the stable calm under Saddam’s oppressive regime to the daily chaotic and life threatening risks under the American administration. The Iraqi people may have trouble coming to terms with the freedom so easily conferred by President Bush—tough to celebrate liberty while ducking American bombs aimed at erasing insurgents from their midst.
The most infuriating and also most dangerous aspect of the Bush Administration is the stubborn insistence of their infallibility. Despite the increase of attacks from insurgents, the administration insists that the situation in Iraq is improving daily. Others are calling Iraq another quagmire—a word not in Bush’s vocabulary. Despite no evidence of weapons of mass destruction, no evidence of linkage between Saddam and bin Laden, and no proof of any intention of Saddam ever attacking the U.S.—as if he really has the wherewithal—the Bush team just continues to parade the same already discredited flimsy data and repeats the bald faced assertions, as if false assumptions can become fact through repetition. They can’t admit they have been wrong and they have no solution for getting out of the mess. They don’t seem to understand that if the U.S. can bog down in a country of twenty some million, then surely the neoconservative doctrine of hegemony begs for revision.
The administration has even justified their preemptive action as a way of preventing all the evil deeds that Saddam might have been contemplating. The implication of this new doctrine to preemption has to be chilling to other nations. How do they know the mighty United States won’t someday decide that they are next on the list of possible evil doers?
President Bush likes to proclaim that it is his solemn duty to protect America and ensure its safety. He has done so by not taking Osama bin Laden seriously before and after 9-11 and let him get away. Instead he has created many more enemies in the Moslem world with the continued American presence in Iraq. It’s hard to see how he expects to make friends with the images of atrocities of Abu Ghraib and indefinite incarceration of captives of uncertain offenses in Guantanamo. His administration has the arrogance not to see the need to apologize or explain their actions. Periodically, the Homeland Security Department heightens the color alert which we later find out is based on stale intelligence gathered years ago. Somehow, I don’t find any of this reassuring.
I am writing this before the November election, therefore with some trepidation. If Bush is defeated then I can boldly proclaim that his presidency has been, hands down, the worst disaster in the history of United States. The course he set forth, if not corrected, will surely lead the United States to irretrievable ruin. After all how many Iraq’s can the U.S. engaged in before the treasury is emptied and dollar rendered worthless?
President Bush has repeatedly placed ideology above other considerations and acted impervious to facts, data or analysis. Paul O’Neill, who served as his first Secretary of Treasury, concluded about Bush thus, “Ideology is a lot easier, because you don’t have to know anything or search for anything. You already know the answer to everything. It’s not penetrable by facts. It’s absolutism.” The problem with this approach is, of course, tax cuts proceeds despite huge budget deficit and drilling for oil despite putting fragile ecosystem at risk. In pursuing his ideology, Bush seemed oblivious to the host of problems he will leave behind for future generations.
Alarm over the harm Bush is wreaking on America is not just coming from the left. Pat Buchanan, dean of Reagan conservatism, has just published a book, Where the Right Went Wrong, blasting the “hijacking” of the presidency by the neoconservatives. John Eisenhower, son of former President Dwight Eisenhower and lifelong Republican, has resigned from the party and openly declared for John Kerry. Ron Reagan, son of former president, spoke at the Democratic convention decrying Bush’s dogmatic opposition to stem cell research. For these men to breakaway, they must be responding to schism of runaway proportions.
With such erosion of his base of support, it is difficult to imagine what sort of last minute Karl Rovian ruse could be staged to keep him in office. Nonetheless, I believe trepidation for my personal well being is justified if Bush is re-elected. As his attorney general, John Ashcroft has shown over again his disdain for the niceties of civil liberties. To arrest and hold anyone, Ashcroft simply needs to declare the person an enemy combatant and all due process can be suspended. At last count, he has detained and incarcerated some 5000 and after three years has convicted exactly zero among them. While no combatant, I am certainly an enemy of the ideologues in the Bush administration.
All my life I considered myself (gasp) a liberal, and I am proud to be true to my own standard. I have never looked up the conventional definition for a liberal. I personally define a liberal as a progressive thinker open to new ideas with the ability to see many sides to an issue. A liberal values human dignity and bleeds from the heart for the less fortunate. A liberal has no patience with hypocrisy, whether it is someone espousing self-congratulatory righteousness in public while popping pills in private, preaching abstinence in public while molesting young boys in private or appearing as a do-gooder in public while stealing the public blind. A liberal like me thinks of Bush’s “compassionate conservative” as contradiction in terms that can’t deceive even the town moron.
The neocons in the media, the aforementioned Limbaugh et al., have been successful in rendering “liberal” into a dirty word. Turn about is fair play. I define neoconpoop as a neoconservative nincompoop, someone so imbued with dogma that he/she is immune to other people’s ideas, unable to change even when dictated by circumstances or when their doctrine is leading to disaster. And neoconpoopism is simply the unholy discharge from a neoconpoop, a stream of repetitious mantra emanating with predictable regularity until they either become accepted wisdom or until doomsday, whichever comes first.
Standing on the main street of a once great Roman port, I finally appreciated the hurt inflicted on human progress by religious dogma. After Constantine converted to Christianity and became supreme emperor of the Roman Empire early in the 4th century, Christianity became the accepted religion of the realm, and the western civilization plunged into the Dark Ages. It wasn’t until Copernicus and Galileo came along in late 16th century and early 17th century did we again understand that God did not put us in the center of universe and the earth really is round.
During the interim thousand years, human kind lived in misery, forgetting or forsaking the technical advances made by civilizations that preceded them. This backsliding took place, because the all-powerful church forbade free inquiry, open discussion and any departure from religious dogma. To enforce orthodoxy, the church wielded threats of excommunication, inquisition, declaration of heresy and burning at the stake. No lines of reason were accepted except the official line from the church. With no thinking out the box, there was no innovation. Improvement in living standards crawled until the Age of Renaissance.
Today it is happening again. This time it’s not so much the organized church as the doings of the bible quoting, gun toting neoconservatives. The Rush Limbaughs, Ann Coulters, Bill O’Reillys and other fellow travelers are so glib with their sound bites that they are succeeding in convincing America that earth is again flat and Darwin is evil reincarnate for bad mouthing the ‘science’ of creationism.
Scarier still are the neoconservative zealots who have emerged inside the power infrastructure and assume senior positions inside the Bush Administration--or as Pat Buchanan says on the jacket of his latest book, they have hijacked the administration. These neocons include Dick Cheney, Vice President of the U.S., Donald Rumsfeld, Secretary of Defense and Paul Wolfowitz, Deputy Secretary of Defense. They think the United States has reached the point where we have the power to impose democracy on any other country. They think only a world of democracies can lead to peace and security. They chose Iraq as their first project.
Alas for the neocons, and for America and for the world, they have grossly miscalculated the power of “shock and awe.” While the U.S. high tech weaponry can blast the enemy to smithereens, ultimately no smart bombs can replace the soldiers needed to take control on the ground. We don’t really know if the neocons even considered the challenge of post-war occupation. It is clear that if they did plan for the occupation, they did it badly. Based on reported incidences of insurgent attacks on the so-called coalition forces over a 30-day period in September and assuming 12-hour days, I estimate that the (~ 90% American) coalition forces experienced one attack every ten minutes somewhere in Iraq--hardly the warm welcome for liberators of Iraq that the neocons have in mind. Since then the frequency of attacks has increased.
In addition to losing over 1000 American lives in Iraq, we are also winning no friends. Even the Iraqi people see no advantage to the American presence. Many are comparing the stable calm under Saddam’s oppressive regime to the daily chaotic and life threatening risks under the American administration. The Iraqi people may have trouble coming to terms with the freedom so easily conferred by President Bush—tough to celebrate liberty while ducking American bombs aimed at erasing insurgents from their midst.
The most infuriating and also most dangerous aspect of the Bush Administration is the stubborn insistence of their infallibility. Despite the increase of attacks from insurgents, the administration insists that the situation in Iraq is improving daily. Others are calling Iraq another quagmire—a word not in Bush’s vocabulary. Despite no evidence of weapons of mass destruction, no evidence of linkage between Saddam and bin Laden, and no proof of any intention of Saddam ever attacking the U.S.—as if he really has the wherewithal—the Bush team just continues to parade the same already discredited flimsy data and repeats the bald faced assertions, as if false assumptions can become fact through repetition. They can’t admit they have been wrong and they have no solution for getting out of the mess. They don’t seem to understand that if the U.S. can bog down in a country of twenty some million, then surely the neoconservative doctrine of hegemony begs for revision.
The administration has even justified their preemptive action as a way of preventing all the evil deeds that Saddam might have been contemplating. The implication of this new doctrine to preemption has to be chilling to other nations. How do they know the mighty United States won’t someday decide that they are next on the list of possible evil doers?
President Bush likes to proclaim that it is his solemn duty to protect America and ensure its safety. He has done so by not taking Osama bin Laden seriously before and after 9-11 and let him get away. Instead he has created many more enemies in the Moslem world with the continued American presence in Iraq. It’s hard to see how he expects to make friends with the images of atrocities of Abu Ghraib and indefinite incarceration of captives of uncertain offenses in Guantanamo. His administration has the arrogance not to see the need to apologize or explain their actions. Periodically, the Homeland Security Department heightens the color alert which we later find out is based on stale intelligence gathered years ago. Somehow, I don’t find any of this reassuring.
I am writing this before the November election, therefore with some trepidation. If Bush is defeated then I can boldly proclaim that his presidency has been, hands down, the worst disaster in the history of United States. The course he set forth, if not corrected, will surely lead the United States to irretrievable ruin. After all how many Iraq’s can the U.S. engaged in before the treasury is emptied and dollar rendered worthless?
President Bush has repeatedly placed ideology above other considerations and acted impervious to facts, data or analysis. Paul O’Neill, who served as his first Secretary of Treasury, concluded about Bush thus, “Ideology is a lot easier, because you don’t have to know anything or search for anything. You already know the answer to everything. It’s not penetrable by facts. It’s absolutism.” The problem with this approach is, of course, tax cuts proceeds despite huge budget deficit and drilling for oil despite putting fragile ecosystem at risk. In pursuing his ideology, Bush seemed oblivious to the host of problems he will leave behind for future generations.
Alarm over the harm Bush is wreaking on America is not just coming from the left. Pat Buchanan, dean of Reagan conservatism, has just published a book, Where the Right Went Wrong, blasting the “hijacking” of the presidency by the neoconservatives. John Eisenhower, son of former President Dwight Eisenhower and lifelong Republican, has resigned from the party and openly declared for John Kerry. Ron Reagan, son of former president, spoke at the Democratic convention decrying Bush’s dogmatic opposition to stem cell research. For these men to breakaway, they must be responding to schism of runaway proportions.
With such erosion of his base of support, it is difficult to imagine what sort of last minute Karl Rovian ruse could be staged to keep him in office. Nonetheless, I believe trepidation for my personal well being is justified if Bush is re-elected. As his attorney general, John Ashcroft has shown over again his disdain for the niceties of civil liberties. To arrest and hold anyone, Ashcroft simply needs to declare the person an enemy combatant and all due process can be suspended. At last count, he has detained and incarcerated some 5000 and after three years has convicted exactly zero among them. While no combatant, I am certainly an enemy of the ideologues in the Bush administration.
All my life I considered myself (gasp) a liberal, and I am proud to be true to my own standard. I have never looked up the conventional definition for a liberal. I personally define a liberal as a progressive thinker open to new ideas with the ability to see many sides to an issue. A liberal values human dignity and bleeds from the heart for the less fortunate. A liberal has no patience with hypocrisy, whether it is someone espousing self-congratulatory righteousness in public while popping pills in private, preaching abstinence in public while molesting young boys in private or appearing as a do-gooder in public while stealing the public blind. A liberal like me thinks of Bush’s “compassionate conservative” as contradiction in terms that can’t deceive even the town moron.
The neocons in the media, the aforementioned Limbaugh et al., have been successful in rendering “liberal” into a dirty word. Turn about is fair play. I define neoconpoop as a neoconservative nincompoop, someone so imbued with dogma that he/she is immune to other people’s ideas, unable to change even when dictated by circumstances or when their doctrine is leading to disaster. And neoconpoopism is simply the unholy discharge from a neoconpoop, a stream of repetitious mantra emanating with predictable regularity until they either become accepted wisdom or until doomsday, whichever comes first.
Sunday, May 9, 2004
The Natural Law of Outsourcing
For this election year, offshore “outsourcing” of jobs has become the lightening rod for rants from politicians, labor leaders, pundits and TV personalities.
As rhetoric heats up and emotions overflow, the frustrated out-of-work individual becomes susceptible to suggestions for irrational behavior. Hate crimes spring from irresponsible and irrational exhortations by persons in positions of influence.
In 1982, Vincent Chin, a Chinese American, was beaten to death with a baseball bat in the hands of two laid off white autoworkers who blamed their misfortune on the success of Japanese cars. After September 11, a number of Sikh Americans were shot to death simply because their turbans and beards triggered the vigilante in some deranged minds.
No wonder when prominent figures in America express outrage at the seeming unstoppable flow of jobs to Asia, Asian Americans cower and fade into the background.
To the economists, outsourcing is as natural as the falling apple bopping Issac Newton on the head. The analogous law in economics to gravity is called the law of comparative advantage.
Simply stated, the law says jobs will naturally go to where the task can be done better for less. Or, the job may simply disappear because of technological advances.
When multinational corporations outsource offshore, of course they are driven to reduce cost or, as detractors say, driven by greed. But making money is not only their fiduciary duty, it also creates jobs.
By moving less demanding and lower skilled jobs to third parties offshore, the savings can be reinvested in research or product development, i.e., higher paying jobs.
Frequently in today’s world, cutting cost is the only way to stay in business and thus preserve other jobs. The alternative is to close the door altogether.
In some places, such as China, multinationals may find it necessary to locate some high paying jobs there in order to be closer to the market. Revenue from their offshore business benefits the health of the overall company.
Silicon Valley venture capitalists now favor business plans with an offshore component because these companies will have improved odds of survival. Offshore outsourcing makes it possible to start some businesses that otherwise could not be economically viable.
Goods made offshore keep the prices affordable for the general public and create a progression of jobs to support the movement of the goods. Stable and low prices keep the economy growing without inflation, which obviously is also good for job creation.
Offshore outsourcing also leads to insourcing of jobs. As the recipients of the offshore businesses grow, they begin to establish offices and operations in the U.S. Japanese carmakers in Tennessee and Mississippi and more recently China’s Haier in South Carolina are examples of the reverse flow in jobs.
Recent but unpublicized findings reveal that the difference between number of jobs outsourced and those insourced is actually getting smaller.
Many have observed that by far the bigger cause for job reduction is due to gains in productivity. Wall Street Journal concluded that the U.S. lost far fewer jobs due to automation and productivity gains than the more backward economies such as Brazil and China.
The advent of automation in self-operated elevators wiped out hundreds of thousands of jobs for elevator operators. No one would now argue that the loss of those jobs as a bad thing.
While personally tragic to the person displaced, the outsourcing trend is inevitable and is actually a positive sign that the economy is allocating resources efficiently.
Protecting jobs per se is self defeating. Had we insisted on keeping the elevator operators, our operating costs would be higher, our buildings would be less efficient and we would have fewer resources to deploy for more productive pursuits.
Some pundits are justifying protectionism by repudiating the validity of the law of comparative advantage—as if water can now flow uphill. The near term solution has to be in anticipating the economic transitions and provide training and assistance to those affected.
Longer term solution clearly rests with making sure that the U.S. continues to be the source of ideas and innovations. Commercialization of new ideas is the top of the economic pyramid beneath which a foundation of new jobs are created.
Historically no other country has captured the essence of this truth as well as the U.S. and no where in the U.S. epitomizes this better than Silicon Valley.
To maintain that trend and stay on top of the heap, the U.S. must improve the education opportunities for the young. To continue the generation of innovations, the U.S. must not let anti-terrorism interfere with her ability to attract the best and brightest from rest of the world.
Rather than lamenting the outflow of jobs, America’s leaders should be much more concerned about the indications that the U.S. is losing its leadership grip on science and technology.
_____________________________________
Co-authored with Dennis Wu
As rhetoric heats up and emotions overflow, the frustrated out-of-work individual becomes susceptible to suggestions for irrational behavior. Hate crimes spring from irresponsible and irrational exhortations by persons in positions of influence.
In 1982, Vincent Chin, a Chinese American, was beaten to death with a baseball bat in the hands of two laid off white autoworkers who blamed their misfortune on the success of Japanese cars. After September 11, a number of Sikh Americans were shot to death simply because their turbans and beards triggered the vigilante in some deranged minds.
No wonder when prominent figures in America express outrage at the seeming unstoppable flow of jobs to Asia, Asian Americans cower and fade into the background.
To the economists, outsourcing is as natural as the falling apple bopping Issac Newton on the head. The analogous law in economics to gravity is called the law of comparative advantage.
Simply stated, the law says jobs will naturally go to where the task can be done better for less. Or, the job may simply disappear because of technological advances.
When multinational corporations outsource offshore, of course they are driven to reduce cost or, as detractors say, driven by greed. But making money is not only their fiduciary duty, it also creates jobs.
By moving less demanding and lower skilled jobs to third parties offshore, the savings can be reinvested in research or product development, i.e., higher paying jobs.
Frequently in today’s world, cutting cost is the only way to stay in business and thus preserve other jobs. The alternative is to close the door altogether.
In some places, such as China, multinationals may find it necessary to locate some high paying jobs there in order to be closer to the market. Revenue from their offshore business benefits the health of the overall company.
Silicon Valley venture capitalists now favor business plans with an offshore component because these companies will have improved odds of survival. Offshore outsourcing makes it possible to start some businesses that otherwise could not be economically viable.
Goods made offshore keep the prices affordable for the general public and create a progression of jobs to support the movement of the goods. Stable and low prices keep the economy growing without inflation, which obviously is also good for job creation.
Offshore outsourcing also leads to insourcing of jobs. As the recipients of the offshore businesses grow, they begin to establish offices and operations in the U.S. Japanese carmakers in Tennessee and Mississippi and more recently China’s Haier in South Carolina are examples of the reverse flow in jobs.
Recent but unpublicized findings reveal that the difference between number of jobs outsourced and those insourced is actually getting smaller.
Many have observed that by far the bigger cause for job reduction is due to gains in productivity. Wall Street Journal concluded that the U.S. lost far fewer jobs due to automation and productivity gains than the more backward economies such as Brazil and China.
The advent of automation in self-operated elevators wiped out hundreds of thousands of jobs for elevator operators. No one would now argue that the loss of those jobs as a bad thing.
While personally tragic to the person displaced, the outsourcing trend is inevitable and is actually a positive sign that the economy is allocating resources efficiently.
Protecting jobs per se is self defeating. Had we insisted on keeping the elevator operators, our operating costs would be higher, our buildings would be less efficient and we would have fewer resources to deploy for more productive pursuits.
Some pundits are justifying protectionism by repudiating the validity of the law of comparative advantage—as if water can now flow uphill. The near term solution has to be in anticipating the economic transitions and provide training and assistance to those affected.
Longer term solution clearly rests with making sure that the U.S. continues to be the source of ideas and innovations. Commercialization of new ideas is the top of the economic pyramid beneath which a foundation of new jobs are created.
Historically no other country has captured the essence of this truth as well as the U.S. and no where in the U.S. epitomizes this better than Silicon Valley.
To maintain that trend and stay on top of the heap, the U.S. must improve the education opportunities for the young. To continue the generation of innovations, the U.S. must not let anti-terrorism interfere with her ability to attract the best and brightest from rest of the world.
Rather than lamenting the outflow of jobs, America’s leaders should be much more concerned about the indications that the U.S. is losing its leadership grip on science and technology.
_____________________________________
Co-authored with Dennis Wu
Tuesday, March 23, 2004
Can Chen Shui Bian Save Taiwan's Future?
Pacific News Service, Commentary, George Koo, Posted: Mar 23, 2004
Editor's Note: Chen Shui Bian barely won the controversial election in Taiwan, and is now facing a country beset with problems, among them a shrinking economy and an angry China. All the while, demands for a recount continue.
Out of nearly 13 million votes cast for the next president of Taiwan, incumbent Chen Shui Bian squeaked through with a margin of less than 30,000 votes. Some would consider this nothing short of miraculous, since only a year ago Chen was as much as 25 percentage points behind his opponent in the polls.
While attention has focused on his narrow victory after an assassination attempt that many suspect to have been staged, little notice has been paid to the failure of Chen's controversial referendum on Taiwan's relationship with China.
During the campaigning, Chen had declared that winning the election without carrying the referendum was meaningless. The failed referendum -- to beef up missile defense against China -- is seen as failure of Chen's advocacy for Taiwan's independence.
What will Chen do now?
First, he will have to overcome the hostility of a large segment of the population still resentful of the manner he prevailed. Next, he will have to address the economic problems confronting Taiwan.
Chen has proven to be an extremely wily and articulate politician. Given time, he should be able to charm many of his enemies into accepting his well-meaning but perhaps disguised intentions.
But dealing effectively with Taiwan's economy is another matter. During his first term of office, Taiwan's unemployment rate increased from 2.9 percent to 5 percent, and per capita gross domestic product not only did not grow but actually shrank by more than 3 percent.
To reverse the downward economic trend, Chen will have to deal with Beijing, by far Taiwan's most important economic partner. According to his own government statistics, over 60,000 Taiwan businesses have made investments in China.
By establishing direct transportation linkages instead of indirect routes via third parties such as Hong Kong, Taiwan businesses would save close to $1.5 billion annually in air transportation costs and $860 million in ocean shipping costs.
A think tank in Taiwan anticipates a conservative boost of $600 million a year to Taiwan's economy if Taiwan opens to tourists from the mainland.
To affect these economic remedies, Chen will have to reach out to Beijing. Since he has no more re-election pressures, Chen is in the position to make these needed moves.
However, leaders in Beijing are wary of Chen's past maneuvers and deceptions, and simply do not trust him. To establish rapprochement with Beijing in his second term of office will be a formidable challenge.
In the meantime, Chen's opponent, Lien Chan, accused Chen of cheating, asked for annulment of this election and demanded a recount. Chen has ceded to the demands, but he has much to answer for. Some 330,000 ballots were disqualified, more than 11 times the winning margin. This is between three to five times higher than ballot disqualifications in past elections.
Lien also accused Chen of staging an assassination attempt on his own life, a classic Chinese strategy called kurouji, which loosely translates as deception via self-inflicted wounds. The alleged assassination attempt occurred the day before voters went to the polls.
The apparent shooting allowed Chen to call a national security alert and activated some 200,000 military and police personnel, taking them out of the voting process. Taiwan's military is known to support the opposing Nationalist party.
Now that Chen is the apparent winner, though pressure for a recount continues in parliament, the hawks in Beijing are reportedly becoming impatient and pressuring China's moderate leadership to take military action. If the hawks should ever prevail, the resulting conflict across the strait will be tragic, not only for China and Taiwan but most likely for the United States and neighboring Asian nations.
Taiwan's latest controversial exercise in democracy is destabilizing Taiwan and raising the temperature across the straits. It is too early to tell how the tension will be resolved.
Editor's Note: Chen Shui Bian barely won the controversial election in Taiwan, and is now facing a country beset with problems, among them a shrinking economy and an angry China. All the while, demands for a recount continue.
Out of nearly 13 million votes cast for the next president of Taiwan, incumbent Chen Shui Bian squeaked through with a margin of less than 30,000 votes. Some would consider this nothing short of miraculous, since only a year ago Chen was as much as 25 percentage points behind his opponent in the polls.
While attention has focused on his narrow victory after an assassination attempt that many suspect to have been staged, little notice has been paid to the failure of Chen's controversial referendum on Taiwan's relationship with China.
During the campaigning, Chen had declared that winning the election without carrying the referendum was meaningless. The failed referendum -- to beef up missile defense against China -- is seen as failure of Chen's advocacy for Taiwan's independence.
What will Chen do now?
First, he will have to overcome the hostility of a large segment of the population still resentful of the manner he prevailed. Next, he will have to address the economic problems confronting Taiwan.
Chen has proven to be an extremely wily and articulate politician. Given time, he should be able to charm many of his enemies into accepting his well-meaning but perhaps disguised intentions.
But dealing effectively with Taiwan's economy is another matter. During his first term of office, Taiwan's unemployment rate increased from 2.9 percent to 5 percent, and per capita gross domestic product not only did not grow but actually shrank by more than 3 percent.
To reverse the downward economic trend, Chen will have to deal with Beijing, by far Taiwan's most important economic partner. According to his own government statistics, over 60,000 Taiwan businesses have made investments in China.
By establishing direct transportation linkages instead of indirect routes via third parties such as Hong Kong, Taiwan businesses would save close to $1.5 billion annually in air transportation costs and $860 million in ocean shipping costs.
A think tank in Taiwan anticipates a conservative boost of $600 million a year to Taiwan's economy if Taiwan opens to tourists from the mainland.
To affect these economic remedies, Chen will have to reach out to Beijing. Since he has no more re-election pressures, Chen is in the position to make these needed moves.
However, leaders in Beijing are wary of Chen's past maneuvers and deceptions, and simply do not trust him. To establish rapprochement with Beijing in his second term of office will be a formidable challenge.
In the meantime, Chen's opponent, Lien Chan, accused Chen of cheating, asked for annulment of this election and demanded a recount. Chen has ceded to the demands, but he has much to answer for. Some 330,000 ballots were disqualified, more than 11 times the winning margin. This is between three to five times higher than ballot disqualifications in past elections.
Lien also accused Chen of staging an assassination attempt on his own life, a classic Chinese strategy called kurouji, which loosely translates as deception via self-inflicted wounds. The alleged assassination attempt occurred the day before voters went to the polls.
The apparent shooting allowed Chen to call a national security alert and activated some 200,000 military and police personnel, taking them out of the voting process. Taiwan's military is known to support the opposing Nationalist party.
Now that Chen is the apparent winner, though pressure for a recount continues in parliament, the hawks in Beijing are reportedly becoming impatient and pressuring China's moderate leadership to take military action. If the hawks should ever prevail, the resulting conflict across the strait will be tragic, not only for China and Taiwan but most likely for the United States and neighboring Asian nations.
Taiwan's latest controversial exercise in democracy is destabilizing Taiwan and raising the temperature across the straits. It is too early to tell how the tension will be resolved.
Thursday, January 1, 2004
Book Review: China Revealed: The West Encounters the Celestial Empire
Out of Italy comes a recently released chronicle of the West’s fascination and fixation with China. China Revealed is not just a masterful collection of illustrations and photos copied from museums and archives around the world that would dress up any living room and delight the eye. The laconically written text traces the historical encounters of the West and China from early Arab traders in the 9th century to when the last emperor of the Qing dynasty left Beijing’s forbidden city to become a puppet in the Japanese imperial design for China just before the outbreak of World War II.
In thirty chapters and 330 large-format pages, Guadalupi reviews how the early enthrallment with a mystic China evolved into a nineteen century target for every western nation with colonial ambitions. Early contacts are initiated by the Vatican desirous of establishing an alliance with the invading Mongols to battle the Islamic forces and the tempting potential of converting the horde to Christianity. Later contacts are consequences of the need to satisfy the western world’s hunger to trade for China’s tea, silk and porcelain and trade flourished when the West found opium a suitable substitute for silver as the medium of exchange.
Marco Polo and others including a number of historically obscure or forgotten figures come to life by the author’s deft descriptions. This is a hugely entertaining and valuable reference for anyone wishing to understand the historical China as seen by western eyes. The book is so rich in information that the reader will have to read it many times in order to absorb it all.
I came across this book by accident at one of the Costco stores and bought the last two copies from this location, one to give away. I have not been able to find the book from various online sources except for one UK based site. According to this site, the book was released on November, 2003 so there should be copies around for those wishing to learn how China has been shaped and influenced by the West.
In thirty chapters and 330 large-format pages, Guadalupi reviews how the early enthrallment with a mystic China evolved into a nineteen century target for every western nation with colonial ambitions. Early contacts are initiated by the Vatican desirous of establishing an alliance with the invading Mongols to battle the Islamic forces and the tempting potential of converting the horde to Christianity. Later contacts are consequences of the need to satisfy the western world’s hunger to trade for China’s tea, silk and porcelain and trade flourished when the West found opium a suitable substitute for silver as the medium of exchange.
Marco Polo and others including a number of historically obscure or forgotten figures come to life by the author’s deft descriptions. This is a hugely entertaining and valuable reference for anyone wishing to understand the historical China as seen by western eyes. The book is so rich in information that the reader will have to read it many times in order to absorb it all.
I came across this book by accident at one of the Costco stores and bought the last two copies from this location, one to give away. I have not been able to find the book from various online sources except for one UK based site. According to this site, the book was released on November, 2003 so there should be copies around for those wishing to learn how China has been shaped and influenced by the West.
Wednesday, November 5, 2003
Taiwan Ignores China at Its Own Economic Peril
Pacific News Service, Commentary, George Koo, Posted: Nov 05, 2003
Editor's Note: Taiwan's impressive economic gains are poisoned by its refusal to increase ties to mainland China. U.S. influence in the region is similarly diluted by divisive cross-strait relations.
Taiwan President Chen Shui-bian flew halfway around the world to shake hands with Secretary of State Colin Powell in Panama, but he won't or can't reach across the Taiwan straits to Beijing. Unfortunately for the United States, potential American influence in Asia is being diluted by this contradiction.
Recently, Taiwan's Ministry of Economic Affairs organized a business alliance conference to attract foreign direct investments. Absent were representatives from China, Taiwan's biggest economic partner.
A parade of multinationals dutifully marched up the stage to announce plans to invest in Taiwan. Particularly impressive was the message that Taiwan has moved up the high tech food chain toward increasingly higher value-added economic activity.
Taiwan pioneered the idea of making semiconductor devices as a service for others, and now owns up to three quarters of the world's semiconductor fabrication capacity that is for hire. A complete industry sprang up around the now-renowned Taiwan Semiconductor Manufacturing Corporation, a multibillion dollar company. Because of TSMC, Taiwan has become a major semiconductor power to rival the United States, Japan and Europe.
Fabless Semiconductor Association came to the Taipei conference to announce the formation of its first office outside the United States, in Taipei. A "fabless" semiconductor company concentrates on the design of new chips for new applications and contracts the making of the devices to the likes of TSMC.
Taiwan has made an even more amazing leap forward in the manufacture of flat panel displays, capturing over 30 percent of the world market by 2002 and surpassing Japan to become the second largest supplier of the displays, behind South Korea.
Flat panel displays are used in laptops and notebook PCs, camcorders and other electronic gadgets. Their next huge application will be on hang-on-the-wall color TVs.
Yet, Taiwan's future in both semiconductors and flat panel displays rests squarely on its symbiotic relationship with China. China just surpassed Japan as the major supplier of IT (information technology) products to the United States. More than 65 percent of these products were exported by Taiwan companies operating on the mainland.
At the business alliance conference, Vice Minister Yen-shiang Shih was asked if Taiwan could maintain its $30 billion trade surplus with China -- an annual surplus that has more than covered Taiwan's deficit with the rest of the world.
Yen candidly replied that Taiwan will continue to provide the high tech computer innards and consumer electronic appliances that are assembled and exported from China. So long as China keeps its competitive manufacturing edge, Taiwan will continue to have an outlet for its sophisticated semiconductor chips and flat panel displays.
Of course, it's not just in China's export of high tech products that Taiwan serves as the crucial partner. Taiwan also has the insider advantage in serving China's vast domestic market. From fast food to fashion to consumer electronics, Taiwan's presence can be seen in all walks of China.
More than a million Taiwanese now live and work in China. Thousands of young Taiwanese flock to Beijing or Shanghai for graduate school. Despite these developments, the Taipei government would rather look elsewhere for its economic partnerships.
According to Taiwan's own statistics, only 145,000 mainland professionals have been permitted to visit the island in last 10 years. About twice that number of visitors goes from Taiwan to mainland China every month.
Taiwan companies have invested over $100 billion in China. China has made zero investments in Taiwan because local regulations forbid it.
Tourists out of China already represent the third largest in the world, but none are allowed to visit Taiwan. Every year about 10 million mainlanders visit Hong Kong. If one out of 10 were to visit Taiwan, it would more than double the number of tourists Taiwan receives annually. Taiwan's economy would easily get a billion-dollar shot in the arm.
At the conference, Taiwan made clear its desire to develop its tourist industry. Yet the most obvious source of tourism, from across the strait, was ignored. In contrast, about two out of every three Taiwanese who go abroad for vacation went to the mainland.
China's economic boom has benefited everybody in the region, not just Taiwan. Trade with neighboring Asian countries is increasing at 50 to 100 percent per year. Everybody seems to understand the importance of China as part of the integrated regional economy except the Taiwan government.
In action and in rhetoric, Chen Shui-bian tends to dismiss China's importance and point to Taiwan's own supposedly more democratic and by implication superior economic system. The United States has heretofore supported Chen's delusion. Instead, the Bush administration should be telling Taiwan to listen to the wise counsel of Singapore's senior statesman Lee Kuan Yew.
Recently, the former prime minister publicly urged the current Taiwan government to face economic reality and play less politics in its cross-straits relations. Whether it's high tech, low tech or no tech, Taiwan's future lies in maximizing its relationship with China, not minimizing it.
Editor's Note: Taiwan's impressive economic gains are poisoned by its refusal to increase ties to mainland China. U.S. influence in the region is similarly diluted by divisive cross-strait relations.
Taiwan President Chen Shui-bian flew halfway around the world to shake hands with Secretary of State Colin Powell in Panama, but he won't or can't reach across the Taiwan straits to Beijing. Unfortunately for the United States, potential American influence in Asia is being diluted by this contradiction.
Recently, Taiwan's Ministry of Economic Affairs organized a business alliance conference to attract foreign direct investments. Absent were representatives from China, Taiwan's biggest economic partner.
A parade of multinationals dutifully marched up the stage to announce plans to invest in Taiwan. Particularly impressive was the message that Taiwan has moved up the high tech food chain toward increasingly higher value-added economic activity.
Taiwan pioneered the idea of making semiconductor devices as a service for others, and now owns up to three quarters of the world's semiconductor fabrication capacity that is for hire. A complete industry sprang up around the now-renowned Taiwan Semiconductor Manufacturing Corporation, a multibillion dollar company. Because of TSMC, Taiwan has become a major semiconductor power to rival the United States, Japan and Europe.
Fabless Semiconductor Association came to the Taipei conference to announce the formation of its first office outside the United States, in Taipei. A "fabless" semiconductor company concentrates on the design of new chips for new applications and contracts the making of the devices to the likes of TSMC.
Taiwan has made an even more amazing leap forward in the manufacture of flat panel displays, capturing over 30 percent of the world market by 2002 and surpassing Japan to become the second largest supplier of the displays, behind South Korea.
Flat panel displays are used in laptops and notebook PCs, camcorders and other electronic gadgets. Their next huge application will be on hang-on-the-wall color TVs.
Yet, Taiwan's future in both semiconductors and flat panel displays rests squarely on its symbiotic relationship with China. China just surpassed Japan as the major supplier of IT (information technology) products to the United States. More than 65 percent of these products were exported by Taiwan companies operating on the mainland.
At the business alliance conference, Vice Minister Yen-shiang Shih was asked if Taiwan could maintain its $30 billion trade surplus with China -- an annual surplus that has more than covered Taiwan's deficit with the rest of the world.
Yen candidly replied that Taiwan will continue to provide the high tech computer innards and consumer electronic appliances that are assembled and exported from China. So long as China keeps its competitive manufacturing edge, Taiwan will continue to have an outlet for its sophisticated semiconductor chips and flat panel displays.
Of course, it's not just in China's export of high tech products that Taiwan serves as the crucial partner. Taiwan also has the insider advantage in serving China's vast domestic market. From fast food to fashion to consumer electronics, Taiwan's presence can be seen in all walks of China.
More than a million Taiwanese now live and work in China. Thousands of young Taiwanese flock to Beijing or Shanghai for graduate school. Despite these developments, the Taipei government would rather look elsewhere for its economic partnerships.
According to Taiwan's own statistics, only 145,000 mainland professionals have been permitted to visit the island in last 10 years. About twice that number of visitors goes from Taiwan to mainland China every month.
Taiwan companies have invested over $100 billion in China. China has made zero investments in Taiwan because local regulations forbid it.
Tourists out of China already represent the third largest in the world, but none are allowed to visit Taiwan. Every year about 10 million mainlanders visit Hong Kong. If one out of 10 were to visit Taiwan, it would more than double the number of tourists Taiwan receives annually. Taiwan's economy would easily get a billion-dollar shot in the arm.
At the conference, Taiwan made clear its desire to develop its tourist industry. Yet the most obvious source of tourism, from across the strait, was ignored. In contrast, about two out of every three Taiwanese who go abroad for vacation went to the mainland.
China's economic boom has benefited everybody in the region, not just Taiwan. Trade with neighboring Asian countries is increasing at 50 to 100 percent per year. Everybody seems to understand the importance of China as part of the integrated regional economy except the Taiwan government.
In action and in rhetoric, Chen Shui-bian tends to dismiss China's importance and point to Taiwan's own supposedly more democratic and by implication superior economic system. The United States has heretofore supported Chen's delusion. Instead, the Bush administration should be telling Taiwan to listen to the wise counsel of Singapore's senior statesman Lee Kuan Yew.
Recently, the former prime minister publicly urged the current Taiwan government to face economic reality and play less politics in its cross-straits relations. Whether it's high tech, low tech or no tech, Taiwan's future lies in maximizing its relationship with China, not minimizing it.
Thursday, September 4, 2003
Don't Blame China for America's Economic Ills
Pacific News Service, Commentary, George Koo, Posted: Sep 04, 2003
Editor's Note: Like it did with Japan some 20 years ago, America seems to be looking East for an excuse for its own troubled economy. This time, China and its currency, the renminbi, are the scapegoat.
If the recent action of members of Congress bemoaning the loss of U.S. jobs is any indication, the United States is suffering from another anxiety attack and loss of confidence. These lawmakers accused China, in particular, of sabotaging the American economy by unfairly undervaluing its currency, the renminbi, against the dollar.
Bear in mind that China first pegged its currency to the dollar almost 10 years ago. When, three years later in 1997, Asian economies suffered a flight of capital and drastic devaluation of local currencies, China was universally praised for holding fast to the peg: it refused to devalue the renminbi in order to protect its share of export trade. (Interestingly, China's exports inexorably marched on despite a stronger currency relative to its faltering neighbors.)
Since then the dollar has weakened against world's major currencies, including the renminbi. Now, suddenly, forcing China to raise the value of the renminbi is being touted as the magical cure to America's economic ills.
This is somewhat reminiscent of America's ire with Japan some 20 years ago. At the time, Japan also held a huge trade surplus and was accused of keeping its yen artificially weak relative to the dollar.
Japan acquiesced and raised the value of the yen. But that did not solve America's economic woes in the early 1980s. Detroit screamed the loudest about the "unfair" competition, but failed to recapture lost market share even as Japanese carmakers raised their prices.
Some long-forgotten member of Congress even smashed a Japanese-made VCR on the steps of Capitol Hill to great fanfare, but this contributed not a whit to solving America's economic problems.
Whereas Japan was a closed economy that discouraged foreign investment and therefore outside participation in its economic growth, China has been open to foreign direct investment and attracted more of such investment than any other nation last year.
Companies invest in China by building manufacturing facilities there. China provides a productive work force at stable wage rates; one that works hard, learns fast and makes a wage high enough to raise its living standards.
Companies that have invested in China make more money by being able to export high quality goods at reasonable prices.
American consumers benefit by being able to buy these goods at a reasonable price and thus improve their standard of living without having to deal with the chaos of escalating inflation.
It has been a winning arrangement for all.
Those who claim that China is enjoying an unfair advantage with an artificially weak renminbi have failed to explain how any currency revaluation is going to bring jobs back to the United States.
Consider the most extravagant claim: The renminbi is being artificially depressed by 40 percent. Even if the renminbi were adjusted upward by 40 percent -- from 8.28 yuan to one U.S. dollar, to 5 yuan to $1 -- the average cost advantage of the Chinese worker over the U.S. worker would drop from 20 to 1 to a "mere" 12 to 1. How much net gain in jobs for the United States will result from that?
The reason China has become the factory for the world is because companies that used to supply the U.S. market from Taiwan, Korea and Mexico have moved their production to China to remain in business. The truth is that most of those jobs have not been in the United States for decades.
Some economists point out that China buys in the global markets almost as much as it sells. China buys products for domestic consumption, and it also purchases intermediate materials that need to be converted into export products. An economically strong China is looked upon as a possible tractor to pull the world out of the economic muck.
Wringing one's hands because we have been beaten in terms of cost and productivity won't solve anything. As recent as three years ago, we were bragging about the superiority of American technology and productivity. We need to get back to that frame of mind.
Forcing the renminbi off the peg is tantamount to destabilizing China's economy. And nobody wins from a weakened Chinese economy.
Editor's Note: Like it did with Japan some 20 years ago, America seems to be looking East for an excuse for its own troubled economy. This time, China and its currency, the renminbi, are the scapegoat.
If the recent action of members of Congress bemoaning the loss of U.S. jobs is any indication, the United States is suffering from another anxiety attack and loss of confidence. These lawmakers accused China, in particular, of sabotaging the American economy by unfairly undervaluing its currency, the renminbi, against the dollar.
Bear in mind that China first pegged its currency to the dollar almost 10 years ago. When, three years later in 1997, Asian economies suffered a flight of capital and drastic devaluation of local currencies, China was universally praised for holding fast to the peg: it refused to devalue the renminbi in order to protect its share of export trade. (Interestingly, China's exports inexorably marched on despite a stronger currency relative to its faltering neighbors.)
Since then the dollar has weakened against world's major currencies, including the renminbi. Now, suddenly, forcing China to raise the value of the renminbi is being touted as the magical cure to America's economic ills.
This is somewhat reminiscent of America's ire with Japan some 20 years ago. At the time, Japan also held a huge trade surplus and was accused of keeping its yen artificially weak relative to the dollar.
Japan acquiesced and raised the value of the yen. But that did not solve America's economic woes in the early 1980s. Detroit screamed the loudest about the "unfair" competition, but failed to recapture lost market share even as Japanese carmakers raised their prices.
Some long-forgotten member of Congress even smashed a Japanese-made VCR on the steps of Capitol Hill to great fanfare, but this contributed not a whit to solving America's economic problems.
Whereas Japan was a closed economy that discouraged foreign investment and therefore outside participation in its economic growth, China has been open to foreign direct investment and attracted more of such investment than any other nation last year.
Companies invest in China by building manufacturing facilities there. China provides a productive work force at stable wage rates; one that works hard, learns fast and makes a wage high enough to raise its living standards.
Companies that have invested in China make more money by being able to export high quality goods at reasonable prices.
American consumers benefit by being able to buy these goods at a reasonable price and thus improve their standard of living without having to deal with the chaos of escalating inflation.
It has been a winning arrangement for all.
Those who claim that China is enjoying an unfair advantage with an artificially weak renminbi have failed to explain how any currency revaluation is going to bring jobs back to the United States.
Consider the most extravagant claim: The renminbi is being artificially depressed by 40 percent. Even if the renminbi were adjusted upward by 40 percent -- from 8.28 yuan to one U.S. dollar, to 5 yuan to $1 -- the average cost advantage of the Chinese worker over the U.S. worker would drop from 20 to 1 to a "mere" 12 to 1. How much net gain in jobs for the United States will result from that?
The reason China has become the factory for the world is because companies that used to supply the U.S. market from Taiwan, Korea and Mexico have moved their production to China to remain in business. The truth is that most of those jobs have not been in the United States for decades.
Some economists point out that China buys in the global markets almost as much as it sells. China buys products for domestic consumption, and it also purchases intermediate materials that need to be converted into export products. An economically strong China is looked upon as a possible tractor to pull the world out of the economic muck.
Wringing one's hands because we have been beaten in terms of cost and productivity won't solve anything. As recent as three years ago, we were bragging about the superiority of American technology and productivity. We need to get back to that frame of mind.
Forcing the renminbi off the peg is tantamount to destabilizing China's economy. And nobody wins from a weakened Chinese economy.
Wednesday, May 14, 2003
Book Review - “The Chinese in America” by Iris Chang
NCM, George Koo, Posted: May 14, 2003
Iris Chang in her latest book, The Chinese in America, examines the phenomenon of an immigrant community still regarded as foreign despite having lived in America for more than 150 years. To Iris, the Chinese experience in the United States has been more of a series of repetitive cycles rather than a monotonic progression from victims of brutal abuse to becoming widely accepted as a “model minority.”
Chang chronicles early experiences that branded the Chinese. In 1877, there was Denis Kearney, a demagogue who rose to political power by fanning an anti-Chinese hysteria, accusing them of stealing the white man’s livelihood. In 1950, Senator Joseph McCarthy began a witchhunt to look for communists under every bed and an inquiry on “who lost China” to communism. The Chinese American community especially felt the heavy siege of suspicion and glare of McCarthyism.
In 1853, the conviction of killers for the murder of Chinese immigrant Ling Sing was overturned on the grounds that the “inferior caste of people who were non-citizens,” meaning Chinese, cannot testify against whites. In 1982, Ronald Ebens and Michael Nitz used a baseball bat to bash Vincent Chin to death. Even though Chin was born in America, Ebens and Nitz did not spend even one night in jail.
Ling Sing’s case prompted the phrase “not a Chinaman’s chance.” After nearly 130 years, Vincent Chin’s chances fared no better.
Everett Drumwright, then U.S. consul in Hong Kong, concluded in his Foreign Service report, filed in 1955, that nearly all Chinese in America were illegal aliens capable of all sorts of dastardly deeds including spying for China.
FBI Director J. Edgar Hoover also subscribed to the notion that the Chinese community teemed with spies from China. Later, FBI analyst Paul Moore was to refine Hoover’s theory by suggesting that China recruited spies differently relying on “ethnic affinity” rather than the customary blandishments of cash and sex.
Moore’s testimonies before the House Select Committee headed by Congressman Christopher Cox contributed to a sensational report alleging that more than 10,000 PRC company offices in the United States are intelligence gathering stations and all Chinese in the United States regardless of citizenship status are potential spies.
Opponents of President William Clinton used the Cox Report to accuse him of losing nuclear warhead missile technology to China. In response, his administration promptly offered Dr. Wen Ho Lee as the designated sacrificial lamb, the book suggests.
Lee was thrown in solitary confinement for months on 59 charges, all but one of which were later thrown out. He pled guilty to one count in exchange for time spent in jail. One can argue that Lee’s experience was an improvement over the fate of his predecessor scapegoats that were lynched, burned or shot by periodic rampaging mobs in the late 1800’s.
The author also drew positive parallels. Yung Wing became the first Chinese to graduate from a major university (Yale in 1854) and opened the door for others. In the early 1900’s, Chan Chung Wing became the first Chinese to practice law in California. Bessie Jeong was the first Chinese American woman to graduate from Stanford and became a practicing physician.
By breaking the mold, the trailblazers paved the way for others to follow. Today, accomplished Chinese Americans occupy every profession from Tsung Dao Lee and Chen Ning Yang (Nobel laureate physicists), to I.M. Pei (architect), Yo-Yo Ma (music), David Ho (medicine), Elaine Chao (government), to Gary Locke (politics), Charles Wang (software), Jerry Yang (Internet) and many more.
Of course, all Chinese Americans should read this book to truly understand how their roots in America were planted. They will be better braced for the next time they face a random invitation to “go back to where they come from”—even if this means Peoria. This book is not just for Chinese Americans but also for all newly arrived immigrants and conscientious citizens that care to appreciate the deficiencies of American democracy.
To read Iris Chang’s book is to understand that the only recourse is to stand for what is right and vigorously protect the principles that have made America a diverse nation from which its unique greatness sprang.
Iris Chang in her latest book, The Chinese in America, examines the phenomenon of an immigrant community still regarded as foreign despite having lived in America for more than 150 years. To Iris, the Chinese experience in the United States has been more of a series of repetitive cycles rather than a monotonic progression from victims of brutal abuse to becoming widely accepted as a “model minority.”
Chang chronicles early experiences that branded the Chinese. In 1877, there was Denis Kearney, a demagogue who rose to political power by fanning an anti-Chinese hysteria, accusing them of stealing the white man’s livelihood. In 1950, Senator Joseph McCarthy began a witchhunt to look for communists under every bed and an inquiry on “who lost China” to communism. The Chinese American community especially felt the heavy siege of suspicion and glare of McCarthyism.
In 1853, the conviction of killers for the murder of Chinese immigrant Ling Sing was overturned on the grounds that the “inferior caste of people who were non-citizens,” meaning Chinese, cannot testify against whites. In 1982, Ronald Ebens and Michael Nitz used a baseball bat to bash Vincent Chin to death. Even though Chin was born in America, Ebens and Nitz did not spend even one night in jail.
Ling Sing’s case prompted the phrase “not a Chinaman’s chance.” After nearly 130 years, Vincent Chin’s chances fared no better.
Everett Drumwright, then U.S. consul in Hong Kong, concluded in his Foreign Service report, filed in 1955, that nearly all Chinese in America were illegal aliens capable of all sorts of dastardly deeds including spying for China.
FBI Director J. Edgar Hoover also subscribed to the notion that the Chinese community teemed with spies from China. Later, FBI analyst Paul Moore was to refine Hoover’s theory by suggesting that China recruited spies differently relying on “ethnic affinity” rather than the customary blandishments of cash and sex.
Moore’s testimonies before the House Select Committee headed by Congressman Christopher Cox contributed to a sensational report alleging that more than 10,000 PRC company offices in the United States are intelligence gathering stations and all Chinese in the United States regardless of citizenship status are potential spies.
Opponents of President William Clinton used the Cox Report to accuse him of losing nuclear warhead missile technology to China. In response, his administration promptly offered Dr. Wen Ho Lee as the designated sacrificial lamb, the book suggests.
Lee was thrown in solitary confinement for months on 59 charges, all but one of which were later thrown out. He pled guilty to one count in exchange for time spent in jail. One can argue that Lee’s experience was an improvement over the fate of his predecessor scapegoats that were lynched, burned or shot by periodic rampaging mobs in the late 1800’s.
The author also drew positive parallels. Yung Wing became the first Chinese to graduate from a major university (Yale in 1854) and opened the door for others. In the early 1900’s, Chan Chung Wing became the first Chinese to practice law in California. Bessie Jeong was the first Chinese American woman to graduate from Stanford and became a practicing physician.
By breaking the mold, the trailblazers paved the way for others to follow. Today, accomplished Chinese Americans occupy every profession from Tsung Dao Lee and Chen Ning Yang (Nobel laureate physicists), to I.M. Pei (architect), Yo-Yo Ma (music), David Ho (medicine), Elaine Chao (government), to Gary Locke (politics), Charles Wang (software), Jerry Yang (Internet) and many more.
Of course, all Chinese Americans should read this book to truly understand how their roots in America were planted. They will be better braced for the next time they face a random invitation to “go back to where they come from”—even if this means Peoria. This book is not just for Chinese Americans but also for all newly arrived immigrants and conscientious citizens that care to appreciate the deficiencies of American democracy.
To read Iris Chang’s book is to understand that the only recourse is to stand for what is right and vigorously protect the principles that have made America a diverse nation from which its unique greatness sprang.
Friday, March 28, 2003
For China, Iraq Conflict is America's War
Pacific News Service, Commentary, George Koo, Posted: Mar 28, 2003
Editor's Note: China is officially opposed to the war in Iraq, but recent actions show China is most concerned with improving its relationship with the United States and keeping its giant economy growing.
On a recent business trip to Shanghai I asked people about the conflict with Iraq. They had little to say. To the Chinese, this is America's war.
China's top advisory body recently expressed "shock and concern" with the war. But unlike France and Russia, which have strongly opposed the war with belligerent statements and U.N. Security Council veto threats, China's response has been relatively mild.
It has never been in the Chinese character to tell another nation what to do. China long ago concluded that confrontation with the United States was not in its national interest. After Sept. 11, 2001, China actively sought common cause with Washington in fighting terrorism. China's former president, Jiang Zemin, visited President George Bush at his Crawford, Texas, ranch in the fall of 2002 to seemingly seal the alliance.
Since then China has gone out of its way to cultivate friendly relations with the United States.
As the U.S.-led military action in Iraq began, a spokesman from Beijing's Foreign Ministry expressed "regret and disappointment" and indicated that the invasion "violates norms of international behavior." His comments, read during a regularly scheduled briefing, did not criticize the United States by name.
After the first missiles landed on Baghdad -- shown live on China Central Television -- reaction on the street was considerably stronger. The U.S. bombing of the Chinese embassy in Belgrade seemed to bubble to the fore, as most concluded that, in the words of one man, "the U.S. is being a big bully again."
Officially, China continues to work within the U.N. charter and in cooperation with other nations to look for a peaceful solution. Clearly, China is reluctant to take any lead in opposition to the unilateral U.S. action. In any case, events on the ground and in Iraq's airspace are likely to overtake any further and futile attempts at diplomacy.
Looming on the horizon is the threat from North Korea, which the Bush administration seems to think is within China's capability to resolve unilaterally. China has demurred, but offers to assist the U.S. in multilateral diplomacy -- alas, not a strong suit for the Bush administration.
China's priority remains its domestic economy, which must continue to grow at 7 to 8 percent per year in order to create the jobs needed to soak up laid-off workers and rural migrants.
Unfortunately, China's economy is also fueled by oil, and this spells potential future conflict with the United States. In 2000, 31 percent of the oil consumed by China was imported. Within 30 years, China's dependence on imported oil is expected to increase to 84 percent. Much of the world's oil is located in the Gulf region.
China can only hope that by the time competition for oil arises, the United States will be too busy or too exhausted to pick another fight.
Editor's Note: China is officially opposed to the war in Iraq, but recent actions show China is most concerned with improving its relationship with the United States and keeping its giant economy growing.
On a recent business trip to Shanghai I asked people about the conflict with Iraq. They had little to say. To the Chinese, this is America's war.
China's top advisory body recently expressed "shock and concern" with the war. But unlike France and Russia, which have strongly opposed the war with belligerent statements and U.N. Security Council veto threats, China's response has been relatively mild.
It has never been in the Chinese character to tell another nation what to do. China long ago concluded that confrontation with the United States was not in its national interest. After Sept. 11, 2001, China actively sought common cause with Washington in fighting terrorism. China's former president, Jiang Zemin, visited President George Bush at his Crawford, Texas, ranch in the fall of 2002 to seemingly seal the alliance.
Since then China has gone out of its way to cultivate friendly relations with the United States.
As the U.S.-led military action in Iraq began, a spokesman from Beijing's Foreign Ministry expressed "regret and disappointment" and indicated that the invasion "violates norms of international behavior." His comments, read during a regularly scheduled briefing, did not criticize the United States by name.
After the first missiles landed on Baghdad -- shown live on China Central Television -- reaction on the street was considerably stronger. The U.S. bombing of the Chinese embassy in Belgrade seemed to bubble to the fore, as most concluded that, in the words of one man, "the U.S. is being a big bully again."
Officially, China continues to work within the U.N. charter and in cooperation with other nations to look for a peaceful solution. Clearly, China is reluctant to take any lead in opposition to the unilateral U.S. action. In any case, events on the ground and in Iraq's airspace are likely to overtake any further and futile attempts at diplomacy.
Looming on the horizon is the threat from North Korea, which the Bush administration seems to think is within China's capability to resolve unilaterally. China has demurred, but offers to assist the U.S. in multilateral diplomacy -- alas, not a strong suit for the Bush administration.
China's priority remains its domestic economy, which must continue to grow at 7 to 8 percent per year in order to create the jobs needed to soak up laid-off workers and rural migrants.
Unfortunately, China's economy is also fueled by oil, and this spells potential future conflict with the United States. In 2000, 31 percent of the oil consumed by China was imported. Within 30 years, China's dependence on imported oil is expected to increase to 84 percent. Much of the world's oil is located in the Gulf region.
China can only hope that by the time competition for oil arises, the United States will be too busy or too exhausted to pick another fight.
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