Chinese Monetary Policy

On Friday, the People's Bank of China (PBOC), the equivalent of the Fed in the US, raised the bank deposit reserve ratio from 9 to 9.5%, increasing reserves at banks. This is the 3rd time this year China's central bank has performed this kind of monetary policy, and it will, in effect, decrease the amount of excess liquidity. Interest rates have also been hiked twice since April.

Chinese Automotive Industry

Many US companies are earning profit in China. US corporate profits in China passed $2 billion in the first 2 quarters of the year. In 1999, only 57% of US firms were profitable in China. In 1999, only 0.1% of Chinese owned automobiles. In 2004, it was 2.2%. GM is leading in the auto market, as its sales climbed 36.7% from January to September to 645,000 vehicles. The top 4 car companies in China based on units sold are GM, followed by Volkswagen, Hyundai, and Toyota. Prior to 2005, Volkswagen was the leader in China. GM was able to reach the number one position by forming joint ventures with domestic firms that make minivehicles. Despite getting a late start in the Chinese market, Toyota, now #4 in units sold, is expected to overtake GM between 2008 and 2010.

Make me ugly!

What a strange story from the China Daily - a Chongqing woman is asking plastic surgeons to make her ugly.

A young woman from Chongqing sought plastic surgery to make her face less attractive recently, after being crossed in love. The 23-year-old woman's sweetheart left her weeks ago to stay with another woman. Although the two had been in love for six years, her ex-boyfriend feared that her too-beautiful face might lure many other men and thus he didn't feel safe staying with her. She came to hate all men after being courted by many others, prompting her desire for the surgery. But the doctors refused to co-operate, saying she had a mental disorder and needed to seek help from psychotherapists.

Freedom of Religion with Chinese characteristics

"Giving away Bibles for free is a crime in China, according to a verdict recently handed down in the case of a House Church leader. Pastor Wang Zaiqing, a prominent Chinese House Church leader in Anhui Province was sentenced on Oct. 9 to two years in prison on the charge of 'Illegal Business Practices,' and fined 100,000 Yuan ($12,500.00). In addition, all the books in his home, and the funds used to print them, were confiscated. Pastor Wang was crippled at the age of 5. He became a Christian in 1993, and later became very well-known House Church for preaching and starting House Churches in several provinces around Anhui Province."

Wang Zaiqing's story brings up interesting ethical dilemmas, especially for a Christian. Should one always obey the commands of the government? China does allow for freedom of religion, but it is limited in that one may only publicly exercise this right in a government sanctioned houses of worship. Privately, one may carry on his/her religious beliefs inside the home. So the question arises, why does Wang see the need to disobey Chinese government officials? Why not just worship God in one of the government sanctioned churches? I know that most (if not all) of the leaders in the Chinese church are really followers of Christ. I met one while living in China. She was educated at a seminary in America, and her faith was real. So why not follow the rules?

On the other hand, the Chinese government does restrict religious practices. One cannot worship freely. You cannot start your own church without a permit. Most sanctioned churches only allow the use of a piano, but most do not allow the use of other musical instruments. Churches sing songs from a sanctioned hymn book, so pastors or music directors cannot introduce new songs each week. Some churches appear to be limited in the number of songs they can sing. Is this truly freedom of religion? No, it is not. Perhaps the Chinese government believes it is, but at best you can only call it Freedom of Religion "with Chinese characteristics".

When should people follow the laws of their government? The Bible commands us to respect political leaders. However, is there ever a time when civil disobedience is justified? Yes, just look at Bonhoeffer and others in the German resistance movement during the time of the Holocaust and the Hitler regime in Germany. I think most would agree that was an appropriate time. And obviously, Chairman Mao Zedong believed civil disobedience was appropriate in the 1940's. George Washington believed in it during the 1770's. And, it appears, Pastor Wang believes today is also an appropriate time. What do you think?

Sacked Statistician

"China's top statistician was sacked after anti-corruption investigations implicated him in the Shanghai pension fund scandal, a spokesman for the National Bureau of Statistics said on Thursday....More than 100 central government anti-corruption investigators have descended on Shanghai in recent months to investigate money reportedly drained from the city's 10 billion yuan ($1.25 billion) social security fund for illicit loans and investments....The probe led to the dismissal of Chen Liangyu as Shanghai Communist Party boss last month. Chen was the first member of the party's 24-member decision-making Politburo to be sacked since 1995 when Beijing party chief Chen Xitong was purged and jailed for corruption. The two Chens are not related."

Democracy, Tibet Style

Xinhua news is reporting that Zhang Qingli, a Shandong native who recently worked in Xinjiang, has been "elected" secretary of the "Communist Party of China (CPC) Committee of the Tibet Autonomous Region. Recently Mr. Zhang spoke with the German SPIEGEL Magazine where he claimed that the 1989 Nobel Peace Prize recipient Dalai Lama has "deceived his motherland" and "did many bad things later on that contradict the role of a religious leader." When the magazine metioned that "The Dalai Lama enjoys a great deal of sympathy in America, Europe and in Asia, also because the Chinese Communist Party is not particularly democratic," Zhang did not comment about the issue. Is a man who only speaks "a few words of Tibetan," well qualified for the job?

Rest in Peace, Wang Guangmei

Wang Guangmei, the widow of former People's Republic of China President Liu Shaoqi died on October 13 and a funeral was held for her today. She worked with her husband after their marriage in 1948. According to Wikipedia:

After the establishment of the People's Republic of China, Liu worked mainly in economic areas. An orthodox Soviet-style Communist, he favoured state planning and the development of heavy industry. He was therefore skeptical about Mao's Great Leap Forward movement which began in 1958. Alerted by his sister to the developing famine in rural areas in 1960, he became a determined opponent of Mao's policies. In the wake of the Great Leap Forward's catastrophic failure he replaced Mao as Chairman of the People's Republic, and began to be seen as Mao's likely successor. His more moderate economic policies help to lead China from the depths of the Great Leap Forward. Liu Shaoqi favoured the introduction of piece work, greater wage differentials and other measures that sought to undermine collective farms and factories.

Half way through the 1960s, however, Mao rebuilt his position in the Party and in 1966 he launched the Cultural Revolution as a means of destroying his enemies in the Party: Liu and Deng Xiaoping, along with many others, were denounced as "capitalist roaders." Liu was labeled as a "traitor", "scab", and "the biggest capitalist roader in the Party". In July 1966 he was displaced as Party Deputy Chairman by Lin Biao. By 1967 Liu and his wife Wang Guangmei were under house arrest in Beijing.

Liu was removed from all his positions and expelled from the Party in October 1968 and disappeared from view. Only after Mao's death in 1976 was it revealed Liu had been confined under terrible conditions in an isolated cell in Kaifeng, which led to his death from "medical neglect" (untreated diabetes and pneumonia) in 1969.

In 1995, the "Project of happiness - Help Impoverished Mothers" was officially launched under Wang Guangmei's guidance. Thanks to her efforts, the project has raised 310 million yuan (39.9 million U.S. dollars) to relieve 154,000 rural mothers and households from poverty, benefiting 695,000 people.

Rest in Peace.

Rebuilt Chinese History

Many ancient sites in China were destroyed during the "Liberation", the Cultural Revolution or other dramatic event, only to be reconstructed in the 1980s or 90s. For this reason, many tourist sites in China claim to be thousands of years old, but upon arrival the site appears to be brand new.

Beijing's Old Summer Palace, or Yuanmingyuan, which was in use during the Qing Dynasty (1644-1911) is currently being considered as a new candidate for reconstruction. I had the opportunity to visit the Old Summer Palace and see its ruins in November 2004. I disagree with reconstruction. I think it would be acceptable to build a museum on the premises to show visitors what the structures used to look like, but I hope the government does not touch the ruins lying there. It is one of the few (non-Buddhist cave) sites in China where you actually feel you are seeing something from the dynastic periods. Even the Great Wall at Badaling, just outside of Beijing, feels recently reconstructed.

Freedom of Golf?

In August I visited the beautiful campus of Xiamen University. Now the Washington Times is reporting the school is requiring all business and law students to learn to play golf!

"Golf classes start in two months and also will be required for economics and computer software majors, the official Xinhua News Agency said, citing university president Zhu Chongshi. 'The aim is to help the students find good jobs," a sports professor at the school, Chen Xiao, was quoted as saying. "Many Chinese business deals are clinched on golf courses.'"

Wiki in China

It seems the GREAT online interactive reference site Wikipedia has been UNBLOCKED in China after previously being inaccessible. I guess we'll see how long this lasts. Last year when I was there, I was never able to access it. Even Hotmail was blocked while I was there, but there were several ways to access it indirectly. This is promising news. China has been censoring the web for some time, even employing some college students to be involved in the censorship. The arrest and incarceration of Liu Di, a psychology major at Bei ShiFan, made the world aware of how serious the Chinese were about censorship in 2002. China may be lacking in the amount of freedom we have in America, but it has been making progress since 1978 thanks to the leadership of Deng Xiaoping. I have great hope for the Hu Jintao government.

Tragedy at the Nepal Border

BBC is reporting that policeman Steve Marsh was resting at a camp on the Tibetan side of the Himalayan peak of Cho-Oyu at the beginning of the month when he saw border guards shooting dead a Tibetan refugee in a group trying to flee to Nepal. He spoke of his shock at the incident, which he said scores of other mountaineers also witnessed. Tibet welfare groups say the Tibetan who died was a young nun, and add that a boy might also have been killed. Click the link to watch the video.

Chinese Etiquette

The Chinese government, in preparation for the coming Olympic games, has been trying to improve the behavior of its population. During this past National Day holiday (the first week in October), some tourists visiting Tian'anmen Square during the holiday received a text message on their mobile phones from the administration committee of the Tian'anmen region to remind them to protect the environment of the square. However, on October 1 alone, around 600 sanitation workers collected 39.8 tons of garbage from the square." At the Old Summer Palace some tourists were found drawing on the relics. However the government is trying and we should give them credit for that. "Education in manners and etiquette has been strengthened in some kindergartens and primary schools in China. But experts believe it may take several generations to nurture civilized behavior and form a positive image of Chinese tourists."

I know from my experience in China that some places are worse than others. I found Dalian and Xiamen to be very clean and, in some areas, very Western. My worst experience was in the Inner Mongolia capital of Huhehaote (also known as Hu Shi). Perhaps I visited it on the wrong day (it was May 7, 2005), but it was extremely windy and trash and dirt were blowing everywhere. To be fair to China, I also encountered trash on the street in some areas of Detroit when I lived in Michigan. Of all my travels, the city with the most trash on the street was Gaya (India) near the tourist destination Bodhgaya. That was just awful.

Zhong Qiu Jie Kuai Le!

Today is the Mid-Autumn Festival (Zhong Qiu Jie in Chinese). The date is based on the lunar calendar (8th month, 15th day), and it also known as the Moon festival or the Lantern festival in other Asian nations. In China, we ate lots of mooncakes. I've seen a few here in New York. We do, after all, have almost 400,000 people of Chinese ancestry living here!

I have a mideterm in my statistics class on Tuesday. I went to ask questions of the teaching assistant this afternoon. She told me she is a 5th year Ph.D. student from Shenyang. She almost fell over when I told her I was familiar with the capital of Liaoning province and the big Mao statue there. Anyway, she had to leave early for a Mid Autumn Festival party. Afterwards, I went over to look for free food on campus! I did discover an all-Korean party celebrating Ch'usǒk (the Korean name for Mid-Autumn festival), but I didn't go. Anyway, for the first time since 2003, I didn't eat any mooncakes on Mid Autumn day.

Appreciating Chinese Money

Chinese Renminbi (RMB) dropped below 7.90 against the dollar yesterday due to speculation that the government will soon expand the band within which the currency is allowed to fluctuate. The rate was fixed at 8.28 from 1994 until July 21, 2005. It has been slowly appreciating against the dollar ever since. Some economists predict it will appreciate up to 6.5. The US continues to put pressure on China. My Senator Chuck Schumer & South Carolina Senator Lindsey Graham continue to back legislation "encourage" China to allow the currency to appreciate faster.

Chinese Caution

Many people ooh and aah over the potential market power of China. 1.3 billion consumers. A cheap labor force in the millions. GDP growing steadily at about 10%. What's not to like? You hear reports about how America's day has come and gone and how China will soon overtake the USA.

Hold your horses. China has a good chance to become a major world power, that is true. But it won't happen as fast as many think. Poverty is widespread, most of its workforce is uneducated and unskilled, the legal system is showing promise but corruption is still widespread, and capital markets are young and untested.

Well, just this week we found out Malcolm Bricklin's Visionary Vehicles will be forced to delay the arrival of its Chinese produced Chery cars in the USA. He had been claiming a 2007 arrival date, but that has now been postponed to late '08 or early '09. Starting an automotive company is difficult, as it is a highly capital intensive industry. I seriously doubt the long term viability of Bricklin's cars. I do feel Chinese produced cars will be shipped to the US in the near future due to the cheap labor there, but I think established car companies such as GM, Toyota, and Volkswagen will most likely be the ones to be successful at this. The global automotive industry is already in bad shape. The market is mature, oil prices are rising, the industry has an excess of capacity, profits are dwindling. China will soon be an economic force to deal with, but its days as a fully developed nation are still far off in the future.

Darfur

Over the past week, the NYU campus has been covered by fliers urging students to go to the Save Darfur Rally at Central Park tomorrow afternoon. For those who might know, the region of Darfur in Sudan has been the site of immense violence over the past few years. Some estimate that close to 1/2 million people have been killed and more than 2 million civillians have fled their homes. The rally is being held in order encourage world leaders, specifically US President George Bush and UN Secretary General Koffi Anan to intervene.

This story also has an international aspect relating to China. The Washington Times ran an editorial a couple weeks ago claiming that Darfur is exposing Chinese hypocrisy. China holds enormous leverage over Sudan due to its investment in Sudanese oil fields. And, despite Wang Guangya, China's UN representative to the UN, claim that China supports sending peacekeepers to Sudan, they have been lobbying against the resolution to send in peacekeepers.

Migrant Recyclers

Today I decided to recycle some of the bottles I'd saved up from various parties over the past month. I get 0.2 RMB (or about $.02) for each 2 liter or 1 liter bottle and 0.1 RMB (about $.01) for each 600ml or similar size bottle. After living in Michigan for three years before moving to China, I had gotten in the habbit of recycling my bottles. Of course, in Michigan, you get $0.10 per bottle! (And in Kentucky you get nothing.) Here is a photo of me and the woman who came to pick them up:



For this stack, I got about 25 RMB (about $3). Doesn't sound like much, but when you can buy lunch in the student dining hall for 3 RMB ($0.37), you can make that money go along way. Anyway, I want to comment a little bit about this young woman. She is my age and has 3 children. Her family lives in Anhui province but it is difficult for her to find a good paying job there. So she came to Tianjin as a migrant worker. She collects bottles for $.01 and gets paid $.02 when she turns them into the recycling center. And she makes more money by doing that than in her home province. How sad. Actually, the money is not as bad as you might think. She made about $3 off of me in about 45 minutes. If she can find 8 customers each day, she could make about 200 RMB per day (or about $25). Assuming she works 30 days per month (and believe me, I've seen these migrants out working every day), then she can earn 6,000 RMB per month! For comparison, a new college graduate from TFSU makes about 1,700 RMB per month. So perhaps I've overestimated her earning potential, but it isn't as bad as it sounds at first. Still, to have to leave one's family behind is sad. She is a very friendly person and even has business cards! Please keep her and others around the world who have to work so hard to provide for their families in prayer. Seeing her at work makes me realize how much God has blessed me. It is a shame how often I forget to thank him for all He's provided. (Remember James 1:17)

TGIF Sendoff

Yan Yan left to go back to Hunan today. While I know I will get to see her again next month when I go to visit her, this could be her last time for her to see Jin Yi. Because Jin Yi will soon leave to begin graduate school in Australia, we decided to have a goodbye party for Yanzi. (In addition, we also like Yan Yan!) So Jin Yi came back from Tanggu after a hard day at work just to see Yan Yan, even though she would have to turn around and take the 6 AM bus back to work this morning. Unfortunately, we got a late start on things. We went to Kisseling but it was just about to close. Then we went to a Thai restaurant nearby but it was too smoky. Then we went to a Mexican restaurant but they had just stopped serving food. Finally, we decided on TGI Friday's:



There aren't many non-fast food American restaurants in Tianjin. This is one of the few. We all had a good time, and they got to try lots of new foods: calamari, fajitas, steak, etc. Fun to introduce them to new food, but hard on the wallet. Many Chinese restaurants are cheap -- you can eat a good meal for less than $2 per person. Foreign restaurants, like TGIF, charge American prices, so it cost more like $10 a head. Not too bad in the US, but expensive for China! That's why the restaurant has few Chinese customers. Most of the people eating there are laowai (foreigners). I joked with them that soon they would be laowai, as all of them are going abroad to graduate school.

Here, Yan Yan leaves my apartment for the last time. She actually lived here with a roommate and took care of it for me while I was gone to Tibet and India in January and February so perhaps this was a sentimental parting for her.



After moving out of the girl's dorm...



...we raced to the train station. I helped her get one of her large bags on the train. It was a good thing too because the train was very crowded and she had many bags. I would have had trouble, by myself, getting all of those bags onto a train this crowded:



Here she is looking at me after I got off the train...



Goodbye Yan Yan! You have a wonderful personality and you will be missed (until I come visit you in Hunan!)

Chinese Financial Markets

I may be in India but I can still write about China....

Last July China revalued the currency (from 8.28 to 8.11 to the US dollar) and now floating the currency against a basket of currencies (versus directly pegged to the dollar). This move increased the risk of foreign currency for many businesses operating in China. The People's Bank of China (PBC) is urging firms to hedge against foreign exchange risk. Also, this past week (on Feb 10), the first ever RMB interest rate swap transaction was completed. Finally, a new financial derivatives futures market is being established in Shanghai.