Why electric cars will succeed in China in ways impossible--for now--in the U.S.

ARTICLE: "China Outlines Plans for Making Electric Cars," by Keith Bradsher, Wall Street Journal, 11 April 2009.

China's government is throwing a billion and a half in R&D help to its auto industry on electric cars. Washington is spending $25B.

And yet, I'm betting the Chinese will win this race.

Why?

Electric car makers may find it easier to gain a following in the Chinese market than in other countries. First-time buyers in China are less accustomed to the power of gasoline-powered cars; most commutes are short and slow because of traffic jams; and Chinese law makes it hard for consumers to sue automakers for safety problems.

Then there's the air pollution and the skyrocketing need for foreign oil.

China, in a word, is incentivized.

This year China should outsell the U.S. in its domestic car market: 11m to 10m.

Beijing issues report on improving human rights

WORLD WATCH: "Beijing Issues Plan To Improve Rights," by Loretta Chao, Wall Street Journal, 14 April 2009.

A 22k-word document that lays out a vague but purposeful government two-year plan to improve its performance on a host of rights issues, "from torture to the death penalty and the environment."

Amnesty International, unsurprisingly, "criticized the plan's focus on economic, social and cultural rights at 'the expense of political rights.'" Still, it allowed that, if successful, this plan would represent "important steps forward for human rights."

The report's authors said they solicited views from government agencies, domestic colleges and local NGOs focused on human rights.

Nice sign? You bet.

China's Warren Buffet--much like China--decides to start buying

BUSINESS: "Hong Kong Billionaire Says It's Time to Buy: Cheerful Words Help Bolster a Market," by Bettina Wassener, New York Times, 27 March 2009.

Stuff like this matters.

Capitalism has always been a confidence game--both good and bad.

China . . . digs faster!

BUSINESS DAY: "Digging a Hole Through China: As Nation's Cities Sprawl, Mass Transit Rushes To Keep Pace," by Keith Bradsher, New York Times, 27 March 2009.

A great race between mass transit construction and the blossoming Chinese love affair with cars.

The Chinese baby gap continues

INTERNATIONAL: "Chinese Bias for Baby Boys Creates a Gap of 32 Million," by Sharon LaFraniere, New York Times, 11 April 2009.

The social unrest argument regarding this disparity is always quite tempting, but as I have written several times in the past, I don't believe it will be the great stress that experts make it out to be.

Why?

Much of that excess male population will be rural based and when personal situations get dire enough, they will emigrate as essentially economic refugees even as the desire for more opportunity for a mate will play a big part. Most of China's illegal migration flow to the outside world comes in the form of rural males who simply bug out on the basis of no opportunity.

Second, you'll see with China the same thing we've seen with South Korea and Japan: guys will seek out and marry foreigners, concentrating regionally. Koreans do this on junkets to Vietnam in serious numbers today. If you think this is too much of a cultural leap, let me note that Chinese males working in 19th century America did the same in large numbers, with a particular taste for Irish Catholic women!

In short, where there is a will, there's a way.

Plus, China's government will come up with programs to facilitate such accommodations, to be sure.

Finally, keep the whole concept in perspective: 32m males represents two percent of China's population, and these males will not be casually tossed on the bonfires of war when they have two parents and four grandparents to care for.

For a longer bit, see my column from March 07.

Why American companies bother hanging around in Mexico

FEATURE: "Business Is Standing Its Ground," by Pete Engardio and Geri Smith, BusinessWeek, 20 April 2009.

Juarez, a city of 1.4m, has seen over 2,000 turf-war killings over the last year, and yet the American companies stay.

Why?

China's too far away and they steal your IP. In short, American companies can exert more control in Mexico, so they stay.

A recent survey of U.S. manufacturers says 15% expect to cut production in China, but only 5% plan to do so in Mexico. In terms of expansion, companies planning to grow in Mexico outnumber the cutters 5 to 1. In China, that ratio is only 2 to 1.

Outsourcing is being trumped somewhat by near-sourcing--as they say.

The same is starting to happen with Mexican engineers versus Indians. Mexicans cost a bit more but they perform at high levels, so once you strip away the lengthier transaction costs with the Indians (distance still mattering), it's a wash.

The Storm, about a week in

It's got some peculiarities I don't like, but I have to admit, I am getting used to it and I like it.

Once I unlearn some typing habits from the Treo, I find that I can type with some speed and almost no mistakes on the touch keypad.

The browser is nice and fast and supposed to get a lot faster. And using the widescreen display (turn the phone sideways) is great, giving me a lot bigger font on average (ditto for emails).

I did sign up for the GPS, which looks great and actually has my home on its maps (a first for us). It means I no longer need to carry my bulky Garmin on the road.

But what really sells me is the ease of the email set up, to include the ability to clean my mac.com account at the same time. I find it's so convenient that I prefer to do my email almost exclusively on my phone now--and that surprises.

Tom's "Why Iran Won't Stop Loving the Bomb" at Esquire.com

Find it here.

It's one of those pieces where you're tempted to lump in all sorts of additional arguments, but I wanted to get the one simple point across.

Go and DiggIt! right now. I'd love to run up that total number and impress Esquire.com's staff.

Possible IMF trajectory

ARTICLE: A Bigger, Bolder Role Is Imagined For the IMF, By Anthony Faiola, Washington Post, Monday, April 20, 2009

A fascinating glimpse at how the IMF may be reborn through this crisis into a financial equivalent of the UN or the WTO, just not with the same punitive powers of either (which are always weaker than they appear to be). The big thing is, we're looking at the rise of repository of new rules for the global financial system. The crisis, as always, revealed huge gaps in rules, and while the major economies are in no hurry to make new ones happen that might restrict their sovereignty, they are acknowledging the need for some process and institutional center of gravity for such rules.

To me, this is a good thing, especially since the key decision-making locus is the G-20.

Tom in Indian Express

Tom had a piece in 'Indian Express' on April 11th, but we just figured it out today!

It's called 'A World to Run' and here's the link to the html version (note the 2/2 positive comments at the bottom) and the link to how it looked in the paper.

The lead:

India and China have become -- by objective standards -- America's most important allies in the 21st century. With their global economic footprints rapidly expanding, rising defence budgets signal growing awareness of the need to defend those interests as globalisation's many frontiers are settled. Considering both must likewise better integrate their rural poor in their national development, each state is highly incentivised to master and accelerate globalisation's advance around the planet.

By contrast, America's traditional Western allies have largely "aged out" of any substantial role in playing globalisation's bodyguard, as past colonial experiences leave them inherently wary of approximating such efforts. Despite much fear mongering on the part of experts, radical Islam presents no existential threat to their lasting wealth, as a globalisation somehow fractured by violent extremism would leave their wealth diminished but still impressive.

China's ruling party ... and one further left

ARTICLE: For China's New Left, Old Values, By Ariana Eunjung Cha, Washington Post, April 19, 2009

Fascinating but inevitable. As the country moved toward markets, a statist Left is left behind. To the outside world, it's hard to imagine such a political movement, that will--I believe--eventually become a party, would make sense in such a system ("A political party demanding more state control?"). And our tendency would be to assume a right-wing authoritarian mindset, when, in fact, the impulse comes from the left (a disgruntled workers' movement). In effect, China already has its capitalistic right-wing authoritarians in its current government, so the natural counter actually comes closer to resurrecting the real communist party than the current ruling party could ever dream of pursuing in terms of an evolution.

In many ways, then, the New Left represents the party of the past while the ruling communist elite clearly define today and the democracy movement represents the left's other possibilities (not just "freedom from ... " but "freedom to . . .") in the future.

To me, there's no question that, if properly destabilized, China would retreat back to what it knows (more government control as advocated by the New Left) instead of plunging ahead into what it's never truly known (markets buttressed by political pluralism).

The irony here, of course, is that the New Left's appearance is--in many ways--only made possible by the market reforms of the past and present, and thus they are a harbinger of a future in which political pluralism ("Pull left!" "No, pull right!" "No, stay in the middle!") provides the decision/leadership dynamics by which course corrections are made.

So while some will just see versions of state control being debated here, I see the beginnings of something better and far more profound. You just have to remember where China's coming from in terms of its recent history.

Balanced piece on "rising" China's military

WEEKEND JOURNAL: "China, Friend or Foe?" by Andrew Browne and Gordon Fairclough, Wall Street Journal, 18-19 April 2009.

A sensible presentation that details the concerns of the Pentagon's Leviathan crowd, but one that doesn't swallow its logic uncritically.

Nicely done, and worth a good read.

But, as usual, the piece starts and end with a subtle strategic bias that says any growth in China's military means a zero-sum loss for the United States, with the status quo being our ability to go anywhere and do anything to anybody at any time. Anything less than that equals a threat, rising powers be damned.

Good sign in Iraq

WORLD NEWS: "Maliki Critic Wins Iraqi Speaker Role," by Charles Levinson, Wall Street Journal, 20 April 2009.

By design, the Speaker seat is reserved for a Sunni. The previous speaker was seen a Maliki tool. The guy just elected hails from a party that stands frequently in opposition to Maliki, who recently has been making a name for himself with petty displays of power (raiding an art fair where caricatures of him were being sold, etc.). Now, the loose coalition of parties that oppose Maliki's centralizing-of-power strategy have somebody to give better voice to their concerns.

This small shift comes as security worsens in southern Iraq, chipping away at Maliki's main claim to legitimacy as a leader of all Iraq.

Obama the free trader at heart?

U.S. NEWS: "New Movement on Colombia Trade Pact," by Laura Meckler, Wall Street Journal, 20 April 2009.

Obama now saying we won't renegotiate entire Colombian FTA but will examine certain labor questions.

Administration also saying the process of a similar deal with Panama looking good.

We can't make nice with Cuba and act like we've got nothing to give on Free Trade Agreements across the rest of the hemisphere.

So I'm glad to hear.

Obama, showing some boldness, in the right way

FRONT PAGE: "Obama Declares U.S. Will Pursue Thaw With Cuba: At Hemisphere Meeting; Sees 'New Direction'--Clinton Welcomes Castro Remarks," by Sheryl Gay Stolberg and Alexei Barrionuevo, New York Times, 18 April 2009.

I like the unilateralism of denying old antagonists their cherished enemies. If we show some patience, I see a beautiful soft-kill opportunity here.

But it won't be overnight.

And yeah, I like an Obama who isn't afraid to shake Chavez's hand. This crap where we're afraid to be seen standing next to petty dictators is simply beyond me.

We're a superpower and we should act like one.

[Ed. Tom also posted on this article yesterday.]

Iraq starts to turn on the spigots

ENERGY: "Iraq's World-Class Oil Ambitions: It has a serious plan to more than double output," by Stanley Reed, BusinessWeek, 6 April 2009.

Good overview of developments in southern Iraq. As is usual, you either talk what's happening with the Kurds in the north or what's happening in the south, but you don't combine the two in reporting.

China, which has never run anything but itself, is careful about asserting leadership--even during crisis

BRIEFING: "China and the West: A time for muscle-flexing; As Western economies flounder, China sees a chance to assert itself--carefully," The Economist, 21 March 2009.

The truth of this new correlation of forces is that China's self-perceived advantage now is more a matter of America's relative temporary decline.

Yes, I know the "declinists" are ascendant right now, and I am "blind" to their "inescapable logic" because I don't see the U.S. as merely the latest "imperial power" to grace the earth but something different and unique in human history.

But the sheer fact remains: if given real opportunity for choice, there's no question that the vast bulk of the world would take America's combination of economic freedom and political freedom over China's sparser offering. Why China attracts so much right now is that it represents an apparent catch-up strategy that does not demand immediate political change to go along with economic change.

Since I find that path highly realistic and historically accurate, I don't have a problem with China's "rise" among those trying to catch-up, but there's no question that China's model represents or reveals no satisfactory endpoint at this time.

No, I don't expect China to change its global leadership model much in the near term. I see some real change being possible once the 5th generation take over in 2012, but I see the tipping point coming about a decade after that when the 6th take over.

That's why the G2 concept has basically gone nowhere (although I like it as somebody who's argued for such open collaboration for years before the mainstream got into the act): the top leadership eschew the global responsibility and the younger portions of the population want to move beyond even that to China actually assuming independent global leadership (truly unrealistic).

To me, the sweet spot will emerge over the 5th and 6th generations, making all this initial sparring important but not decisive.

And yet it will likely be the biggest accomplishment of Obama's possible two terms.

But all this talk about an "assertive" China is--to me--far too premature. The crisis will make the current leadership more conservative, not more aggressively assertive, even as that defensiveness may create some more friction that appears to the unsophisticated thinkers as aggression.

Obama's charm doesn't yield instant magical results!

OPINION: "Obama's Popularity Doesn't Mean Much Abroad," by Josef Joffe, Wall Street Journal, 18-19 April 2009.

We are told that nobody has yet rolled over in response to Obama's clear popularity. On many intractable issues, Obama's positions are not that different from Bush's. That means not acting like arrogant assholes all the time is a complete waste of time. Obama is JFK reborn: charming but useless.

Completely tired logic from a German intellectual who hit his prime a long time ago.

When the attack finally comes, the evidence trail leading up to it will be vast

OPINION: "Somali Extremists Have al Qaeda Ties," by Ali Soufan, Wall Street Journal, 15 April 2009.

Solid opening para:

The mortars fired at the plane carrying New Jersey Rep. Donald Payne out of Mogadishu Airport on Monday were a sharp reminder that although the recent focus on Somalia has been on piracy, the bigger threat comes from terrorists operating onshore. On land, radical jihadists now have one of the largest territories from which to operate since the Taliban hosted al Qaeda in Afghanistan.

The group involved, al Shabab, is described as a post-9/11 version of al Qaeda: loosely coupled cells and very decentralized. The ties between this group and al Qaeda go way back, and "many in the current leadership cadre are graduates of al Qaeda training camps." AQ vets make up a significant portion of al Shabab's top talent.

Then we hear about the wormholes that link Somalia to Minneapolis, Stockholm, Cardiff and Dubai, thus the FBI put al Shabab at the top of its list of transnational terror groups that might have attacked the U.S. during Obama's inauguration.

Think AFRICOM won't be important over the long haul?

Think again.

Pleeeease: China is a capitalist, single-party state

CORPORATE NEWS: "Total, China in Talks On Venezuela Refining," by Simon Hall and Russell Gold, Wall Street Journal, 15 April 2009.

FRONT PAGE: "China Inc's Top Deal Maker Provokes a Backlash Abroad," by Shai Oster and Rick Carew, Wall Street Journal, 16 April 2009.

The lock-in mentality of the Chinese right now is intense: having been frightened by the prices they were paying during the recent energy/commodities boom (which they largely created), they now seek to lock-in as many bilat resource contracts as possible.

It is a ruthless but smart approach to this unprecedented buying opportunity, otherwise known as the global financial crisis.

China's foreign M&A activity amounted to about $1-2B in 2003 and it's on course to do something like $80 to 100B this year after topping $50B last year.

But when the top deal-maker suddenly pulls out and joins the government as a cabinet member, both he and China's unabashed strategic approach receive a lot more suspicious attention.

I mean, it's like China is just a big corporation pretending to be a government. How very Marxian in a pre-socialist sense.

If I wasn't optimistic about China's commitment to capitalism, I would say it's heading for a workers' revolution.

A country in which the government seems to exist primarily to meet the needs of flagship national corporations. Where have I seen that before in American history?

Interesting to compare this with the charge that America is now ruled by a financial oligarchy.

As always, I find the similarities between the U.S. and China more interesting and compelling than the differences. The big difference is, we've got a complete market culture and popular ideology (highly individualistic) to sustain us during rough patches, while China has yet to develop those, and really can't, so long as it remains a single-party state.