The China Track 与中国接轨

China's Internet: Are things improving?

China's Internet has never been an easy place to drive. Although theoretically a super-highway paved with thousands of kilometers of fiber optic lanes, the Internet is more like a highway with a toll booth at every mile. Data is scanned repeatedly and often. In techno-speak, the speed is high, but there is also high latency. That's why even when some enterprising souls turn on their VPN's as a way to get around the Great Fire Wall, their performance goes up -- the broadband speed declines but most of that latency (sitting around at toll booths) disappears. 

Things have gotten even worse since last Fall, most likely as a result of the 18th Party Congress. Not only are certain individual websites less accessible, in general it's felt as if another layer of filtering and security was added, molasses poured on top of glue. This has been the informal feeling of friends across China, north and south, off and on campuses, Chinese and foreign. 

Today is the first day I'm wondering if things have changed. Why? Because Skype today worked crystal clear for first time since I can remember. A clear video-to-video chat between China and the US, without VPN, over WiFi, with essentially no problems, save for my kids bouncing around the room not holding the camera steady. We could all see and hear each other clear as a bell with no static or delay.

I looked outside, the sky was still a semi-clear, semi-milk white haze (PM 2.5 reading still way up there). A few minutes later I got into a cab, and traffic still was snarled, and the drivers still darted left and right without warning. Pedestrians still hocked loogies on to the street. Bushes were still covered with dust, and tree branches still were naked. And the ground was still as dry as a desert - because yes, we are, in fact, living on top of a desert hidden by a city of 20 million.

Yet I still have a ray of hope that something positive happened today. 

Am I dreaming?

Getting Government-Business Relations Right

How can government-business relations be structured to most likely generate good economic policies? A huge question with perhaps no good answer. In the late fall I gave an interview to a reporter from the China Enterprise News (CEN) on this question. My answer, published a couple days ago, borrowed from Peter Evans' 1995 book, Embedded Autonomy. In a nutshell, businesses need to have access to government to collect information and provide ideas, but at the same time not be too closely enmeshed with their regulators and politicians. 

CEN was kind of enough to publish an extensive transcript of the interview in which I compared governmen-business relations in the United States and China. America certainly has huge problems with powerful lobbyists, but more and more Chinese I meet are confounded by the increasingly unbreakable ties that bind business and the state in China. And it's not just SOEs. Private companies, in order to survive economically have had to come to terms with the system politically. In most cases, they now go along to get along. China appears to be moving further and further away from the reasonable ideal that Peter Evans described. 

China's new leadership: Econ reform yes, political reform no

Today's unveiling of the new Chinese leadership reveals a system that generates balances, however, fragile, involving factions, policies, and process. 

We tend to over-emphasize the significance of personal factions and princelings, since neither tells us much about the policy preferences of individuals or the likely policy direction of the leadership overall. But to the extent that we do, there is factional balance in this group. Jiang Zemin apparently was able to insert more allies in positions on the Politburo Standing Committee (PBSC) than Hu Jintao, but Hu's man, Li Keqiang is #2, a spot higher than usual for Premier, and ahead of supposed Jiang ally, Zhang Dejiang. But the wider Politburo has several folks who served in the Communist Youth League or are from Anhui and could be considered allies of Hu, most importantly, Hu Chunhua (Party secretary of Inner Mongolia) and Wang Yang (Party secretary of Guangdong). And some have worked closely with both Jiang and Hu, such as Wang Huning, who was originally brought to Party center by Jiang, but has served as head of Party's policy research office under Hu. And although Xi is surrounded by supposed Jiang and Hu accolytes, he is the top dog, and he immediately got Hu's seat as Chair of the Central Military Commission. Hu looks like the loser, but it wasn't a blow-out.

Whatever we think about any one individual or factional ties, we are seeing some interesting broad trends in the group. The average age of Poliburo members is unchanged, but the trend of growing diversity in educational backgrounds has continued. Engineering technocrats no longer dominate the body. Even majoring in Chinese literature isn't an obstacle to getting to the top.

 

Some of the disappointment I've heard about the new group is that the two most likely advocates of serious political reform, Li Yuanchao and Wang Yang, didn't make it to the PBSC. But you'd have to beyond optimistic to believe the CPC top leadership is at all serious about democratization. That is not in the cards no matter who is in the PB. There's not a Gorbachev among them. We'll see a range of reforms to improve how this system works (budget transparency, income reporting, more efforts to rein in corruption), but all of these tactics are being done to make this system work better, not prepare China to move toward another (multi-party democratic) one. If you're skeptical they can make this system work better, they're going to try and prove everyone wrong. Either they'll succeed, or there will be a political meltdown. 

There has been some talk about "institutionalization" of the succession process and elite politics. Yes, if this means efforts to secretly negotiate an outcome minimally acceptable to all powerbrokers, and forcing anyone 68 or older into official retirement. But beyond that, things appear much more fluid. Bo Xilai was brought down with a sledge hammer for apparently covering up a murder and being corrupt, and it is certainly possible opponents of Wen used the foreign media (NYT) to tar him for having a wealthy family. Negotiations were not neat and orderly and appear to have lasted through October. And many of the final decisions are inconsistent with recent practice: 1) The PBSC went from 9 to 7 members; 2) The premier's rank was raised from #3 to #2 in the Party hierarchy; 3) Xi assumed the Central Military Commission chair immediately rather than at a future plenum a year or two later (as Jiang and Hu did in 1994 and 2004); and 4) The number of women on the Politburo rose from 1 to 2, a positive but unprecendented development. 

I suppose someone could say all of this is consistent with "flexible" institutionalization, but that would be an excellent example of "conceptual stretching."

Despite the Party's likely continued tight control on the political wheel and the lack of institutionalization, I expect more balance between encouraging market mechanisms and industrial policy. We should see sustained, though incremental economic reforms, which would be an expansion of trends begun over the past year: liberalization of interest rates, continued bond market and stock market reforms, gradually opening the capital account, loosening prices for commodities and energy, and reducing monopolies for SOEs. At the same time, we should be under no illusion that industrial policy's days are numbered. To the contrary, we will continue to see extensive intervention in most areas of the economy, particularly for "strategic emerging industries (SEI), particularly for SEIs, as the government is not about to have faith that the market alone will push firms to invest in R&D and focus on moving up value-added chains. 

Most refreshing, though far from Obama-like, is Xi Jinping's style. When he addressed the media, he spoke in non-Marxist terms about how he views the country and what his goals are. He made zero reference to his predecessors -- Mao Hua, Deng, Jiang, or Hu, and he only mentioned "Socialism with Chinese Characteristics" once. There was even some varying intonation in his voice, and he had a genuine smile. Goodbye Robot Hu!

Obama's Victory and US-China Relations: The West Wind Blows

The winds are blowing West, and this is good for US-China relations and addressing global problems.

Why am I more than cautiously optimistic? 

• The "feeling out" period often associated with new administrations will be much shorter and less bumpy than had Romney prevailed. Secretary Clinton and perhaps some other cabinet secretaries will likely step down in the Spring, but there should be substantial continuity in personnel. More change will come on the Chinese side, but most of the new leaders have already been on the scene and engaged with the US and international affairs for some time. The main adjustments will be adapting to Xi Jinping's style and the new slate of members on the Central Military Commission. 

• The victory allows Obama to carry out his domestic policies with renewed vigor. Although Obama did not win a clear policy mandate, and the House of Representatives is still in Republican hands, he and the Democrats performed impressively. The economic recovery is likely to continue and improve, and the US's long-term demographic transition is likely to benefit the Democratic Party. There will be tremendous pressure on the Republican Party to give up its strategy of opposing Obama at every turn. Hence, we should see a rollback of the Bush tax cuts, full implementation of Obamacare, and greater attention to US industrial competitiveness. 

• Obama's policies toward China and East Asia will continue along the same trajectory developed over the past few years. Aside from token criticism of Obama's weakness vis-a-vis the Chinese curency, Romney and the Republicans had very limited critiques of Obama's foreign policy (see the second debate). The 60-plus official bilateral fora for dialogue and cooperation will continue. At the same time, the US will proceed with using the WTO and bilateral antidumping and counterveiling duty investigations as a way to push Chinese economic policies to be less harmful to US business interests. Efforts to adopt a Trans-Pacific Partnership will continue apace and perhaps with a greater PR campaign. The US will continue to highlight the importance of freedom of transit and the peaceful solution of territorial disputes in the South China Sea and expand cooperation with countries on China's periphery. And without the specter of another election, Obama may be more willing to engage multilaterally for a mini-Doha package and a substantive deal on climate change through the UN process. 

• China could be on the defensive for the next few years. In early 2009, because of the global financial crisis, Obama began his presidency in a weakened position, and China's star seemed to be rising quickly. Now things look different. It is the US that is resurgent, and there are serious concerns about China's economy, in the short term due to substantial growth in debt, and in the medium/long term due to the difficulties of shifting toward a more efficient economic growth model. Although there are understandable concerns about a flair-up with Japan, I don't expect China to assume a nationalistic defensive crouch during this period. That is because the likely new Politburo Standing Committee will be relatively reformist in character, closer in temperment to the group in power in the 1990's (not surprisingly, Jiang Zemin has had a big hand in shaping the incoming group). I expect the new Chinese administration to adopt policies that help China gradually overcome many of its economic challenges (although I don't see democratic reform on the horizon). In the near term, these problems may be serious enough to constrain China's assertiveness. 

In March 2012, Kenneth Lieberthal and Wang Jisi issued an important report highlighting the strategic distrust that has seeped into the relationship. I do not see that distrust dissapating easily and replaced by a straightfoward, uanbashed partnership. However, I do think the continuity of leadership on the US side, the potential greater US confidence domestically and internationally, combined with serious challenges in a China headed by a more reformist leadership may create an environment for greater cooperation. The US may be more ready to compromise on some aspects of the Doha Round and climate change, and China may need a more stable periphery and explicit support in a way it hasn't shown of late. 

Thus, in multiple ways, there is a chance to re-live the 1990's all over again, but this time get it right. When the Clinton Administration came into office, the US had vanquished the Soviets and Iraq. It took over a year for the president to drop the "Butchers of Beijing" rhetoric and extend MFN to China without condition. The relationship improved somewhat, but was still hit by the Taiwan Straits crisis and the mistaken bombing of the Chinese embassy in Belgrade.

More broadly, although the Clinton Administration got the US economy rolling again (or at least supported trends eminating from Silicon Valley and elsewhere), signed NAFTA, and got the WTO launched, more could have been done in terms of addressing climate change, limiting nuclear proliferation, enhancing mechanisms of cooperative security, and adopting policies that really fostered economic development and state-building in developing countries. That agenda was cut short by the Bush victory in 2000 and 9/11. We can't erase those 8 years, but it's possible the Bush era could be seen as an interregnum, a pause taken to deal with immediate threats that pushed back addressing deep-seated, long-term global challenges.

And if China is entering a period where they recognize a new wave of domestic reform is needed, then we really could be back in a similar situation. Of course, we cannot unwind the 2000's -- the threat of Middle East terrorism, the damage to the US economy, and China's emergence -- but with Obama repeating Clinton's successful re-election bid, it does feel a little like 1996. 

And if you listen, you can hear Celine Dion singing her hit of the year, "Because You Loved Me."

The Leadership Transition and SOEs

Conventional wisdom has it that we are unlikely to see a highly aggressive economic reform agenda adopted by the new leadership that comes to power in a couple weeks. One of the main reasons given is the lobbying power of state-owned enterprises (SOE). Commentators highlight the strong ties between the leadership and SOEs, for example, highlighting that Zhou Yongkang spent so much time at China National Petroleum Corp. that he is essentially the oil industry's advocate on the Politburo Standing Committee. And once he retires, he could be replaced on the Politburo by Su Shulin, formerly a general manager at Sinopec and now governor of Fujian.

Certainly these ties are not insignificant, but we ought not make too much of them. The trend, in fact, is a decline in direct ties between leaders and SOEs. I collected data on all of the Politburo members for the 15th Central Committee (1997-2002), 16th (2002-2007), and 17th (2007-2012), and then made my best guess on the likely composition of the upcoming Politburo. I then culled their bios for work experience in SOEs. The data are surprising:

The biggest reason for the decline in SOE experience is the larger number of Politburo members who have worked their entire careers in the Communist Party and government. This is particularly true for those who have worked their way up through the Communist Youth League. They, of course, owe their rise to Hu Jintao. 

SOEs are not well represented anywhere in the official political system. Here is how things break down on the current National People's Congress, China's legislature: 

SOEs are certainly over-represented relative to private companies, of which there are far more, but a 9% share of seats is quite small. The NPC is dominated by government and Communist Party officials, not SOE executives. 

The Central Committee data show the same results. There are a very small number (less than 10) of SOE managers who are alternate members of the Central Committee, but none are regular members. 

This situation may change, but those looking for SOE influence don't make that argument. 

So where does SOE power likely come from? 

1) The government's ownership and control of SOEs, which gives offiicaldom a stake in making sure SOEs do well. If the financial sector is liberalized and administrative monopolies shrunk, that will hurt SOEs. 

2) The above data only focuses on officials themselves and not their family members. It is likely that just about every single member of the Politburo and Politburo Standing Committee has at least one family member who works in an SOE. 

3) Even if officials don't overly care about SOEs or have family members in SOEs, it is likely they have friends and colleagues who work in SOEs. Officials are socialized to believe that SOEs are natural and important parts of China's social fabric, and they shouldn't be penalized. 

4) SOE senior executives share the same administrative rank or have an even high rank than many of the bureaucrats who are supposed to regulate them. That makes SOEs difficult to control. 

The above discussion shows reasons why we shouldn't overstate SOE influence but why we should expect them to still have significant power. My own view is that despite being highly influential in a variety of ways, if the leadership wants to institute substantial reforms that hurt SOE interests, they could, and they would not pay a steep political price for doing so. There are a variety of ways the leadership could manage this kind of opposition, including rotating or firing SOE managers, implementing changes gradually, and compensating SOEs with other kinds of benefits. The question is, does the leadership want to do this? We'll find out soon.

 

China in the Debates, Electric Car Sales in China

China featured prominently in the 2nd and 3rd US presidential debates, in fact, more in the 2nd than the 3rd, even though the latter was on foreign policy. Although there has been handringing in Beijing because President Obama and Governor Romney have emphasized the competitive nature of the relationship and the need to have China play by the rules, neither has given many specifics about policy going forward. Also, both have used essentially the same formulation, "We want to be partners if China plays by the rules." That is essentially consistent with the approach taken since the middle of the Clinton Administration.

The most detail we got from Romney is that, "On Day One I will label China a currency manipulator." That implies he will institute sanctions or penalties against China because the RMB is undervalued. Maybe, but not necessarily. There are several steps that have to occur between his declaration and sanctions, and none are automatic. So this moment of supposed policy precision is just another example of Romney being Romney. In fact, we have absolute zero idea what Romney's policies toward China -- or essentially anywhere in the world -- will be. 

President Obama's position seems clearer. He'll continue his policies of the last 4 years, particularly since the administration adopted its "pivot" to Asia in 2010/11. Obama will continue to go to the WTO, since as he noted, the US has been so successfl there. By my count, it has won 9 of 10 cases against China in Geneva. He also was perhaps unexpectedly honest about the Trans-Pacific Partnerhsip (TPP). He did not mention these words last night, but when he said the US is organizing countriesi in the region to adopt an agreement on trade and investment principles that sets high standards and that should put additional pressure on China, he meant TPP. This framing gives the agreement a sharper edge than perhaps the administration has been suggesting in public, but one can see why Obama would do so in the context of the campaign. He may have also concluded that there is no way China would ever sign on, at least initially, so there's no harm in being more explicit about the TPP's goals. 

Switching gears, in 2011, China sold less than 9,000 electric or hybrid vehicles. At the time I remarked how this was a horrible record for a country supposedly so intent on promoting green energy. Things have only gotten worse. According to Caixin, in the first 3 quarters of 2012, China has sold only 235 electric cars. That is essentially zero and means there is no support for this sector whatsoever. China reportedly did export 7,500 electric cars. If so, we are seeing the same pattern as in the solar sector: export over 95% of production. This means solar and electric vehicles are part of a global trade strategy but not central to domestic energy or conservation policy. 

Union Pay gets busted

China's Union Pay (银联) finally got busted. The WTO ruled yesterday* that Union Pay has an illegitimate monopoly on electronic payments that must come to an end. The US Trade Representative trumpted the win on its website. 

*(well, actually they ruled a few weeks ago but only released their findings yesterday)

This is the second financial services case brought against China -- the first involved financial information -- Xinhua wanted to be the sole distributor of financial information -- and China lost that case, too. 

China has one year from today to implement the ruling, and I expect them to do so within that timeframe. Chinese were happy this case was brought against Union Pay, because their monopoly has made the credit card business more expensive for Chinese banks and others. So Mastercard, Visa, and others who pushed the US to bring the case are not the only beneficiaries. The only thing that could lead to a different outcome is if US-China relations go into such a nosedive (over say the South China Sea or another trade dispute) that this case gets tied up in other conflicts. Possible but that hasn't happened to other WTO disputes. China has a clear record of modifying domestic laws and regs to come into compliance when it loses in Geneva. The only exception was the case concerning movie distribution rights, since it related to the regulatory authority of the Party's propaganda bureaucracy. Despite that, a deal in that case was reached to the satisfaction of Hollywood. 

From a consumer's perspective, I'm now hopeful that greater competition in China will lead to an elimination of the often imposed 3% fee on using foreign credit cards for local transactions. 

Chinese bookstores: nothing going on this year

One would think from visiting bookstores in China that nothing important is occuring in China this year. Of course, later this year the Chinese Communist Party will hold its 18th Party Congress and select a new slate of leaders to take up positions in the Politburo Standing Committe, Politburo, Central Committee, and its top offices, such as the Organization Department, United Front, etc. The same transition occurs first at the provincial level and before that at the county and city levels. The replacement of Party leaders will be followed by replacement of government officials up and down the system. Probably around 20,000 officials will gain and lose posts through this transition. 

This is a huge deal, more important than anything else going on in China this year. And it is being absolutely, 100% ignored by Chinese scholars and the media. There is not a single scholar in all of the Chinese mainland who has made a career out of analyzing Chinese elite politics. I've met academics who are quite knowledgeable about the leadership, and if they chose, could write impressive articles. But they write barely anything, at least within publications available in China. 

Imagine if in United States the media and scholars didn't pay any attention to American elections and the political class. Of course, that seems like absolute nonsense. There are experts on American elections, the presidency, Congress, and lobbying. Then there are all the news stories, Sunday talk shows, blogging, and twittering, day and night, 365. All absent in China. 

Except in Hong Kong. In this little tiny exception of a place, the 18th Party Congress is a huge topic for experts and the media. Go to any Hong Kong bookstore or newspaper stand on the side of the road and you will encounter dozens and dozens of books about China's leadership, their families, and potential developments in policy. In one store, I found a shelf with about 12 books.  

It took me a while to sift through these, and I thought I had a good treasure trove. But then I turned around a found a whole other set of shelves, all with books about the leadership. A few steps away even more titles awaited me. If I had wanted, I could have bought 60-70 titles. I must admit that after looking through many of these books, I was not extremely impressed. The books had some basic info about the leaders, and made assertions of about so-and-so being part of Hu's faction and other so-and-so's part of Jiang Zemin's faction, and on and on. And the more I read, the less convinced I became in the accuracy of the claims. But at least there were claims and a discussion. 

Back in Beijing? Zilch. I went to one of the city's best bookstores, Wansheng Shuyuan (万圣书院), just outside the south entrance to Tsinghua University. Overall not a bad bookstore, with lots of books on a host of subjects. But nothing on elite Chinese politics save the selected works of various leaders. The bookstore listed its Top Ten Sellers for May, and they were mainly about Chinese history and philosophy, not politics.  

The window display of new and suggested titles was equally anodine. Nothing remotely related to the country's politics. 

I was curious if I had missed something. So I asked a sales clerk if they had any books on the 18th Party Congress. Her reply, a simple, "no." I asked about books regarding elite politics, and she pointed me to the Politics section of the bookstore. What did I find? A lot of books on Chinese international relations and diplomacy, but nothing on elite politics. 

I asked other sales clerks if anyone else had asked for books about the 18th Party Congress, and they answered either, "I don't know," or "it's unclear" (which means, "no, stop bothering me"). 

In one last attempt, I looked at the magazine rack to see what I could find. Again, nada. One magazine had what could only be described as an extremely boring story on Li Keqiang's recent tour of Europe. 

The silence in China is deafening. The contrast with Hong Kong and other places with more open political discussion is stunning. Of course, there are tons of private conversations and gossip-trading going on, but nothing is occuring out in the open.  

One is left to ask: Is this a healthy state of affairs for a political community and a country going not only through a political transition but through rapid economic and social development? 

 

 

Another sign of China's slowdown: US visa applications up

Caixin reports that visa applications to the US were up 43% in the 2012 fiscal year. If that's the US government's fiscal year, that means from October 1, 2011 to June 30, 2012. Here's part of their story: 

U.S. Processes Over 1 Mln Visa Applications from China

The U.S. State Department said on July 12 that over one million Chinese visa applications had been processed in the 2012 fiscal year, a 43 percent increase from 2011. The increase is the result of measures taken to attract more Chinese visitors, including expanding staff and reducing waiting times at U.S. embassies. 

Besides greater efficiency, might this in part also be a result of China's sluggish growth? After the financial crisis, where China did not suffer as much as others and then launched an RMB 4 trillion stimulus, there was a wave of returnees, and I'd expect, a relative decrease in visa applications to go abroad, including to the US. 

This is just total conjecture. I'd welcome info from someone more informed. 

My own southern tour

In January 1992, Deng Xiaoping famously set out on his Southern Tour with the aim of kick-starting economic reforms, which had languished over the previous 3 years. His trip included a visit to the electronics maker Xianke, whose manager was the son of one of Deng's fighting comrades in the 1930's in Jiangxi province. A decade later, despite the best of connections, Xianke went down in flames. Neither Deng nor any of the other top leaders who paid homage to Xianke could force Chinese consumers to buy Xianke's stereos or DVD players. 

My trips to Guangdong have never been so consequential. The first visit was in early 1988, when I arrived by overnight boat. I started in Guilin on a rickity bus that went up and down over horribly scary roads (I occasionally read about them going over cliffs with 20 passengers on board), and then took at boat from Wuzhou down the Pearl River to Guangzhou. I had a small open birth with many people on both sides of me. There were photos near a door showing the results of what happens when you smoke or light a fire on board. Grusome! When I arrived the following morning, I found Guangzhou difficult to navigate compared to Beijing because its roads were not straight and no one spoke Mandarin. I stayed at a nondescript hostel not far from the US consulate and the Swan Hotel. I had three-cat soup and some snake at a restaurant written up in the Lonely Planet guide. When I visited the restroom, I walked by cages stacked to the ceiling of meowing meals. 

24 years after my first trip and two decades after Deng's trip to Guangdong, I decided to make my own treck south in late May to see how things were going. Deng and Xianke are now both long gone, and I didn't bother to look for the snake restaurant. My main goal was to take stock of economic reforms and how well Guangdong's leader, Wang Yang, is making out. 

My efforts were helped tremendously by Sun Yat-sen University's Edward Wang, who introduced me to many of his friends (including some folks who visited IU before) and helped arrange some excellent interviews.

School of Asia-Pacific Studies, SYSU

Sun Yat-sen University has a gorgeous campus. Its northern border sits along the Pearl River. The buildings are not overly large (like some on the campus of Renmin University in Beijing), and there are trees and quiet paths everywhere. 

School of Management, SYSU

What did I find out about Guangdong and Wang Yang? In short, I was pretty impressed by both. Guangdong's economy grew rapidly in the 1990's and 2000's as the core of China's export machine, but as production costs there have risen and global markets have shrunk, everyone knows Guangdong needs to move up the value-added chain and focus more on serving domestic demand. Wang Yang has been forcefully pushing this transition. He's run into some serious opposition from manufacturers who just want to squeeze more and more out of their workforce, but he's also managed to induce some companies to move to northern Guangdong or other provinces and push firms that remain in the Pearl River Delta to upgrade. I'm currently searching for confirming stats, but this is my general impression. 

Guangdong has also been relatively proactive on the political front as well, encouraging governance that gives a greater voice to the grassroots, such as through NGO's and village elections. Guangdong is also experimenting with open budgeting so that citizens can have a better (though not perfect) understanding of where their taxes go. On all scores, Guangdong looks very different from the recent approach of Chongqing. And we know what happened there. 

One of the highlights of my time in Guangzhou was a visit to a provincial advisory body known as the Canshishi (参事室). This official advisory body is composed of scholars and experts who serve at the pleasure of the Party Secretary and governor, giving their frank opinions about all sorts of policies. I was only marginally aware of these advisory bodies before, which serve the leadership of every province and the central government's State Council. I think they deserve much more attention.  

Outside the Guangdong Provincial Canshishi, Guangzhou

During the visit I was able to meet the office director, Mr. Zhou, and received a briefing about the office's history and the evolution of their responsibilties. 

From left to right: Mo Xianchun (advisory group's staffer), Wang Xinsheng (Deputy Dean, SYSU School of Asia-Pacific Studies), Zhou Yi (director of the advisory group office), and Edward Wang (SYSU professor and a great guy)

After having my most productive visit ever to Guangzhou, I made the short trip by train to Hong Kong and tried to measure the temperature from the other end of the Pearl River. My first visit to Hong Kong (in 1991) was worse than my first to Guangzhou. It involved a very heated argument with a sales clerk on Nathan Road; I ended up with a bloody lip soothed only by some ice from a nearby McDonald's and then a few hours of rest on the beaches near Stanley. Don't ask my what I said to provoke the clerk's ire!

Downtown Hong Kong (no one dares to jaywalk)

Nothing like that happened on this visit. I had a good time bunking in with a buddy who just moved down from Beijing, and over the course of a few days meeting with analysts of all sorts and shapes. Your average person on the street may not be paying much attention to Beijing, but Hong Kong's newspapers and analyst class are going gangbusters trying to determine which direction China and its leadership are headed in. Needless to say, there's a wide array of views about Guangdong and the future of China's economy and politics. I visited a bookstore and was overwhelmed by the number of books and sensationalistic titles and covers. Digesting that stuff could take months, and it'd leave you with serious stomach pains.

Book covers at a Hong Kong boostore

Having finished my interviews, I went over and took the Star Ferry from Central to Kowloon and enjoyed the views. There's nothing like quietly drifting across the harbour while at the same time gazing at Hong Kong island's towering buildings on one side, the bustling streets of Kowloon on the other, and tug boats and steamers passing through the middle. 

 

   View of Central in Hong Kong from the Star Ferry