The China Track 与中国接轨

Biden's Bipolar Defense of a Free Press

Today in Beijing Vice President Biden issued a strong and candid defense of a free press. In his speech to US business executives he said, "innovation will thrive where people breathe freely, speak freely, are able to challenge orthodoxy, where newspapers can report the truth without fear of consequences." He went on, saying that "We have many disagreements, some profound disagreements on some of those issues right now - the treatment of U.S. journalists."

Of course, he is referring to the difficulty of reporters from the New York Times and Bloomberg getting accredited, as well as the daily hassles foreign reporters face in China. Their treatment truly is unreasonable and self-defeating, as reports on these problems generate further negative stories on China. More importantly, if journalists had greater access to all of China, official and unofficial, there would be more positive stories out of China. If China thinks it can force foreign media to simply report on China through their officially approved framework, then it is mistaken, and every day it is losing the battle for the minds and hearts of Western audiences. (I think their efforts at ideological control also have a corrosive effect on Chinese people's view of their own government as well.)

Seen in that light, I applaud the Vice President for sticking up for foreign correspondents, which was the centerpiece of an excellent post today by Elizabeth Economy of the Council on Foreign Relations.

At the same time, Biden's comments lose some of their power as a result of his own government's efforts to constrain the media. The White House itself has gone to great lengths to shape coverage of the President, including limiting press conferences and increasing the use of the White House's own staff photographer and keeping out press photographers from certain occasions. Even more important are the revelations from Edward Snowden that are emerging through the New York Times and Washington Post. The USG has put a great deal of pressure on these organizations and their reporters and has taken the position that everything being released and reported should not be. The British government has taken an even more hostile tact in dealing with the Guardian. Just as important, the activities of the NSA and the complicity, in part intentional, of Amerian hi-tech companies, is giving greater impetus to the end of the borderless Internet. Countries and companies are doing more to take as much control as possible of their telecommunications networks, and this inevitably will reduce the free flow of information. 

In short, the US government itself has taken steps, particulalry in the wake of 9/11, to exert control over the media and communications networks that has the effect of chilling investigative coverage and open discussion of issues that may expose the US government to embarrassment and uncover wrong-doing. (For a deeper discussion of the weaknesses of the American media, see the superb exchange from late October in the New York Times between Bill Keller and Glenn Greenwald.)

None of this is meant to reflect an equivalence of China's hard-fisted and explicit media crackdown and the more nuanced and less overt efforts at manipulation and ubiquitous surveillance by the US government. The Western press is still far freer than the Chinese media, even liberal elements such as Caixin Media and Sina Weibo. However, it wouldn't surprise me if in light of what the US does, Chinese would see Vice President Biden's comments as hypocritical and self-serving. They may conclude that the US likes a free press when it hightlights the deficiences of other governments, but as soon as it turns its gaze on "core US national interests," that commitment may be less firm. The Vice President would be on firmer ground vis-a-vis the Chinese if the First Amendment was better protected at home. And Americans would be better off as well.

Biden's approach reflects a broader "bipolar disorder" in how Americans typically engage China. (I'm, of course, only using this term metaphorically.) When we are discussing and debating issues domestically amongst each other, we recognize that there are lots of problems with existing policies and laws. This not only applies to the media, but, speaking from my admittedly liberal perspective, to the decline of privacy in general, our expensive health care system that leaves many without access, the growing gap between rich and poor, extensive corruption in Washington and state capitals, our decrepid physical infrastructure, the prevlance of guns that annually results in thousands of deaths and injuries, a weakly regulated financial system that favors big banks over small investors and consumers, a patent and copyright system that also favors large companies over consumers, continued racism, gridlock in Washington, and an education system that is generating declining abilities in math, science and other subjects. But when the Vice President and other officials go to China -- or meet them anywhere -- we tend to suppress and ignore these problems (or say they're irrelevant to the issue at hand), and tell the Chinese that the US stands for important principles such as the free market, a level playing field, human rights, and not using coercive force against peaceful countries, and therefore, China should yield on specific demands the US makes. 

Not only should we expect that China give more access to foreign correspondents, not to mention their own journalists, the US needs to be less "bipolar" and not pretend that the problems we have do not exist when we are talking and negotiating with others. Some may worry that doing so would feed the Chinese propaganda machine that the US is a terrible place and declining country. But I think doing so would have a more positive effect on America's image in China and make American negotiators more effective, not less. We would also gain greater control over contextualizing these problems and take that power away from China's propagandists. We should feel comfortable being open about our problems because the US has so many amazing strengths that we and the Chinese can admire, and we have a system that can be quite good at addressing these weaknesses. 

So I encourage Biden and other US officials to not only tell it like it is -- and should be -- in China, but to not ignore how it is in the US as well. We'll be a better country and have a more effective foreign policy by doing so.

From Nouns to Adjectives: The 3rd Plenum Communique

Since Party plenums are closed-door events with nothing emerging except what the leadership wants us to hear, we are still reduced to tea-leaf reading and old-school Zhongnanhai-ology. And although Xi Jinping has been praised for using more flowerly language and shows genuine emotion, the communique issued at the end of the 3rd Plenum of th 18th Party Congress is a bland document. This is the kind of thing you would introduce your students or family to if you wanted them to never be interested in Chinese politics and leave you alone. 

I drank some strong coffee, pulled out my highlighter, and opened my dictionary. What did I find? A document that potentially heralds substantial reforms, but leaves a lot, perhaps too much, to the imagination.  

Communiques from previous Party plenums that signaled major policy changes introduced new nouns to the ideological lexicon. The "commodity economy," "socialist market economy," etc. Perhaps the key word from yesterday's communique is "decisive," as in having "the market place the decisive role in resource allocation." That is not as big a change in direction as was ushered in at the 3rd Plenums of the 11th, 13th, or 14th Party Congresses. By focusing on an adjective and not a noun, the Party is now trying to clarify and sharpen the direction it wants China to go, not set a fundamental new course.

I say "perhaps the key word" because the summary provided by Xinhua at the end of the text did not focus on that point at all. It definitely is significant because it goes beyond previous statements of markets playing a "basic" role in allocating resources. But is it the most important thing in the document? No one can say for sure.

There were other significant elements.

On the positive side of the ledger:

1. It looks like we will see a lot of experiments and new national policies in a wide variety of areas, including general government administration, further price liberalization, central and local government finances and budgets, cadre assessment, property rights and land ownership, taxes, environmental protection, the judicial system, household registration, greater access to capital and industries for private and foreign industry, and ensuring competitive markets.

 2. There was a clear sense on the need to nationalize and unify policies, including reducing inter-regional barriers and standardizing government administration across the country. 

 3. The word innovation was used several times, including with regard to science and technology, but the adjective "indigenous" (自主) never appeared. This continues Li Keqiang's pattern of never saying "indigenous innovation," in contrast to Wen Jiabao and Hu Jintao, and portends a more liberal approach to sci-tech policy.

 4. There will be a creation of a national security council. It's unclear precisely what its job will be, but it could potentially operate like the US's NSC and help coordinate foreign and security policy across the ministries. This could help alleviate inconsistent signals and bickering we see between the PLA, Ministry of Foreign Affairs, MOFCOM, the PBOC, and other ministries.

 5. There was no mention of border disputes, the South China Sea, the island dispute with Japan, or cybersecurity. Any emphasis on a threatening external environment could be used to justify greater defense spending or a more aggressive international posture. We did not see that. 

On the negative or unclear side of the ledger:  

1. There could have been more details about specific kinds of reforms. Instead, there were lots of hints -- and hints are often critical -- but the more detail would have provided less wiggle room to opponents.

 2. There was a strong emphasis on the continued importance of the public, state-owned economy. Not only are SOEs important in "pillar" (支柱) sectors, but they are supposed to raise their overall competitiveness in the entire economy. That may be the politically safe thing to say, but it suggests genuine constraints on reforms in these sectors and walling off SOEs to standard rules regarding competition policy, market access, and financial markets. On the other hand, it is possible that this means SOEs will be pushed to be much more efficient, to hand over a much larger percentage of their earnings, to standardize their internal governance, and to compete more head-to-head with private and foreign companies. We just don't know, but the vagueness is not reassuring. 

 3. The creation of a Leading Small Group to Deepen Reform could be a way to get around the gridlock that exists in the standard policymaking process and the special interests within the Party, government, and SOEs that oppose change. This could help speed up adoption and make implementation go more smoothly. But its creation may also signal that there is significant opposition and making headway will be quite difficult.

4. Aside from emphasizing the need for judicial reform and genuflections toward democracy, human rights, and other standard elements of the constitution, there was very little new that would give one confidence the Party is willing to accept systematic constraints on its authority, either rules governing how it operates or ways it and the government can be held accountable. For those who think greater political space is needed for markets to work well and for state-society relations to be genuinely stable, this document does not openly provide a lot of hope. 

5. There was no mention of family planning policy despite signals it would be an important reform. Just the day before the state press ran stories to this effect. We will need to wait to see if the one-child policy is adapted further into an essentially two-child policy. 

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? 

 

 

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

 

The censor's marker

Last month I picked up a copy of Newsweek just before boarding a plane in Beijing for the US. The issue focused on women across the globe. Inside was an interesting table placing American women in comparative context. A thick black line was placed through the word "country" at the top of the second column. Given that Taiwan is mentioned in table -- not once but twice -- I can understand how this kind of thing might be insulting to Mainland readers. However, I can't think of a good substitute word to put in that location. "Region," "authority," "island," "location," etc, don't fit there.

There may be another explanation. Not nationalism, but prudishness. Perhaps censors were upset that Taiwanese women apparently have the world's highest ownership rate for vibrators, and discussion of such things shouldn't be so public. Or was it both?

At least Taiwanese women are good in math!

Speaking at the Caixin Summit on Green Modernization

I have no illusions about China's political system and its effect on freedom of the press, but no one can deny that the unofficial media in China have developed substantially over the last two decades, and this has been followed by the growth of the Internet and non-traditional media sources.

An initiator of this trend has been Hu Shuli. She broke through with Caijing Magazine from 1998 to 2008. But she left Caijing to form a new company, Caixin Media, which has expanded well beyond a weekly magazine. Caixin is now a brand applied across a wide range of information products, from periodicals to video programming to conferences.

Given Caixin's role in China, it was an amazing honor to be invited to speak at this year's summit, whose theme was "China and the World: Strategizing Sustainable Growth." I spoke on the panel on “Green Modernization – the Next 10 Years,” together with representatives from Rio Tinto, Citibank, and a local private equity company. I stressed that going green will require going beyond government-mandated standards. Green certification programs for products and construction, well developed in the United States, are just in their infancy in China, but hold a great deal of promise in reducing energy usage and increasing efficiency, all the while contributing to economic growth.

I also suggested that Chinese consumers use their market power to push domestic and foreign product suppliers to raise the environmental protection standards of their goods. A “China effect” could be just as positive in promoting green modernization as the well-known “California effect." As an example, I said that China shouldn't criticize the EU's new airline carbon trading scheme, which many have said is too costly and a trading barrier; instead, China should not only embrace it but issue their own higher standards. I think most folks in the audience were sympathetic to these kinds of suggestions, but one person interpreted my comment as a defense of European protectionism and went on a rant for several minutes. I actually would've been happy to engage her, but the moderator shifted to other questioners.

Here are links to more coverage of the conference and the Green Modernization panel. A PDF version of his PowerPoint presentation is available here (Download Kennedy Green Modernization Nov 11).

In suggesting that Chinese need to go beyond their government to promote green modernization, I provided data about the relatively low level of government transparency in providing information about the state of the environment and government policies.The Natural Resources Defense Council and a Chinese partner organization developed a Pollution Information Transparency Index based on 2009 data. They found wide variation across Chinese cities; the most transparent city was Ningbo, in Zhejiang; the least transparent was Xining, in western China. Peter Lorentzen of UC-Berkeley and Pierre Landry of the University of Pittsburgh took the data one step further to examine the reasons for these differences. The answer: cities in strong fiscal positions have the resources to collect environmental data, and cities that do not have a dominant company have the political will to release this information. Here is a look at the Top Ten and Bottom Ten and the related data. I'm grateful to Peter and Pierre for letting me use this information in my presentation.

The most interesting speaker on my panel was from Rio Tinto. He gave a detailed description of how this huge mining company attempts to be as efficient as possible and support reductions in energy usage for itself and its customers.

Beyond our panel there was a ton of interesting speakers and comments. Liu Mingkang, who just stepped down as head of the China Banking Regulatory Commission, described in detail how the CBRC has tried to monitor and control the negative consequencese of expanding local government debt. Economist Wu Jinglian spoke quite forthrightly about his hope that the new leadership line-up next year will usher in a new wave of economic reforms that liberalize China's markets and create a greater likelihood the economy will be more efficient and balanced in the years ahead.

All in all, a total blast!

Searching for Owen Lattimore

One of the highlights of the just-completed China study tour was the inclusion of journalists. Chris Fyall, a young and energetic reporter with the Bloomington Herald-Times, Greg Andrews, the equally energetic, though slightly older (seasoned?), managing editor of the Indianapolis Business Journal, and George Vlahakis of IU's Office of University Communications were all terrific. Chris, who must not need sleep, filed several stories in the midst of the trip. (When we returned I heard many people remark about the quality of the pieces.) Greg and George both kept blogs as we traveled, and Greg then made China the cover feature for the March 28-April 3 edition of the IBJ. George also took a few thousand photos -- literally -- several of which made it onto his blog, and many others were burned onto CDs he shared with the group. 

One special element of their participation is Greg Andrews' special connection to China. His full name is Greg Lattimore Andrews. His great uncle was Owen Lattimore, one of the world's foremost China experts of the 20th century; and his grandmother, Owen's younger sister, was Eleanor Frances Lattimore, who herself was a famous author of children's books. If you haven't read Little Pear to your children, you should (even if your kids are 40). Owen and Eleanor's parents moved to China at the very turn of the century to teach English, first living in Tianjin before moving to Shanghai, where Eleanor was born in 1904. (Owen and Eleanor had 3 other siblings - Katharine, Isabel, and Richmond.) After going to school in the West, Owen returned to China and in the 1920's worked in the insurance division of the British firm, Arnhold Brothers & Company. Part of his job involved traveling to western China to learn about the risks some of their clients faced, and that is how he originally became an expert in a part of China so few westerners (or Chinese) ever saw. Those skills were later translated into positions with the US government (he helped the US and its allies understand Mao and his Communist movement when the CCP was based in Yan'an, in northwestern China) and then as a scholar at Johns Hopkins University. McCarthy singled Lattimore out as one of the "Communists" lurking in the State Department, a total fabrication, but enough to force Lattimore out of Hopkins. He left the US and taught at the University of Leeds in the UK. Lattimore returned to the US much later in life and passed away in Rhode Island in 1989.

Having not learned of Greg's family connections until well after he had agreed to participate and just a couple weeks before we left for China, one side goal of the trip became to find the home in Shanghai where Owen and Eleanor lived. I put a call into my favorite historians: Jeff Wasserstrom, formerly of IU and now at UC-Irvine, has written some great books about Shanghai, including Global Shanghai; and Bill Rowe, who has taught history at Hopkins since the early 1980's. Bill didn't have any info on Owen's old addresses in Shanghai, but he shared a wonderful article (Download Rowe Lattimore JAS 2007) he wrote about Owen's scholarship. Jeff didn't have any details either, but he put me in contact with Shanghai officianado Paul French. Given his authorship of The Old Shanghai: A-Z, I figured we were in luck. I told Paul where we thought Greg's relatives had lived (in something called "The American Compound"), but that didn't yield any more substantial clues. He then put me in touch with another Shanghai specialist Tess Johnston, but her expertise is on the 1930's and 1940's, a little too late for us. So we boarded the plane to China thinking all was lost. Heck, even if we had an address, we figured that the building would have long been torn down and replaced by one of Shanghai's 5,000 high rises.

A couple days into the trip, Paul emailed me with one last suggestion. He said I should try Greg Leck, another Shanghai expert whose interest was the first few decades of the 20th century. I emailed him my final plea, and low and behold, he responded:

My 1916 directory does not show him [Owen], but my 1921 directory already has him moved out to Tientsin, to which he returned from his sojourn in Shanghai, to take up a journalist position. The best I can do is give you the address of his Shanghai workplace:  Arnhold Brothers & Co., Ltd.  (He worked in the insurance department.) Arnhold Building, 6 Kiukiang Road, Shanghai. (The company moved to Sassoon House at 1 Nanking Road around 1930, but Owen was long gone by then.)

He wrote "best" as if to apologize, but to us, this was fantastic. We had a real place and building to connect Greg to his family. I wrote to Paul and thanked him, and he responded with even more encouragement that made us more excited.

Just to let you know the Kiukiang Road (Jiujiang Road) building of Arnhold and Brothers still stands magnificently on the street and also has a plaque on the building identifying it as the former Shanghai office of Arnhold's. It's well worth a visit and you'll also find some other Arnhold buildings from slightly earlier round the corner on Dianchi Road (formerly Jinkee Road) - these two are identified by plaques on the outside.

So on Friday, March 18, we set out to complete the journey. After wrapping up very interesting visits to Tianma Micro-Electronics and Cummins Fleetguard, we took our charter bus from Pudong back into Puxi (the western side of the Huangpu River) with the rest of our group, but then had the bus drop the two of us off at the first convenient place it could pull over. We then walked 3-4 blocks to get to Jiujiang Lu (九江路), which is the more common way Kiukiang is transliterated into a form non-Chinese readers would understand. We started at about 700 Jiujiang Lu, and the numbers got smaller in the direction of the Bund, so that's the way we went. With even numbers on the left side of the street, we expected sooner or later we would have to run into 6 Jiujiang Lu. Block by block we went, and the numbers got smaller and smaller. I could then see we were getting closer to the Bund, and as we did the buildings began to look older and some of them had plaque on the walls identifying the historical roots. But we were running out of blocks, because the Bund is at the river's edge. When we got within 50 yards of the end of the street, I looked at the last building on the left, and it was something like #36 Jiujiang Lu. The plaque on the side of its cement face gave no indication of the Arhold Brothers & Co. To focus on something different, we crossed the street to the bund itself and enjoyed the skyline view of Pudong and the river and talked to a few curious Chinese. We then crossed back over and decided, hey, let's walk back up on both sides of the street, thinking that perhaps the street numbers since the 1920's had changed, and we should focus on the plaques rather than the address. We did this for about 15 minutes without any clear luck until I happened upon an old man sitting in a booth next to one of these buildings. I explained Greg's story thinking nothing would come of it, but I got an interesting answer. The man, who was serving as a guard for one of the buildings, or at least its parking lot, said that although he himself was born "after Liberation," that is, after 1949, he thought the building directly next to his had at one point been owned by a British company. So we went to give it a second look. We walked all the way around it and found no plaques; we peered through some glass windows, and the inside was currently being entirely renovated. It was stripped bare, with nothing of note inside, and just a light white-gray facade on the outside.

We got no confirmation this was the right place, but we were tired. We had exchanged emails with Jeff, Bill, Paul, Tess, and Greg, and Greg Andrews had consulted his living relatives and even some of their family papers. Despite not being sure, we decided to adopt this building as part of Greg's heritage. In front of it he stood, and I clicked away (iPhones have a nice fake clicking sound).

It's very likely we did something wrong in the search -- that there may be a different Jiujiang Lu, or we should have been at WEST Jiujiang instead of EAST Jiujiang, or we passed by the right building and were just too stupid to notice it, or it was just around the corner and we would have seen it had we taken 10 more steps in this or that direction.

But for now, that's irrelevant. Perhaps for no good reason, Greg and I now are nostalgic about this building. It may or may not be where Owen Lattimore worked in the 1920's, but it was where Greg Lattimore Andrews stood in 2011, and we know for sure his great uncle and grandmother walked these streets and stood along the bund and admired the beauty and vibrancy of where they were. What's a block or two when you've circled half the globe? We may not have found "history," but Greg lived a little more of his family's history. And for that reason, it was an exciting day.

If any of you Shanghai specialists out there know what we did wrong, don't tell us! No, I'm kidding. Please do let us know where we should have gone, and where we should have stood. And if you have a photo, even better! You'll earn a free coffee at the Starbucks nearest to Owen Lattimore's office. Now, I wonder, do you think Owen liked coffee?

Red Dawn re-make is re-made

I usually hate re-makes, but I was looking forward to seeing the new version of the 1984 movie Red Dawn. The original centered on how Americans in a small town repelled a Russia invasion. The new version was supposed to feature Chinese invaders bearing down on Michigan. But apparently because of concerns of how the movie would affect its business with China, the movie is being re-made to substitute North Koreans for Chinese.

A very good article in the Los Angeles Times reports that "the filmmakers now are digitally erasing Chinese flags and military symbols from "Red Dawn," substituting dialogue and altering the film to depict much of the invading force as being from North Korea, an isolated country where American media companies have no dollars at stake."

MGM may have saved some China business, but they're going to lose me. I'm not worried in the least about a North Korea invasion of the US. I think the chances of the Chinese crossing the Pacific are also ridiculously small (and I don't like fear-mongering against any country), but the thought plays into the collective American imagination, however warped, of a threatening China on the rise and on the march. North Korea scares Americans because it has nuclear weapons, and that doesn't fit with the premise of Red Dawn.

 

Spring Break in China

I'm leading a delegation of IU professors, Indiana business executives, and local journalists on a trip to Hangzhou and Shanghai during Spring Break. We leave in a few hours. We'll land at Shanghai's Pudong International Airport, then take a two-hour bus ride to Hangzhou. There we'll participate in a conference hosted by Zhejiang University, IU's strategic partner in China. Because Indiana and Zhejiang are both along the coast, it's natural they are sister state-provinces. :)

Following the conference, we'll visit with the Zhejiang government, a TV station, and tour several companies, including Alibaba and Geely. We'll then make our way to Shanghai, with a few more visits, including to Crown Biosciences, founded by former IU professor and Eli Lilly researcher, Faming Zhang. We'll also tour Shanghai General Motors, Cummins Fleetguard, and the LCD/flat panel manufacturer Tianma.

While I'm thrilled to be traveling with my colleagues and three terrific entrepreneurs -- Mat Orrego of Cornerstone Information Systems, Matthew Neff of University Health Management and CHV Capital, and Ben Shobert of Teleos -- I'm particularly excited about the two journalists coming with us, Chris Fyall of the Bloomington Herald-Times and Greg Andrews of the Indianapolis Business Journal. The Midwest media covers China some, but not to the extent it needs to. So our center created a program to help Indiana journalists better understand China and figure out how to report on the country in a way that is relevant to their audience. Chris and Greg are visiting China for the very first time. I've visited so often that it's easy to lose the thrill of the trip. Not this time. To make things even more exciting, Greg is Greg Lattimore Andrews. His great uncle was Owen Lattimore, one of the West's first  China specialists. Owen and Greg's grandmother, Eleanor, lived in Shanghai from 1904 to 1920. One scholar we are meeting translated Owen Lattimore's memoirs. Now if we could only find where the Lattimores lived, that would be so, so cool.

I'll write more in this space as the trip progresses. But you can also follow us through the blog, "IU Takes You to China" (印大华夏行). Its author is George Vlahakis, a manager in IU's Office of University Communications. This is also George's first trip, and I'm excited to see China through his eyes.

(Full disclosure: Faming Zhang, Mat Orrego, and Ben Shobert are on the advisory board of the Research Center for Chinese Politics & Business, which I direct.)

 

The "Experience China" Ad

Yes, this may seem like old news to you, but I've been offline for a few weeks and have some thoughts about the ad that weren't captured in other commentary.

I agree with the conventional wisdom that the ad tanked and did not give Americans a positive impression of China or Chinese people. The ad more than likely had the opposite effect. Yes, the people shown wore familiar "Western" clothing and did not seem exotic. And the average American might even recognize one or two of them, such as Yao Ming. But unless you watched the ad many times, anyone would have a hard time picking out individuals. As research found for me by IU political science doctoral student Edwin Way suggests, these folks look very competent, but competency often is accompanied by the quality of being cold, not compassionate.

Here's a key quote from this 2008 study by Cuddy, Fiske and Glick:

Groups perceived as warm and competent elicit uniformly positive emotions and behavior: admiration, help, and association. Those perceived as lacking both warmth and competence elicit uniform negativity: contempt, neglect, and attack. But most group stereotypes appear high on one dimension and low on the other: the ensuing ambivalent affect and volatile behavior endanger constructive intergroup relations. High warmth wth low competence yields pity and patronizing help or neglect. Low warmth with high competence evokes envy and strategic association or, under threat, attack. (p. 137).

Also significant is not only who is in the ad, but who is not. All of those shown are extremely successful, and in fact, not "typical" Chinese. Such an ad, which I think would've been more successful, would have featured farmers, migrants, construction workers, teachers, and children -- lots of children. And while red is a popular color in China, when Americans think of China and red, they have one thought -- Red China, that is, Communist China.

Why did they make these mistakes? Because it's very likely the ad's producers, like all advertising agencies, wanted to please their client -- the Chinese government. This is typical.

My mother, Karen Kennedy, who ran a successful ad agency for about two decades, reports to me that this is a typical dynamic of the profession:

It’s hard to blame the agency, even if they are from Shanghai—though I agree a really strong and principled US agency would have done a better job. The problem, I believe, lies with whomever commissioned the ad. I believe they were determined to get their way and had certain preconceived notions about how the ad should look and feel. The truth is most agencies are whores and will do what the client says; if not, the client will merely walk across the street.

And the client -- the Chinese government -- has shown repeatedly it has a hard time putting itself in the shoes of Westerners and shaping arguments they would find appealing and persuasive. As a quote from "A Father's Book of Wisdom," given to me by a local Bloomington bank says, "We do see things as they are. We see things as we are."

I can't wait for the next ad.

The NY Times, IPR Theft, and Software Piracy Data

It's the day before Christmas and all through the house...we're reading the NY Times editorial about China's growing thievery of intellectual property rights (IPR). It's rare for the world's "paper of record" to run an editorial about such a specific issue coupled with details about Siemens, railroads, etc.

As I've written before in this space and elsewhere, Indigenous Innovation policies are troubling, but mainly for their potential future harm, not for what has occurred so far. In the case of Siemens, I wonder why they haven't gone to court. Is it that they're afraid of upsetting the Chinese and being locked out of further business? That what the Chinese side did was hardball but legal?

The editorial notes that at the recent JCCT the Chinese promised to better protect software. On this point, it'd be instructive to look at some data. IPR theft data is extremely difficult to compile, and much of what is compiled is methodologically flawed (more in a second). But let's see what we've got. The most common measure is provided through an annual study released by the Business Software Alliance (BSA) and the International Data Group (IDG). The BSA/IDG studies have been released since 2004, and before that BSA released its own report for several years. But to be sure we compare apples to apples, let's just look at data from the seven BSA/IDG studies issued so far. I've compiled the data on China and the US in two graphs and a table:

Two things stand out from this table: (1) China's piracy rate, in terms of the percentage of pirated software to total software sold, is much higher than that in the US; but (2) the piracy rate in China has been consistently on the downward trend. Whereas it used to have the first or second-highest piracy rate in the world, in the 2010 study, China was tied for 26th.

Things look differently if we compare the China and American piracy rates in terms of dollar value of pirated software: 

From this perspective, the United States has been and continues to be the world's leader in terms of software piracy. Just using the last seven years, total software piracy in the US is valued at almost $53 billion, compared to almost $38 billion for China. Earlier this month BSA lobbied Washington to take a new approach on IPR toward China, focusing on achieving actual results. Perhaps BSA should push Washington to change its approach toward protection software IPR in the United States.

Two wierd things about these tables stand out: (1) The reduction in China's piracy rate, in terms of percentages, appears to have accelerated in 2005 and 2006, just when China had launched the first stage of its Indigenous Innovation policies; and (2) Despite the decline in percentage terms, the dollar value of software piracy in China seems to have grown. That must mean the total hypothetical software market expanded dramatically during the past few years, and thus it is likely that actual software sales are also rising quite quickly. 

What to make of these numbers? I think they're highly suspect guesses about what is going on.BSA/IDG explain that their data reflects the "value of pirated software if it had been sold in the market. It is calculated using a blended average price of software in an economy, as sold in retail stores, using volume licensing, and as bundled with hardware" (BSA/IDG, 2010 Survey, p. 8). This assumes that consumers would have paid for the software at the average price had the piracy option not been available. But we know that is not the case, and much less software would have been in use. This type of calculation may make sense when calculating the cost of stolen cars, but it doesn't transfer well to copyright infringement. Even the researchers at IDG who conducted the study for BSA disagree with terming the calculated figures as "lost sales" since it is likely only one in ten of those sales would have occurred at the retail price.

On the other hand, BSA and IDG are consistent, and although you don't want to be inaccurate when doing surveys, it is much more important to be consistent, that way your research maintains the same bias over time and space, and it is easier to make adjustments from that starting point.