China »

Social Stability and the Legacy of Tiananmen Square
[9 April 2010, Comments Off on Toppled Government in Kyrgyzstan Raises Uncomfortable Memories for Beijing, Tags: , , , , , , , ]

Most commentary on the April 7th protests and apparent collapse of Kyrgyzstan’s government has focused on the Kyrgyz political situation, the failure of the 2005 Tulip Revolution, (former?) president Kurmanbek Bakiyev’s autocratic behavior, and the roles of the United States and Russia.

But I want to turn readers’ attention to the relevance of this event for China. And there could even be serious implications for U.S. global economic and political priorities.

This week’s events in Kyrgyzstan parallel, in some ways, China’s own Tiananmen Square protests in 1989. Those were also a fairly spontaneous, nation-wide movement responding to both political repression and rising prices. In both 1989 China and 2010 Kyrgyzstan, many policemen and soldiers refused to attack their countrymen. Both culminated in violence in the capital (though the Chinese student protest movement, unlike the Kyrgyz opposition, was unarmed and peaceful).

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India »

Frustration of Foreign Companies in China Might Be a Boon for India–But Only If India is Ready
[1 April 2010, Comments Off on China’s Tense Business Climate Could Benefit India, Tags: , , , , , , ]

Integrated auto manufacturing facility near Chennai, India*

From the Indian perspective, the recent downtown in China’s business friendliness to foreign companies is good news. Some companies are beginning to question whether they have too many eggs in the China basket.

Right next door to China is another vibrant economy, with relatively stronger domestic spending, a younger population, and–within just 15 years–what is expected to become the world’s largest population, larger than China’s.

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China, Publications »

Date: 24 March 2010.

Publication: BusinessWeek.

Author: Daniel Michaeli.

The best strategy for dealing with Beijing’s chilly new business climate is not to copy Google’s example

No matter how tense commercial relations between the U.S. and China become, American corporations cannot afford to mimic Google’s (GOOG) mistake and give up huge growth opportunities in the world’s largest market. That’s why business leaders need to adjust their strategies quickly to stem the damage.

First, they must cultivate untapped sources of support within China, beginning with independent executives who also chafe at Beijing’s market-unfriendly policies. Coordinating a message with these leaders would change the narrative, removing the perception that greater economic openness means giving in to foreign pressure.

Some are already willing to join U.S. companies in public support of better Chinese economic policies. On Mar. 24, for instance, Bloomberg reported that Chinese executives including Yang Yuanqing, CEO of Lenovo (LNVGY), have gone public with their support of the currency realignment U.S. exporters need to be more competitive in China.

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China, U.S. Policy »

How Not to End Chinese Currency Manipulation
[24 March 2010, Comments Off on About Sanctioning China (and Then Being Sanctioned by China), Tags: , , , , , , ]

The Chinese Renminbi, whose largest denomination remains 100 yuan ($14.64)

In the recent hoopla about sanctioning China for currency manipulation, there are a few factors that are being overlooked. These factors suggest that sanctioning Chinese exports won’t help the United States achieve the economic results one would hope to achieve.

To begin with, the goal should be reducing the trade deficit with China not for its own sake, but to produce more jobs in the United States. (After all, this is why China’s currency manipulation matters.)

So U.S. companies need to find more demand for products they produce, either here or elsewhere around the world. Yet if the U.S. slaps a 25% tariff on Chinese goods, it might as well give up on selling much at all to China’s 1.3 billion-person market.

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China »

When the Going Gets Tough…Google Leaves
[22 March 2010, Comments Off on Google’s China Blunder, Tags: , , , , ]

There was never a chance that the Chinese government would cave to Google’s demand that it end censorship of search results, as I argued when Google first announced its threat to leave China in January:

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China, U.S. Policy »

I’ve heard many people over the past few weeks question whether we should continue engaging with China as we have–or, even more starkly, whether we should engage with China at all.

The argument goes something like this: Engagement was supposed to produce a different kind of China than we’re seeing today, one that shares U.S. interests. Because the Chinese government is behaving increasingly aggressively against the “status quo” and has been moving backwards on political and economic reforms, engagement has failed and we need another policy.

I understand the frustration underlying this kind of argument; I, too, am deeply troubled by recent trends in China. But we should question the assumptions and reasoning above. Here are a few reasons why:
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China »

Landless Peasants and Social Stability

Petitioners Line up in Beijing (Daniel Michaeli, 11/2008)

John Garnaut of the Sydney Morning Herald says rural land disputes could lead to “revolutionary turmoil” in China, citing Yu Jianrong of the Chinese Academy of Social Sciences. This is a very sensitive issue in China. (Indeed, imagery relating to government land-grabs led Chinese officials to stop showing versions of the film Avatar.)

But after studying these very issues in China in 2007 and 2008, I would caution readers that truly revolutionary turmoil from land disputes per se is highly unlikely.

These land disputes occur in times of economic plenty, when companies are looking to expand their operations out of cities into surrounding villages. Landless peasants are not highly destabilizing when the economy is good and they can find jobs in cities.

I would flip around Garnaut’s point: in economic hard times, land disputes are likely to become much less common as corrupt local officials have much less to gain from them; but the products of earlier land grabs–landless peasants–could prove to be a destabilizing force.

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