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from Breakingviews:
Review: China’s red capitalism needs retooling
By Wei Gu
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
China’s authoritarian capitalism may be a victim of its own success. It is getting harder to satisfy a population that is devoid of ideology and which demands non-stop lifestyle improvements. Powerful state-owned companies are consuming the fruits of reform. Moreover, the system’s lack of checks and balances has led to widespread corruption. For China to thrive, it needs change its one-of-a-kind development model. That is the persuasive argument made by journalist-turned businessman James McGregor in his new book, “No Ancient Wisdom, No Followers”.
McGregor appears to be particularly concerned with the role of State Owned Enterprises, making them his first chapter. Over the last decade the SOEs have become much more efficient and profit-oriented, but the resurgence of these government-favoured companies, which account for as much as half of GDP, squeezes private companies. And the state-private competition is biased against the private sector. Chinese think-tank Unirule estimates that subsidies and foregone costs gave the SOEs a $1.2 trillion boost between 2001 and 2009. Without that help, the average return on equity for the SOEs would have been a negative 6.3 percent.
The combination of state support and underlying unprofitability hardly suits them for their new role as leaders of China’s corporate push abroad. McGregor suggests that Chinese leadership change priorities. The goal should be to promote true entrepreneurship by levelling the domestic playing field.
from Breakingviews:
China’s hukou belongs on history’s scrapheap
By John Foley
The author is a Reuters Breakingviews columnist. The opinions expressed are his own
China's future lies in building bigger, better cities - then giving everyone a fair chance to live in them. For over 50 years the "hukou" system of household registration has prevented free movement, and controlled where and how people live. This inhumane system is changing, but too slowly. It belongs on history's scrapheap.
from Breakingviews:
Weibo should tap the financial network in 2013
By John Foley
The author is a Reuters Breakingviews columnist. The opinions expressed are his own
Weibo is changing Chinese society, but can it change investors' minds? The rambunctious social media site, where over 400 million of the country's web users post, follow, share and criticise, could be worth multiples of what the market currently suggests. A partial spin off in 2013 could be a good way to unlock Weibo's charms.
from Ian Bremmer:
The three 2012 themes that matter most
2012 - the year of the primary, the election, the Diamond Jubilee, the superstorm, the flying dictator, the escaped dissident, the embassy attack, the empty chair, the tech protest, the Olympics, and dozens of other stories already forgotten. It was a busy year and a terribly volatile one, too. Which of these stories will actually matter five years from now? By my count, three:
1) China rising
2) The Middle East in turmoil
3) Europe muddling along
They’re the good, the bad, and the ugly of 2012.
The Good: For the sake of our listless global economy, thank goodness for China’s rise. The country’s Commerce Minister is promising that China will hit its GDP growth target of 7.5 percent for the year. (In the first three quarters of 2012, it grew 7.7 percent.) China’s ability to power through the financial crisis provided global markets with much-needed energy, and its momentum, despite the crisis in the Eurozone, a key trade partner, has helped limit the damage. If it wasn’t for the resilience of the world’s second-largest economy, we’d all be a lot worse off.
from The Great Debate:
Who will be Rockefellers of BRIC nations?
John D. Rockefeller’s immense wealth made “rich as a Rockefeller” part of the lexicon. But his legacy rests not on what he earned. As the founder of Standard Oil and the richest person in history, Rockefeller donated so much money during his life that he needed a team of philanthropy specialists to distribute it. The result was the Rockefeller Foundation, chartered in 1913 “to promote the well-being of mankind throughout the world.”
Much as the Gilded Age in the United States created titans like Andrew Carnegie, Cornelius Vanderbilt and Rockefeller, the economic success of emerging powers has produced a new class of multimillionaires and multibillionaires. Brazil, Russia, India and China are home to 276 billionaires, according to the most recent Forbes list, almost a quarter of the world’s total. Many have begun to focus on what Carnegie called “the business of benevolence.” This nascent trend is poised to grow. But it requires support if philanthropy is to meet its potential to tackle the developing world’s socioeconomic challenges.
from Ian Bremmer:
China is the elephant in the situation room
Earlier this month the National Intelligence Council released its Global Trends 2030: Alternative Worlds report — a document that comes out once per presidential administration — mapping out likely geopolitical trends over the next two decades or so. As usual, it’s a must-read, offering comprehensive analysis of the disparate factors that will drive global politics through 2030.
Further, the NIC took bold steps to correct some previous weaknesses in past reports. In the past the report nailed the “what” more often than the “when.” That is particularly the case with its treatment of the United States, for which “past works assumed U.S. centrality.” This time around the NIC sets an increasingly “multi-polar world” — which I call the G-Zero — as the backdrop of its report, acknowledging that the lack of global leadership has accelerated in the wake of the global financial crisis of 2008-09. America’s status as a “hegemonic power” is eroding, and no country is likely to take its place.
from Ian Bremmer:
In a year of big elections, Japan’s was Godzilla
Entering 2012, we were staring at a host of critical elections and transitions in countries that represent about half the world’s gross domestic product. You would think those elections and political handovers would have been some of the most important events of 2012. Yet they were largely red herrings.
In China, the consensus view is that even with a change of leadership, China is largely the same as it was; if anything, the Chinese leadership has doubled down on the approaches of its former government. In Russia, Vladimir Putin went from running the country as prime minister to running the country as president. In France, Nicolas Sarkozy was voted out and a socialist, François Hollande, voted in, but that hasn’t changed France’s stance toward the European Union, its most important relationship. And in the U.S., Barack Obama swatted aside Mitt Romney while Congress remained divided, making four more years of the status quo likely.
from Photographers Blog:
Coffin therapy
By Sheng Li
After many days trying to set-up an interview at the Ruoshui Mental Health Clinic, which resides within a commercial apartment building in Shenyang, China, I finally received a call from the owner on December 12 who granted me the access and opportunity to photograph one of their “death experience therapy” patients.
An hour later, I found myself in the so-called “death experience room”, a 10-square-metre room with nothing but a coffin on the floor. On the wall there was a poster of Jesus holding a newborn baby illuminated with gloomy blue lights. My first impression? Quite intimidating.
from Global Investing:
African growth if China slows
The apparent turnaround in Africa's fortunes over the past decade has been attributed to the rise of China and its insatiable appetite for African commodities. So African policymakers, like those everywhere, will have been relieved by the recent uptick in Chinese economic data.
But is Africa's dependence on China exaggerated? A hard landing in the Asian giant will be an undoubted setback for African finances but according to Fitch Ratings. it may not be a disaster.
from Breakingviews:
China Inc helps AIG streamline, at a price
By John Foley
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Bob Benmosche is making AIG more aerodynamic - at a price. The U.S. insurer has agreed to sell its aircraft leasing business to a Chinese-led group for a valuation of $5.3 billion. AIG’s own shareholders will probably forgive their chief executive for the mean headline number and the lack of a clean exit, and focus on the fact that AIG is a step closer to independence from its government shareholder.
