Thursday, May 15, 2014

Of Money Supply and Mattresses

Padding for a cadre’s good night sleep

This entertaining New York Times Op Ed penned by author Yu Hua raises the lid on the variously creative ways that corrupt Chinese officials attempt to conceal their ill-gotten gains. The Op Ed piece is ostensibly an explanation of why the faster growth of China’s money supply relative to its GDP has not resulted in runaway domestic inflation. The hypothesis? That a large proportion of the money supply is in the form of bribe money that is socked away rather than put into circulation. While the intriguing economic theory is not substantiated with empirical data, the inventive means that bureaucrats have used to stash the cash are worth describing here:
- $4 million in a safe deposit box;
- $1.5 million in the bathroom of a new apartment, which subsequently developed a water leak;
- $450,000 in a garbage heap next to his brother’s house;
- $3 million “wrapped in layers of plastic and hidden in a hollow tree trunk, beneath an ash heap, in a rice field and inside a latrine”;
- $200,000 in a rented luxury apartment. Despite wrapping the cash in plastic, it got moldy. Presumably, he should have reinvested part of the booty in a functioning air conditioner;
- $21.5 million (!) in cash and gold hidden away in a bureaucrat’s two houses. He later admitted that hiding the loot was a colossal headache.
It’s commendable that China’s reluctance to create a currency note worth more than RMB 100 ($16) is partially motivated by the desire to make cash-based corruption and money laundering more cumbersome. However, the bigger underlying problem of course is that such graft is still so rampant. And if the growing pile of dirty cash is not stemmed, at some point, inflation will indeed become a real problem. The iconic red RMB 100 notes may even become a cheaper material than cotton and coils for stuffing mattresses.

Tuesday, May 13, 2014

North Korean Memoir – A Transforming Read

Moving hearts, minds and the soul.

This just-released book is the sort that can save lives – hopefully even 25 million of them. It is a memoir written by Jang Jin-sung, a North Korean defector and ex-poet laureate for Kim Jong-il, and translated into English by Oxford-educated Shirley Lee. It is the most absorbing read that this blogger has had in many years. Why is it better than the many noteworthy books on North Korea that have been published before? Because it was written by a high level insider - one of the country’s chief propagandists - who also happens to be an articulate and sensitive writer, with a vastly different perspective from that of a Westerner or a "common" (if there can be such a characterization) North Korean escapee. 

It's not just a searing indictment of the Kim dynasty or a political dissertation that details the organization and functioning of a Stalinist dictatorship. It's not just an intimate account of unimaginable human suffering that has been inflicted on a nation’s population over the past few decades by an evil regime. It's not just a thrill-a-minute international espionage story that follows two high-value defectors as they flee, starving and penniless, across the winter landscape of Korea and Northern China, hunted by security forces from both countries. In fact, it is all of these story lines, plus more. The range of its setting stretches from privilege to privation. It is a depiction of a place that seems surreal and hallucinogenic, though it is only too real. It is a story of a man’s awakening from a blinkered life to a wide world beyond his imagining – both its horrors and beauty. It is about his coming to terms with terrible truths and the equally terrible lies that he had helped to perpetrate. It is a buddy story about two young men on the run who share every human emotion possible – from valor to shame to frailty to brotherly love. And perhaps most importantly, it is an epic poem, written by a talented story teller. As such, the book touches the reader in ways that no other account of North Korea has done before. By interweaving original poetry and lyrical descriptions of artistic expression into a John le Carre thriller, there is something for everyone. It runs both wide and deep, like a restless ocean.
As such, it has the potential to reach an audience that is broader than any book on the subject. One can only hope that it does, and that by burrowing deeply into millions of readers, it changes the perspective and energy of the global dialogue on North Korea. Such change is desperately needed – evil on this scale needs to be combatted by more than just a handful of poignant, indomitable souls such as Jang Jin-sung, or a few politicians and international NGOs. At stake are millions of lives, and our very humanity.

Jang Jin-sung's blog:


Thursday, May 8, 2014

From PRC to UAE

Mandarin spoken here.

The UAE, led by its crown jewel principality of Dubai, is a jaw-dropping place. It’s a country that should barely exist, situated as it is where a bone dry desert meets a salty sea, with no fresh water for hundreds of miles around. However, money and cheap petroleum, if poured in with sufficient abandon, and a few rip-roaringly big desalinization plants can change anything. Once a series of trading posts between Arabs and the Indian subcontinent, the Emirates are now home to the ultimate in man-made superlatives and oddities. The world’s tallest building, by a huge 300 meter margin. A “seven-star” spinnaker-shaped hotel with enough gold leaf to fund a country's central bank. The world’s largest mall. The world’s biggest indoor ski facility. The world’s tallest hotel. The list goes on and on. And yet its population demographic is a throwback to a society from the nineteenth century: a small fraction of hyper-wealthy locals, dressed either resplendently in white thobes or ominously in black burkas, which lords over millions of foreigner workers (mostly from Southeast Asia or the Philippines) who live with few rights and close to the poverty line. The principal aim of the place? To attract wealthy foreigners with the lure of trading financial assets and living the good life in a sun-drenched, tax-friendly, first-class accommodated living environment. Over the years, Brits, Saudis and Russians have come in droves. And more recently, particularly since an inflated asset bubble burst in 2008, so have the Chinese. There is now a Dragon Mall especially catering for them. Mandarin language use has expanded. Festivals feature dragons, lion dances and firecrackers.
Not wanting to feel left behind in the paper chase for Chinese wealth, Dubai’s neighbor to the west – Abu Dhabi – has thrown off its more conservative, understated cloak and swung open its doors. As summarized in this
 report in the Jing Daily, the efforts, like a pomegranate tree, have been bearing lush fruit. Over 32,000 Chinese visited Abu Dhabi in the first quarter of 2014, resulting in the best first-quarter tourist figures ever. Furthermore, in April, a massive group of 16,000 employees from the China branch of the Nu Skin direct-sales beauty company visited the UAE on a 10-day boondoggle. Such numbers are big enough to impress even those used to witnessing outrageous excesses.
Potential constraints to the future growth prospects for Chinese in the UAE? Booze and casinos are still severely limited. But who knows going forward. After all, the UAE has already shown that, in a place where big money can transform anything, anything is indeed possible.

Wednesday, May 7, 2014


It should come as no surprise that many of the best young (less than fifty years old) universities in the world are located in Asia. It should also stand to reason that many of the top schools are technology-focused. The table above lays out the Top 10, as compiled by The Times Higher Education website in the UK. A few additional names and their rankings have been added from an alternative source of university rankings, provided by QS. As shown, at least four of the top five institutions hail from Asia. Interestingly, the two from Korea are not located in Seoul, but rather in provincial cities – Daejeon in the case of KAIST and Pohang in the case of POStech. While the names on this list don’t yet match the venerated and storied universities in the US and Western Europe, they are names to watch in the years ahead, particularly if the global academic brain drain begins to tip and then reverse itself, to flow from West to East.