Friday, October 22, 2010

A Talk with Kishore Mahbubani

This past Tuesday, Kishore Mahbubani came to talk at Yale. He was the Singaporean permanent representative in the UN Security Council and currently he is the Dean of the Lee Kuan Yew School of Public Policy.

Mr. Mahbubani is extremely forward thinking and has written articles and books about the idea that the West in in decline while Asia is rising. I found his speech fascinating. Here were his main points:

  • Historical eras change rapidly. Power and dominance can decline in the blink of an eye. For example, he has lived through the fall of the British colonial empire, the Cold War era, and the rise of America.
  • Western dominance has actually been an anomaly in history. Before the year 1820, for thousands of years, the two largest economies in the world were China and India. The last two hundred years of Western rise has been a historical aberration.
  • The coming era will signify the end of western triumphalism. America reached its peak in the 80's and 90's - now we have to manage our decline. What is happening today in Asia is analogous to the Industrial Revolution in Europe - but look at the scale. In Europe, living standards increased by 50% in one lifetime. However, in Asia today, living standards are jumping by 10,000% during one lifetime.
  • Why is the change occurring now? Asia is adopting what Mahbubani calls the "7 Pillars of Western Wisdom": free market economics, mastery of science and technology, culture of pragmatism, meritocracy, culture of peace, rule of law, and spread of education. These factors build upon each other to create te massive rise and development of Asia.
The challenge today is to find a way to reshape the global order without conflict. For example, right now global institutions are very western-dominated. The IMF and the World bank have requirements that the leaders must be European or American. France and the U.K. are permanent members of the UN Security Council though they are no longer major players on the world stage.

What about democracy? Mr. Mahbubani also warns us to "be careful what you wish for." Right now everyone wants democracy to spread all over the world. However, there are 5.8 billion other individuals out there. If they all got a say, the world may not be as friendly to Americans as it now is. For example, he claims that a completely democratic China would be an extremely nationalistic China, and that right now the Communist Party is carefully controlling its population and keeping it stable. Democracy will come later when the country itself is ready for it. He provides the example of the U.S. - we took 200 hundred years to reach full democracy.

These are all fascinating ideas that really bring us a new perspective. What do you think of the rise of Asia? Is it inevitable? Will it be bad news for the U.S.?

The image is courtesy of the Lee Kuan Yew School of Public Policy.

Saturday, October 9, 2010

Liu Xiaobo's Nobel Peace Prize

Wow, exciting news yesterday morning - this year's Nobel Peace Prize was awarded to the Chinese dissident Liu Xiaobo. He's the only recipient that was in prison at the time of receiving the award. The committee wants to recognize him for his peaceful protest against the Chinese government.

The Chinese government really is really angry. Apparently, they threatened to break off ties with Norway, even though the committee doesn't have anything to do with the Norwegian government. This prize definitely adds more pressure on China regarding its lack of political freedoms for its citizens. The CCP must be so stressed right now - they already are getting called out by the international community on economic issues such as their currency undervaluation.

I feel like China will feel like this is an attack on their sovereignty and legitimacy. This may open up room for discussion among citizens, but the government itself may become more aggressive, paranoid, and strike out. After all, it is being attacked already for its economic policies and its behavior towards Japan. However, since the Nobel Prize isn't really connected to one actor, China may not have the ability to directly retaliate. I can imagine the government clamping down on internal dissidence more intensely, because it may be afraid of protests generated by this award. After all, its already trying to block Liu Xiaobao's name from internet searches. It's unclear if he himself even knows he won the award.

So, I really want to know your opinion. Do you think he deserves the prize? How do you think the Chinese government will deal with being under the spotlight yet again? Will Chinese citizens start to press for political freedoms again?

This image is courtesy of the LA Times.

Thursday, October 7, 2010

China's Currency

I'm sure you have all heard about how China's yuan is undervalued compared to the U.S. dollar, and how this is supposedly damaging our economy and causing American workers to lose jobs. This argument has been all over the news, and more recently, both Republican and Democratic candidates' campaigns.

For example, this article "China-Bashing Gains Bipartisan Support." In addition, articles about China's currency have made headlines in the New York Times for the past few weeks.

However, have we considered any opposing arguments, or at least views that believe there are better solutions to deal with the economic crisis?

In my class "Gateway to Global Affairs," we discussed alternative perspectives. First, some background info: right now, with the yuan undervalued, exports are cheap for China and imports are more expensive. On the other side of the coin, imports from China are cheap for the U.S. and it is costly for U.S. manufacturers to export to China. Therefore, if the yuan appreciates, Chinese imports will become more expensive for U.S. consumers.

The main argument in the media seems to be that if we forced China to appreciate its currency, goods from China would be more expensive, making our domestic manufacturers more competitive, so American jobs would increase. However, why would jobs move from China to the U.S.? This is not a world that only consists of two countries. It makes sense that job creation would occur in the next low-cost producer, such as Vietnam and India. It is not likely that jobs would return to the states. So are politicians just using China as a convenient scapegoat for our economic problems?

Who is benefiting from artificially-cheap Chinese imports? Largely the American lower-middle class (think Wal-mart shoppers). So why the disconnect?

On the export side: change in currency may make U.S. products cheaper in China, so this may benefit American export manufacturers. However, Chinese savings rates are far higher than the rates in the U.S., so it is not certain that Chinese citizens would spend that much more money on imports. A good policy may be for the Chinese government to encourage more consumption among their citizens. Stephen Roach argues for this approach in the NY Times. He's the chairman of Morgan Stanley Asia.

Stephen Roach also teaches at Yale. Funnily enough, he's actually the sponsor for our Global China Connection chapter.

Saturday, October 2, 2010

Bill Valentino, VP of Corporate Social Responsibility for Bayer

This semester I joined the executive board of Yale's chapter of Global China Connection. Global China Connection (GCC) is the world's largest student organization dedicated to providing the future leaders of China and the international community with a platform to engage each other. A non-profit, non-partisan organization, GCC is represented in over 50 chapters at top universities around the world. We work directly with top Chinese universities as well as a number of corporate and organizational partners on a variety of projects to provide opportunities for our members to gain international experience and develop an international network.

Specifically, we organize speaker events to educate the Yale campus about different issues. We also plan to host a student delegation from Peking University in the spring. Our first speaker of the year was Bill Valentino, the VP of Corporate Social Responsibility for Bayer in China.

Mr. Valentino also is a professor at the prestigious Tsinghua University in Beijing. He has lived in China for 23 years and can speak fluent Mandarin. Last Friday, Mr. Valentino visited Yale to speak about corporate social responsibility (CSR) and what that really means for the company, its consumers, and the people that it affects. Here are some of the most interesting points he made:
  • Every company has a direct impact on the environment, social fabric, and development of an area. It's important to be conscious of this ability and whether it has positive or negative consequences.
  • Creating value: most companies only look to the short-term and care about creating economic value. However, there is also the potential to create social value and ecological value in a community.
  • The world's richest 20% consume over 76% of the resources. The world's poorest 20% consume about 1.5% of resources. In the future, companies that look to develop new markets will be targeting the lower segments of society.
  • Companies are sensitive to consumer opinion and consumers care about the ethics and values of the company. Therefore, it is in the interest of the corporation to be socially responsible.
  • China in general has to balance the desire for economic growth with the health of its people and its environment. In the past few decades of rapid development, the latter two have been mostly ignored. For example, 90% of rivers in China are polluted, and the income gap between rural and urban areas has increased greatly.
  • When we think of sustainability, many times the environment comes to mind. However, there are many other facets of sustainability such as public health, education, food security, poverty, gender, labor, etc.
  • China is becoming aware of the need for CSR. From the blogosphere to Hu Jintao himself, a recognition is forming that balance is necessary in the corporate world.

I am really glad that foreign corporations are now becoming aware of the effects they have on the surrounding area and are now dedicating entire departments to CSR. Bayer is an extremely prominent international pharmaceutical company and is leading a great example. Let's hope other businesses, both foreign and domestic, soon follow in their footsteps (Foxcomm anyone?).

Thanks so much to Mr. Valentino for coming to Yale!