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Ethnic issue is only one of the many dimensions of some of China problems

Comments on Michael Clarke “Beijing redoubles counter-terrorism efforts in Xinjiang” 26/02/2014, http://www.eastasiaforum.org/2014/02/26/beijing-redoubles-counter-terrorism-efforts-in-xinjiang/
Undoubtedly there have been serious ethnic problems in Xinjiang and some of them may have been caused by policies and/or implementations of policies and administration. However, attribute most problems in Xinjiang as ethnic problems may mask other causes to the problems. For example, there are many serious problems in areas that are mainly Han ethnic people - the dominant and the largest ethnic group in China, such as demolishing properties for new construction in cities or new urban areas. Some reports indicate that there are tens of thousands of mass unrests a year in China, a reflection of general problems as opposed to ethnic problems.
In terms of the pipelines linking Xinjiang to Turkmenistan and Kazakhstan, it probably paled in significance when compared to the Three Gorges Dam that caused/forced millions of people to move and migrate to other new settlement areas.
Were the problems of the Three Gorges Dam project mainly an ethnic problem perceived by people outside China? Probably not.
Development may cause some destructions and China has not been skilful in dealing with many issues associated with development, such as dislocation of people and destruction of some historical, cultural, religious and ethnic heritages.
Development can and often does involve changes. No one can promise no changes to anything while making development a reality at all occasions involving either natural or man-made things. The key issues include costs and benefits any potential development means and how to protect those that should be protected and prioritise things and how to handle sensitive issues.
While that is a fact, exaggerating issues that may be general but at the same time involving minority ethnic groups does not necessarily contribute positively to finding better solutions to resolving them.
For example, here in Australia there are issues and different views of how the economy in Tasmania is going and how to balance the need for development and growing the economy and protect the environment. Such issues, while differing in degrees, are not too dissimilar to some of the development issues in China.
Having made the above comments, I would say that the arrest of Uyghur scholar Tohti was a regrettable event. There should ideally be greater freedom of speech for everyone in China.


China's stability - a test for its national leadership team

Comments on Kerry Brown “Will China find the memory of Zhao Ziyang too hard to handle?” 25/02/2014, http://www.eastasiaforum.org/2014/02/25/will-china-find-the-memory-of-zhao-ziyang-too-hard-to-handle/

From what have happened so far under the new leadership team centred around Xi Jinping, it does not appear this team of President Xi is tactical not strategic. Xi, if successful in his likely ten years in the position of the top power, is likely to be ranked similarly with Mao and Deng, though success is far from being a certainty at this early stage of the 10 year period.

From the number of high level people who have been investigated (so called tigers) and charged in the anti-corruption campaign, it seems so far that Xi and his team are much bolder than the two previous leadership teams.

While from certain aspects that it would be important to revisit the issue of Zhao, that may be fairly minor from those more important and pressing issues that the new leadership team is facing now. The risks in rehabilitating Zhao and its potential for causing confusion even unrest may be very heavy for the leadership to bring that issue into their not too distant future agenda.

Media information/speculation seems to suggest that there may be some split within the current and some of the past top leaders as part of the anti-corruption campaign. The Zhao issue would add further fuels to that should that be brought to light any time soon.

Stability has to be one of the most important issues that the current leadership should be focused on.

Effective decision making key to regional infrastructure investment

Comments on  Mahendra Siregar, BKPM, Andrew Elek, ANU, and Maria Monica Wihardja “Seizing the global infrastructure opportunity in Indonesia”, 25/02/2014, http://www.eastasiaforum.org/2014/02/24/seizing-the-global-infrastructure-opportunity-in-indonesia/

If I were an Indonesian charged with managing the economy, I would probably put more emphasis and focus on the most likely and feasible options that are likely to be outside the G20 and possibly APEC exist multilateral frameworks. Some commentators have commented that the G20 has become a talkfest. And it seems indeed very difficult for the G20 to come to a common position with strong commitment to the issues discussed in the article, given the very different situations of the members' domestic economies and politics.

On the other hand, the AIIB initiative may be helpful to regional infrastructure investment, given that China is the sponsor or initiator and it has the money to invest overseas, as well as its links to the regional economies and its desire to show leadership with its financial resources outside of the IMF and world bank frameworks where it does not have adequate weight of influence due to under-weighted voting power.

Certainly it would be much easier to make decisions among the parties involved, given the needs for investing in regional infrastructure and the financial resources available that is fairly concentrated in terms of decision making, as compared to the IMF or the world bank where understandably there are more disparities among the major stakeholders.

The authors’ discussion on that may bear more fruit to advance infrastructure investment in Indonesia and indeed the East Asia region. And that is likely to contribute to enhanced growth of the region.
In short, the desire for using existing multilateral organisations to invest in infrastructure is one thing, the reality of difficulties in getting agreement is likely to be another, not too dissimilar to the world trade organisation negotiations and other bilateral or regional free trade agreements negations.


Proposal for UN to expand Gini measurement

Comments on UN “2014 AMR Part II (17 February - 2 March): Sustaining development gains through inclusive development”, 22/02/2014, https://www.unteamworks.org/node/423746#comment-63704
I address the last question listed above first. I think that a set of necessary and widely applicable conditions or strategies for fostering social inclusion and citizen engagement can be identified. 

If I can talk about social inclusion and citizen engagement in terms of economic ones because it is an important area and without this any benefits will not be sustainable in the long term.
Let's define economic growth as average growth of the economy of a country or a region. Then one can also calculate the economic growth by a set of classification of population based on their income levels, say percentiles. Inclusion can mean a number of concepts, say the lowest 10 percent, 20 percent, or 30 percent have also achieved growth that is not appreciably below the average growth.

Many people are used to using Gini index for equality purposes. Gini index is very useful in measuring income or wealth distribution for a country or region and indeed the whole world if one wishes to do so.
I do mind using that but have some concerns on indiscriminately using it to every occasion particularly to situations where changes are rapid and large in some of the underlying indicators like GDP growth. This is because Gini is a static indicator of relativity of income distribution for a particular point of time and can indicate very little about the level. As such, it may mask significant improvement in, say, poverty reduction when economic growth is rapid with the poor benefiting from it but at the same time Gini may show inequality has increased.

China is a case for this where poverty has been reduced significantly but its Gini measure may have worsened.
I think the UN should undertake some studies to develop some measures which can improve the shortcomings of Gini in that regard. This work may have important applications in managing expectations and contributing to a better and happier society by showing a true picture.


Australian and Chinese housing bubbles to burst soon?

Comments on John Collett “Nightmare vision of impending property crash”, 13/02/2014, http://www.canberratimes.com.au/money/investing/nightmare-vision-of-impending--property-crash-20140213-32kl2.html

While Harry Dent may be right in claiming there are bubbles in both the Australian and Chinese housing markets, his prediction of nightmare crashes of the two markets are unlikely to be realised, especially in the short term, say this year or the next.
By international standards based on the OECD countries of average housing price to average household income, reports show that the ratio for Australia is high and much higher than that in the USA. If that is used as the definition of housing property market bubbles, then there is no doubt that there is a bubble in the Australia housing market.
Applying the same principle, there are housing bubbles in some big cities in China, particularly Beijing, Shanghai and possibly Guangzhou. However, China's situation is different and the degree of bubbles differs enormously across the country and it is unlikely there are significant bubbles in many smaller cities and towns.
Whether bubbles exist is one thing and whether they are bursting is another, even though the former is generally the condition for the latter to occur.
While China's central government has been talking about regulating and controlling the housing market particularly housing prices within China for many years, the effects so far are not particularly successful. Talking about regulating and controlling prices does not necessarily mean to push the housing prices down significantly, even though different people may have different interpretations.
Further, the Chinese government cannot afford a hard landing or crash on its housing sector that may cause significant negative effects on its economy which has been described as the main reason underpinning its governing legitimacy by some commentators.
The Australia case is different but it has its own unique circumstances to sustain the high price levels, mainly its market demand is not simply domestic residents alone. Australia is geographically located in or close to Asia where there can be many shortages but population. Australia is an immigration country and there are significant immigrants each and every year that support a growing housing market, particularly in its two largest cities, Sydney and Melbourne. But that is not so different from other countries such as the US and Canada. What is significantly different is that there are significant external factors of housing demand, because non-Australian residents can buy new properties in Australia and its geographic location closer to Asia further make it more attractive to Asian buyers.
Based on that factor, the criterion used for defining bubbles in a country is strictly not applicable in its crude form of the ratio of average price to average household income. The existence of strong external demand factors means that that ratio is bound to be high. This is because while the house prices may be high relative to its domestic income, external forces may sustain the higher housing prices. In the eyes of many overseas buyers, the housing prices are not that high, given that many overseas buyers are relatively rich and the housing prices in their own countries may be high due to much higher population densities that mean land is relatively more scarce when compared to Australia. This reasoning clearly applies to some Chinese buyers.
To conclude, Dent will likely be disappointed when his predicted bursting of bubbles in both the Australian and Chinese housing markets in this and next year does not come true.

Treasurer needs to act on jobless rate

Comments on Mark Kenny “Joe Hockey feels sting of shock rise in jobless figures”, 13/02/2014, http://www.canberratimes.com.au/federal-politics/political-news/joe-hockey-feels-sting-of-shock-rise-in-jobless-figures-20140213-32ndm.html

While his rhetoric is understandable, Joe Hockey needs to recalibrate his approach to the coming budget in the wake of significant deterioration in the jobless rate.
Government has a duty in keeping unemployment low and fiscal policy is a major tool in achieving that. Monetary policy is another major macroeconomic tool in managing jobless rate and economic growth and it has done its fair share in regard. Now it is fiscal policy that must do its fair share which requires Hockey to act sensibly.
Six per cent unemployment rate is not too bad in international comparison, but it is not good at all when compared historically within Australia, if the report that it is a 10 year high is correct.
It is understandable that it would not look good for him to suddenly change what he has been arguing in terms of repairing the budget. But it is the real action in the making a good budget that counts.
On that it is hoped that Joe Hockey will not disappoint as the Treasurer.

A sensible approach to Qantas by Hockey

Comments on Mark Kenny “The storm facing Qantas was one Joe Hockey couldn't ignore”, 13/02/2014, http://www.canberratimes.com.au/federal-politics/political-opinion/the-storm-facing-qantas-was-one-joe-hockey-couldnt-ignore-20140213-32lkr.html
While it is sensible to provide a sovereign debt facility to Qantas in the short term, it would be better to revoke the Qantas sales legislation, particularly the restrictions of foreign ownership, so Qantas can compete with other similar airliners on an equal footing.
Providing such a debt facility can be justified due to the restrictions of the Qantas Sales Act. In that sense, Joe Hockey is not inconsistent at all in his approach to corporate welfares.
It has been a long while since the privatisation of Qantas and many arguments, such as the needs for a national carrier in case of emergence for it to be used in transport Australian worldwide, or excuses underpinning that legislation no longer hold. Irrespective what ownership of Qantas, it can be reasonably expected that it will meet the needs whenever they arise. Further, commercial charted flights can also be used to meet government obligations to its citizens in case of emergencies.
It is time to re-examine that legislation and the federal parliament needs to act and the sooner it does the better for Qantas and the nation. For Qantas it needs to compete on the same footing as other carriers. For the nation it would avoid unnecessary government subsidies to private businesses.
Qantas has been and still is a very good air carrier even in the face of extremely strong competitions particularly in the wake of the GFC. A strengthened position will enable it to perform better.


Closing the gaps needs to be realistic and practical

Comments on Michelle Grattan “Failure to make progress closing the Indigenous employment gap”, 12/02/2014, https://theconversation.com/failure-to-make-progress-closing-the-indigenous-employment-gap-23099

While we all like to see the close of the gap between Indigenous Australians and the rest, it will be very challenging to achieve all targets, particularly those like life expectancy within the set period.

Further, while I have very high respect to Deloitte Access Economics, the headline number of 1.15% economic benefit of closing the gap appears to be very optimistic, perhaps too optimistic.

What is the share of Australia's Indigenous population? How much can one realistically assume closing the gaps can achieve?

One must bear in mind that there are various gaps in a society such as Australia. For example, there is a perceived or observed pay gap between male and female in workplace in Australia that may take very long time to achieve to close that pay gap.

A point on capital account liberalisation in China

Comments on Daili Wang “Taking the middle road to capital account liberalisation in China”, 12/02/2014, http://www.eastasiaforum.org/2014/02/06/taking-the-middle-road-to-capital-account-liberalisation-in-china/
I share some agreement with the following argument by Daili Wang: "Capital account reforms should be accompanied by the introduction and the enforcement of an adequate degree of regulation and supervision. Inflows of foreign direct investment are broadly considered to result in net benefits. Nevertheless, this investment has potential negative effects, such as inhibiting local entrepreneurship and causing irreversible environmental damage. Authorities must create regulation and supervision about the type of inward investment that will maintain China’s competitiveness and guard its national interests."
The same spirit may also apply to outward capital flows.
However, it is important to balance the daily efficiency of capital markets and the prevention of potentially large destabilisation and/or destruction of speculative forces and in the case of panic. This is no different to banking where government may need to step in at times of crisis, say for deposit guarantee, but it may take a quite different form.
Such a balance requires well designed provisions in capital account regulation that has some built in mechanisms to prevent crises but does not affect daily operation of the capital account.

AIID is a positive initiative

Comments on Andrew Elek “The potential role of the Asian Infrastructure Investment Bank”, 12/02/2014, http://www.eastasiaforum.org/2014/02/11/the-potential-role-of-the-asian-infrastructure-investment-bank/

From reading this article by Andrew Elek, the AIIB is largely if not exclusively an initiative by China. It is understandable that China has made such an initiative, given China's economic size, huge savings including foreign exchange reserves and its experience in economic development and infrastructure investment/building, as well as the needs from the region.

It is a positive step from China to contribute to a better Asia and APEC.

It also appears that such an initiative may also reflect China's desire for reforms to existing international institutions and the difficulties that it has faced in that direction.

It is not very clear from the article, whether AIIB will be a Chinese state bank, a private bank with some support from the Chinese government, an international institution or other types of institution/organisation, even though the articles seems to imply the form of AIIB is likely to be dependent on consultation and negotiation China has and will have with APEC members and other interested or potentially interested parties.

The broader the shareholders or stakeholders of the AIIB, the better its influence is likely to have. On the other hand, decentralisation of the governing structure may have implications for decision making.

An appropriate balance is needed to make the AIIB most useful to and beneficial for the region.