Revaluing the yuan (#126; Topic B)

Since the World Affairs Forum on "China Today" (#123) took place just three days after PRC President Hu's visit to USA (#124), and since the revaluation of yuan, China's currency, was suggested by the media as a "hot" topic for discussion, I decided to add a few comments on it in my presentation. A key point by researchers at the Center for Strategic and International Studies (beside that quoted in #125) is that "The chief cause of America's difficulties is not China [but by] attending to its fiscal and trade deficits and strengthening its educational system." This sentiment was echoed by a Stanford professor writing in the Wall Street Journal (4/20/06): "China's reduced trade surplus -- i.e., less lending to the U.S. -- will mean higher interest rates here and abroad." About this time, the G-8 finance ministers met, and there were rumblings about the strength of the US dollar as the world's reserve currency. This allowed me to quote another essay, in the Barron's 4/24/06, detailing the fate of pound sterling (the world's reserve currency before the US$) from 1 UKP = $4.03 in 1948, to = $2.80 in 1949 devaluation, to = $1.05 in 1985 all-time low, and to = $1.78 now; the implication is that, if not careful, the US$ might follow suit. Indeed, when Treasury secretary Snow, in a CNBC interview on 4/29/06, could not give a convincing reason why a revaluation of the yuan does not mean a devaluation of the US$, the market reacted by lowering the dollar's value relative to the Euro and to the yen. Well, the market rightly says that it cannot be easily dumbed down.

US firms operating in China (#125; Topic B)

At the World Affairs Forum on "China Today" (#122-4), I was expected to discuss US-China economic relations. For this segment, I prepared several viewgraphs designed to counter the misleading argument, popular in the US media, that China closed her door to international competition to the detriment of US companies. One shows the number of US firms operating in China grew from 23 (with investment totalling $120 million) in 1980 to some 49,000 (with investment totalling $51 billion) in 2005. (Data are from a report by China's National Development and Reform Commission, quoted in Wall Street Journal, 4/18/06). On another, I was able to draw from a 4/20/06 interview of GM's CEO over CNBC. In it, he stated that China opened the door to GM a decade ago, while Japan and South Korea, to this day, limit their domestic auto manufacturing to domestic companies. (The World Bank group had set up a joint venture in China involving French auto maker Peugoet about a decade before GM's entry; I was personally involved as a WB staff member.) He added that GM has a 17% share of the Chinese market, #1 among foreign car manufacturers, and that, while GM had an overall loss of some $10 billion last year, its segment in China was profitable in 2005. I was also able to quote, from a recently published book on China (by researchers at the Center for Strategic and International Studies and reviewed in the Economist 4/22/06) that "America is about $70 billion a year richer as a result of trading with China, despite painful job losses in unskilled industries."

Presidential visit between USA and China (#124; Topic F)

The World Affairs Forum on China, held on April 25-26 in Shepherdstown WV (#122,123), just a few days after PRC President Hu Jintao's visit to USA on April 18-21. Thus, in my presentation at the Forum, I had a segment on the history of presidential visits between the two countries. For the record, they are as follows:

1972 2 21~28 President Nixon to China
1975 12 1~5 President Ford to China
1979 1-28~2-5 Vice Premier Deng Xiaoping to USA
1984 4-26~5-1 President Reagan to China
1985 7 22~31 Chairman Li Xiannian to USA
1989 2 25~26 President George H. W. Bush to China
1997 10-26~11-3 Chairman Jian Zemin to USA
1998 6-25~7-3 President Clinton to China
2002 2 21~22 President George W. Bush to China
2002 10 22~25 Chairman Jian Zemin to USA
2005 11 19~21 President George W. Bush to China

"Can we be friends?" (#123; Topic A)

At the very beginning of a seminar on "China Today" for high-school students held in Shepherdstown WV yestesterday (#122), the MC asked for questions from the audience. "Can we be friends?" was one of the questions offered. This is indeed a profound question, and reminds me of an utterance, by Rodney during a Los Angeles riot many years ago. In the LA case, involving a conflict between an Afro-American citizen and European-American policemen, the speaker was speaking from a position of weakness; he sought accommodation. Here, the speaker, a citizen of a superpower, is speaking from a position of strength; still, he/she seeks understanding and offers cooperation. A very positive attitude. When I had occasion to touch upon this question, I mentioned that, among western powers, the Chinese people view Americans most favorably -- or, stated in the reverse, least unfavorably -- that latter honor is reserved for the UK for its role in the Opium War (an event mentioned by one of the panelists in this seminar). Time did not permit me to comment that, while accepting reparations after China lost a war against an alliance of 8-powers, the other seven (six European countries plus Japan) tried to squeeze every last ounce of silver from China, but USA at least had the decency (when confronted by a Chinese diplomat) to leave some money behind for sending Chinese students to USA to study. The first group of such students was sent to Yale, and President Hu Jintao made reference to it during his visit to Yale last week. Because of this gesture, China and USA were always friends -- never enemies. Thus, "Can we be friends?" is superfluous. Perhaps a better phrasing might be "How can we be better friends?" Friends suggests mutual acceptance -- tolerance, if you will. Friends are not dominant-recessive, not "you are either with us or against us;" friends are equals, "live and let live."

Cultural identity and understanding (#122, Topic E)

The second day of a two-day seminar on "China Today" (#118), sponsored by the Rotary Club of Shepherdstown WV and held yesterday from 8:30 am to 3:00 pm on the campus of world-class National Conservation Training Center, was for high-school students. Some 200, from seven high schools in the county, participated. The format called for (1) four panelists to give a 20-minute presentation each in the plenary session, (2) students to discuss specific topics in small groups while having lunch, (3) panelists to visit some of these small groups and participate in their discussions, (4) spokespersons from each small group to present key points in the reconvened plenary session, and (5) panelists to comment on some of these key points. These students impressed me greatly -- they listened intently, they debated issues seriously, they summarized points systematically -- above all, they asked thoughtful questions. One of the themes that was mentioned repeatedly by various small groups is culture -- culture identity, understanding of culture, cultural differences, exchange of culture. Come to think of it, if China represents east and if USA represents west, a China-USA encounter is indeed a East-West encounter. Given their youthful exuberance and their sheltered life, it is understandable that many students held/hold a high regard for western culture -- "ours is superior," almost along the line of "you are either with us or against us." To gently counter the former, I mentioned that "Chinese culture has several thousand years of history behind it;" to the latter, I offered that, to the Chinese way of thinking, it is "Live and let live." To these impressionable minds, it is hoped that the program sponsored by the Rotary club has allowed them to broaden their thinking and entertain alternative viewpoints.

"From which country did you come?" (#121; Topic A)

Yesterday, I went to the Brookings Institution for a briefing on PRC President Hu Jintao's visit with US President George Bush next week. For convenience, I went to its cafeteria for lunch, sharing a table with a man sitting alone. I asked whether he was a staff member; he was. He was formerly a staff member in the World Bank group, as I was. He then asked "Are you from Japan?" Since the World Bank has staff members from all over the world, when meeting a stranger in a situation like this, I have been accustomed to ask "From which country did you come?" -- for four simple reasons: (1) I don't know many countries by name; (2) I cannot discern, by looking at one's facial features, whether he/she is a citizen of country A or country B; (3) mentioning a specific country, if wrong, might offend the one being asked; and (4) why speculate, when a direct question is just as easy. So, I was surprised that a former fellow World Bank staff member would risk being offensive (and he was). Still, I answered his question, but added that a direct question would be just as easy. To prove my point, I asked him the question; he was from Germany. He then asked how long I was with the World Bank group, and what I did before that. To the latter, I answered: "I was a university professor." Before I could mention any university by name, he blurted out: "Beijing University?" This could either be a praise (Beijing University in China has the same high regard as Yale in USA) or a put-down (I was not good enough to be on the faculty of a US university). Regardless, I thought he was rather presumptuous. After answering his question ("University of Washington in Seattle"), I said as much. By this time, he had finished his lunch and it was time for him to go back to work. I remained at the table, finishing my lunch, reading some papers to kill time, and then walking to the room where the briefing was to be held.
Posted at 7:22 pm, Tuesday, April 11, 2006

Index to entries #81 - #120 (#120X; Topic O)

A Attitude - people of principle 81, "It's all your fault" 92, power play: 1741 and 2005 101, "I carry a bag" 119
B Business - making money in China 83, "Are you ashamed?" 86, Washington vs business 89, trading with enemy 94, protectionism 96, western brands in China 98, culture and reform 104, yuan revaluation 111, currency manipulation 115
C Classics - bettering the teacher 103
D Daily life - sharing-a-secret 82, meditation120
E Education - school before games 90, role of university president 95, tenure decision 99, Ivy League education 116
F Foreign affairs - western civilization 91, statistics 100, western journalism 105, port management/ownership 109, tariff bill 112
G Games
H History - Zheng He's legacy 106, honoring Zheng He 108, history 100+ years from now 110
I Innovation - democracy 93, abacus 118
J Sino-Japanese relations - visiting shrine for war criminals 87, suing Japan for 1938 bombings 102
K Customs
L Language - "mistakes have been made" 85, native tongue 97, homonyms 113
M Money matters - saving vs. spending 88
N Nostalgia - Valentine's day 84, friendship 107, Cancun 1981 114, typewriter 117
O omooc blog-management
Posted at 5:03 pm, April 11, 2006

Meditation, Eastern style vs Western style (#120; Topic D)

In a day-long workshop on Living Well With Cancer I attended yesterday (#119) was a concurrent session on meditation. The room had subdued lighting, which I thought fitting, but it also had a DVD beaming some nondescript music -- neither classical nor modern, neither Eastern nor Western. I thought the leader would turn it off when the session began, but she did not. She merely used the remote control to lower its volume. The type of meditation she practiced is concentrative, which places emphasis on breathing -- paying attention to breathing is said to banish negative thoughts, increase feeling of well-being, enhance inner strength, and such -- benefits valuable to a cancer sufferer. Well and good. Still, I was puzzled that, throughout her talk -- and, later, during short periods of meditation -- the music was on. When she invited questions, I said that I thought meditation is supposed to be practiced in absolute silence -- I mentioned that, a few months ago, I attended a session sponsored by the Library of Congress with Dalai Lama as the featured speaker, which included a segment on meditation, done with absolute silence in an auditorium seating some 800 people. This was also so in a meditation demonstration by a yoga master from India. While I did not mention it, one of my Tai Chi teachers and a follower of meditation, when he saw fit to include meditation, he did it in absolute slience. Indeed, in meditation related to Tai Chi, the emphasis is not on breathing per se, but on directing one's attention to the inner workings of one's body -- specifically, to directing the flow of energy to identify areas that are not functioning properly. Thus, to my way of thinking, having music or whatever is disruptive rather than contemplative. But I did not pursue the matter, charging it to the difference in approach between East and West.
Posted at 11:33 am, Sunday, April 9, 2006

"I carry a bag" (#119; Topic A)

The keynote speaker of a day-long workshop on Living Well With Cancer I attended today, co-sponsored by a hospital, an HMO, and a TV station, was by a cancer survivor, an African-American woman in her early 30s who is also a pastor of a century-old church in DC. She talked, movingly, about her personal life, from being a poor kid in the District to her unending struggle for financial survival in early days, to her being inflicted with cancer, to her decade-long study to be a pastor, and to her being elected to her present position a few years ago. For visual impact, she carried a bag -- and said, repeatedly, that "I carry a bag." The bag, actually, is a two-in-one; as she succeeded in fighting off her early misfortunes, she discarded the outer bag to reveal a smaller bag -- and suggesting, symbolically, of shedding some of her baggages. While justifiably proud of her achievements, I nevertheless detected an underlying sense of unfairness. (I was sitting at the first row, in a seat that was closest to her, so I could see her expressions quite clearly.) As a person, she worked hard; she played by the rules -- but she had to struggle most of her life, to "fight back," first (my conjecture) for her skin color and, later, for her unwelcome disease. Here, she used the phrase "We fight this together" repeatedly, perhaps to the "sisters" who were in the audience (perhaps two-fifths of the attendees today were African-Americans, an unusually large percentage, suggesting their susceptibility to cancer). Perhaps she equated the attendees to her congregation, instilling hope in them -- to fight back, whether in life or for cancer.
Posted at 11:59 pm, Saturday, April 8, 2006

Abacus (#118; Topic I)

Yesterday, an ex-colleague at the World Bank asked me to substitute for him at two events, both on "China Today", in West Virginia. With a Rotary Club being the sponsor, in my resume, I included a line stating that, at one time, when I was a partner in the Taipei office of an international CPA headquartered in Manila, I was a Rotarian, using Abacus as my name. Ah, abacus, the world's first calculator. An authentic version of this Chinese invention is a rectangular wooden frame, with a fixed divider about 1/4 from the top along the longer side, 17 columns (the number is invariably a prime number: 11, 13, 17, and 19 are commonest); for each column, two beads above the divider, resting at the top of the frame (each with a value of 5) and five below, resting at the bottom of the frame (each with a value of 1). Using an abacus is straight forward -- common sense plus simple directions. For example, in adding numbers 1 through 4 in sequence, one first pushes up a below-divider bead toward the divider, yielding 1; when adding 2 to it, two below-divider beads are pushed up -- the three below-divider beads together represents the new subtotal at this point (3). When adding 3 to this subtotal, pushing three more below-divider beads is no longer possible (only two are still available), one needs to invoke a simple direction: "plus 5 minus 2" ("plus 5" = pushing an above-divider down; "minus 2" = removing 2 below-divider beads) -- the resulting one above-divider bead (with a value of 5) + one below-divider bead = 6. Adding 4 to this subtotal needs another simple direction: "minus 6, increment 1 [to the column to the left]" -- columns are in the base-10 mode; a bead in a left column is 10 times more valuable than its immediate-right counterpart -- here, the bead to the left (with a value of 1 x 10) + no beads in the column to the immediate right (0) = 10. Last December, our son, returning from a vacation in Cambodia, brought back, as a gift to me, an artwork with 2 abacuses, each with 23 columns, with each column having only one above-divider bead and four below-divider beads. (The second above-divider bead and the fifth below-divider bead are for overflows, useful when doing multiplication or division. They are frequently omitted in abacuses made in Japan and other Asian countries.)
Posted 7:45 pm, Wednesday, April 5, 2006

Typewriter's "transformative power" (#117; Topic N)

Yesterday's Washington Post has an article, complete with a photo, of a 1910 Corona typewriter found by three 12-year olds in a neighbor's basement. Now on display at the Arlington Central Library, it invites "anyone who wants to share their memories of the transformative power of the typewriter" to visit it. I have no idea what is meant by a typewriter's "transformative power," but I do have a fond memory. It was during the 1949-50 academic year, when I was enrolled at the University of Pennsylvania's Wharton school as a graduate student. To earn an MBA, I needed to write a thesis, which, of course, had to be typed. The going rate for typing at the time was 25 cents per page. Assuming that my thesis would be 75 pages long, and assuming that I needed a draft, that meant a total page count of 150, or an outlay of $37.50. Considering that the tuition for the academic year was only $500, that was a lot of money. One day, at the Student Union, I saw an ad, posted on a bulletin board, that a fellow student was selling his typewriter for $25. I did not know whether this was a good price, but, since having a typewriter would allow me to type the thesis myself, thereby saving me $37.50, I bought it -- a used Remington, perhaps 20~30 years old, about my age (I was 21 at the time). The seller was a tough bargainer, refusing to budge; I paid the asking price. Later, I learned that I paid too much, but it was too late; the seller refused to take it back. I knew how to type when in college in China; in fact, I had a portable typewriter, a Smith Corona, bought new -- and, thus, newer than the Remington. After earning my MBA, being unable to return to China, I enrolled at the University of Illinois's PhD program in Accountancy, rated No. 1 in the nation. Many courses I took there required term papers and, to earn a PhD, I had to write a dissertation. I managed to do all these on the Remington. Though I have moved many times during the interim 57 years, this bulky black box is always with me -- now in retirement as I, it has contributed mightily toward my well-being during its active years.
Posted at 8:31 pm, Tuesday, April 4, 2006

Is an Ivy League education worth it? (#116; Topic E)

Five alumni of St. John's University in Shanghai were invited to another alumnus's home for dinner Saturday, 4/1, probably to celebrate the host's 80th birthday. Reminiscing after dinner, C.F. commented that his first-year tuition upon arriving in USA was $400, about one-tenth of the average annual income of $4,000 in US. (Mine was $500; see #12.) Now, the tuition to an Ivy League school is $40,000, about 40% of a middle-class family's income of $100,000. Since the cover of Washington Post Magazine's special issue on Education (published Sunday, 4/2, but home-delivered 4/1) asked: "Is It [an Ivy League education] Worth It?", we felt that we could offer comments from three different perspectives. One, Shanghai's SJU, which existed until 1952, might be compared to a "Big Three" in USA. Two, many of us, upon arrival in USA, earned graduate degrees from Ivy League schools (among the six of us, at least one PhD from Yale, two masters from Columbia, and an MBA from Penn). Three, many of our children also went to Ivy League schools (our two children and son-in-law have a total of 5 masters and one BA from Penn, and another BA from Yale). The WP article used earnings as the measuring stick -- and answered the question ("Is it worth it?") in the negative. In my view, using quantifiable measures as criteria misses the point. The single most important benefit from going to a prestigious school is an intangible one -- the self-confidence gained from such an association. We conduct ourselves with self-assurance. In the face of adversity we remain calm. This was quite obvious when our children, having graduated, were seeking employment. There was no hurry; wait for the right one; and, lo and behold, the right one did come in due course. Indeed, there is nothing more satisfying than knowing that you are in control of yourself. Come to think of it, this is what Confucius taught us: as a prerequisite to being a useful member of the society, discipline yourself. A brilliant teaching at its very best.
Posted at 9:09 pm, Monday, April 3, 2006

Currency manipulation (#115; Topic B)

After a week or two's macho action, akin to a player's making high-stake raises in a poker game with but a deuce as the hole card, the talk about China's being a "currency manipulator" has subsided -- and the rumor inside the beltway is that a new US player is likely to be installed. Seizing this occasion, the 4/3/06 issue of Barron's, the Wall Street Journal's sister publication, offered a historical discourse on US Treasury secretaries' efforts in "stabilizing the dollar" over the last 25 or so years. It seems that, back in 1987, Jim Baker, Reagan's Treasury secretary, tried the same tactic on Germany. Following a rebuff, "Treasury-bond yields topped 10%, and the Dow plunged 22% on a single Monday, October 19, 1987." Michael Blumenthal, Carter's Treasury secretary and US's next player, "also endorsed a little dollar debasement as what's good for the U.S. economy." The article then said: "But things are different now, aren't they? We stand four-square for a strong, stable dollar, but at the same time we want an upward appreciation of the Chinese yuan. We want the world to keep sending its excess capital to cover our current-account deficit, but only to buy our low-yielding IOUs." (pp 7-8). My sentiment exactly. The 4/1/06 issue of Economist clarified the issue with a revealing chart, showing that (due to a stronger US dollar relative to the Euro) the yuan, in Euro terms, has appreciated by about 16.5% since January 2005 (the peak was 19+% in November 2005). The article then continued: "Those who accuse the Chinese of pursuing a cheap-yuan plicy forget that during the East Asian crisis [in the 1990s] China did not devalue, although almost all its neighbors did." Indeed, to discourage currency speculation, such as by a well-known specimen camouflaged as a philanthropist, who almost brought down Thailand's economy single-handedly in the 1990s, China, based on my reading of materials in Chinese, is likely to do a gradual revaluation of the yuan pari passu with the prevailing interest rate -- with the latter at 4-3/4%, (a speculator's cost) a revaluation of up to 5% over a year's time (the benefit) would hardly make currency speculation profitable. We'll see.
Posted at 7:02 pm EDT, Sunday, April 2, 2006