A right to schooling, but not to education


Swaminathan S. Anklesaria Aiyar
Aug 14, 2009           
     
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India has just enacted a Right to Education Act, guaranteeing every child in the six to 14 age group the right to free, compulsory education. The new law is essentially socialist: it seeks to ensure that, as far as possible, state governments provide free government schooling to all children. But it also obliges private schools to reserve a quarter of their seats for poor and low-caste children. This could, almost by accident, create the biggest school choice programme in the world, covering 30 million children.

The new law has several flaws. Government teachers cannot be fired, one reason why teacher absenteeism in government schools is chronically high. In one survey by a Harvard economist, a quarter of government teachers were absent on any given day, and only half were teaching. The law does not address teacher accountability. Teacher unions are too powerful, so politicians dare not discipline them.

Currently, millions of children complete school without being able to read simple paragraphs or do simple sums. Yet the act talks only of access to schools. It is concerned wholly with educational inputs, not outcomes. It provides a right to schooling, but not to education.

Children from richer families perform better because they get private tuition in the evening, sometimes from the very teacher who was absent at school in the morning. The new law prohibits government teachers from giving private tuition. This is supposed to induce them to take teaching in school more seriously. Alas, teachers will break this rule with impunity.

The law mandates quality standards and official certification for all private schools, but none for government schools. Government teachers are armed with the appropriate degrees, while many private school teachers are not.

Yet, in the absence of motivation or accountability, teaching in government schools is so pathetic that many poor parents in urban slums send their children to fee-charging private schools rather than free government schools. Often these private slum schools are of low quality, yet poor people find government schools worse.

The new law says all private schools must reserve a quarter of their seats from first grade onwards for neighbourhood children from "socially and educationally disadvantaged classes" - lower Hindu castes and poor people, who are well over half the population. For these children, the government will reimburse private schools.

This will not be the standard voucher system found in other countries. Indeed, many politicians hate the very word "voucher", and view the 25 per cent reservation as a way of hammering elite schools rather than empowering students through school choice.

Elite private schools fear the system will impose a huge and unwarranted tax on them because the voucher will not cover their actual costs. They will probably appeal to the courts against the new law's reimbursement provisions, and it remains to be seen what view the courts take.

The author is a research fellow at The Cato Institute's Centre for Global Liberty and Prosperity (SEHK: 0803, announcements, news)

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Nuclear supply crunch bodes ill for cancer fight


Michael Richardson
Aug 17, 2009           
     
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Leading cancer control experts met in Vienna recently to discuss strategies for fighting the growing cancer burden in Asia and the Pacific.

Cancer, once considered to be mainly an affliction of the rich, is fast becoming a major global health problem. Specialists estimate that by 2020 there will be about 15 million new cancer cases a year, the majority of them in developing countries. Asia alone can expect up to 5 million cancer deaths annually by then.

The Vienna meeting was organised by two UN agencies - the International Atomic Energy Agency (which is responsible for all forms of nuclear energy, including its use in medicine) and the World Health Organisation. The aim was to enable cancer experts to share their knowledge with health professionals developing and implementing cancer management strategies in low and middle-income nations in Asia.

Yet even as methods for fighting cancer improve, a global shortage in the supply of the main medical radioisotope is threatening this success, forcing doctors to ration supplies and prioritise patient care by delaying treatment of less urgent cases.

Radioisotopes, tiny radioactive particles that can be injected or ingested, are the backbone of nuclear medicine. More than 100,000 hospitals and specialised cancer clinics worldwide, including those in Hong Kong and other parts of China, routinely use them.

Radiotherapy treats some conditions, especially virulent forms of cancer, using radiation to weaken or destroy targeted cells. But about 90 per cent of nuclear medical procedures involve diagnoses of illnesses such as heart disease and cancer with radioactive tracers that emit gamma rays. These rays can be detected and "photographed" by imaging equipment, providing far more information than X-rays or ultrasound.

The low energy gamma rays easily escape the body, keeping the radiation dose to a safe level. The most common radioisotope used in diagnosis is technetium-99m, with some 30 million procedures per year, or about 80 per cent of the total. The technetium is itself derived from the decay of another isotope, molybdenum-99. The latter is produced most efficiently and cheaply in nuclear research reactors. There are 280 of these reactors around the world. But most are designed to do other things and cannot be easily adapted to make molybdenum.

At present, just four reactors - in Canada, the Netherlands, France and South Africa - produce 95 per cent of the world's molybdenum-99 for technetium generators supplied to hospitals and clinics. All the reactors are more than 40 years old, nearing the end of their lives and vulnerable to unplanned shutdowns. One of the oldest, at Chalk River near Ottawa, closed abruptly for repairs in May. The reactor, the source of 40 per cent of the world's molybdenum-99, is not expected to return to service before the end of the year.

The second biggest source (about 25 per cent) is a research reactor at Petten in the Netherlands. It is also in need of major repair. Shutdowns of reactors producing molybdenum have become all too frequent. Continuous supply is vital since it is impossible to stockpile the molybdenum or technetium isotopes. They have a so-called half-life of only 67 hours, meaning that they lose half their radioactive energy in less than three days - and half of what's left in another 67 hours. As a result, these medical isotopes have to be delivered by express air and land transport.

Early this year, the IAEA met to discuss the fragility in the global technetium supply chain. But high capital costs, low profit margins and exacting licensing processes make it hard to establish new facilities without incentives or subsidies - which many governments are reluctant to approve as they battle recession.

Human ingenuity may find a way around this modern medical conundrum. But no solution is in sight and without it, patient care will suffer.

Michael Richardson is a visiting senior research fellow at the Institute of Southeast Asian Studies


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Failing the nine steps to effective policymaking


Joseph Wong
Aug 19, 2009           
     
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The government has made it clear that the pilot scheme to conduct drug tests on secondary-school students in Tai Po will proceed in December, despite the concerns of various groups. But something must have gone wrong in the policymaking process when those who expressed concern included Bishop John Tong Hon, of the Catholic Church in Hong Kong, which is a large school sponsor, and the privacy commissioner for personal data, Roderick Woo Bun.

As the chief executive has likened the fight against youth drug abuse to an all-out war involving the whole community, this is a timely reminder that the government should get its act together and do a better job. Our government can learn some useful lessons from Britain.

As part of its Modernising Government initiative, launched in 1999, the British government developed a professional policymaking model for officials that features nine key principles. According to the model, a policy under development:


clearly defines outcomes, taking into account the likely effect and impact of the policy in the future five to 10 years and beyond;

takes full account of the national and international situation;

takes a holistic view looking beyond institutional boundaries to the government's strategic objectives;

is flexible and innovative, willing to question established ways of dealing with things and encourage new and creative ideas;

uses the best available evidence from a wide range of sources;

constantly reviews existing policy to ensure it is really dealing with problems it was designed to solve without having unintended detrimental effects elsewhere;

is fair to all people directly or indirectly affected by it and takes account of its impact more generally;

involves all key stakeholders at an early stage and throughout its development; and

learns from experience what works and what doesn't through systematic evaluation.
If we apply the above model to the school drug testing scheme, there are some glaring omissions. For example, has the government clearly defined the outcomes of the pilot scheme? Why did it not involve the privacy commissioner, an important stakeholder, in the early consultation? Some international schools in Hong Kong have been conducting drug tests on students for many years. Why did the government not study their experience more closely and solicit their help?

As the chief executive has said, drug testing is only one aspect of the war against drugs. Other areas include mobilising the whole community, garnering support of various stakeholders in the districts, enforcement against drug traffickers, and rehabilitation of drug takers. The adverse public reaction towards school drug testing will be a blessing in disguise if it helps officials improve and fine-tune the details of the Tai Po scheme.

As a former civil servant and minister, I readily accept that, in policymaking, the government faces many constraints. Hence, the British model remains a reference. But increasing globalisation and civil engagement demand that governments adopt a more systematic and professional approach in policymaking to win public support and achieve the desired results.

Based on overseas experience, our war against youth drug abuse will have to be fought on many fronts with the full support of the community. Innovative ideas, systematic evaluations and continuous improvements should become an integral part of the strategy that may stretch on for years.

When the chief executive delivers his next policy address, in October, he should lay out a comprehensive plan with specific proposals and clearly defined outcomes that have taken into account the views and aspirations of all stakeholders.

Joseph Wong Wing-ping, formerly secretary for the civil service, is an honorary professor at the University of Hong Kong


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Law for the times
Imposing artificial 'stability' at the expense of justice can no longer work for a changing China

Jerome A. Cohen
Aug 20, 2009           
     
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Only enlightened leadership will move China towards a rule of law. Bottom-up cries for justice and independent courts increase daily. Will the top eventually respond with structural reform rather than dictatorial repression? Can China's deeply conservative political elite, so determined to impose artificial "stability" on a dynamic nation, produce leaders with the vision and vigour to press for a legal system in keeping with the country's economic and social progress and its world stature?

The Communist Party's current attack on human rights lawyers and law-reforming non-governmental organisations exemplifies the problem. Lawyers lead the battle to implement the constitutional rights and statutory protections that the party has promulgated in its quest for legitimacy. The battle has become increasingly intense as the party seeks to preserve its monopoly of power against multiple challengers who have been disappointed by their inability to obtain relief from the truncated, authoritarian and inadequate legal system established by Deng Xiaoping after the Cultural Revolution.

Activist lawyers have thus become the battle's first casualties. Yet they are closer to the people than party officials and represent growing popular demands for justice and for a court system that is honest, fair and competent, untainted by corruption, political instructions, local protectionism and personal connections. Party leaders, however, refuse to tolerate the development of an autonomous legal profession and impartial courts. Instead, they have resurrected the "mass line" of the pre-1949 communist "liberated areas" that glorified political justice.

Plainly, the legal institutions and "spirit" of rural, revolutionary China seven decades ago cannot respond to today's demands or those of economic development and international co-operation. China now needs leaders who can take on the huge task of systemic legal reform with the same dynamism that former premier Zhu Rongji devoted to economic modernisation. Is it far-fetched to think such leaders might appear?

Chairman Mao Zedong knew little about law and cared less. Deng understood a legal system's importance to economic development but believed in law under government rather than government under law. Neither faced the sophisticated demands of the 21st century. Vice-President Xi Jinping and Vice-Premier Li Keqiang , slated to assume the nation's helm in 2012, are well-educated and experienced administrators capable of appreciating the benefits that rule of law can confer on a changing China. Might they undertake this historic task?

The recently published memoir of the late premier and party general secretary Zhao Ziyang suggests that, had he not been toppled by the 1989 Tiananmen tragedy, he might have done the job. During the 1986-89 period, there were public hints that Zhao's hopes to separate the party from daily government administration included plans to eliminate party interference with judicial decision-making. Zhao's memoir indicates how far his thinking had evolved.

Zhao came to see that economic reform could not be sustained without political reform. Although he did not then wish to end the party's monopoly on power, he thought that "its method of governing had to change". As he told the then-Soviet president, Mikhail Gorbachev, even socialist countries should be governed not by "rule by men" but by "rule of law". Moreover, he thought that legislation should be enacted to gradually implement the rights enshrined in China's constitution, including media freedom - the handmaiden of the rule of law.

Zhao saw that an independent judiciary was essential. Without it, he wrote, "the courts could not judge a case with a disinterested attitude". Yet Zhao was stunned, even before the June 4 massacre, at the enormous opposition to such reform at every level of party leadership.

After his fall, Zhao's endless, lawless detention radicalised his views. He concluded that, without a multiparty, democratic, parliamentary system that featured an independent judiciary, China could never have a healthy market economy, curb corruption, reduce the gap between rich and poor, and meet popular demands for reform.

Zhao's detention also showed him how arbitrary the administration of justice could be, even for the nation's highest officials. No legal process was ever applied to him, nor did the party elite follow party procedures in punishing him. Their accusations were factually distorted, and they decided his case in secret and without a fair hearing. Formal investigation of the accusations was never completed, and party officials refused to announce their decision and punishment even within party circles. They frequently lied to the public about his situation during the 16 years before his death, denying that he was under house arrest.

Zhao's fate may well deter would-be law reformers among the leadership. But unless someone steps forward, the very instability that present leaders fear is sure to intensify. To paraphrase Mao: "Sailing the seas depends upon the helmsman."

Jerome A. Cohen is co-director of NYU's US-Asia Law Institute and adjunct senior fellow at the Council on Foreign Relations


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Distant shores
Few cities can boast a harbour as beautiful as Hong Kong's, or a government as clueless about developing it

Stephen Vines
Aug 21, 2009           
     
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No right-thinking person develops a habit of saying nice things about the Singapore government. But, when it comes to making the best of limited urban resources, the Singaporeans leave the Hong Kong government trailing to an embarrassing degree.

A recent visit to the Singapore River, in truth little more than a glorified ditch in some places, showed what can be done with imagination and determination.

The banks of the river have been transformed into a truly wonderful area filled with life, riverside cafes and bars, gardens and a broad promenade for walking, exercising or whatever. People flock to this area because it is so darned compelling. I could hardly keep away from the river, appreciating what had been created and, in equal parts, depressed by the massive contrast with Hong Kong's harbourside.

How can it be that one of the world's great port cities with a truly spectacular harbour, from which Hong Kong takes its name, so completely fails to take advantage of this fantastic resource?

The question is hardly original and has been addressed by both pressure groups and an official committee that advises the government on waterfront planning. This committee now wants more power to get things done and to find a way to plough through the inertia of the 12 government and quasi-government bureaucracies that have responsibility for the harbourfront.

To gauge the demand for harbourside activities, you need only visit the dismally tacky waterfront promenade in Tsim Sha Tsui, which is jam-packed with people even though there is barely anywhere to eat or drink in the open air, no more than a few struggling pieces of vegetation and a collection of insultingly awful statues of Chinese performers who surely deserve better.

Yet, for those wanting to be beside the harbour, there are few alternatives. True, there are some patches of development in a number of places, a dog-walking park, a bit of promenade attached to skyscrapers in Hung Hom and, out towards Western, a few bits of road that nestle up to the harbour in an interesting way. (I am loath to mention the latter because no redevelopment has taken place and I fear being held responsible for inciting the bureaucrats to engage in another act of official vandalism).

The activists, who have done so much to highlight the desecration of the harbourside, and have been constructive in offering alternative plans for development, can reel off the list of excuses for inaction with barely a prompt.

They have seen the buck passed from department to department, they have been solemnly assured that the government is every bit as concerned as themselves but hopes that they will understand that progress requires bigger and better roads, bigger and better palaces to house the bureaucrats and that, most unfortunately, all this needs to be done alongside the harbour.

But the public is not fooled, which explains the extraordinary and spontaneous protest that greeted the destruction of the Star Ferry terminal. And it is confirmed by every single opinion poll affirming a yearning for a harbourfront development that stretches along the entire harbour and contains the vibrancy of alfresco dining, gardens and other facilities that would make this a truly special place for the public.

The bureaucrats simply don't get it. They thought that somehow the heritage of the Star Ferry pier could be preserved by shifting the site along the harbour and creating a faux Victorian-style edifice in an inconvenient spot. Predictably, the plan has been a dismal failure.

Five years ago, the Harbourfront Enhancement Committee was established. It has now finished its latest raft of recommendations. Lamentably, only one thing can confidently be predicted and that is further delay in seizing the initiative to start transforming the harbour into a living area truly appreciated by the public.

It is unfair to assert that the bureaucrats, as individuals, are intent on doing their worst. The problem is a system of government which is impervious to the wisdom of the public and unable to connect up its fragmented departments.

Stephen Vines is a Hong Kong-based journalist and entrepreneur


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Boom and burst
Don't be fooled by false signs of economic recovery. It's just the lull before the storm

Andy Xie
Aug 24, 2009           
     
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The A-share market is collapsing again, like many times before. It takes numerous government policies and "expert" opinions to entice ignorant retail investors into the market but just a few days to send them packing. As greed has the upper hand in Chinese society, the same story repeats itself time and again.

A stock market bubble is a negative-sum game. It leads to distortion in resource allocation and, hence, net losses. The redistribution of the remainder, moreover, isn't entirely random. The government, of course, always wins. It pockets stamp duty revenue and the proceeds of initial public offerings of state-owned enterprises in cash. And, the listed companies seldom pay dividends.

The truly random part for the redistribution among speculators is probably 50 cents on the dollar. The odds are quite similar to that from playing the lottery. Every stock market cycle makes Chinese people poorer. The system takes advantage of their opportunism and credulity to collect money for the government and to enrich the few.

I am not sure this bubble that began six months ago is truly over. The trigger for the current selling was the tightening of lending policy. Bank lending grew marginally in July. On the ground, loan sharks are again thriving, indicating that the banks are indeed tightening. Like before, government officials will speak to boost market sentiment. They might influence government-related funds to buy. "Experts" will offer opinions to fool the people again. Their actions might revive the market temporarily next month, but the rebound won't reclaim the high of August 4.

This bubble will truly burst in the fourth quarter when the economy shows signs of slowing again. Land prices will start to decline, which is of more concern than the collapse of the stock market, as local governments depend on land sales for revenue. The present economic "recovery" began in February as inventories were restocked and was pushed up by the spillover from the asset market revival. These two factors cannot be sustained beyond the third quarter. When the market sees the second dip looming, panic will be more intense and thorough.

The US will enter this second dip in the first quarter of next year. Its economic recovery in the second half of this year is being driven by inventory restocking and fiscal stimulus.

However, US households have lost their love for borrow-and-spend for good. American household demand won't pick up when the temporary growth factors run out of steam. By the middle of the second quarter next year, most of the world will have entered the second dip. But, by then, financial markets will have collapsed.

China's A-share market leads all the other markets in this cycle. Even though central banks around the world have kept interest rates low, the financial crisis has kept most banks from lending. Only Chinese banks have lent massively. That liquidity inflated the mainland stock market first, then commodity markets and property market last. Stock markets around the world are now following the A-share market down.

By next spring, another stimulus story, involving even bigger sums, will surface. "Experts" will offer opinions again on its potency. After a month or two, people will be at it again. Such market movements are bear-market bounces. Every bounce will peak lower than the previous one. The reason that such bear-market bounces repeat is the US Federal Reserve's low interest rate.

The final crash will come when the Fed raises the interest rate to 5 per cent or more. Most think that when the Fed does this, the global economy will be strong and, hence, exports would do well and bring in money to keep up asset markets. Unfortunately, this is not how our story will end this time. The growth model of the past two decades - Americans borrow and spend; Chinese lend and export - is broken for good. Policymakers have been busy stimulating, rather than reforming, in desperate attempts to bring growth back. The massive increase in money supplies around the world will spur inflation through commodity-market speculation and inflation expectations in wage setting. We are not in the midst of a new boom. We are at the last stage of the Greenspan bubble. It ends with stagflation.

Hong Kong's asset markets are most sensitive to the Fed's policy due to the currency peg to the US dollar. But, in every cycle, stories abound about mysterious mainlanders arriving with bags of cash. Today, Hong Kong's property agents are known to spirit mainland-looking men, with small leather bags tucked under their arms, to West Kowloon to view flats. Such stories in the past of mainlanders paying ridiculous prices for Hong Kong flats usually involved buyers from the northeast. In this round, Hunan people have surfaced as the highest bidders. The reason is, I think, that Hunan people sound even more mysterious. But, despite all this talk, the driving force for Hong Kong's property market is the Fed's interest rate policy.

Punters in Hong Kong view the short-term interest rate as the cost of capital. It is currently close to zero. When the cost of capital is zero, asset prices are infinite in theory. At least in this environment, asset prices are about story-telling. This is why, even though Hong Kong's economy has contracted substantially, its property prices have surged. Of course, the short-term interest rate isn't the cost of capital; the long-term interest rate is. Its absence turns Hong Kong into a futile ground for speculation, where asset prices increase more on the way up and decrease more on the way down.

When the Fed raises the interest rate, probably next year, Hong Kong's property market will collapse. When the Fed's policy rate reaches 5 per cent, probably in 2011, Hong Kong's property prices will be 50 per cent lower.

Andy Xie is an independent economist


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The mainland may have to get back on its bike


LEADER

Aug 25, 2009           
     
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The mainland has the perfect ingredients for efficient public transport: many large cities with high population densities. Ideally, investing in bus and rail systems should pay off handsomely. Yet authorities are insisting on pouring resources into the already massive car industry, and generous incentives mean that cars are cheap to buy. Consequently, roads are day by day becoming ever more choked by traffic, and the pall of pollution from exhaust fumes is worsening.

Governments are in a bind. Roads cannot be built fast enough to keep up with vehicle numbers. Subways and elevated rail networks take time to plan and build. Outright bans are, in the absence of an alternative, not a solution.

The search for efficient and non-polluting transport that can be quickly put in place has been made a priority. Guangzhou and Shenzhen several years ago determined that motorbikes were too noisy and dirty. A Guangzhou lawmaker has stirred debate by suggesting that people turn to bicycles. It is surely the irony of all ironies that a nation that for three decades has so successfully pushed bicycles off the streets in the name of progress would even consider a return to pedal power.

Conflicting interests are difficult for any government to deal with. In the mainland's case, it involves balancing a policy of using vehicle production to boost industrial growth with ensuring that cities are liveable and function properly. The car industry is the catalyst for a plethora of spin-off industries that boost job creation, meet consumer demand and lay the groundwork for export markets. But cities are where factories, offices and workers are located and they need to be efficient and safe.

Without concerted long-term planning, there will always be an unhappy meeting of the two. Road-pricing schemes, higher fuel emission standards and transport infrastructure are the obvious way forward. But such measures require discussion, planning and time to implement. In the circumstances, with air pollution and traffic woes becoming ever more pressing problems, turning back the clock to the days when the bicycle was king on the mainland may, for now, be the best idea.


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An America more like China, and vice versa


LEADER

Aug 26, 2009           
     
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The Hollywood hit Confessions of a Shopaholic tells the story of a shopping addict who finds love and learns frugality in these economically trying times. It has an uplifting moral for American consumers who suddenly discover the joy and virtue of thrift.

But the comedy may turn out to be a horror show for everyone else. For if Americans have turned their backs on the greatest shopping binge the world has known, where are exporting countries such as Japan, China and Germany going to sell their products?

Economists and policymakers have long recognised the profound imbalances in the world economy, even before the current crisis. The global recession has forced painful readjustments, for example, by forcing Americans to save more and Chinese to boost domestic spending. The current account surpluses of high-saving and export-oriented nations have all been shrinking while America's current account deficit is falling. There is, however, no guarantee this will continue.

The promised land of a sustained recovery around the world is one of rebalanced growth based on private demand, which replaces government stimulus or spending. But to get there, a number of things have to happen, such as continuing the narrowing of the current account gap between the high savers and the reformed big spenders.

One reason why global stock markets, led by Shanghai, fell out of bed at the beginning of last week was because of recurrent doubts about the strength of the economic recovery and the adequacy of government responses around the world. Wall Street took a plunge because the numbers for consumer confidence were not picking up as strongly as predicted. Shanghai was worried that Chinese bank lending would be curbed. Many investors, apparently, were still hoping for a return to the past and for the party to resume.

Later in the week, the bulls regained lost ground. They point to figures showing Japan, France and Germany have returned to growth. China's output grew at a spectacular annualised rate of 16 per cent from April to June. US Federal Reserve chairman Ben Bernanke made his most optimistic assessment on the US economy on Friday, helping to send the Dow Jones index up more than 155 points. But unless the major economies are truly committed to making the changes that are necessary to reorient themselves, the world's recovery rests on fragile ground. The current crop of green shoots needs to be sustained and nourished by more than just government-induced liquidity.

Key policymakers recognise what they need to do, but it is not clear they will succeed. White House economics director Larry Summers recently said the US economy needed to become more export-oriented rather than consumption-based.

Beijing is building social safety nets in education, health care and housing so ordinary households can spend more rather than save for a rainy day. The jury is still out on whether Japan and Germany - or for that matter, China - intend to revamp their export-oriented growth strategies.

In the best economic scenario, America would be more like China and China more like America. Whether or not that will ever come to pass is difficult to predict. Perhaps filmmakers from high savers like Germany and China should jointly produce another comedy, to be titled Confessions of a Workaholic, about a hero who learns to produce less and shop more.


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Health care where people are treated like animals


Nicholas Kristof
Aug 28, 2009           
     
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Opponents suggest that a US "government takeover" of health care will be a milestone on the road to "socialised medicine" and, when he hears those terms, Wendell Potter cringes. He's embarrassed that opponents are using a playbook that he helped devise. "Over the years, I helped craft this messaging and deliver it," he noted.

Mr Potter was an executive in the health insurance industry for nearly 20 years before his conscience got the better of him. He flew in corporate jets to industry meetings to plan how to block health reform, he says. He rode in limousines to confabs to concoct messaging to scare the public about reform. But, in his heart, he began to have doubts as the business model for insurance evolved in recent years from spreading risk to dumping the risky.

Then, in 2007, Mr Potter attended a premiere of Sicko, Michael Moore's excoriating film about the US health care system. Mr Potter was taking notes so that he could prepare a propaganda counterblast - but he found himself agreeing with a great deal of the film.

A month later, he was back home in Tennessee, visiting his parents, and dropped in on a three-day charity programme at a county fairground to provide medical care for patients who could not afford doctors. Long lines of people were waiting in the rain, and patients were being examined and treated in public, in stalls intended for livestock.

"It was a life-changing event to witness that," he remembers. Increasingly, he despised himself for helping block health reforms. Mr Potter loved his job and perks. But, at 56, he left global health service company Cigna last year.

This year, he went public, testifying before a Senate committee investigating the insurance industry.

Mr Potter says he liked his colleagues and bosses in the insurance industry, and respected them. They are not evil. But he adds that they are removed from the consequences of their decisions, as he was, and are obsessed with sustaining the company's stock price - which means paying fewer medical bills.

One way to do that is to deny requests for expensive procedures. A second is "rescission" - seizing upon a technicality to cancel the policy of someone who has been paying premiums and finally gets cancer or some other expensive disease. A congressional investigation found that three insurers used this technique to cancel more than 20,000 policies over five years, saving the companies US$300 million in claims.

Insurers encourage this approach through performance evaluations. One employee earned a perfect evaluation score after dropping thousands of policyholders who faced nearly US$10 million in claims.

Mr Potter notes that a third tactic is for insurers to raise premiums for a small business astronomically after an employee is found to have an illness that is very expensive to treat. The business is forced to drop coverage for all its staff or go elsewhere.

All this is monstrous, and it negates the entire point of insurance, which is to spread risk.

The insurers are open to one kind of reform - universal coverage through mandates and subsidies, to give them more customers and profits. But they don't want the reforms that will most help patients, such as a public insurance option, enforced competition and tighter regulation.

Mr Potter argues that much tougher regulation is essential, and that a robust public option is an essential part of any health reform.

The US is at a turning point. Universal health coverage has been proposed for nearly a century. Yet, each time, it has been defeated in part by fear-mongering industry lobbyists. That may happen this time - unless the Obama administration and Congress defeat these manipulative special interests. What's un-American isn't a greater government role in health care but an existing system in which Americans without insurance get health care in livestock pens.

Nicholas Kristof is a New York Times columnist


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Slumbering US wakes up to a headless Asia


Richard Halloran
Aug 31, 2009           
     
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A recent gathering of Asian and US diplomats, economists and scholars in Honolulu came to the surprising conclusion that no Asian nation was willing or able to assume leadership in Asia despite the economic and political progress of recent decades.

The Asian and American "Asia hands" agreed that China was not ready, Japan was not willing, India was just emerging onto the world stage, and the United States was preoccupied with Afghanistan, the Middle East and the economy.

Moreover, Asian international organisations, such as the Association of Southeast Asian Nations, have so far shown themselves to be mostly talk shops.

Most of those in the conference asserted that peace and prosperity (SEHK: 0803, announcements, news) in Asia would be best served by a balance of power, especially between China and the US.

No one suggested that Beijing and Washington take joint control over Asia, but all agreed that armed conflict between the two would be disastrous.

This consensus is surprising because a widening view among Asian leaders asserts that power is shifting from West to East.

The Asians and Americans in Honolulu met in a senior policy seminar at the East-West Centre, a research and education organisation funded largely by the US Congress. Under the conference rules, speakers and those who took part in the discussion cannot be identified, supposedly to encourage candour.

On China, one Asian said: "China is not oriented towards foreign policy but is obsessed with domestic issues, somewhat like the US."

China's first major venture into international relations, leading the six-party talks to persuade North Korea to give up its nuclear weapons, has gone nowhere in six years. Internal dissension was underscored with uprisings in Tibet last year and in Xinjiang this year.

Japan, still wrapped in the passive cocoon into which it retreated after the devastating defeat of the second world war, has been constrained by its divisive politics.

As a potential leader, India was barely mentioned. "India is in the equation for the first time," said an American, lamenting the lack of attention to India.

A military officer noted that relations between India's military forces and those of the US had expanded. "India," he said, "is getting out and about."

Some Asians and Americans argued that the US was declining in power, with its forces spread thin around the world and a troubled economy at home.

Others disagreed. "Are we seeing the twilight of the US in Asia?" one American asked. "No, we are not withdrawing."

Several speakers contended that the administration of George W. Bush had neglected Asia while US President Barack Obama was seeking to reverse that perception.

"America has been like Rip Van Winkle, sleeping under a tree," an American sceptic said. "Now he's awake but we have to see what he actually does."

Richard Halloran is a former New York Times foreign correspondent in Asia and military correspondent in Washington


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Hub hubris
Grand visions for new engines of growth go back a long way. Is Hong Kong ready to get things moving

Joseph Wong
Sep 02, 2009           
     
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Chief Executive Donald Tsang Yam-kuen has started his consultation on this year's policy address and has made it clear that the government aims to develop the six industries recommended by the Task Force on Economic Challenges that would sustain Hong Kong's long-term growth as a knowledge-based economy.

The search for new engines of growth outside the traditional pillar industries of financial services, trade and logistics, tourism and professional services is not new. In his 1998 policy address, former chief executive Tung Chee-hwa referred to the report of the former Commission on Innovation and Technology, chaired by Professor Tien Chang-lin, and laid out his vision for Hong Kong to become a place of many centres: for example, a world centre for design and fashion, health food and Chinese medicine, or a regional centre for multimedia-based information and entertainment, or for professional and technological talent and services.

The government has since set up a permanent Innovation and Technology Commission, invested in Cyberport and set aside billions of dollars in applied research and technology. While we have seen progress in a number of areas, it is fair to say that we have yet to realise the vision set by the former chief executive; and Hong Kong lags behind places like South Korea in turning innovation and technology into new drivers for economic growth.

Ten years later, the government continues to identify innovation and technology as one of the six industries with high potential. The chief executive said he would "actively explore the possibility of new financial or tax incentives to encourage the private sector to increase investment in research and development". Many governments, such as Taiwan's, use fiscal incentives and outright subsidies to support the development of new industries. But the Hong Kong government has always held on to the principle of "small government, big market". Whether this year's policy address will unveil a major shift in the economic policy and mark the beginning of substantial and active government intervention in our economy is something we should all watch and debate.

But that is not denying the importance of government support in nourishing new industries, such as education and medical services. It is true that we have achieved progress in these two areas: we have the largest number of international schools of any city and our top universities are among the best in the region. We have a world-class medical profession and our hygiene and regulatory regime has withstood the most rigorous tests brought about by severe acute respiratory syndrome and, more recently, swine flu.

But both areas have their share of problems. Despite the rapid development of tertiary education, only 18 per cent of our secondary-school leavers can enter university, the lowest percentage among developed economies. Apart from several thousand mainland students, we have only about 200 foreigners studying in our undergraduate programmes, making our universities look more provincial than international. Whether the two earmarked sites will be developed to meet the demand of local students or to attract foreign ones will raise the fundamental issue of balancing the social needs of providing more tertiary places for our students with the economic benefit of exporting our educational services - something Australia has been doing for many years.

For medical services, reserving four sites for the development of private hospitals is a step in the right direction. But we also need to tackle such policy issues as the respective roles of public and private hospitals, the regulation of medical fees and services, and the whole unresolved question of health care financing for our own people.

The government has also outlined the possible development of three other industries: environmental industries, cultural and creative industries, and testing and certification. Only the last one is specific - the government will set up a Council of Testing and Certification in three months' time and the council will draw up a three-year market-oriented development plan within six months after its establishment.

On environmental policy, the government will have to do much more than stopping the purchase of incandescent light bulbs to turn Hong Kong into a green city with economic opportunities. On cultural and creative industries, the CreateHK office that the government set up only a few months ago has yet to produce results.

Our chief executive has announced a grand plan to propel Hong Kong in a new direction of economic growth. He will have to give us the details in his policy address.

Joseph Wong Wing-ping, formerly secretary for the civil service, is an honorary professor at the University of Hong Kong


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Don't repeat the folly of Iraq's war in Iran


LEADER

Sep 03, 2009           
     
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Western nations are increasing the heat on Iran over its nuclear programme. They are threatening tougher sanctions if it does not take up the offer of talks. American and Israeli officials have gone a step further, hinting that military strikes are not out of the question. Given the lesson of Iraq's alleged weapons of mass destruction, now is the time for caution, not hyperbole.

Powerful lobbying groups are driving the discussion. They claim Iran's centrifuge cascades are less about processing uranium for electricity than making weapons. Teheran vehemently denies the allegations. Yet it is not being transparent - restricting the access of inspectors to its nuclear facilities and setting conditions on talks.

Fresh debate has been stirred by the UN's nuclear watchdog, the International Atomic Energy Agency, which has circulated a report outlining Iran's technical progress and compliance with UN resolutions and the nuclear Non-Proliferation Treaty. The UN Security Council's five members and Germany are meeting to weigh options. US President Barack Obama and allied European leaders have given Iran until the end of the month to accept talks on suspending its nuclear work - or face unspecified consequences. Pressure is mounting to put the issue high on the agenda of the upcoming G20 summit in Pittsburgh.

The US-led war on Iraq was originally justified with intelligence on the country's nuclear, chemical and biological weapons, which proved to be unfounded. It was a costly error, financially and in terms of innocent lives lost. An attack on Iran could well lead to the same consequences. As in Iraq, sanctions will harm citizens, not leaders. Outgoing IAEA chief Dr Mohamed ElBaradei said on Tuesday the threat from Iran was "hyped"; there was no evidence that the nation would soon have nuclear weapons. He has been criticised by Tehran's opponents for being "soft". Their judgment is wrong: a cautious approach towards Iran is needed. Talks are the only way forward. Negotiators have to base their position on proven facts, not suppositions and politically motivated claims.


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Much to be done on domestic helpers' rights


LEADER

Sep 04, 2009           
     
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Malaysia is finally giving rights to its foreign domestic workers. Horrific cases of abuse by employers have prompted an agreement with Indonesia to give maids a day off each week, the right to hold passports and a minimum wage. Helpers from other countries are not covered and the high incidence of mistreatment is not tackled, but the decision is a welcome starting point. It is a reminder to other Asian governments that they must do more to improve the conditions of migrant workers.

Hong Kong prides itself on being the region's leader in guaranteeing rights to maids. The rules that Malaysia will be introducing were put in place here more than two decades ago. Authorities said on Wednesday that benefits were being further improved with the raising of the food allowance from HK$300 a month to HK$740. Such requirements still fall far short of those Hong Kong should set for itself as a developed territory.

Too many maids are being underpaid and mistreated. Rules that favour bosses make them fearful of reporting abuse. Unlike other foreign workers, they cannot qualify for residency.

Of greatest concern is the lack of respect some employers have for maids. Dozens of cases of physical, sexual and mental abuse are reported in Hong Kong each year. In Malaysia, the numbers run into the thousands. There have been scores of deaths in Singapore over the past five years, most put down to accidents and suicide.

Canada, in contrast, sets some of the world's most generous standards. Domestic helpers there are assured a minimum wage based on an eight-hour working day, privacy when off duty and citizenship after two years of employment. We are unlikely to see the adoption of similar measures in Asia any time soon. But helpers should not be made to feel like second-class citizens.

Malaysia is trying to change perceptions. It has much work to do before maids are given the rights they deserve. Singapore should follow by giving them regular rest days. Hong Kong and the region as a whole have to do their utmost to treat maids fairly.


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Compromises render drug tests all but useless


Philip Yeung
Sep 07, 2009           
     
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By caving in to discordant voices from the misguided, the government has doomed the drug-testing programme for students to early failure.

The same tiresome buzz words are being dragged into this muddled debate: a "labelling" effect on students who test positive and "respect for privacy". Students on the straight and narrow have nothing to fear, but those who stray will use every known tactic to dodge detection.

Making the test programme entirely voluntary is self-defeating. What drug-abusing students would voluntarily step forward to submit themselves to the risk of detection? What do we do if no student volunteers? While police involvement may not be desirable, compelling addicted students to join an intervention programme should be non- negotiable. Otherwise, all we have is a totally toothless programme.

I don't hear any discussion of the nitty-gritty of the test programme. Don't they know that using hair samples is the best way to go? The presence of drugs is apparently traceable in the human hair for up to 90 days, while it is only detectable in urine samples within three days of taking a drug. Besides, how do you ensure that the samples actually belong to the students, without following them into the toilets? Doesn't this then become a gross violation of their privacy, not to speak of acute embarrassment for all concerned ?

Drug-abusing students will no doubt be taught by their suppliers to take plenty of fluids to dilute their samples, while hair samples are much less susceptible to tampering. It is high time the authorities approached experts on this matter. They can be found at the Hong Kong University of Science and Technology's biology department, where I believe they have been carrying out sophisticated experiments on hair samples from drug addicts for years.

What should have been a fairly straightforward procedure and programme has now taken on unnecessary complications because the government has failed to stand firm on something other privacy-conscious jurisdictions have been doing as a matter of course. Compromise may be the art of politics but, in this case, compromise is the art of a sell-out. The test of leadership is in filtering out the noise that undercuts the soundness of a laudable programme.

While it is true that the threat of expulsion for students who continue to test positive may not be open to public schools obligated to provide 12 years of free education, refusal to enter a drug-treatment programme should constitute grounds for police enforcement action. Without the threat of legal action, the programme is nothing but fluff.

When will the government learn from the experience of schools outside our system? Why are we making much ado about nothing? Privacy should never have been invoked in the case of underage schoolchildren who find themselves in the twilight zone. Privacy does not trump protection of students who are already on the brink of self-destruction. By making the test voluntary, you not only show your weakest hand, and mollycoddle students desperately in need of rescue, you are also only playing into the hands of drug dealers.

Few ever successfully kick their smoking habit voluntarily, much less a drug-taking habit. There is a time to be soft and a time to play hardball. Is our government ever capable of playing hardball in situations where it is convinced of the rightness of its action in a vital public issue?

The latest programme has been watered down to such an extent as to be laughably toothless.

And there is something else, too. On the unlikely assumption that the test programme is a success in identifying the size of the drug-taking student population, do we have a support or treatment programme in place to handle such an eventuality? Detection is one thing, treatment and rehabilitation is something else. A bigger headache for the government may already be in the making.


Philip Yeung is a Hong Kong-based university editor. philipkcyeung2@yahoo.com


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Old friend in need


LAURENCE BRAHM

Sep 08, 2009           
     
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In China's diplomatic language, the term "old friend" (lao pengyou) is used often. In the good old innocent days of Sino-US relations, old friends meant people like president Richard Nixon and his then-national security adviser Henry Kissinger, who opened the door to China. Last year, former president George W. Bush was praised as an old friend for his unflinching resolve to attend the opening ceremony of the Beijing Olympics. These old stalwarts stand in contrast to the likes of French President Nicolas Sarkozy, who wavered over attending the Games, and German Chancellor Angela Merkel, who has dared to question China's human rights record.

So, how friendly will US President Barack Obama be viewed, in Beijing's eyes, when he makes his first state visit to China in November? Obama could be given the title "old friend" even though he has been in office for less than a year. Unlike his predecessors, Obama is not in a position to offer favours or face. Rather, he is a friend in need - big need, in fact - because he has to finance Washington's US$1.75 trillion deficit. Beijing is the only one who can afford to do so. That means Washington must play soft with Beijing. Obama's advisers are likely to suggest that he should pretend the dragon is a panda, and cuddle it.

There are good reasons for this. In June, the US Treasury Department got the jitters when China sharply cut its US Treasury bill purchases by US$25.1 billion. China-held US Treasury assets suddenly dropped from US$800 billion in May to US$776.4 billion in June - the largest reduction in nine years. Thus began much speculation in Washington about the motivation behind the move.

Many feared it was politically motivated. China's sharp reduction ran against the market trend. In the same period, Japan increased its Treasury bill purchases by US$34.6 billion, while Britain bought a bullish US$77.2 billion - both friends indeed. So, US analysts had reason to wonder why China would move so suddenly against such a trend. Is Beijing asserting its global geopolitical prerogatives with its newly found financial and economic clout? That is how some read it.

Beijing claims there is no ulterior political motive; just classic Chinese pragmatism and business as usual. China calls its recent reduction in treasuries "a regular adjustment". Some see it simply as diversification.

For years, the established pattern has been that, every month, China leads in the purchase of US Treasury bills, followed by Japan, Britain and Russia. That pattern was first disrupted in the wake of Wall Street's meltdown last September. Beijing shifted from long-term corporate and institutional paper to short-term treasuries, a move seen by some analysts as positioning for a fire sale. Beijing gave Washington the jitters again when it reduced its Treasury bill purchases in April, by US$4.4 billion, which it also said was a market adjustment. The White House sighed with relief when Beijing's purchases shot back up again in May.

Officially, China has adopted "three principles" for managing its US$2.13 trillion in foreign exchange reserves: liquidity, security and yield. These principles are repeated like a mantra from Vice-Premier Wang Qishan and central banker Zhou Xiaochuan , to the foreign-exchange traders themselves. So, as much as Beijing may want to diversify, it doesn't have much choice. On average, US Treasury bills yield 1-2 percentage points more than European ones. China will continue to buy them, for now.

Consequently, US relations with China have entered a new era. Diplomatic visits by both US Secretary of State Hillary Rodham Clinton and Treasury Secretary Timothy Geithner have been perceived more as investment portfolio management roadshows. During their meetings, both quoted ancient Chinese proverbs to help schmooze Beijing into debt financing America's recovery. So, when Obama visits Beijing, he should not be surprised if he is greeted with an ancient western proverb: a friend in need is a friend indeed. Now let's see what friendship is all about.

Laurence Brahm is a global activist, international mediator, political columnist and author. For more information see www.laurencebrahm.com

shambhalahouse@yahoo.com


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Time for America to seek professional help


Bob Herbert
Sep 09, 2009           
     
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Maybe the economic stress has been too much. Looking back at the past few months, it's fair to wonder if the US is having a nervous breakdown.

The political debate has been poisoned by birthers, deathers and wackos who smile proudly while carrying signs comparing the president to the Nazis. People who don't even know that Medicare is a government programme have been trying to instruct us on the best ways to reform health care.

There is no end to the craziness. The entire Republican Party has decided that it is in favour of absolutely nothing. The president's stimulus package? No way. Health care reform? Forget about it.

We need therapy. The wackiness is increasing, not diminishing, and it has a great potential for destruction.

But there is another type of disturbing behaviour, coming from our political leaders and the public at large, that is also symptomatic of a society at loose ends. We seem unable to face up to many of the hard truths confronting the US as we approach the end of the first decade of the 21st century.

The Obama administration's biggest domestic priority is health care reform. But the biggest issue confronting ordinary Americans is the devastatingly weak employment environment. Politicians talk about it, but aggressive job-creation efforts are not part of the policy mix.

Nearly 15 million Americans are unemployed, according to official statistics. The real figures are far worse. The unemployment rate for black Americans is a back-breaking 15.1 per cent.

Five million people have been out of work for more than six months, and the consensus is that, even when the recession ends, the employment landscape will remain dismal. A full recovery will take years, and there are real doubts as to whether the US economy is capable of providing enough jobs for all who want and need to work.

This is an overwhelming crisis that is not being met with anything like the urgency required.

We've also been unable to face the hard truths about the wars in Iraq and Afghanistan and the toll they are taking on our young fighting men and women. Most of us don't want to know. Moreover, we've put the costs of these wars on a credit card, without so much as a second thought about what that does to our long-term budget deficits or how it undermines much-needed initiatives here in the US.

There are many other issues that we remain in deep denial about. It's not just the bad economy that has thrown state and local budgets into turmoil from coast to coast. It's our refusal to provide the tax revenues needed to pay for essential public services. Exhibit A is California, which is now a basket case.

The serious wackos, the obsessive-compulsive absurdists, may be beyond therapy. But the rest of us Americans could use serious adult counselling. We've forgotten the fundamentals: how to live within our means, the benefits of shared sacrifice, the responsibility of citizenship, the importance of a well-rounded education, and tolerance. The first step, of course, is to recognise that we have a problem.

Bob Herbert is a New York Times columnist


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Medical Council has got it right on charges


LEADER

Sep 10, 2009           
     
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The doctor-patient relationship is at the heart of the practice of medicine. The trust a lay person places in a medical practitioner is almost an act of faith. That is why the community expects the profession to see that its members uphold the highest ethical standards. A recent finding of misconduct against a private specialist who overcharged an elderly patient is a case in point. Doctors, however, are up in arms about it. What sets the decision apart is that it is a landmark case that touches on doctors' right to set their own fees. They are not defending the colleague in question, but claim that the ruling by the Medical Council is dangerous because it does not define "excessive charges".

The council's disciplinary committee reprimanded the specialist after it found he overcharged for laboratory tests for financial gain. He billed the patient HK$2,780 and HK$1,400 for two sets of tests for which laboratories charged HK$1,400 and HK$175. There can be little argument about the overcharging. Filling in an order form for tests is not that different to writing out a prescription.

But that is not the way many doctors and their professional body look at it. Ten of the 28 members of the Medical Council have called for a review of the ruling. The Hong Kong Medical Association fears that it could leave doctors exposed to disciplinary action for charging high fees for professional skills and services because it fails to define "excessive charges".

The Medical Council's code of professional conduct on fees has regard for the difficulty, costs and special circumstances of the services performed and the time, skill and experience required. That would seem to be a framework that leaves doctors reasonable scope to set their fees without fear of being deemed to have overcharged.

Private doctors have every right to set their own fees in a free market. But the Medical Council has got it right when it says that they must set out their charges clearly, honestly and transparently on request, without any hidden elements, and, if they are substantial, do it in advance. Patients are entitled to be informed, and to have an opportunity to go elsewhere if they think the price is too high.


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The tide has turned for insider traders


LEADER

Sep 11, 2009           
     
  |   

  



Greed and opportunity ensure that so long as free markets exist, unscrupulous insiders will be tempted to find ways to profit at the expense of honest investors, whatever the risk. But if anyone has yet to get the message that Hong Kong now treats as criminals those who trade with the benefit of inside information, they no longer have any excuse. Yesterday's conviction of former Morgan Stanley Asia managing director Du Jun should ram it home.

In the biggest insider dealing case brought by the Securities and Futures Commission, Du faces up to seven years' jail for offences involving HK$87 million. His conviction caps a run of successful prosecutions. Five people have been jailed for insider dealing since April, when the first prison sentences were imposed. There has long been a high tolerance for insider dealing in Hong Kong. The tide has now turned - and not before time.

Insider dealing was, until recently, viewed as a matter best kept away from the criminal courts. The theory was that it is such a difficult offence to prove that the criminal standard - beyond reasonable doubt - would rarely be met. The string of convictions this year shows that need not be the case. Persistence, patience and the use of e-mail records as a valuable source of evidence have paid off. It is surprising it has taken this long for jail sentences to be imposed. Insider dealing was, after all, made a criminal offence in 2003. The shift is due largely to a new, more aggressive, approach by the SFC which involves working closely with the Department of Justice and pursuing cases in the higher courts. It has, so far, proved to be successful. There have been 10 convictions. The policy has created a much-needed deterrent for would-be insider dealers.

Du's case broke new ground, and not just because it involves such a large sum of money. It marked the first time the SFC had moved to freeze the assets of an insider dealer using a provision in the Securities and Futures Ordinance which is becoming an increasingly useful tool in the fight against market misconduct. The case may yet become the first in which the proceeds of insider dealing are distributed to the victims, in this case people who sold the shares to Du. There will, no doubt, be legal issues to resolve. But if profits can be seized in such cases and used to compensate those who lost out, this will go a long way towards removing the perception that insider dealing is a victimless crime.

The reality is that it poses a serious threat to our financial system, tilting the level playing field and causing serious damage to markets and investors. It must be taken seriously.

It is not only the regulators who have a responsibility to ensure insider dealers cannot thrive. Corporations must be on their guard for signs that those with confidential, price-sensitive information are using it for illicit trades. In the case of Du, questions must be asked about the effectiveness of his investment bank's compliance system. It failed to detect his activities until far too late, even though he informed the control office he intended to trade. Du had access to confidential information about a deal with oil company Citic Resources (SEHK: 1205). He was borrowing large sums of money from his employers to purchase millions of shares in that company. It should not, in those circumstances, have been possible for the crime to be committed.

The judge will decide on the penalty Du must pay for his greed. But his conviction has already helped reinforce the message that insider dealing will no longer be tolerated.


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World cannot afford another trade war


LEADER

Sep 16, 2009           
     
  |   

  



Beijing's response to the US slapping tariffs on Chinese tyre imports has predictably been swift and to the point. It has lodged a complaint with the World Trade Organisation. An investigation has been threatened into possible unfair American practices in exports of automotive products and chicken meat. Is a tit-for-tat trade war looming?

Neither country can afford a trade lockdown, and so far actions have been relatively measured. Their recovery from the financial crisis depends on their maturing trading partnership. Economies so powerful and so deeply entwined have to be handled with care. In short, Beijing and Washington need one another.

But trade spats have the potential to spiral out of control.

Domestic pressure probably drove US President Barack Obama to ignite the dispute last Friday. Unions - key supporters of his campaign - contend that 5,000 American jobs have been lost to China's alleged dumping of cheap tyres. A 35 per cent tariff was put on the tyres and a preliminary decision made to impose duties of up to 31 per cent on steel pipes from China. Obama has insisted that the dispute will not escalate, but he has set a precedent by applying a previously unused part of the trade law known as Section 421. It allows US industries and workers to seek protection from sudden increases in Chinese imports with a minimal burden of proof. In recent months there have been complaints about perceived surges of all manner of Chinese goods, among them shoes, blouses, women's underwear, computer monitors, hearing aids and T-shirts. The floodgates could be in danger of opening.

China's economy, naturally, is directly affected by tariffs. The cost of the duty on tyres is estimated at US$1 billion, not accounting for the impact of lost jobs. This, in turn, strikes at Beijing's efforts to meet the 8 per cent GDP growth target seen as essential to preventing social unrest. There is potential for a knock-on effect beyond economics to other aspects of relations.

The actions come at a sensitive time. Obama is scheduled to meet President Hu Jintao at the G20 summit in Pittsburgh next week. He will also make his maiden trip as president to China in November. Washington needs Beijing's help on a range of issues, from global warming to Iran's nuclear programme. China generally does not counter trade moves with just a trade-related response; Washington may find relations will cool at all levels.

Neither Beijing nor Washington - nor the world - can afford a round of protectionism from the two most important economies. The financial crisis has already led to a growing tide of protectionism, which is harming economies and relations. The same trend followed the economic meltdown of the early 1930s; it deepened rather than alleviated the Great Depression.

So far, at least, reactions have been measured despite populist rhetoric. Beijing's turning to the WTO to referee the dispute over tariffs is in keeping with the nature of their ties, and indicates a desire to keep relations on an even keel in an interconnected world.

The US economy will remain in the doldrums and its unemployment rate will stay high until Americans start spending again. China's export markets, so crucial to development and improving the lot of the population living in poverty, will also be flat until that time. Neither government can really win a trade dispute. Escalating this fight makes little sense given what can be lost. Far better is to co-ordinate policies and build understanding through developing ties at all levels.


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Fate of climate pact is in American hands


Jonathan Freedland
Sep 17, 2009           
     
  |   

  



Anyone who cares about the survival of our planet should start praying that President Barack Obama gets his way on reforming US health care. That probably sounds hyperbolic, if not mildly deranged: even those who are adamant that 45 million uninsured Americans deserve basic medical cover would not claim that the future of the earth depends on it. But think again.

Next week, world leaders will attend the first UN summit entirely dedicated to climate change. The plan is to replace the Kyoto treaty with a new one, to be agreed in Copenhagen in December. The prospects of getting a deal worthy of the name get bleaker every day.

Few deny that the world needs a new agreement. In the 12 years since Kyoto, we've emitted a whole lot more carbon. The science is now clear that if we do not manage to keep the increase in the earth's temperature below 2 degrees Celsius, we risk facing the effects of catastrophic climate change.

A new Copenhagen treaty would lead us to the day when our worldwide emissions peak - and then start coming down. We would at last be reversing the tide that threatens to engulf our planet.

If that's the prize, there are the most enormous obstacles in its path. A single text would have to be acceptable to rich and poor nations, democratic and not. Elected leaders will also have to be sure that whatever they sign at Copenhagen will be accepted back at home.

Which brings us to Obama. Last November, greens and diplomats breathed a sigh of relief around the world. While George W. Bush had ripped up Kyoto, Obama would surely lead the way to Copenhagen.

Now, that early confidence is fading. Those same diplomats and negotiators have seen Obama struggle to make what, to outsiders, look like pretty reasonable changes to US health care. They have seen a summer campaign demonise him as an amalgam of Stalin, Hitler and Big Brother, bent on sending America's frail grannies to their deaths in the name of a new socialism.

If that's the response he gets when he suggests Americans should be covered, even when they change jobs or get sick, imagine the monstering he'll get for telling them they have to start cutting back on the 19 tonnes of carbon dioxide each one of them emits per year.

But, if Obama cannot even get his health care reform through a Democratic-controlled senate, what chance a climate change treaty that goes beyond Kyoto?

So is the world about to blow its last chance to avoid catastrophe? Earlier this week I visited the Department of Energy and Climate Change - where a Countdown to Copenhagen clock greets visitors in the lobby - to talk to the British environment minister, Ed Miliband.

He concedes that talks are "hanging in the balance" but argues that, even if some omens are troubling, the stars will never again be in such favourable alignment. He is confident that, as long as the Chinese come to see low carbon as an opportunity to make green-tech products for export - and as long as US opinion can be brought around - a deal is within reach.

Jonathan Freedland is a writer for the Guardian


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A test of official concern for the 'little people'


Stephen Vines
Sep 18, 2009           
     
  |   

  



The government seems intent on turning a tragedy into a scandal by insisting that it will take some six months for the Labour Department to conduct an investigation into the deaths of six workers in an accident at the International Commerce Centre.

On the surface, this appears to be a classic case of the government doing its best to protect the interests of a powerful property company by ensuring its investigation drags beyond the point where emotion over the deaths remains raw.

This impression has been strengthened by explanations from Secretary for Labour and Welfare Matthew Cheung Kin-chung. He is testing credibility by saying that a lengthy investigation is required because the accident occurred in a long lift shaft. Really? Does that mean that an investigation in a small building would be shorter? This is nonsense of the highest order.

What prompts Cheung to utter such twaddle? No doubt he is aware that the deceased workers were employed by a subsidiary of Sun Hung Kai, one of Hong Kong's most influential companies. And, no doubt, he is aware that one of the administration's cardinal rules is to avoid upsetting tycoons wherever possible.

This is not to pre-judge the issue and conclude that the company is guilty of negligence or inadequate supervision of its employees. Clearly, the accident needs to be thoroughly investigated, but does it really take six months to do the job?

Following the accident, Chief Executive Donald Tsang Yam-kuen rushed to the site in a small but appropriate piece of theatre designed to express official concern and offer condolences to the families of the deceased. His actions remain at the level of a show if they are not followed up by swift action to identify why these workers died and to discover whether there are ways of ensuring further accidents of this kind do not occur.

Speed is of the essence, not just so that justice is done, but in accordance with the legal adage that justice delayed is justice denied.

Compare this sloth with the speed of the government's response to something like a threatened bank failure. When, for example, the ailing International Bank of Asia ran into problems, it took a matter of days for officials to deliver decisive support. The administration ensured that not only was the bank rescued but that a systematic collapse was averted.

There are no prizes for noting the differences here. One case involves the lives of people at the lower end of the workforce, waste clearers with no influential connections. In the other instance, we are talking about hard cash and banks run by very influential people.

Here lies the heart of the scandal and it is a scandal that will hardly be relieved by suggestions that official sloth is not a matter of deliberate design, merely a reflection of official incompetence.

This is an extreme example of how Hong Kong's bureaucracy works. There is one type of response for the rich and powerful and quite another for the powerless and poor. It can be viewed at many levels. Take the most commonplace example, seen in government offices where ordinary citizens are forced to stand in long queues to receive the attention of bureaucrats dealing with everything from dishing out licences to accepting payments for various levies.

The rich and powerful have no experience of this treatment because when they or their representatives interact with the bureaucracy, they do so by appointment, are ushered into offices, seated and provided with refreshments. It is a different world, one infamously described by the notorious American heiress Leona Helmsley as setting her apart from the "little people".

The reality is there will never be a perfect level playing field that makes no distinction between rich and poor, but it is the duty of the government to narrow the gap in its own dealings. As long as differential treatment is perceived to prevail, trust in the government will diminish.

Stephen Vines is a Hong Kong-based journalist and entrepreneur


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Out of sight
It remains to be seen whether the political appointment system in Hong Kong has been a success

Anthony Cheung
Sep 21, 2009           
     
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Ever since the controversy last year surrounding their nationality and remuneration, Hong Kong's undersecretaries and political assistants have been subject to frequent ridicule and have sometimes been blamed for poor performance. The present system of political appointments is by no means flawless, but criticism needs to be put into perspective.

Many critics use popularity polls to rate political appointees' performance. While this may be fine for ministers, who appear in the media almost daily to explain policies, respond to public queries and comment on issues and incidents, their deputies and assistants do not have the luxury of such exposure. Without knowing what they do in support of their ministers, it is difficult to fairly assess their performance.

One could still blame the government: if undersecretaries and political assistants don't feature prominently in policymaking and public debates, how can people know what they are really doing? This is indeed something for the administration to ponder.

The political reality is that legislators and parties all prefer to talk to the very top, and undersecretaries are not perceived as carrying enough weight. Where even ministers have to compete for the media limelight, how can undersecretaries, who are not given charge of specific portfolios, as in other jurisdictions, be recognised for their role and impact?

Many subscribe to the theory that, since undersecretaries and political assistants are "outsiders", they are naturally not welcomed by civil servants who may see them as competing for policy influence. Without underestimating the problems of transition and mutual accommodation, one must not simplify matters.

In the new Civil Service Code, the role of civil servants vis-a-vis politically appointed officials is clearly spelled out - civil servants support them in formulating policies and are responsible for executing policies. Permanent secretaries are responsible to the ministers, and heads of departments and agencies are responsible to ministers through the permanent secretaries.

Though undersecretaries may, on behalf of their ministers, convey to civil servants the latter's views and work priorities, and may ask civil servants to prepare and provide information and data, such working contact is in the spirit of partnership and does not constitute a supervising or subordinating relationship. This is in line with international practice. Interestingly, while many would defend the power of civil servants, few have asked if undersecretaries are given sufficient support to do their job well.

In other systems, rivalry between political appointees and career bureaucrats seldom leads to systemic tension because there are well-established constitutional conventions and political ethos. If civil servants disagree with ministers, the latter's will prevails; however, ministers can't afford to ignore the honest advice of their civil servants, otherwise they pay the political price for any ill-conceived decisions.

Unless we go back to the pre-2002 system, where all ministerial posts were taken up by senior civil servants as career postings, extending and improving the political appointment system is the only way forward.

Politically appointed officials are most often not experts in the field of their bureaus. This is not necessarily a problem - British Prime Minister Gordon Brown was a lawyer but nobody questioned his competence to take charge of the Treasury for more than 10 years as Chancellor of the Exchequer. Their authority is not questioned because the doctrine of political appointment is accepted by all who see the benefits of the political executive being in charge but balanced by a career bureaucracy. Hong Kong has been so used to long years of government-by-civil-servants that people have yet to undergo a shift in mentality. However, ministerial appointees have to demonstrate their political capabilities to win public confidence.

The question comes back to whether the logic and purpose of political appointments are generally supported in Hong Kong and, more crucially, whether there is a suitable infrastructure to support them - such as the capacity of political parties and think tanks to groom, supply and support talent for political appointment.

If not, those appointed as undersecretaries and political assistants are left with an impossible mission.

Anthony Cheung Bing-leung is an executive councillor and founder of SynergyNet, a policy think tank


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Voice of the public heard in RTHK decision


LEADER

Sep 23, 2009           
     
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Radio Television Hong Kong's future has at last been made clear. It will remain a government department and our public service broadcaster. New resources will help it better serve the community. The components for a strong, independent voice have been put in place.

The government has, sensibly, followed public suggestions in making this decision. It could have adopted the three-year-old recommendation of an independent review panel and set up a new public broadcaster. No role for RTHK was spelt out in that document; a hiring freeze in its wake meant job insecurity for staff, which eroded morale. The uncertainty has now been removed.

There has been no explanation as to why the panel's advice has been ignored. The long delay in making a decision had created concern about the future of RTHK. The process could have been more sensitively handled. Speculation had been rife that the review would be used to transform RTHK into a broadcaster that provides only government information. Such a step would have found favour among some in pro-Beijing circles, but would not have been in Hong Kong's best interests.

The commitment by the government to maintaining RTHK's public broadcaster role is, therefore, welcome. But suspicions linger and every effort must be made to ensure its editorial independence is upheld when the new policy is implemented. Surveys have consistently shown the high regard in which RTHK is held. But its programming has been allowed to slide in quality. Secretary for Commerce and Economic Development Rita Lau Ng Wai-lan promises the new-look RTHK will have the resources and support mechanisms to provide the best-possible programming.

A bottom-up approach has been adopted. New headquarters will be built. RTHK will enter the digital era with radio and television channels. More funding should ensure better local productions and mainland and overseas programmes. RTHK's remit will be laid out by the government in a charter to be signed by the chief secretary. Its relationship to the government and responsibilities will be made plain.

One concern, though, is the creation of a new advisory body whose members will be appointed by the chief executive. It is to provide advice on, among other things, editorial policy. There is a danger this will lead to pressure being applied in areas which should be strictly within RTHK's editorial autonomy. This must be avoided. In whatever framework is laid down, measures must ensure the advisers are not able to impinge on the broadcaster's editorial independence or the integrity of its news-gathering process. Members of the advisory body should be chosen with good governance and transparency in mind.

The role of a public broadcaster is to serve its community. Taxpayers fund its operations; it has to fulfil their needs. Editorial independence, cultural diversity, upholding democracy and political balance and providing a wide range of views are cherished cornerstones. These pillars must be enshrined by the government in the charter. The government has made the right decision in keeping RTHK and bolstering its position. It must now ensure that the seeds of suspicion that have been sown as a result of the review process do not persist. The results of a public consultation starting next month into how the new RTHK should fulfil its mission and the direction it should take should be followed. A new, happier chapter in RTHK's long, proud and respected history has, it is hoped, begun.


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Two birds, one stone


CHRISTINE LOH

Sep 24, 2009           
     
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Even as the world's political attention is focused on global warming, air pollution remains widespread and dangerous. It poses a daily threat to people, animals and plants, and leaves a brown-black haze that affects visibility. This is the right time for our government to lay the groundwork to ensure its climate change and air pollution policies dovetail. It is already consulting the public on tightening air quality standards, and another study under way seeks views on what the city can do to fight climate change.

The public clearly supports reducing air pollution and improving public health. The climate change study needs to discuss two aspects of air pollution with large climate-heating effects - black carbon and ozone. Reducing them is relatively easy, cheap and politically feasible compared with mitigating carbon emissions.

Black carbon is a form of particulate pollution that turns things brown-black. It results from inefficient and incomplete fossil-fuel burning, such as from poorly maintained vehicle engines and heavy bunker fuel for ships. Power plants and factories that burn coal inefficiently also contribute to the problem.

Black carbon's warming effect is equal to between 20 per cent and 50 per cent of the effect of carbon dioxide, making it the second or third largest contributor to global warming. Ozone, a natural occurrence in the upper atmosphere, filters ultraviolet radiation, and its depletion can have serious effects on humans, such as dramatically higher rates of skin cancer.

However, ozone can also occur at lower levels. It is formed when gases such as carbon monoxide and nitrogen oxide - which are derived from burning fossil fuels - react with sunlight. It is a heat-trapping greenhouse gas whose warming effect is equal to about 20 per cent of the effect of carbon dioxide, and is bad for our health.

The major sources of these emissions locally are vehicles, ships and power plants. While carbon stays in the atmosphere for centuries, black carbon and ozone remain for only a matter of days or weeks. Nonetheless, they are both widespread and being emitted continuously. Reducing them would see rapid improvements to air quality and global warming.

Black carbon and ozone can be reduced with existing technologies at relatively low cost compared to mitigating carbon. Fossil-fuel use, especially diesel, is responsible for 35 per cent of global black carbon emissions. Particulate filters for vehicles are a first line of defence. Air pollutants that form ozone come mostly from transport and industrial processes. Solutions to the transport problem - most relevant to Hong Kong - include fuel additives and catalytic converters. Hong Kong already has programmes for trucks to use filters and catalytic converters. The government's climate change study needs to assess any benefits these have produced and how they can be enhanced.

The government's consultation on air quality standards includes proposals to deal with diesel engines. Should Hong Kong shift away from diesel fuel?

This is not easy to answer but some experts think cleaning up diesel to remove more pollutants may be a losing proposition. Much energy is used to produce each cleaner grade and, during the refining process, more carbon is emitted. Moreover, filters, additives and catalytic converters are not ideal.

Thus, switching to natural gas, biodiesel, hybrids and low-carbon electricity may be better in the long term. A move away from dirtier fuels has many benefits, and this issue will be increasingly debated around the world. The government's study to develop a climate strategy shouldn't ignore this question.

Once the government recognises that black carbon and ozone have key environmental, public health and climate effects, officials will have to tackle them in tandem, rather than treat them separately. A new policy should focus on reducing air pollution in ways that also slow global warming.

Christine Loh Kung-wai is chairperson of the Clean Air Network and chief executive of the think tank Civic Exchange. cloh@civic-exchange.org


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The short march
Ironically, as democratic capitalism stumbles in the West, planned economics looks to be serving China well

Orville Schell
Sep 25, 2009           
     
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The Chinese government is making massive preparations for a grand National Day parade in Tiananmen Square to celebrate both the 60th anniversary of the founding of the People's Republic and the 30th anniversary of Deng Xiaoping's programme of "reform and opening up". Walking through the square the other evening, I found myself thinking back to when I first began following China's amazing odyssey. The iconic, Mona Lisa-like visage of Mao Zedong still gazes out from the Gate of Heavenly Peace, but what was happening all around me suggested how much things had changed.

When I first began studying China, at Harvard half a century ago, its leaders trumpeted the superiority of their socialist command economy, which controlled every aspect of life. Hostility between the United States and China, however, prevented students like me from actually travelling there.

But in 1975, while Mao still lived, the Cultural Revolution still raged, class politics still held sway, and there were no private cars, shops, advertisements or private property, I arrived in Beijing. Even we visiting foreigners - all dutifully clad in blue Mao suits and caps - were expected to attend regular political "study sessions" to purify our bourgeois minds with proletarian tracts written by the Gang of Four. That trip set an indelible baseline against which I have been able to measure all the changes China has undergone.

As Deng began to encourage individual incentives over the next several decades - embodied in such slogans as "To Get Rich is Glorious" - I watched with wonder and amazement as China's private economy began to rise from the ashes of Mao's revolution. As this process unfolded, it became fashionable for market fundamentalists in the West to bask in a sense of vindication. After all, were the scales not falling away from the eyes of Chinese leaders, and were they not now turning for salvation towards the God of capitalism that they had once so militantly denounced?

This "end-of-history" interlude, when "communism" was either failing or recycling itself into its opposite, also encouraged many latter-day American political missionaries to proselytise for democracy as well as capitalism - to urge China's leaders to abandon state controls not only over their economy, but over their political system as well.

Of course, China's leaders vigorously resisted that evangelism, especially after the collapse of communism in Europe in 1989, often berating the West for "intruding in the internal affairs of China" and clinging even more defiantly to their Leninist, one-party form of governance. As the imbalance between China's ever more dynamic, modern and globalised economy and its opaque, single-party system of political rule deepened, many Western specialists predicted that the contradiction would inevitably trip China up. Instead, it was America and the West that went into an economic tailspin.

When, after the eight catastrophic years of George W. Bush's presidency, Barack Obama entered the White House, it seemed for a moment as if America might be able to arrest its downward slide. But then an unwelcome thing happened. Obama ran right into a perfect storm of the worst aspects of American democracy: red-state provincialism and ignorance, fearful conservatism, Republican Party obstructionism and even some Democratic Party dissidence.

The US Congress became paralysed by partisan politics. Seemingly lacking a central nervous system, it has become a dysfunctional creature with little capacity to recognise any common national, much less international, interest. Under such circumstances, even a brilliant leader, with an able staff and promising policies, will be unable to pursue his agenda.

As governments across the West have become increasingly bogged down trying to fix a broken economy, China has been formulating a whole series of new, well-considered policies and forging ahead with bold decision-making to tackle one daunting problem after another. Triumphant from the 2008 Olympic Games, its leaders have undertaken the most impressive infrastructure programme in history, implemented a highly successful economic stimulus package, and now are moving into the forefront of green technology, renewable energy and energy efficiency - the activities out of which the new global economy is certain to grow.

In short, China is veritably humming with energy, money, plans, leadership and forward motion, while the West seems paralysed.

As I strolled through Tiananmen Square, the paradox that struck me was that the very system of democratic capitalism that the West has so ardently believed in and advocated now seems to be failing us. At the same time, the kind of authoritarianism and state-managed economics that we have long impugned now seems to be serving China well.

It is intellectually and politically unsettling to realise that, if the West cannot quickly straighten out its systems of government, only politically unreformed states like China will be able to make the decisions that a nation needs to survive in today's high-speed, hi-tech, increasingly globalised world.

Orville Schell is director of the Centre on US-China Relations at the Asia Society. Copyright: Project Syndicate


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