Quotation of the Day

15 April, 2011

Book Talk

城中讀書會

題目:聯邦論 / 漢彌爾頓, 麥迪遜, 傑約翰著
講者:邵力競(中文大學公共政策碩士課程兼任講師、公共事務咨詢、前特區政府政務主任)
日期:2011年 4 月 29 日(星期五)
時間:7:00p.m.-9:00p.m.
地點:中環美國銀行中心1樓A,中大專業進修學院演講廳
報名:http://www.cuhk.edu.hk/bookclub(成功留座者將獲發留座編號作為憑證)

簡介
一部二百多年前的政論集,對現實的香港人有何意義?美利堅立國之初艱難重重,開國元勳草擬的憲法可說是人類歷史上的嶄新政治試驗。當中的三位匿名作者,如何為解釋推動制憲,針對時弊,從人性出發,博引古今,縱論共和制度的優勝劣敗?《聯邦論》不止是美國政治、法學的傳世經典,更間接奠定了美國兩世紀的富強基礎,對我們思考今日香港的社會困局和出路,又有何啟發?

14 April, 2011

The Chinese model (originally published on EJ Insight www.ejinsight.com)

Apr 14, 2011 08:21

The Chinese model
By L K Shiu

Economist Wu Jinglian couldn't have been more timely in reminding us of the big hurdle to China’s economic reform: state-owned enterprises (SOEs). His comments, reported by EJ Insight on April 4, represent a good countervailing opinion to the stock market frenzy surrounding state firms, which until very recently were still seen as unfitting remnants of the Soviet planned economic model.

Champions of the “Chinese model” of development should take note of the professor's concerns. According to American political economist Francis Fukuyama (who is himself not a champion of this model), the model comprises these features: a market economy, an export-oriented strategy, a one-party authoritarian government and a relatively effective state apparatus in achieving prescribed goals.

The notion of “market economy” is, however, contestable. “Market economy” in the Chinese model does not quite carry the same meaning as found in economics textbooks or as understood by general western readers. Just this week it was widely reported that China is putting a brake on prices of various things, from coal to consumer goods, via administrative directives or through “consultation” or “counsel”.

Price regulation is certainly at variance with market economy. But more interesting is the role played by the SOEs, which makes the Chinese market economy very different from other market economies, even those of European nations noted for heavy taxation and a high percentage of nationalized industries.

First and foremost, this is reflected in the sheer size and scope of the SOEs. They are predominant in nearly all strategic economic sectors, pillar industries, and the most profitable areas that stand to benefit from China’s economic reform. Amongst them there are about 120 registered as “Central SOEs” under a commission of the State Council. Their business embraces oil, coal, power generation, automobile, telecommunications, civil aviation, shipping, etc. The big names include thirty Fortune 500 companies such as Sinopec, PetroChina, China Mobile, China Railway Construction, Dongfeng Motor and China Southern Power Grid.

Their influence on the national economy is colossal. In 2010, they paid more than one-sixth of all national taxes. Their realized profits, some 850 billion yuan (US$129.97 billion), were nearly one-tenth of the national income.

From such pivotal role comes immense political power. Managers of SOEs are more like officials than businessmen. We shouldn’t be surprised to see top executives taking political posts, as Su Shulin did recently. The Sinopec chairman was appointed to the No. 2 position in Fujian province.

Many of these people come from official background and would go back to the bureaucracy. Indeed they belong to a well merged bloc. Reportedly there’s a story that back in 2004, the railway minister (who stepped down this year on corruption charges) summoned all domestic rail equipment producers to Beijing in preparation for negotiations with foreign suppliers for high-speed rail cars. The domestic manufacturers humbly deferred to the ministry’s leadership since many of them were once from the ministry.

While good government rapport gives critical advantages to big enterprises in a society famed for “guanxi” (connection), investors should not forget the possible downside risks. The price attached is that the SOEs are often asked to shoulder political responsibilities that their western counterparts could lightly brush aside in the name of shareholders’ interest.

At a recent State Council press conference, an official reminded SOEs to treat well their employees, consumers, the environment as well as the community at large. More surprising was the call to those SOEs with investment abroad to duly safeguard the interests of foreign employees and contribute to the social development of the countries where they operate.

Such language might sound a bit odd or even hypocritical to western investors, even allowing for all the concerns over corporate social responsibility in recent years. But in the Chinese model, it is not just rhetoric.

As the senior management of SOEs is so intertwined with the political leadership, it’s purely natural, from the perspective of personal interests, that they should care about their political future. Such cooperation between the state and the corporate is a defining feature of the Chinese model. And it stands out most when it comes to complying with national objectives in macro-economic management (such as price regulation), ensuring availability of essential goods to market, investing in key infrastructural projects and ensuring national or energy security.

L K Shiu is a part-time lecturer at Chinese University and a public affairs consultant. He worked as an administrative officer in the Hong Kong Government.

-- Contact the writer at utopia1848@gmail.com

RC

01 April, 2011

Rail versus road development (part 2)

Published Mar 28, 2011 08:24 EJ Insight

Rail over road
By L K Shiu

China is pursuing a parallel track of development for its land transport system. There are good reasons for that.

In the first place, rail is more efficient in terms of energy consumption. According to the US Department of Energy, freight transport by rail consumes about 246 Kilojoules (Kj) of energy per ton-km (i.e. hauling one ton of goods over one kilometer). The corresponding figure for trucks on roads is about 2,400 Kj. For passenger transport, cars consume approximately 28 percent more energy than trains.

Remember always that China is energy-hungry. Although the country is not poor in endowment of resources, the per capita share is rather meager. Take coal as an example. China tops the world in coal excavation and has the third largest coal reserves in the world. Yet its per capita share of coal is only 50 percent of world average. Energy saving is not just about silencing foreign critics on carbon emissions or soothing domestic national security concerns, but has very real implications for further expansion of the economy. It will continue to be a defining characteristic in China's national development in all aspects of the economy, not least the transport sector.

Secondly, let's not forget that land is a very scarce resource in China, despite its absolute size. This is particularly evident for the area used to be called "China proper" (i.e. excluding Xinjiang and Tibet), which is only about half of the country but inhabited by the majority of population. All land-based transport networks take up space that could otherwise be used for residential, commercial or agricultural purposes. Land use by transport systems has to be economically efficient.

We can roughly compare the efficiency of different transport means by looking at the load carried over a given distance (say one kilometer). Take the passenger statistics during 2011 chunyun (transport during the Spring Festival season) and divide them by the total length of rail and road networks (which by 2008 stood at about 80,000 km and two million km respectively) and the result is quite startling. The rail network, despite its much shorter total length, carried about 2,500 passenger-trip per kilometer, whereas the road network carried about 1,100 passenger-trip per km. In other words, rail is taking up more than twice the passenger loads of road.

In freight transport, rail contribution is even more pronounced, especially for strategic commodities. According to the Ministry of Railways, rail cars were responsible for moving 60 percent of coal and over three-quarter of oil in 2008.

The third is a non-economic reason but no less important. A casual impression one gets after travelling in Japan, Germany and USA is that smaller compact countries like Japan and Germany seem to have a natural preference for rail construction, apparently because it makes more economic sense. But could it also be a cultural phenomenon?

A smooth rail system requires good national coordination between various parts of the country, strict adherence to time-table and discipline, and cooperation amongst people manning different components of the system for the greater collective good. And the tolerance for failure or mistakes is extremely low compared with vehicular transport. The sense of ownership arising from these two modes of transport is also entirely different: rail is public, car is private (allowing for, of course, some sections of private rails and public vehicles).

I am not advocating any over-generalization of national character here. But I suspect that the auto culture of the United States is closely associated with the pursuit of individual freedom that is so much ingrained in the American spirit. It is perhaps only possible in a country with population spread so thin and sparse across the land. And I do not believe such love for individualism is what the Chinese government would want for its people.

China is unlikely, therefore, to be another automobile market like America in the past century. The country will promote car manufacturing as one of the strategic industries, but the emphasis is already on the commercialization of energy-efficient hybrid and electric models.

L K Shiu is a part-time lecturer at Chinese University and a public affairs consultant. He worked as an administrative officer in the Hong Kong Government.

This is the second of a two-part series on China's rail and road development strategy.

-- Contact the reporter at utopia1848@gmail.com

RC/CH