Monday, May 31, 2010

Daily Links, May 31, 2010

Caught this one last week in Miaoli. What's hovering on the blogs today?

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Sunday, May 30, 2010

What is this?

I biked for a few hours down in Lukang today with the awesome Nathan Miller and Drew Kerslake. We passed these poles, some kind of old electricity system, on the north side of the city. They appear to run between the old military base there, and the current modern radio transmission towers in a field north of the city. Is this an old power transport system? A horizontal radio aerial? Or what?
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TVBS Poll: Neck and Neck in the North?

The latest TVBS poll has the DPP's Su Tseng-chang and the KMT's Hau Lung-bin at 41% and 46%, respectively, for the year-end Taipei city election. It asks if tomorrow were the vote, who would you vote for?

Hau 46%
Su 41%
Undecided 14%

Among self described independents, Su has a commanding 41-31 lead over Hau, with 28% uncommitted. Since in TVBS polls the uncommitted typically break DPP, it would appear that, at least according to TVBS, the DPP is doing quite well in Taipei at the moment (cue anything can happen disclaimer). The margin of error in the poll is 3.5%. Even within the realm of the poll itself, Su and Hau are basically neck and neck.

Similarly, the May 24 TVBS Poll for Xinbei city, The City Formerly Known As Taipei County, has the DPP's Tsai Ing-wen 44-43 over the KMT's Eric Chu. Among independents, Tsai has a commanding 42-30 lead, with 28% undecided. Since in TVBS polls the uncommitted typically break DPP, it would appear that, at least according to TVBS, the DPP is doing quite well in Taipei County/Xinbei at the moment (cue anything can happen disclaimer).

For a review of TVBS' consistent underestimation of the DPP vote, see this post.
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Saturday, May 29, 2010

Gangsters and Politics from AP

Deb Wu of AP turned in a doozy of a piece on criminals in Taiwan's local politics this week that was featured in both the Taipei Times and the Taiwan News (a more permanent link is at Yahoo News). Since the latter has the longer and richer formulation of it, I'll grab an excerpt from there, but be sure to read the whole thing, it is outstanding:
Taiwan expert Bruce Jacobs of Australia's Monash University says gangster governance is an important part of Taiwan's political glue, without which many people would lose a shot at fair treatment in what has long been a rigidly hierarchical society.

"They are providing services, and that creates respect within the community," he said.

Criminals rose to prominence in politics in the late 1980s, and their influence peaked in the mid-1990s, when a third of county and municipal councilors had criminal backgrounds, according to then Justice Minister Liao Cheng-hao. They included the legislative speaker in Pingtung county, Cheng Tai-chi, who was later executed in 2000 for gunning down a gambling den competitor six years earlier.

Today, the proportion in county legislatures has dropped to 15 to 30 percent, estimates political scientist Chao Yung-mao of National Taiwan University in Taipei. That's still large enough to have a major impact on local politics, he said.

"Gangster deputies demand that government officials give priority to projects in their constituencies or help arrange temporary jobs in the government for their supporters," Chao said. "They warn officials about 'consequences' if their wishes go unfulfilled."

Their names are widely known in Taiwan. People like Tainan county legislative speaker Wu Chien-bao, recently indicted for bribing professional baseball players. Or Nantou county power broker Chiang Chin-liang, whose murder and extortion convictions in the 1980s raised embarrassing questions for Wu Den-yih, now Taiwan's premier, after it was reported that Chiang had accompanied him on a trip to Indonesia in 2008.
The piece focuses on Yen Ching-piao, the gold standard for criminals in politics, who in his own self unites all the strands of political power in Taiwan -- influence over local temple associations, construction and gravel industry control, local political clout, organized crime, and close links to the KMT. The article goes on to give one of the most common explanations for the tight links between local gangsters and the KMT:

Wang Yeh-lih, another National Taiwan University political scientist, said that gangster governance in Taiwanese counties evolved from deals that then President Lee Teng-hui cut with criminal elements in the late 1980s.

At the time, Wang said, Lee needed a strong counterweight to influential elders in his Nationalist Party, who were trying to maintain the political dominance of the so-called "mainlander" faction _ people who had fled to Taiwan in 1949 when Mao Zedong's Communists defeated Chiang Kai-shek's Nationalists in the Chinese civil war.

Lee himself was a native Taiwanese _ the descendent of families who had come to the island from the Chinese mainland in the 17th and 18th centuries _ and to neutralize the mainlander faction, said Wang, Lee "nominated many native Taiwanese gangsters to run in regional elections and for positions in the party's decision-making body."

It is common to blame Lee Teng-hui for the incorporation of gangsters into the KMT as local candidates, but the reality is that the KMT had been intimately involved with the local factions -- which are closely gang-connected -- since day 1. My background piece on irrigation associations and local politics has a number of quotes of how the farmer's associations were corrupted in the 1970s and became the power bases of local politicians, who, by the 1980s, were spending as much as US senate elections to gain the posts. Read the quote on vote brokers. Recall also that in 1984 gangsters under KMT government control killed author Henry Liu in the US.

But more: an article in Taiwan's Electoral Politics and Democratic Transition by Huang Teh-fu has a rundown on the statistics of the KMT's involvement in the local factions, which are heavily involved in all sorts of organized crime. It notes:
"How close was the relationship between the KMT and the local factions in these elections? In elections from 1954 to 1989, the average representation of factional candidates among all KMT candidates in Taiwan Provincial Assembly elections was 60.7%... Between 1954 and 1989, the factional representation of the KMT never dipped below 50%."
In other words, if Lee really was picking local gangsters for legislative posts, he was merely following an old trend. But the reality was that the trend of increasing factional influence was bottom up, not top-down. The KMT began its rule in Taiwan as an alien and unpopular colonial regime heavily dependent on local factions to sustain its rule. Over time this evolved into a mutually beneficial relationship -- the KMT arbitrated between factions, sometimes to the point of rotating seats between competing factions in the same area, and sent down resources to the local faction networks for distribution to help them maintain power, and in return its power at the national level -- the power of mainlander faction at its core -- went unchallenged. An important component of this KMT policy was that factions were not allowed to operate on the national scale -- no faction could operate across county lines, and local Taiwanese politicians could have only local-level posts in the KMT Party heirarchy. This ensured that no politician could acquire an independent power base big enough to operate at the national level and challenge the mainlander power structure. Divide and rule at the local level....

However, as Chen Ming-tong relates in a paper on local factions in Taiwan's Electoral Politics and Democratic Transition, after Chiang Ching-guo died the local factions, who had been increasing in power since Chiang himself accelerated Taiwanization -- bring native Taiwanese into the KMT at increasingly higher levels -- began forming groups to operate across regional boundaries. Chen writes:
"After Chiang's death, local factions made a series of nationwide coalition moves aimed at undermining the KMT's domination over central government agencies. Such moves included the establishment of the Wisdom Club, the emergence of the DC club, and the Yi Lan Conference prior to the KMT's thirteenth national conference in 1988, in which the speakers and vice speakers of 21 cities and counties demanded more political power from central authorities."
Chen reports that in the 1992 Legislative Yuan election Lee nominated the highest proportion of factional candidates ever, 59%, a figure not exactly out of proportion to the importance of local factions in KMT politics. The DPP responded by claiming this was pure money politics -- which it was -- but it was also recognition of the evolving power of the factions within the KMT and their thrust for national prominence. In the 1992 elections the KMT took a beating, apparently for corruption, and consequently, in the next round of city and council elections, under Lee Teng-hui the party fielded the lowest proportion of faction candidates ever in such an election, 42%. The KMT got thumped anyway.

In other words, Lee accepted a situation of increasing local factional power he was handed, and ran with it. He was capable of nominating lots of local faction politicians, or few, as the case demanded. Involvement of local organized crime/factions in KMT politics is an old, not a new situation. The claim that Lee "nominated many native Taiwanese gangsters to run in regional elections and for positions in the party's decision-making body" with the implication that this number was somehow a disproportion or something totally new that caused a new social trend is completely false.

I can't resist pointing out one more thing. At this point in time, in the early 1990s, Lee's Minister of Justice was one Ma Ying-jeou, who was carrying out a crackdown on corrupt local politicians that earned him much enmity in the 1990s. Lee eventually removed him from that post. Now that you understand the role of faction politicians in the KMT of that period, their rising power after the death of Chiang, and their importance to the KMT grip on Taiwan, ask yourself whether Ma was earnestly trying to clean things up, or whether he was simplying carrying out the old KMT policy of suppressing local factions attempting to operate at the national level, by jailing them for corruption, with the added bonus of knocking out Lee supporters. And then look at the current program of attacking DPP politicians for "corruption" under the Ma Administration, and ask yourself if it is just a case of, as far as political strategies go, plus ca change...
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New Camera: Fuji Finepix HS10

A few months ago I got my son a new Fuji camera with an 18X lens that was longer than my Canon Powershot's. Falling behind in the camera arms race was a traumatic experience for me that required much consumption of alcohol to cope with. Fortunately my lovely wife took pity on me in my wretchedness and bought me a new Fuji Finepix HS10 last night. It is easy to understand why I married this woman.

We picked up the camera for $15,900 at one of the shops in NOVA in Taichung. I'd been thinking about a Canon Powershot SX10 IS for a while since my Powershot is slowly falling apart but the zoom wasn't quite big enough for me to go out and pick up a new camera, among other issues. Not when there was bike stuff to buy! But as soon as I wrapped my hands around that Fuji's big lens I was in love.

As you can see in the pic above, the HS10 sports a huge 24-720mm optical zoom (30x), which appears to be the same lens the NSA uses to read license plates from orbit. Two shots are here -- the street at 24mm and then racked out to 720mm in the inset. The man's head and lettering in the lower section are behind the truck on the left center of the main photo. You can sorta see him there as a gray-blue blob.

Here's two shots again of the same street, the main shot wide angle (24mm). The red box is the place displayed in the inset at longest zoom. Note that the zoom racks out manually -- gives you much better control and saves battery power.

Here's a shot from a road near my house in Tanzi, north of Taichung on wide angle (24mm). Factoid: thanks to a quirk in the configuration of the river basins between here and Wufeng, on a clear day you can see Nantou from this tiny rise even though we are something like 15K from Wufeng. Good luck getting a clear day, though. Note the highway construction in the center distance....

Same highway construction, 720mm zoom.

One of things that delighted me about the first Fuji I owned, an S5000, was the excellent macro capabilities. My current Canon S5 IS also takes great macro shots. Here is a carrot at super macro with the new Fuji.

Cilantro on super macro. I think I'm going to have a lot of fun with this camera.

The camera shoots in RAW and in a variety of image sizes. ISO ranges from 100-6400, and Fuji's high ISO processing appears to have less noise than the Canon's. The macro is easier to use than the Canon's, but the other functions are often less efficiently arranged -- the Powershot's functions are all easily accessible, one of the things I really love about that camera. The Fuji powers up instantly when you turn it on so it is ready when you are. A nifty feature is that when you bring it up to your eye to peer through the viewfinder, it senses the closeness of your face and automatically switches from the LCD to the viewfinder. Overall image sharpness and quality seems excellent but my impression at present is that it is slightly inferior to the Canon Powershot's when you zoom into a photo, a consequence of Fuji's JPG compression routines, I think. In any case shooting on RAW addresses that problem (on RAW my 16G SD card takes about 1000 pictures).
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Economist on Taiwan/China IT supply chains

Economist's latest on Taiwan. Aside from the pro-China propaganda references on "becoming Chinese," it's an interesting look at what Taiwan's IT industry actually is, a nifty counterpart to the piece I posted a couple of days ago on Taiwan's labor costs and branding problems:
Computex includes stands where Acer and Asustek, another local computer-maker, display their latest wares. But it is not so much an IT exhibition as a mall for computer parts. Memory chips, motherboards, disk drives, fans, connectors, casings: each component has its own neighbourhood of booths. The heart of the Taiwanese IT industry is a network of hundreds of small specialised firms that make these things, overnight if need be.

This strength, however, is also Taiwan’s weakness. Most firms are junior partners in the world’s IT supply chains, making things others have developed. They are good at incremental innovation, mostly related to manufacturing (firms from only three other countries have filed more patents in America than Taiwanese ones over the past decade). But many of them are stuck in a “commodity trap”, cautions Dieter Ernst of the East-West Centre, a think-tank in Honolulu. Profit margins, he says, are razor-thin and do not allow adequate investment in R&D and branding. The Taiwanese industry is particularly weak where the most valuable intellectual property is created these days: in software, services and systems. As a result, Taiwan has a huge deficit in technological trade. Its firms are often sued by Western ones for patent infringements. In March, for instance, Apple filed a complaint against HTC.

What is more, under pressure from their customers, Taiwanese computer-makers have moved most of their production to cheaper countries, mainly China. Yet China is becoming a force in its own right in high-tech innovation and is itself fostering IT giants, such as the Semiconductor Manufacturing International Corporation (SMIC), another foundry.
The piece goes on to discuss how Taiwan is attempting to handle those issues, at least in IT, with ITRI taking the lead in fostering design, software, and services upgrades. But it does represent another look at how Taiwan's current business model is reaching its limits in many areas.
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Friday, May 28, 2010

Hot Pot Time

The other day it was hot pot time. Yum. Here we contemplate some golden needle mushrooms.

We stopped by the table at the local market where all sorts of goodies are sold.

You tofu, really great in hot pots.

We don't put these in our hot pots.

A world full of unfamiliar objects.

These were probably dried on someone's sidewalk or pavement.

We don't use these either.

Eggs, bacon, and....

..."salad dressing", or mayo. Because no meal is complete without a healthy dose of mayo squeezed across it.

Five flavor peanuts. I seldom buy peanuts, the bag rarely makes it to the end of the day, my wife and eat them like candy.

This wasn't in our hot pot either.

Mushrooms and.... what?

Meatballs. A must in every hot pot.

Good on the side, but not in the pot.

It's kind of like a supermarket in miniature.

Not for the hot pot.

How would I prepare this? Hmmm....

Stewed eggs, tofu skin spring rolls, and other goodies.

Alas, shellfish are a common illegal import from China in local markets, filled with deadly chemicals. We avoid them.

This kind of soft tofu is really delicious.

Fungus among us.

Good, but not in our hot pot.

Traditional tofu. A staple of our hot pots.

What sauce would be complete without these?

Not for sale!

A watched pot does in fact boil, contrary to popular misconception.
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Thursday, May 27, 2010

Tsai: ROC = government in exile while KMT Legislator = government with guile

Tsai Ing-wen, DPP Chair and newly minted mayoral candidate for The City Formerly Known as Taipei County raised a few eyebrows across the island today when the story broke that she had said that the ROC was a government in exile. The Taipei Times reports:
Government officials and Chinese Nationalist Party (KMT) lawmakers yesterday rushed to slam Democratic Progressive Party (DPP) Chairperson Tsai Ing-wen (蔡英文) for calling the Republic of China (ROC) a government-in-exile while the DPP defended Tsai, saying her remark was taken out of context.

Tsai on Tuesday suggested in a speech at a book launch that from Taiwan’s perspective, the ROC government was a Chinese authoritarian government that had dominated Taiwanese politics for the last six decades. However, she also said that in the past few decades, with the rise of Taiwan’s democracy movement and replacement of Chinese interests with Taiwanese interests, the ROC government had become both legitimate and sovereign.
The article contains the usual overblown accusations from the KMT, who must have been relieved to have something else to talk about after the latest KMT corruption scandal in which a legislator used fake aides to pocket funds which he said were used for party caucuses, but I thought the KMT Minister of the Interior's remarks were the most sensible:
Minister of the Interior Jiang Yi-huah (江宜樺) said some academics used to refer to the ROC government as a “government in exile,” but the official view is the “ROC government is the ROC government.”
It is good to have it officially confirmed that the ROC government is the ROC government, so I can refer to that in case I become confused. If you read the whole article you get a sense that Tsai was actually referring to a historical process, not the present day government. The official DPP position is laid out at the bottom of the article: Taiwan is a sovereign and democratic state (Taiwan News has a fuller picture of the DPP side). The whole thing is manufactured by Taiwan's Golden Retriever media.

What was this corruption case? A classic, offering all the components of the stereotypical case.

1. The powerful politician says go easy on him:
Legislative Speaker Wang Jin-pyng (王金平) yesterday urged prosecutors to seek lighter punishment for a former Chinese Nationalist Party (KMT) legislator who was barred from leaving the country for allegedly pocketing salaries paid to legislative aides during his tenure.
Speaker Wang himself was recently found innocent of downloading government bucks, though some aides had to do some time. Of course, this is nothing like a situation where the little guys take the fall for the powerful untouchable politician. This was justice.

2. There are relatives involved:
Wang was commenting on prosecutors' recent decision to prohibit former KMT legislator Kwan Yuk-noan (關沃暖) from leaving the country after Kwan allegedly embezzled about NT$4 million (US$123,000) that should have been set aside for legislative aides. Kwan, a former legislator-at-large representing KMT overseas compatriots from 1998 to 2004, was released on NT$600,000 bail last week.

Taipei prosecutors said Kwan suspiciously used four relatives’ names to claim NT$4 million in payments for legislative aides during his two terms. He might also be accused of corruption and forgery, they said.
Bonus fact: the legislator doesn't even represent anyone in Taiwan, he represents "overseas compatriots."

3. The Taiwan defense: "everybody does it":
Kwan yesterday protested his innocence, saying this is how it works in the legislature. He said legislators-at-large are all required to financially support party caucuses by giving NT$100,000 per month and that this is how they do it.

“The legislature gives us the money and then we deal with the fund,” Kwan said. “I have my integrity. I wouldn't embezzle a penny even if the cash is given directly to me.”

Wang said all legislative caucuses had similar requirements for legislators-at-large, adding that one or two legislators also pay the fee in a similar way. He did not name them.
Some things just never change.....
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Leninist Organization in Action

It is easy to look at the KMT and the cash and not look past that, but one of the most important components of KMT dominance over society is its Leninist drive to bring all the institutions of society under its own control. In Leninist forms of organization, Right or Left, the Party interpenetrates with society so that whether at home, on the job, or socializing, the Party is always in control, monitoring, and shaping the behavior of others. A friend of mine flipped me this email, which I have edited slightly to obscure identities, that shows how this process of establishing and operating local institutions works at the ground level.


Subject: [TOSA] Taiwan ROC Youth Alliance of Pacific Northwest, USA

Dear TOSA members,

On Saturday May 22, 2010 at 2pm, there will be a ceremony for the establishment of a new organization called “Taiwan ROC Youth Alliance of Pacific Northwest, USA”.

The goal of this organization is to form a bridge between Taiwanese associations and students from college and community colleges in 6 vicinity states (Washington, Oregon, Alaska, Idaho, Montana, and Wyoming).

So far, we have representatives from:
- Taiwanese Club @ EdmondsCC
- Taiwanese Club @ Greenriver CC.

This group is open to members from ages 16 to 40 but is mainly focused on serving students and young professionals.

If you would like to know more about this group or would like to gain some leadership experiences, you should definitely attend the ceremony this Saturday. As this group is still in the formation process, we will most likely be looking for students who are interested in taking some leadership roles.

Event Details:
- Date/Time: Saturday, May 22, 2010 @ 2pm
- Location: Cultural Center of TECO in Seattle
(1008-140th Ave NE, Suite 108 Bellevue, WA 98005)
- We will be accepting membership application to join the group.
Student members application fee $5
Non-student members application fee $10.
- There will be food and drinks prepared

If you have anymore questions, feel free to e-mail us at

Hope to see you there!
TOSA TEAM 2009-2010

XXXX and I decided to check it out so we could try to understand what they are after. AAAA, a member of our group, is guessing this may also be used to pump up support for "ROC100". A TECO Cultural Center woman lead the beginning introduction, her student assistant lead the rest. During the welcome and introduction (all the meeting was in Mandarin) she told the ~200 students that this would be a non-political group. To me this raises red flags immediately, and I mentioned to BBBB that their interpretation of non-political likely meant to keep the student groups from supporting anything that ROC/KMT was against. One thing I noticed was the constant use of "中華民國" [Chunghwa minguo] throughout all the afternoon, and only using "Taiwan" when absolutely necessary.

They handed out the bylaws and a member registration which I have scanned and attached; reading these will really give you the insight of what they are doing here. Ms. TECO announced she would read the bylaws and if anyone had an issue with them, they should speak up, but if you agreed or didn't really know what it means, please clap (oh, please, let's just copy the CCP rubber stamp process here!) Some key red flags in the bylaws would be the mention of "Chinese culture", but sometimes in the same sentence with Taiwanese this or that; the ability for them to kick out a member for any reason; the inclusion of many political support requirements, read as patriotism to ROC and Chinese culture.

One of our members was the only one brave enough to stand up and ask several questions for different sections, particularly the part about what patriotic activities meant and to give an example. Ms. TECO was a bit hesitant to answer, but couldn't seem to dodge the question as well as Ma does. She explained that although you might have differing opinions on religion, as ROC citizens the students would be expected to stand up and support the ROC government as one voice, and would be expected when called upon to show up for ROC government functions; for example if President Ma comes to Seattle, they would be expected to show up and cheer for him to show their patriotism and love for country and the president. (BBBB turned to me at this time and whispered jokingly if that would apply for past presidents like Chen or Lee). Here is where our own AAAA was likely right about this being done now to get ready for ROC100.

To our surprise, despite many students not knowing each other because they were from different schools, they ran the election immediately after gathering the membership forms and money. We heard much grumbling from the students about the unfairness of this as it was influenced greatly by the number of students who were able to show up from any one school. Our feeling here was OCAC was simply giving a veneer of student control with student elected officers, but real control still resided in OCAC. It was obvious that the leaders for each of the school's groups were there because they were promised money backing for their activities, and that is how OCAC intends to keep them in line as well.


....but the KMT can only dream of the Party as God, as Gady Epstein at Forbes writes about China today.
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UK Intelligence warns on China's Huawei

From the China Reform Monitor:
British intelligence agencies have warned that Beijing could cripple IT-dependent telecom infrastructure and critical services through embedded malware installed by Chinese telecom firms Huawei. In response India’s communication ministry issued warnings to test all Chinese-installed equipment for “trapdoors, black box, and malwares.” London warned that through covert modifications Huawei could compromise systems in ways difficult to detect allowing Beijing to disrupt communications. Huawei is responsible for sweeping and debugging China’s embassies, giving their experts knowledge of telecommunication systems and their weaknesses. The company, founded by a retired senior PLA officer Ren Zhengfei in 1988, also works for the most repressive regimes – it built military projects in Iraq for the Saddam Hussein regime and telecom projects in Afghanistan for the Taliban, The Economic Times of India reports.

[Editor’s Note: The U.S. shares Britain and India’s concerns about Huawei's close connection with the Chinese security establishment. The U.S. government canceled Huawei's 2008 bid to pick up a stake in 3Com due to concerns that the Chinese company could modify equipment and computer software sold to the U.S. military.]
It's not just Huawei, many firms in the financial and electronics industry have tight informal and formal links to the CCP and the State in China. But Taiwan is going to annex its economy to China because its economy needs "saved." Good luck with that......
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Tuesday, May 25, 2010

ECFA as a status quo economic policy.

I've been arguing that the Ma Administration's ECFA policy is a status quo policy; indeed, I've said before that the China move by Taiwan businessmen was essentially a way to maintain the economy in another place, and not move forward. A thought provoking piece out at INPR notes:
Simply stated, if Taiwan’s business model does not change, Taiwanese firms will continue to be reliant on low cost labor for survival. With the rise of wages in China, these firms would be compelled to move to other states in Asia with lower wages. Currently, Taiwan’s manufacturing wage is only half of Korea’s. The crux lies in Korea has already transformed from its previous contract manufacturing model to one centered on brand marketing.


In conclusion, the negotiation strategy on ECFA should premise on assisting Taiwanese firms to embark on the new business model which emphasizes branding and innovation instead of seeing it as a means to prolog the current contract manufacturing business. The government needs to pay more attention to the service industry and to the potential barriers and risks associated with Chinese marketing. “Early Harvest list” can be likened to a pain killer that relives the pressure of potential trade diversion caused by China’s FTA with ASEAN countries and therefore is not the focus of ECFA. Taiwan should firstly open up the Chinese market for its service industry and bolster its brand marketing efforts. Succeeding on this front, ECFA will be the catalyst in triggering a new wave of rapid and lasting economic growth for Taiwan.
You don't have to believe in the possibility of Taiwan having its own brands to see the current version of ECFA as a status quo policy.
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US China Policy: Opposite Poles

My hat is off to Greg Torode over at SCMP, who performed a public service with an excellent piece on retired US Admiral Bill Owens and the Sanya Initiative.

I blogged on Bill Owens before, when FT failed to supply the right context for Owens (don't miss the comments on that post, they are very informative). Torode, by contrast, gives a complete picture of Owens' backers.
As someone who has experienced the most frigid extremes of the cold war between the US and Soviet Union, Admiral Bill Owens has made it his life's mission to try to prevent a similar chill freezing the emerging relationship between Beijing and Washington.

Talking to the veteran nuclear submarine commander and former vice-chairman of the US Joint Chiefs of Staff in his Hong Kong office, it is clear he is far from sure whether he will succeed. He speaks repeatedly of mutual suspicions haunting both capitals as well as the march of time that threatens the "enormous leadership" required to turn things around.

Already his fledgling Sanya Initiative - a private effort to foster trust and communication between retired military leaders from both countries - must struggle against those suspicions. He is not afraid, he says, to be branded a "panda hugger" back in Washington - a phrase long used as a pejorative in pockets of America's military-industrial complex.

If not exactly a precise return to cold war paranoia, Owens fears China and the US becoming locked in a military, political and economic competition from which only the rivalry of great nations, not the partnership, will be allowed to thrive.

"I think time tends to run out on these things as the attitudes on both sides harden ... as the Chinese military grows, the US will react to it in a competitive way," he explains. "We have only a limited amount of time remaining to find ways to ... become more like friends than competitors and genuinely engage in addressing the issues that the world faces.


He does cast himself, however, as someone who believes US behaviour and actions - Taiwan arms sales, for example - can shape China's responses by building trust. Increasingly, that puts him at odds with many military and security analysts who sense China is already determined to present a bi-polar challenge to US primacy.
Why perhaps does Owens hold these positions? Torode deftly informs us of Owens' longtime business connections to the PRC:
After retiring in 1996 as vice-chairman of the Joint Chiefs of Staff - the second-highest ranking military official in the US - Owens became chief executive of telecoms giant Nortel and the attempted satellite start-up Teledesic. Both gave fresh insight into China's future as he dealt with dynamic mainland firms such as Shenzhen giant Huawei Technologies.
In other words, as discussed in the previous post, Owens is a businessman with longtime connections to the PRC. What is the Sanya initiative? It's basically The Remains of the Day with Chinese characteristics. Torode supplies more detail....
Within the administration there is also an unease about the involvement in the Sanya Initiative of General Xiong Guangkai , the former deputy chief of the PLA General Staff and military intelligence supremo. Other generals include General Yu Zhenwu and Vice Admiral Zhao Guojun, former commander of the PLA Air Force and commander of the East Sea Fleet, respectively. The US side includes Admiral Joseph Prueher, former US ambassador to Beijing and head of the Pacific Command, and General Dennis Reimer, former US Army chief of staff. As well as formal discussions, the group have held banquets, fishing trips and met together with their wives.

Funding comes from former chief executive Tung Chee-hwa's China-US Exchange Foundation, Singapore's state investment fund Temasek as well as individuals including former AIG Insurance chief Maurice Greenberg, Owens himself and Vincent Mai, the chairman of AEA Investors, the boutique US private equity firm that employs him.
Note the interconnections -- AIG is an old Shanghai insurance firm, and Greenberg also wrote a similar piece about China for CSIS a while back. It's the emerging global financial nexus of US financial firms and Greater China, fronted by US businessmen who use the titles of yesterday to legitimate their business activities of today. Really, about the only surprising thing is not finding Goldman Sachs' name here.

It would be far easier to buy Owen's piety if his backers were not who they were. As I noted before:
I suppose at this point I should be ranting, but instead I'll simply confine myself to noting, as Ken Silverstein did in Harper's last year, and Carsten Holtz did in FEER two years ago, that the class that shapes our China policy is populated with individuals who also do business with China. The sad sickening Charles Freeman "debate" simply failed to address this urgent problem.
A counterpoint to Owen's views appeared in the UK Prospect this week. It pointed out, basically, that the emerging cold war between China and the US is not merely driven by Chinese expansionism, but also by the nationalism that defines China's economic behavior:

The signs of decoupling are all around us. In January, Google claimed that its proprietary source code and the Gmail accounts of human rights activists had been targeted in a sophisticated cyber-attack from inside China. In response, the company threatened to quit the Chinese market. It remains unclear whether the Chinese government played a direct role in the attacks, condones them, or is simply unable to stop them. The government promotes “indigenous innovation,” a vaguely articulated plan to encourage homegrown intellectual property and the companies that develop it. Some of that innovation has been stolen. Google’s charges placed the issue of Chinese cyber-espionage in the headlines, but the problem has been building for years. Following the Gulf war in 1991, the Chinese government saw the need to invest in the information warfare capabilities of the People’s Liberation Army. At first, cyber-espionage was mainly confined to the military realm, but in the past three years it seems to have expanded into the corporate world.

Beyond the espionage problem, China’s ambitions have provoked a sharp response from high-tech companies in the US and Europe. They charge that China’s policy of favouring products made with domestically created intellectual property proves that Beijing is no longer even pretending to observe international intellectual property rules. That’s why the Google story is not really about censorship or state persecution of dissidents. It is mainly about Baidu, Google’s main Chinese rival. Baidu already holds the dominant market share within China, and if Google leaves or is forced out, Baidu will benefit the most. Companies such as Baidu have growing influence within China’s state bureaucracy and have also become symbols of pride for the government and public.

In January, the US government announced a plan to sell $6.4bn in weaponry to Taiwan. This kind of deal was sure to provoke an angry response from the mainland, and it did. But this time Beijing added an extraordinary threat: the imposition of sanctions on US aircraft manufacturer Boeing, which dominates China’s airline market, worth $400bn over the next 20 years. Were Boeing to lose this business, some of it would surely fall to European aircraft-maker Airbus. But over time, more of it would move to emerging Chinese companies.

The predicaments of Boeing and Google illustrate how the US and Chinese brands of capitalism are pushing Washington and Beijing towards conflict. For the moment, the governments’ incentives for co-operation outweigh any advantage that either can find in direct confrontation. But the forces that divide them are too large for either side to fully control.

Even if Owens is sincere in his views, the tragedy of Adm Owens is that bringing the two nations closer economically is precisely what is driving them apart. Complaints about China's economic nationalism are now commonplace among western businessmen in China. Economic integration does not necessarily bring peace -- just look at the world prior to the first world war. In that context, the problem of China is more like the problem of Germany and the UK at the end of the 19th century, with the rising power of Germany, a declining UK, widespread economic nationalism, trading blocs and colonies.... As Twain said, history does not repeat itself, but it does rhyme.

When nations start spouting rhetoric like "assuming our rightful place" and engaging in exuberant displays of nationalism, take cover. The result is usually piles of corpses.
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Daily Links, May 25, 2010

Drying tea in Chiayi on Saturday... what's being prepared on the blogs this week?

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Monday, May 24, 2010

Daily Links, Lost Finale Day: Apologies

I was going to gather a ton of links today as I usually do on Mondays, but instead I watched the finale of Lost. My family and I are big fans.

That was a stupid thing to do.

The ending didn't simply suck the way Battlestar Galactica was merely mediocre. Rather, the ending was a complete and total betrayal of its audience, rendering the entire show meaningless. It pissed me off so much that I can't keep my focus on anything tonight.

So I'll do the links tomorrow.


PS: Yes, I could have written at least ten endings for that show, all better.
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Tsai for Xinbei

Taiwan is abuzz with DPP Chair Tsai Ing-wen's announcement that she will stand for election as mayor of New North City, the City Formerly Known As Taipei County. Taiwan News has the call:

At her first news conference after announcing her bid, Tsai, 54, said the result of the Sunday election was a sign that the party stood behind her.

The fact that “I found that there was sufficient unity inside the party and that it was stable gave me even more confidence to move forward,” she said.

The party announced on Sunday evening that Tsai had won re-election with 90 percent, while her only opponent, former Taipei County Magistrate Yu Ching, received 9 percent.

About an hour after the election results came out, Tsai issued a news release to announce she had decided to run for mayor of Xinbei, the administratively upgraded successor to Taipei County.

At her Monday news conference, she said the region was a microcosm of all of Taiwan’s society and the right place to begin implementing the ten-year policy master plan the DPP was working on.

Tsai also responded to accusations that she was only using the Xinbei election as a springboard for the 2012 presidential election.

“If we are elected, we will bear responsibility all the way,” she said.

This means that two of the most powerful figures in the DPP are running for positions in the north. Both of them are said to harbor Presidential ambitions. If both of them win, which is a possibility, then who will the DPP run for President?

Interesting, I had heard scuttlebutt from those in the know that Frank Hsieh was under consideration for Taichung. They decided instead....

Apart from Tsai for Xinbei, the other major move was the nomination of DPP Secretary-General Su Jia-chyuan, 54, to run for Taichung Mayor against incumbent Jason Hu, 62.

The party also confirmed that ex-Premier Su Tseng-chang, 63, would run for Taipei City Mayor against incumbent Hau Lung-bin, 58. Kaohsiung Mayor Chen Chu, 60, and lawmaker William Lai, 51, already won poll primaries for the Kaohsiung and Tainan areas respectively.

If the election were held tomorrow, the KMT's Jason Hu would win big in Taichung, the DPP's Chen Chu in Kaohsiung, and William Lai is probable for Tainan. Tsai would probably get beaten in Taipei County, but I suspect Su would actually defeat Mayor Hau in Taipei City. But the election is months away....

The FT "blog" -- I hate it when the media attempts to annex the authenticity of real blogs by renaming their columns "blogs" -- writes:

Tsai, a graduate of National Taiwan University who got her masters in law from Cornell and a doctorate from the London School of Economics, has been the opposition Democratic Progressive Party’s answer to president Ma. The two share many similar characteristics - both are internationally educated, have a clean, slightly academic image, and are politically more centrist than segments of their supporters would like.

Unlike Ma, however, Tsai has a glaring gap in her otherwise impressive CV: she has never run in a public election. Her political career began when the DPP was in power and she rose quickly to ministerial rank. Winning the year-end vote, therefore, would significantly boost her credibility as a serious contender for the presidency in 2012. Tsai said in an open letter to her party that she looks forward to the challenge. “Although this is my first time running, it also means that I don’t bring any baggage with me into the election. I will realise my dreams through this election.”

I think this analysis is wrong. She can't contend for 2012 if she wins in Xinbei, because DPP rules presently prevent candidates from stepping down from briefly occupied positions to run for new ones, and because the DPP has pledged that if elected, the mayors of Taipei and Xinbei will serve out their terms. Of course, that could change....

Rather, I suspect the strategy here is for Su and/or Tsai to lose but do well, showing that they are serious contenders and keeping them in the public eye, and for Tsai to get some experience in the rough and tumble of electoral politics. The prospect of them performing well but losing is good -- the DPP county chiefs of Taipei County (including Su himself) did capable work, and the last KMT chief of Taipei County left a big stink behind. In Taipei, KMT Mayor Hau does not inspire and Su has a good chance of performing well. As I pointed out before:
Another way to look at is look at the DPP vote peak in 1998 -- 688K, and the KMT vote last time around, 692K. That is a difference of just 4,000 votes. Hau Lung-bin, the current mayor and probable candidate, lacks the popularity Ma enjoyed, and there is no reason at present to think we will see a significant gain in KMT voters for this election. If Su reaches the DPP high, and the KMT performance is lackluster, just a couple of thousand voters have to switch to make Su the mayor. And the DPP has been doing well lately.....
It is also wrong to label Ma a "centrist". He's an ardent Nationalist Chinese/Chinese Nationalist ideologue who regularly deploys the KMT colonial/ideological vocabulary and its faux Confucianism and Chineseness in ways that suggests he has deeply internalized that mentality, groomed from birth for the position he now holds, with initial strong support from the Deep Blue rank and file (though not party elites) in the first Chairmanship election. The disenchantment that certain KMTers on the far right and center-right feel about Ma does not mean he is a "centrist". It just means they are disappointed.

By putting powerful candidates in the north, the DPP forces the KMT to commit meaningful resources to the Taipei area elections, reducing its ability to impact Kaohsiung and Tainan.

What are the effects of Tsai's decision? FT says:
Should she lose the year-end elections as well, it would all but seal the fate of the 2012 presidential elections and guarantee another four years of rule by Ma’s Kuomintang party. However, a Tsai victory would put pressure on the government and perhaps force Ma to slow further cross-Strait liberalisation before the 2012 elections to avoid any backlash.
Apple Daily took a totally different position:
Tsai's decision to run for mayor of Xinbei City is a clever political strategy because if she wins it will reinforce her leadership of the party, and if she loses it will be no big deal because it is well known that the city is a traditional stronghold of the ruling Kuomintang.
I tend to agree with Apple Daily. How Tsai's losing in the City Formerly Known as Taipei County "seals the fate" of those elections is unclear to me (I still see Ma winning in 2012). Similarly, how a Tsai victory there would force Ma to slow down the cross-Strait sellout is also unclear -- it seems more logical to argue that if the DPP sweeps the north, Ma would accelerate the program, since the danger of a DPP win in 2012 might rise.

Can anything stop ECFA? The DPP has won six of the last seven elections, and the pace of ECFA "liberalization" has not slowed one iota. Further, poll after poll has shown that Ma has poor satisfaction ratings and that a majority of the public does not support ECFA (either they oppose or don't know). Has ECFA slowed at all because of that? A centrist who was interested in his party's fate would probably slow the cross-Strait sellout. But an ideologue would probably stay the course irrespective of what it meant for his people at the local level.

Time will tell....

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Sunday, May 23, 2010

Chiayi Riding

Had an inspiring ride on Saturday ahead of the monsoon rains down in Chiayi with my friends Drew and Darrn. I think this is the route we took. Our navigation sucked; the red markers represent places where we missed turns, so I am not sure exactly what the route was. Here Drew and Darren converse as we take a break.Click on READ MORE to see more...

Income Inequality in Taiwan

A commentator in the Taipei Times on ECFA and its probable effects on income inequality in Taiwan noted:
Despite Hong Kong’s per capita GDP exceeding US$30,000, an analysis by the Hong Kong Council of Social Service last year showed that the poverty rate was approximately 17.9 percent and that 1.236 million people in poor households with low incomes live below the poverty line.

The latest statistics show that Hong Kong’s Gini coefficient — a measure of wealth distribution where 0 describes perfect equality and 1 describes perfect inequality — has reached 0.533, the widest income gap among all developed economies.

Looking at Taiwan, Chiu Hei-yuan (瞿海源), an Academia Sinica research fellow, says that if Taiwan does not handle its cross-strait and industrial policies cautiously, the income gap is likely to be even worse than that in the next two or three years.

An ECFA is essentially the same as the Closer Economic Partnership Arrangement (CEPA) China signed with Hong Kong, as they are both free-trade agreements with “Chinese characteristics.”

That also means the approach to informing the WTO is handled with “Chinese characteristics” — that is, Taiwan’s leaders lean toward China. Putting aside any sovereignty concerns, an ECFA will mean increased social contradictions as the rich get richer the poor get poorer.
Taiwan's worsening income inequality has been the subject of much discussion in recent years. Though the Beautiful Island is nowhere near the stratospheric levels of the US or China, it is a key social issue with powerful political effects -- stagnant incomes were a major factor in public subscription to the KMT propaganda claim in the second term of Chen Shui-bian that the economy was getting worse when in fact growth was rising rapidly. Because the fruits of growth largely didn't reach the working and middle classes, they experienced stagnant incomes amid rising prices. Now that the KMT is power, Ma & Co. are the targets of middle and working class discontent over rising living costs and stagnant incomes. Another interesting effect of income inequality is women putting off marriage as male income inequality rises, a situation that has been a political football in recent years as well.
The Gini coefficient is a commonly used measure of inequality -- the higher the number, the worse the income inequality. As the table (source) above shows, the Gini coefficient (the table renders it as an index percent) in Taiwan has been worsening during the last two decades; in reality, since the 1980s when it was in the 20s. The bump in 2001 was due to the nasty recession that year. As the table shows, the Gini has risen despite increased social welfare spending.

There is much debate as to the exact cause of the widening income gap. Is it rising demand for skilled workers in the knowledge-intensive industries leaving out the working class? How could inequality be growing if more and more people are attending college? I suspect that one cause of inequality is the increasing financialization, corporatization, and formalization of the economy. These have shrunk the proportion of income that individuals are able to hide and that is off the books, meaning that informal economy is shrinking in proportion to the economy as a whole: alternative incomes are smaller, an effect felt in many families. Another effect, not often mentioned in studies of inequality, is the problem of the way income is redistributed from rest of Taiwan to keep Taipei living well. This means that the income boosts from public spending are lower in the central and southern areas because less public money is spent there.

The effects of ECFA on the distribution of income in Taiwan will likely be negative, as the author of the commentary observes. Traditional industries are likely to be hard hit, as they have been in places like Indonesia and Thailand, meaning that individuals already experiencing growing inequality will find things even harder, while rewards will go largely to giant firms, financial companies, and similar, who already have money. The inconsistent correlation between social spending and income inequality in Taiwan shown in that paper above suggests that Ma's program of compensating individuals in hard-hit industries, even if sincerely meant and competently executed, may not have much tangible effect.

ECFA effects, aging population, industries leaving for China... it's going to take a lot of imagination and foresight to steer the nation through the next couple of decades.
Daily Links:
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