Wednesday, October 20, 2010

One Eye on China: West Moving East

Here is an insightful, and brief, perspective from Hong Kong of the cultural and economic changes we are beginning to observe in frequent headlines. Andrew Sheng, the Chief Advisor to China Banking Regulatory Commission and former Chairman of Hong Kong Securities and Futures Commission, writes these comments in a 9/15/2010 opinion article in Caixin, the online newspaper, titled Confusing Hong Kong's Reversion with Submersion. There is a lot of critical rhetoric directed at China coming from elected and unelected politicians in the US. Their talk is cheap. Understanding the problem, understanding the culture, and working towards mutual agreement is the task. Jawboning is not going to help. The differences between the east and the west are big. However the need for both the east and west to cooperate is just as big. Doing so with a cooperative mind set will last a lot longer than cooperation out of single minded, self preservation motivations.

Out of the top 40 think tanks in Asia, Singapore had 4 and Hong Kong had only 1 (Hong Kong Center for Economic Research).

Of course, think tanks are not necessarily the best measure of thinking, because the rating system was based on publications in English.  My response to anyone who says that China is not transparent enough is that they often mean China is not transparent in English. It is pretty transparent in Chinese. But India comes out of this rating with 10 out of 40, Japan 7 and China 6.  These English-based think tanks assume that non-English speakers don't think.

For what it is worth, I believe quite strongly that Hong Kong's real success is in its experimentation after the failure of the old order. There is a creative destruction going on in Hong Kong. In an influential article in Time magazine on March 20, 2010, Christopher Hayes had this powerful indictment of the old order:  "In the past decade, nearly every pillar institution in American society — whether it's General Motors, Congress, Wall Street, Major League Baseball, the Catholic Church or the mainstream media — has revealed itself to be corrupt, incompetent or both. And at the root of these failures are the people who run these institutions, the bright and industrious minds who occupy the commanding heights of our meritocratic order. In exchange for their power, status and remuneration, they are supposed to make sure everything operates smoothly. But after a cascade of scandals and catastrophes, that implicit social contract lies in ruins, replaced by mass skepticism, contempt and disillusionment."

Much of the old order is in ruins because economic power is shifting from the West to the East, technology and globalization has "flattened" communications and knowledge and iPad and Sohu are changing the way we think, work and play.