2 November 2010

China on my mind

Recently I went to a picture sale at a West Country auctioneers. Among the lots was a watercolour landscape of Hong Kong in the colonial period, at a guess late 19th century. It went to a phone bidder for more than twice the catalogue estimate and by now is probably on its way east. One can expect that there are quite a few people in 21st century Hong Kong who would appreciate the picture’s historic value. They are also too sophisticated to be offended by the red-jacketed British soldier in its foreground.

Since the sale, China has kept coming up, to start with in the lead story in 18 October’s DefenseNews:
Turkey, China in Exercises – NATO Blanches as Ankara Looks East
“... In mid-September a fleet of Chinese Su-27 and Mig-29 aircraft flew through Pakistan, refuelled in Iran and reached Turkish airspace for exercises with the Turkish Air Force.”
According to DefenseNews this was the first time a NATO member has held joint drills with the PRC. So it wasn’t a surprise to read in the FT (£) on 24 October that India is considering:
“an $11bn deal to buy 126 multi-role combat fighter jets to rearm India’s out-of-date air force and boost defence capabilities against Pakistan and China. ... India has a choice of F-16s or F-18 Super Hornets over Mirages, MiGs, Eurofighters and Gripens. ... China’s assertiveness in the region – over trade, global finance and its borders – is overshadowing the traditional and better-understood threat from nuclear-armed Pakistan.”
The FT quoted an Indian strategic affairs analyst, C.Raja Mohan:
“... The rise of China is going to cause a whole set of problems across Asia.”
On a lighter note Decanter.com on 26 October revealed that:
“Chateau Lafite Rothschild's 2008 bottle is to feature the Chinese symbol for the figure eight in celebration of the First Growth's new vineyard venture in China. ...Lafite is in partnership with CITIC, China’s largest state-owned investment company, to develop 25ha of vines on the Penglai peninsula in China’s Shandong province. ...The symbol, which is considered especially lucky in China, will be on every bottle and magnum of Lafite 2008.”

The most expensive Bordeaux wines have recently taken the fancy of China’s wealthy elite, as David Gauvey Herbert pointed out on 28 October in Foreign Policy:
"Chateau Lafite is the wine of choice for those with serious RMB to drop. Just as the American hip-hop community rescued French cognac from the brink in the last decade, the Chinese obsession with this French Bordeaux is sending prices through the roof: Last year, Chateau Lafite sold its 2008 Lafite Rothschild for €185 a bottle, but that price hit more than €1,000 on the resale market last month, according to the Wall Street Journal.
The reasons for Lafite's success are something of a mystery, but Jean Marc Porrot, a wine importer in Shanghai, argued that it is a combination of the label's early entry into China, French origin and its Chinese translation of "lafei," which is easy to pronounce.
"Eighty or 90 percent of the people who buy Lafite know nothing about wine," said Porrot, who himself thinks the label is overrated and has only tasted it twice in his life."
Wealthy Chinese could easily afford to buy up all the best, not just Lafite, of every year's vintage if they wanted to now, let alone after another decade or two of spectacular economic growth. However, also on 26 October in his Asia in Numbers article in The Times (£), Leo Lewis, reported a:
“... grim government survey in which a third of the 6000 scientists at China’s best research institutions admitted to plagiarism or falsifying results. Revelations such as these, analysts argue, make it doubtful that China's corporate R&D departments actually have the expertise to match the country's roaring ambition. For Nicholas Smith, an MF Global strategist, these dismal realities deal a heavy blow to the notion that China is only inches away from performing the supposed "miracle" that turned Japan into the technological powerhouse it became in the 1960s. In that era, he says, the quality of Japan's education and its educated youngsters provided the perfect ingredients for the shift to knowledge and innovation-based growth. China’s system, by contrast, has already left its corporate sector facing a severe talent shortage even before the real shift from manufacturing has begun.”
which puts a different gloss on Tim Leunig’s view in Economy class in November’s Prospect (£) that:
“emerging economies such as China are very good at manufacturing and are moving up the value chain rapidly. After starting with textiles, Chinese manufacturers moved to medium-value manufacturing such as white goods, and are entering the higher value-added sector, such as high-speed trains. Chinese wages are very low, and countries such as Germany and Japan will have a serious competitor soon. I would not want to be in their shoes.”
Returning to the watercolour, I remembered reading earlier this year Christopher Meyer’s lucid account in Getting Our Way of how Britain came to acquire its former colony and our eventual departure. In the Opium Wars Britain had acquired Hong Kong Island (1842) and part of the nearby Kowloon peninsula (1860) in perpetuity, but in 1898 a large tract of land north of Kowloon was leased for 99 years. Well before time was up in 1997 the British had concluded that the colony would not be viable without the New Territories (as the leased area was called) and started tortuous but ultimately successful negotiations to hand all of Hong Kong over to the PRC.

One can only speculate as to the situation which would have emerged by now if the lease had been for 125 years, expiring in 2023. The relative economic and global significance of the two countries has altered markedly, and not in the UK’s favour, in the years since the negotiations. Probably just as well China’s post-Olympic supercomputing patience wasn’t put to the test.

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