Tag: China

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Economics History & heritage Politics & government

[2999] The three shadows of the 2000s and an eulogy for Abdullah Ahmad Badawi

Malaysia has not had many Prime Ministers, despite what it may have felt like during the merry-go-round contest that took place from 2020 until 2022. In this age where the idea of modern state is taken for granted, it is easy to forget that the modern country is young.

Even with a short modern history—modern meaning post-colonial—it is easy to claim that Abdullah Ahmad Badawi is one of those Prime Ministers who history are looking back kindly. Kindly, because when he passed away earlier this week, most have only kind words for him. Some wept. Kindly, because of the subsequent Prime Ministers who had far worse controversies and were utterly divisive.

The contemporary kindness appears incongruent to the intense emotions and harsh condemnations many felt and said no more than twenty years ago. Living through Malaysia of the 2000s, it is difficult to ignore the dramatic loss of popular support his administration underwent. I suspect there is a recency bias at work here for a majority of people. We forget.

Or maybe we forgive and forget because Abdullah was a kind man, and people generally return kindness with kindness.

I further suspect that we forgive because we now understand that many of the things that happened in the 2000s making life difficult for Malaysians was beyond his control. Living in the shadows of the 1990s was not easy for many. And living in the shadows of Mahathir Mohamad was difficult for Abdullah. But I think most importantly, we were all living in the shadow of a rising China, which could only be understood by looking back from the future, which is today.

The rise of China was a competition Malaysia struggled to address back then. The result is obvious. In the 1990s, Malaysia had a far higher per capita GDP relative to China’s. Now, it is about the same with China slightly ahead.

The rapid industrialization of China caused some Malaysian deindustrialization in the 2000s. As a result, Malaysia’s income growth of the 2000s was slower than it was in the 1990s. Already used to rapid growth, the 2000s growth slowdown (as I wrote in The End of the Nineteen-Nineties) felt like an era of unmet expectations. The Abdullah government fell victim to that. The unmet expectations fueled various dissatisfaction that were amplified by a newly popular and evolving technology that was the internet. Everything else—including the strong rise of energy prices that eventually led to the massive subsidy liberalization shock—was a second-order effect caused by China’s rise.

Abdullah cannot be blamed for China’s success. The story of China was a long-coming world-history in the making. He tried his best but the fact is, it was a tough condition for Malaysia that many would-be leaders would struggle to address. That condition was only reversed by the quantitative easing of the late-2000s/early 2010s, yet again beyond Malaysia’s control, however Najib would later like to claim.

We understand this—explicitly by those who keep a close tab on the global economy, and implicit by those who do not—and thus we forgive.

And from what we know, he had forgiven us too. Such was a gentleman.

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Books & printed materials Politics & government Science & technology

[2983] Reading Chip War and some questions for Malaysia

I had expected it to be a technical reading but I was pleasantly surprised at the ease I read through Chris Miller’s Chip War: The Fight for the World’s Most Critical Technology. It is a 400-page book published back in 2022 at a time when chip availability was still a big problem that caused delays in delivery of everything that had semiconductors in it. Those goods included small electronics like cell phones and gaming consoles as well as large items such as cars. I had to wait for almost two years for the delivery of a new car from Japan. Even as the semiconductor market conditions improved by 2023, the issues discussed by Miller in his book remain relevant as the China-US tech war heats up further and as the use of AI among the public spreads.

For most parts, Chip War goes through the history of semiconductors and it is less so about contemporary contest between China and US. In this sense, I feel the title is a slight misnomer. When I first thought of the book title, I had imagined a little bit of reading notes from my work place: supply chain, industry interlinkages, international trade, policies, tariffs, war. While the author discusses these topics, they are all subsumed under the historical narrative that covered industry development during World War II and right up to the present day. And the historical narrative, in many ways, is written around multiple personalities (scientists, engineers, military men and politicians) who played (and still play) a role in the development of semiconductors. Contemporary issues are covered in a few chapters close to the end.

The author does provide brief technical description for things like early transistors, modern chips, and advanced equipment needed to make those chips. But that does not affect the readability of the book negatively, which is good thing. It is just not that technical. Some may find the non-technicality as a negative, since more than one engineer in multiple reviews have criticized Miller for oversimplifying various processes.

The United States is the main focus of the book, given its centrality in developing and the marketing semiconductors. Several other countries are mentioned extensively too. Soviet Union/Russia for its failure. Taiwan, South Korea and Japan for their successes. And China for being the new kid on the block and how the country is challenging US technological supremacy in a way the Soviet Union never could.

Malaysia has two or three mentions throughout the book, as the country plays major roles in testing and packaging of semiconductors. Those roles are not as sexy as designing or fabricating chips, but it is still essential in keeping the industry running.

Here, I want to touch something discussed in the book that has a direct impact on a specific Malaysian policy: the development of Malaysia’s 5G infrastructure within the context of China-US tech war.

Malaysia through its state-owned entreprise Digital National Berhad (DNB) is building the country’s 5G network with equipment and expertise supplied primarily by Ericsson. The selection of Ericsson is not without controversy, with the other contender being Huawei of China. The current government under Pakatan Harapan however appears unhappy with the DNB-Ericsson arrangement and has hinted that Malaysia should have a second network built by Huawei.

Of relevance here is that Huawei has come under strict restrictions imposed by the US, restrictions which have deprived the company from the latest chips needed to run 5G network. This has forced China to hasten the development of its own indigenous chip industry and indeed since 2020 when the US first tightened export controls on Huawei, the company and the general Chinese semiconductor industry have made progress in advancing its own chip design and manufacturing capability. Yet China is behind that of the US and its allies in terms chip technology. These allies include Taiwan that run the world’s most advanced chip manufacturing facilities (TSMC’s), and the Netherlands that makes the world’s most advanced chipmaking machinery (ASML’s). China is now able to design and manufacture 5nm chips (as of 2023?) but struggles to close the gap with 2nm chips that US-centric supply chain is now focusing on.

In more general terms, China might be 3-5 years behind the US chip technology. The 3-5 years gap might sound small, but for an industry governed by Moore’s Law, it is not something someone could shrug off.

Under these conditions, my question is, would it make sense to turn to Huawei for Malaysia’s 5G infrastructure (assuming building a second 5G network makes sense at all)?

From the way Miller described it in Chip War, Huawei faces difficulties in securing advanced chips needed for 5G equipment, unlike Ericsson.

And if Malaysia does get a second 5G network to be built by Huawei, would that 5G infrastructure be inferior to the first one due to restrictions faced by Huawei ?

Or is Chinese chip technology, wherever it is on the trailing edge, good enough for Malaysian purposes?

From Malaysian perspective, this does not sound like a geopolitical concern (Sinophobia?) that some in government make it out to be. Rather, it is a practical technological concern.

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Economics Politics & government

[2640] Welcome back, LDP

I do not understand the intricacies of Japanese politics. I simply do not follow it closely. But I do know that Japan can play a significant role in Asia, if it finally decides to take up that role, which it has not under the uncertain leadership of the Democratic Party of Japan.

The DPJ wanted a closer relationship with Asia and less of the US. Contrary to what it hoped to achieve, a DPJ-led Japan has not successfully engage China and Japan now needs to forge a strong relationship with the United States in time when China is rising and growing more assertive against its neighbors. DPJ’s economic management itself has not been stellar but I think there it is unfair to blame to DPJ for that.

Unhappy with China, I welcome the reelection of the more conservative Liberal Democratic Party and a Japan with a backbone. That is so because it is almost certain that the LDP will strengthen its relationship with the US. With a stronger relationship with the US and a strong US presence in East Asia (and Southeast Asia), hopefully China will think twice in asserting its weight around the region. China has been an irresponsible giant so far, escalating crisis when a mature power would have handled it with care instead. For instance, is it really necessary to send a plane over the Senkaku islands?

A more hawkish (not too much I hope) Japan will tell China that it cannot bully its way through the region any longer. Rather than a hawk-dove strategy, now China faces a hawk-hawk scenario, which is more complicated and may force China to rethink its assertive, bullying regional policy into something more cooperative and amiable.

A hawkish Japan does have its own problem but at the moment, I do want a Japan that is willing to stand up in the region. China needs to learn that its bully tactics does have consequences and an LDP Japan can push back and say, no, play nice.

One big issue with LDP is its economic policy of Japan. First is the government interference in monetary policy. The Bank of Japan is losing its independence with the government trying to force the central bank to target for higher inflation rate. While I do think Japan needs a bit of more inflation, I am unsure how the interference will pan out. Lack of independence can be a recipe for too much inflation. There is some nuance in the interference in the sense that LDP government wants a stricter (but higher inflation) rule for the BOJ to follow but it does create a precedent of interference nonetheless.

On the same track, the LDP government will embark on a massive stimulus program to revive the economy. I prefer monetary to fiscal stimulus. The preference presents me with a problem: BOJ itself is too conservative to my liking and that probably makes the executive infringement into monetary policy somewhat palatable. Nevertheless, with expansive and coordinated fiscal and monetary policies, I suppose you will get inflation.

Finally, while I welcome the return of the LDP, I do not think the election of DPJ was a mistake. The Japanese system needs a shake-up and the DPJ did just that, even if it did not fulfill its promise. Being in power for too long can be dangerous to a political culture because it implants the party into the state apparatus. For a healthy democracy to prevail, the state has to be ultimately separate from the party. In the case of Japan, there is an additional dimension: the civil service is too influential. From my readings, the DPJ did have some successes in reigning the influence of the Japanese civil service, and that is good.

Categories
Conflict & disaster Economics Liberty

[2402] The cost to the Beijing development model

The rapid and successful economic development of China so far has been presented as the superiority of central planning over the approach taken, for example, by India. It is the Beijing development model as some would say. Authoritarian top-down approach gets things done, unlike the messy democratic means from the bottom up. All those criticisms weigh things down needlessly.

The recent high-speed train disaster that killed nearly 40 persons[1] should give advocates of the authoritarian approach a considerable pause the next time they try to sell the Beijing model over democratic ones. Reports are coming out that these infrastructure projects were rushed for the 90th anniversary of the Communist Party.[2] Results do not look good for the Chinese government.

The Beijing way of doing things has become controversial, especially after the accident.

How much of infrastructure projects all around China suffer from abuse of power or corruption in general? Was the accident a symptom of a rotten system?

Between authoritarian and democratic states, the former lacks real mechanism to make the state accountable. It will be hard to answer the questions even in democratic states, much less in ones like China’s.

Typical of authoritarian governments, the Chinese government is trying to muzzle investigations into the incident.[3] This is amid angry allegations of corruption with respect to these projects and specifically, the high-speed train system. That is an example how there is little accountability in China. Any reprimand is for public show only. Such reprimands have proven to be inconsequential. In Malaysian parlance, small fish.

Even before the train disaster, the system was already suffering from service interruptions, barely weeks after its official opening. Something must be wrong when so many glitches happened so frequently so soon.

Something is rotten in the state of China. That rottenness is the cost of the authoritarian model. There is a cost to absence of check and balance, of accountability, of freedom. It is a shame somebody has to die to learn that.

While India suffered from embarrassing criticisms before and during the last Commonwealth Games due to perhaps their incompetence in meeting deadlines, at least we knew the problems before it was too late. Remedies were taken. For China, there is a guessing game: which one is the facade and which one is real. As the train disaster showed, we found out about the rotten apples way too late.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

[1] — BEIJING—The first high-speed train passed through the tracks where a deadly train collision occurred in eastern China, as authorities sought to soothe public concern over safety and the handling of the accident as well as jitters about the future of its prized high-speed rail system. [Norihiko Shirouzu. Beijing Seeks to Soothe Train Jitters. Wall Street Journal. July 26 2011]

[2] — China’s high-speed rail line between Beijing and Shanghai has been beset by glitches in the two weeks since it opened to great fanfare on the eve of the Chinese Communist Party’s 90th anniversary celebration. [David Pierson. China’s high-speed rail glitches: Racing to make errors?. Los Angeles Times. July 16 2011]

[3] — BEIJING — China has banned local journalists from investigating the cause of a deadly high-speed train crash that has triggered public outrage and raised questions over safety, reports said Tuesday. [Allison Jackson. China seeks to muzzle reporting on train crash. AFP. July 26 2011]

Categories
Economics Environment

[2137] Of 40% cut in carbon intensity may not be something to shout about

Bernama wrongfully reported that the Prime Minister of Malaysia, Najib Razak, put up a conditional offer to cut 40% of Malaysia’s 2005 carbon emissions by 2020.[1] The same goes with the New Straits Times, except it did it more badly by not directly quoting the Prime Minister.[2] This is sloppy reporting. The truth is that it is a conditional cut of 40% to Malaysia’s carbon emissions intensity in terms of GDP within the base and time frame mentioned. Regardless of the inaccuracy, is the cut impressive?

The size of the cut seems big but cutting carbon emissions intensity is a lot easier than cutting outright carbon emissions; a cut in emissions is more expensive than a cut in carbon intensity. Achieving 5% cut as demanded by Kyoto is a lot harder than 5% cut in carbon intensity. The difference is clearer when one takes note that emissions itself can increase even under a situation of decreasing carbon intensity.

A demostration is in order. The most convenient way of showing this is by using intensity per capita as a unit rather than per GDP. In order words, this refers to emissions per person.

Assume that the emissions per person is 2 and there are a total of 10 persons in a neighborhood. The total emissions is therefore 20.

Assume further than emissions per person improves to 1.5 and total population increase to 15. Total emissions gets worse: it is now 22.5.

A cut in emissions will address total emissions. A cut in carbon intensity does not guarantee that.

A concrete example is the United Kingdom. According to the National Environmental Technology Centre of the UK, total emissions fell slightly between 1990 and 2005. Carbon intensity? It fell more or less by 40%. [3]

Hence, the act of stressing the difference is not a matter of splitting hair.

Carbon intensity has the tendency to decrease over time due to application of technology. The typical criticism directed at any commitment at reducing carbon intensity is that even without such commitment, carbon intensity will decrease anyway. This is especially true for developing countries where there is a lot of space for technological improvement through by merely copying.

Given this, the Prime Minister’s conditional offer is not something to shout about. China also made an offer to cut carbon intensity and it has been rightly criticized for trumpeting an unremarkable target and then demanding moral authority at the negotiation table in Copenhagen during the 15th Conference of the Parties that ended recently.

(Despite this tendency, Malaysia’s carbon intensity between 1990 and 2004 increased. I suspect a Kuznets curve.[4] The ratio may increase up to a certain level before decreasing. Malaysia after all was industrializing during the 1990s and now, Malaysia is largely done with industrialization.)

It should only be seen as a brilliant diplomatic maneuver and not a big effort at cutting emissions. It is brilliant not just because that the commitment is very likely to be achieved anyway and thus, making the offerers look good, it is brilliant because it makes demand for aid — and making the exercise cheaper than it would — even when the cut in carbon intensity is very likely to be achieved without any binding commitment.

This is not to dismiss the importance of cut in carbon intensity. I myself believe that technology is the answer to climate change but it is important to get the right message across while the Malaysian mass media failed the public miserably.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

[1] — COPENHAGEN, Dec 17 (Bernama) — Malaysia has agreed to reduce its carbon dioxide emission to 40 per cent by the year 2020 compared to the 2005 levels subject to assistance from developed countries.

Prime Minister Datuk Seri Najib Tun Razak said the cut was conditional on receiving the transfer of technology and adequate financing from the developed world.

“I would like to announce here in Copenhagen that Malaysia is adopting an indicator of a voluntary reduction of up to 40 per cent in terms of emissions intensity of GDP (gross domestic product) by the year 2020 compared to 2005 levels,” he said in his speech at the United Nations Climate Change Conference 2009 here, on Thursday,

United Nations data shows Malaysia’s carbon emissions in 2006 stood at 187 million tonnes or 7.2 tonnes from each Malaysian. [Malaysia Announces Conditional 40 Per Cent Cut In Emissions. Bernama. December 17 2009]

[2] — PM Najib says Malaysia is committed to do its best in combatting climate change.

MALAYSIA will voluntarily slash by up to 40 per cent her carbon emission by 2020 compared with 2005 levels.

Prime Minister Datuk Seri Najib Razak, who made this commitment yesterday, said the cut was part of Malaysia’s contribution to global efforts to combat climate change. [40 per cent reduction of carbon emission by 2020. Mimi Syed Yusof. New Straits Times. December 18 2009]

[2] — COPENHAGEN: A roadmap towards realising the 40% reduction of carbon emission per capita from the 2005 level by 2020 will be presented to the Cabinet soon. [40 per cent reduction of carbon emission by 2020. Mimi Syed Yusof. New Straits Times. December 18 2009]

[3] — [Page 18 and 19. Carbon dioxide emissions and energy consumption in the UK. The National Environmental Technology Centre]

[4] — See Kuznets Curve at Wikipedia. Accessed on December 25 2009.