Thursday, April 29, 2010

Spam: India among the top, China lower down

India has been ranked second in the list of "dirty dozen" spam relaying countries, accounting for over 7% of global junk mails sent during the first quarter of the year, according to a new study by Sophos.

China, which has earned itself a bad reputation in many country's eyes for being the launch pad of targeted attacks against foreign companies and government networks, but at least in the last 12 months they can demonstrate that the proportion of spam relayed by their computers has steadily reduced, and it ranks at 15, contributing to just 1.9% of the volume.

The top dozen include -
United States - 13.1% of the share of junk messages in the world
India - 7.3%
Brazil - 6.8%
South Korea - 4.48%
Vietnam - 3.4%
Germany - 3.2%
Britain - 3.1%
Russia - 3.1%
Italy - 3.1%
France - 3.0%
Romania - 2.5%
Poland - 2.4%

The Economic Times, 29 April 2010, has two items on the question of spam.
India, South Korea top sources of spam in Asia,
India second top spam generating country in world: Study,

Friday, April 23, 2010

Do awakening giants have feet of clay?

China and India’s rapid rise has spawned many books and controversy. YaleGlobal, the online journal has two new articles that looks at the diverse strategies in China and India.

In the first article, economist Pranab Bardhan, author of "Awakening Giants, Feet of Clay," takes a contrarian view, detailing challenges often overlooked by the financial media in celebrating short-term growth. He points out that both nations have lifted millions from poverty but cautions that political incertainty could hamper growth.
For the financial press, China and India have become poster children for market reform and globalization, even though in matters of economic policy toward privatization, property rights, deregulation and lingering bureaucratic rigidities both countries have demonstrably departed from the economic orthodoxy in many ways. If one looks at the figures of the widely-cited Index of Economic Freedom of the Heritage Foundation, the ranks of China and India remain low: out of a total of 157 countries in 2008, China’s ranks 126th and India 115th. Both are relegated to the group described as “mostly unfree.”

Contrary to popular impression, the level of economic inequality is actually lower in globally more integrated China than in India...

The relationship between democracy and development is quite complex, and authoritarianism is neither necessary nor sufficient for development. In fact, authoritarianism has distorted Chinese development, particularly as powerful political families distort the allocation of state finance and unaccountable local officials in cahoots with local business carry out capitalist excesses, both in land acquisition and toxic pollution.

Democratic governance in India, on the other hand, has been marred by severe accountability failures. Nor can one depend on the prospering middle classes to be sure-footed harbingers of democracy in China. In many cases the Chinese political leadership has succeeded in co-opting the middle classes, including the intelligentsia, professionals and private entrepreneurs, in its firm control of the monopoly of power, legitimized by economic prosperity and nationalist glory. Indian democracy derives its main life force from the energetic participation of the poor masses more than that of the middle classes.

While both China and India have done much better in the last quarter century than they have during the last 200 years in the matter of economic growth, one should not underestimate their structural weaknesses. Many social and political uncertainties cloud the horizons of these two countries for the foreseeable future.
You may read Prof Bardhan's complete article here.

In the second part, Börje Ljunggren, Sweden’s former ambassador to China, argues that the rise of Asian powers has momentum. In particular, China’s rapid economic development is likely ”the biggest change” of our lifetime. China’s pace as an economic power is more rapid than India’s, Ljunggren argues, and its global status could depend on increased investment in public goods like infrastructure, education and health. Empowering greater numbers of Chinese would rally popular support for the government system.
The established notion is that China has become a much more unequal society than India. Bardhan questions this, saying that the Gini calculations have been based on income in the case of China but consumption expenditure in the case of India. Bardhan’s analysis goes, however, far beyond the question of income distribution as such as he explores the “initial conditions” for equitable growth. This is where India has failed. Land reform was very haphazard, and a vigorous policy to develop basic education wasn’t launched. The sad fact remains that 44 percent of the Indian labor force is illiterate (World Bank, 2009). In China’s case, the foundation was, laid already in the pre-reform era when literacy increased more than three times and life expectancy by more than 50 percent.

One aspect ignored by scholars like Bardhan is the dimension of what is happening in research and development. In this sphere, China in recent years has done much better than its authoritarian nature would suggest, and India less well than its smart industry and “Bangalore image” suggests. According to a study by Thomson Reuters for the “Financial Times” (January 25, 2010), “China has experienced the strongest growth in scientific research over the past three decades of any country” with a 64-fold increase in peer-reviewed scientific papers, and the pace does not show any sign of slowing. This growth has put China in second place to the US, while India has not moved up the ladder. The quality was naturally very uneven, the figures just telling about the number of articles passing the peer-review threshold. Chemistry and material sciences are areas where China was found to do very well. The same is true for nano and energy technology, two areas where China will likely surprise the world.

One weakness common among many authors analyzing China’s rise, and Bardhan is no exception, is a failure to appreciate the nature of the Chinese authoritarian state. They fail to recognize fully how repressive and arbitrary the seamless Chinese party state is at its very core.

The Chinese party state will to have to manage increasingly rough weather, not least the IT revolution, which Bardhan mentions only in passing. IT will have a big impact on both societies, but put the Chinese authoritarian structures in particular to fascinating tests. An online civil society is emerging with “rights activism” as an important feature. This development will have profound consequences in just a 10-year perspective...

India has the advantage of a being an electoral democracy, but hostage to vested interests and short-sighted politics that have left India developing far below the potential of a more open economy and a more inclusive society.
You may read Ambassador Ljunggren's complete article here.

Sunday, April 11, 2010

Six myths about China's economy and environment

China's stunning economic rise is one of the biggest stories of this generation. The transformation has occurred so quickly that myths and misperceptions abound about the challenges and opportunities that China poses to America and the rest of the world. Arthur Kroeber, the managing director of GaveKal-Dragonomics, an economic research firm in Beijing, lists “Five myths about China’s economy” in the Washington Post, on 11 April 2010. Following are a few excerpts.

1. China will quickly overtake the United States as the world's most powerful economy.
In 2010, China's economy is expected to produce about $5 trillion in goods and services. China is ahead of Japan, but it would still be barely one-third the size of the $14 trillion U.S. economy and well behind the European Union, if taken as a whole. One reason China's economy is so big is simply that it has 1.3 billion people. But China's per capita gross domestic product is only one-seventh the U.S. level. Each year, an average Chinese household consumes one-fourteenth the value of goods and services purchased by an average American household. In terms of the value of goods, the United States produces more than 20 percent of global manufacturing, or about double China's share.
2. China's vast holdings of U.S. Treasury bonds mean it can hold Washington hostage in economic negotiations.
China has the biggest holdings of U.S. Treasury bonds of any country -- around $1 trillion. Like a depositor, China has little ability to tell its bank how to run its business. It can only vote with its feet, by taking its deposits elsewhere -- but its deposits are so huge, there is no other "bank" in the world that can take them. And it can't simply invest all its dollars at home, because doing so could lead to rampant inflation. So like it or not, Washington and Beijing are stuck with each other -- and neither has the power to hold the other hostage.
3. Letting its currency grow in value is the most important thing China can do to reduce its trade surplus.
Certainly, the exchange rate is important, but it's a mistake to think that letting the yuan rise in value would magically make China's trade surplus disappear. In the late 1980s, Japan allowed the yen to double in value, but its trade surplus didn't budge. Conversely, in 2009 China kept the value of the yuan fixed against the dollar, and its trade surplus fell by a third. By far the most important thing China can do to reduce its trade surplus is to stimulate domestic demand (including demand for imports), something it has started to do through a massive infrastructure spending program. There's some evidence that Chinese households are also beginning to spend more freely as wages rise and people feel optimistic about the future.
4. China's economy has grown mainly through the cruel exploitation of cheap labor.
Every time a developing economy starts growing fast, richer countries accuse it of "cheating" by keeping its wages and exchange rate artificially low. But this isn't cheating; it's a natural stage of development that comes to an end in every country, as it will in China. China has grown in much the same way as other economies we now view as mature and responsible success stories -- including Japan, South Korea and Taiwan. Those nations invested heavily in infrastructure and education, and quickly moved their workers from low-productivity jobs in rural areas to more productive jobs in cities. China still has plenty of workers moving from the countryside to the cities, but the age of ultra-cheap Chinese labor will soon be gone.
5. China's hunger for resources is sucking the world dry and making major contributions to global warming.
China is now the biggest producer of carbon dioxide and other greenhouse gases that contribute to global warming. But China uses more energy to produce a dollar of its GDP than most other countries, including the United States. But on a per-person basis, China's use of resources is still modest compared with that of rich countries. For instance, China, with nearly a quarter of the world's population, accounts for less than one-tenth of the world's oil consumption. The United States, with only 5 percent of world population, accounts for nearly a quarter of global oil consumption.
6) Economic growth degrades the environment
To the five points above, Prof Donald Boudreaux of George Mason University, USA, who blogs at Café Hayek would like to add another one. China's GDP is "barely one-third the size of the $14 trillion U.S. economy," yet, "China is now the biggest producer of carbon dioxide and other greenhouse gases." That is, America's economy - nearly three times larger than China's economy - produces less pollution than does China's economy. So much for the myth that economic growth inevitably and always increases pollution and environmental damage. Clearly, after some point, continued growth can REDUCE pollution and environmental harm.

China's records a trade deficit in March 2010

For the first time in Six year, China posted a monthly trade deficit of $7.2 billion, in March 2010. Exports totaled $112.11 billion in March, up 24.3% from a year earlier. Imports reached US$119.35 billion, up 66% compared to the same period last year, Xinhua reported. China's global trade surplus was $7.6 billion in February and the combined January-February surplus was $21.8 billion. Economists say the deficit reflected weak exports to the United States and other major markets still struggling to recover from the recession, as well as sharp rise in import of commodities. But China's minister of commerce, Chen Deming, described March's deficit as only a "blip on the radar," in the state-run newspaper China Daily. Read more in USA Today, on 11 April 2010.
Is this a blip on the radar, or is it indicative of something new?