卦Trigram 2.0

Ever since I started blogging, in my pre-MBA days back in 2003, it’s been clear that Asia was becoming more important and would become central – and that we would know this when mass trends were seen to start in Asia and take hold in the West.

In February 2005, I had this to say:

And following on about globalization, I’ve been saying for a couple of years that we’ll know that it’s really arrived when it means that fashions start in Asia and go West, instead of Asians consuming Hollywood etc… I guess things like manga and anime, Bollywood and Feng Shui were the beginning of this, but if Chinese New Year becomes a world-wide festival, as Christmas has become, we’ll know that we’re in a real global society.

When I moved to Singapore in 2002, it seemed highly unlikely that the Welsh town where I’d been living would every hold a Chinese New Year Festival, and yet, a few years later, it happened.

It’s a theme I’ve come back to several times over the years. I mention now because of course other people have been thinking the same way, and I recently discovered an extremely interesting post by China-based Aimee Barnes, who has been taking a look at “What makes China cool”, with an eye on anticipating what might feed those trends. Worth a look.

I just thought I’d blog this, since it’s a topic I’ve been following since before I started my MBA.

Asia Times Online reports that China has finally reached an agreement with Myanmar on the transport of oil and natural gas. Tankers bringing oil from Africa and the Middle East will now dock in Myanmar. The oil, and natural gas from Myanmar itself, will be transported in overland pipelines to China’s Yunnan province. This has two important benefits for China. Firstly, the transport time for oil will be reduced significantly. Secondly, it means that the main part of China’s total oil supply (80%, in fact) will no longer have to move through the pirate-infested Straits of Malacca (which are also extremely vulnerable to naval blockade).

China’s plans in Myanmar seem to have changed since I first wrote about them on the first incarnation of this blog, back in 2004. At that time, the idea was to re-open the Irrawaddy to ocean-going ships, including oil tanker, which would then be able to sail upriver to a port deep inland in Myanmar. Perhaps this proved technically impossible, or perhaps there were political issues that stopped it. Perhaps longer pipelines from the coast are simply cheaper and quicker to build.

I still think that China has its eyes on the Irrawaddy, for reasons I went over in a 2006 blog post: it would make the development of China’s far west much more rational in economic terms, as manufactured goods could be shipped to market directly from the Indian Ocean.

However, this is getting off-topic for this post!

At around the same time as the deal with Myanmar, China also signed an agreement with Russia, locking in supplies of oil for the next twenty years.

That’s a long time – particularly as Gregor MacDonald, an energy analyst with a pretty good track record, is predicting oil to hit a price of $200/barrel by 2012… Now, that may or may not happen – but it’s clear to anyone who reads the business pages that oil prices are only low now because of the global recession, and once the economy improves… naturally demand for oil will rise and the price of oil will move to reflect this.

All in all, it looks as though China’s leaders are following a very low-key, and very clever, strategy when it comes to energy security…

Over the last few years, I’ve become something of a global nomad, shuttling between three bases:

• Cowbridge
• Beijing
• Singapore

This is an interesting  combination, I’ve come to realise. The first is an ancient market town which still has a very strong community despite recent demographic change, and very much has the potential to be self-sustaining economically. The second is, of course, the huge capital city of a gigantic nation. There are still areas with a very strong neighbourhood spirit, although the ‘Old Beijing’ of pre-1949 (or even the ‘new’ Beijing of 1949 – Olympics) is now much diluted. As a city, Beijing isn’t particularly self-sustaining. However, as an old, organic city it has many areas and buildings that could be brought into use for urban farms and other community projects. Beijing is also close to farmland, and its fate is closely tied to the future prosperity, or otherwise, of the  country’s peasant farmers. The third, Singapore, is the most artificial, and is dependent on supplies from outside in order to exist. Although the government constantly warns this country’s citizens how fragile their nation is, there is an emerging national consensus and community spirit. The government reserves all community action to itself, however,regulating and monitoring all citizen activity closely.

As the global recession bites, it’s clear that the global economy will not continue as before; the money simply isn’t there any more. So how will these three bases of mine cope with the end of abundance (in the West), energy scarcity, resource depletion, and peak oil? What can the  West, facing the end of Baby-Boomer affluence, learn from bottom-of-the-pyramid ingenuity? How the West’s knowledge be shared with the Asian poor?

There’s a story I read once, although I forget now the name of the book. It’s from Russia in the early 20th century. There was a village, deep, deep in the countryside; let’s call it Porechye (though that wasn’t the name in the story – I’ve forgotten that). In Porechye there was a small church nestling in a clearing in the forest. There was a village pond, where the ducks swam. There was a girl named Masha, who had beautiful blue eyes and beautiful golden hair. In Porechye there was also a young man, who was in love with Masha. One day, recruiters from the Tsar’s army came to Porechye. They told the young man that it was his sacred duty to join the army and fight on behalf of the Tsar and Mother Russia against the Germans.

The young man loved his country, and did his duty. He joined the army, and was taken on trucks and railways to the far-away battlefront. He fought bravely against the Germans. One day, the news came that the war was over. The soldiers were happy, but they didn’t know what to do. No lorries came to take them home from the battlefront. Eventually, they threw away their rifles, and began to return to their homes as best they could.

The young man was passed by a truck, who asked him where he was going. He said, “I am going to Porechye, where the church nestles in a clearing in the forest and the ducks swim on the village pond, and there is a beautiful girl called Masha who has beautiful blue eyes and beautiful blonde hair. Do you know it?”. And the men on the truck said “Yes, yes, we know it. We are going far, and Porechye is on the way. Come with us, and we will take you there!”.

So the young man got onto the truck, and he travelled with them for many, many days, that turned into many weeks. They had many adventures together, and eventually they reached the village of Porechye. His friends cried “here you are, back at your home, but we have far to go still, and must leave you here with our best wishes!” And the young man waved farewell until the truck was a distant spek, and then he walked into Porechye.

He found that there was a church nestling in a grove in the forest, but it was a different church, and indeed a different grove. There was a village pond, but it was not the village pond of his Porechye, and the ducks were of a different kind. There was even a girl called Masha, who had beautiful blue eyes and beautiful blonde hair – but it was not his Masha. For Russia is very, very large, and there are many villages named Porechye, with churches in groves and village ponds and beautiful girls called Masha, and the young man had not thought, before he left for the army, to ask how to get back. And so he buttoned his coat and hitched up his pack, and set off to find his Porechye, wherever it was.

The book, alas, did not say whether he ever found it. Perhaps he is still searching. I’m not sure why I’m even telling you this story, but I suspect it has something to do with roots, and where we’re from, and the globalized world, and how we sustain communities when the big world outside is rocked by great change. I suspect that this is where this blog is going in future.

A haven for the South Asian migrant workers, and an interesting insight into the services needed by an insecure, low-paid service force.

The LIFT Asia conference starts today, and I can’t be there. Bummer. I had really hoped to attend; the LIFT conferences is one of the more interesting gatherings around, from my particular set of interests. Alas, the new semester starts next Monday, and today and tomorrow I have meetings that Shall Not Be Missed… Ah, so near and yet so far – just a couple of hours’ flight across the Yellow Sea to Korea. Ah well, I’ll just have to read about it on their website like everyone else…

All things change, and the globalized economy is no exception. The globalization of the early noughties was based on cheap oil – but oil isn’t cheap any more. At the same time, globalization took the internet… almost everywhere.  Two stories that I found via Slashdot show future directions…

1. Rising fuel costs make outsourced manufacturing less desireable. The cost of shipping manufactured goods from low-cost countries such as China is now such that it’s beginning to outweigh the price benefits of low wages. As a result, manufacturers in Western countries are becoming competitive again.
2. If the rising cost of oil is reversing the outsourcing of things, there is no such barrier to the outsourcing of knowledge work. Students in the UK have been found outsourcing their assignments to graduates in lower-cost countries. Universities are stumped for a solution. “The problem is definitely getting worse, it is hard to detect, the number of these sites is spreading all the time and it is impossible for us to monitor all of them.”, says one administrator.

Will these two trends develop and become persistent? The consequence will surely be a globalisation very different from what we first anticipated – manufacturing becoming strong and locally-based again, while intellectual work becomes the most competitive (and dishonest?) sector…

Living in China is fascinating in very many ways; one of them is watching the transformation of values as prosperity spreads through Chinese society. The Chinese are, of course, just like everybody else: they want security, consumer goods, education… and that shouldn’t be any surprise; it’s odd sometimes to hear Western commentators (especially in the US) attributing more sinister reasons to China’s increasing demand for the resources needed for a better life.

The worrying thing is whether it can last – not just here, but everywhere. Looking at my RSS feeds, I see many worrying trends:

• the price of oil is rocketing – $200/barrel soon? – and that’s affecting our entire society. In the US, the consequences will be felt most of all; Paul Krugman talks about this in today’s IHT, for example.
• One consequence is the rising price of food, for example, partly because so much agriculture is based on oil-derived fertilisers, partly because of the substitution of crops for ethanol production instead of food crops. (This situation may soon get much, much worse as the Ug-99 fungus looks set to devastate wheat production throughout Asia and the Middle East).
• The rise in food prices has already sparked food riots in Africa, Asia, and the Caribbean. What happens when people realise that their government is not capable of ensuring affordable food? Of course, they lose faith in the government and, eventually, seek more effective affiliations – perhaps criminal, or insurgent… and these groups are getting more and more powerful, with sometimes international or global influence. This is the kind of trend that John Robb is documenting in Global Guerillas, and it can make worrying reading. Just as a thought, who do you think will be strengthened by food riots in Afghanistan?

So the future looks tough. I don’t think it will necessarily be the Grim Meathook Future that did the rounds a year or two back; there will be technical fixes, and new discoveries, and political initiatives. At least, I really hope there will. Still, it’s worth reading and comparing two IHT articles on transition from abundance to scarcity and self-reliance. Which one would you choose for yourself?

1. Voluntary simplicity re-emerges. A renewed trend in the US of affluent, educated professionals shedding their possessions, and opting for a simpler lifestyle as on-line homesteaders, or techno-nomads.
2. Living off the land in a post-Soviet world. When their economic and political world collapsed, well-off skilled workers in Kyrgzstan were forced to become subsistence farmers. They were the lucky ones, perhaps, with land and clean water.

Like I say – which transition would you prefer? What’s the best way to prepare?

Are we heading for a global recession? All of the signs are that the US economy is now in recession. The next thing we find out is how much knock-on damage this will cause in developing markets. Are the Asian markets sufficiently decoupled from the US economy for India-China trade to keep everyone here afloat? We’ll find out in the next few months.

This recession, which was sparked off by the US housing bubble and compounded by bankers’ recklessness, has been a long time coming. Steven Roach at Morgan Stanley was warning about it even before I took my MBA, so it’s not as if we haven’t seen it coming.

What has come up swiftly and without much warning, and may yet bite us hard, is the shortage of food staples – rice, especially. With a number of media sources warning of food riots and social instability as a consequence, this is likely to be tough all around.

The people who are going to suffer the most are the ones Niti is investigating at the bottom of the pyramid – and this is going to be very different from anything we’ve seen before.

I remember, as a child, seeing the pictures of the famine in Cambodia, and the appeals for public donations. I helped to organize a Blue Peter Bring & Buy sale at my primary school to contribute. Soon afterwards, the focus shifted to Ethiopia. Here I oversimplify horribly, of course, but in essence the famine victims here had to be essentially passive, waiting for external food aid to arrive.

In a lesser case of food shortage, citizens in the old Soviet Union had to opportunistically join queues as soon as they saw one forming, hoping it meant that a delivery of food or other scarce goods had just arrived – even when (famously) they often didn’t know what they were waiting for until they reached the head of the queue. This would just be luck of the draw.

What difference will it make when the poor, who are most desperately affected by food shortages, all have mobile phones? Will governments and aid agencies use it to inform people of deliveries, and in this way alleviate anxiety? Will be see spontaneous, SMS-directed “hunger mobs” flash-forming on the rumour of food availability (either delivery, storage or hoarding)? And what will it mean for us when instead of seeing appeals for donations on TV, the hungry millions are calling us for help personally?

Mao Zedong’s famous dictum says that “the guerrilla lives amongst the people like a fish lives in water”. Without the people, the guerrilla cannot live.

To survive, a large-scale guerrilla movement, or insurgency, must have a message, a purpose, that resonates to at least some degree with the feelings and beliefs of the population in which it exists. There must be enough people who are broadly sympathetic, in order to supply recruits, shelter, and material support.

What does it take to turn the people against the guerrilla?

The people of Afghanistan know what the Taliban are like. The Taliban used to rule the country, and their treatment of women, their bans on popular culture, their public executions, and so on, were not enough to make the people turn against them and stand up to them.

After the American-led invasion, the Taliban were forced to retreat to their heartlands, and the areas of Pakistan where they had deep support. And yet, people there are suddenly prepared to stand up to the Taliban, with force if need be.

What happened?

The Taliban destroyed mobile phone masts.

Claiming that the Pakistani military, and Western armed forces, were tracking militants by locating their phones, the Taliban opted to take down the network – and provoked an immediate and forceful backlash from the ordinary people, for whom the mobile phone has been a life-changing technology. Even the Taliban’s own fighters are angry.

According to Afghanistan’s Minister of Telecommunications:

“The people said please … repair the infrastructure and we will guarantee the security of the tower,” Sangin said. “We believe that if the Taliban continue with these kinds of activities the hatred will increase against them, and as a result we are awaiting a change in their policy.”

Of course, mobile phones are no panacea. We’ve seen plenty of examples of their use to enable terror and death. However, this example clearly shows how the mobile phone is successfully improving the lives of impoverished communities in developing countries, and bringing them the benefits of integration with the wider world.