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Saturday, November 13, 2010

The rise of China and the downfall of Malaysia


Sam Chee Kong

LETTER Now I know why all the Malaysian talents are no returning home to work. Even with the government’s Talent Corp, with the objective to reach out to those talents it will be a failure if there is no meritocracy in government decision making process. Forget about getting them home, you are just buying the person but not their heart and you cant keep them foe long… Learn your lesson from NBIS China and Stem Cell Research Singapore !!!

China is an inventing nation. China is the nation that invented printing,fork, drum, silk, gunpowder, paper,umbrellas ,rice cultivation, wheels and a whole lot of other things. China’s history is littered with war and famine, so you can expect the Chinese to be tough and been there and done that sort of thing. After thousands of years under the rule of dynasties and finally Communist China, chaos upon chaos and finally under Chairman Mao, China began its nation building.

Nation building is also refers to constructing the national identity using the power of the state. It involves the unification of its people so that the state is politically stable and sustainable in the future for development. China addresses this problem very well and it has built a patriotic , hard working and educated workforce. The key to developing a nation’s wealth is developing your human resources and at the same time educate them and built up your middle class while at the same time developing your science and technology base. So it is not surprising to see China takes the lead in this century. Whereas in Bolehland we are still searching for our very own identity through the launching of the 1Malaysia concept which nobody understands. On one side the government is promoting 1Malaysia and on the other side it reassures the Malays that its right will be preserved no matter what. China is also a living prove of what can be achieved when a Communist nation embraces capitalism. As a nation they have syncronised the chaos into a force to be reckoned with. Even the West has accepted the fact that the Chinese are smarter, more hardworking, obliging and its immense pride to collectively build a nation. Unlike our politicians who have lied and lied about our country with all the manipulated data and facts, instead of informing us about all these seismic changes around the world.

A few years ago there was a survey done by The Economist concerning car ownership in China, India, France and USA. As predicted USA has more than 1000 cars, France 762, China 11 and India 7 for every 1000 people. Just only last year China has became the biggest car market in the world!! According to China Daily in the first 10 months car sales were up 34% from last year…. BMW has already fulfilled its target of 112,000 cars for this year in September, Mercedes sold over 101,000 units and Rolls Royce sold more of its cars in China than the US and last month Jaguar/Landrover has just open a new dealership in China. Today’s Communist China isn’t the same as 1980s Communist Russia where you will have trouble getting your hands on a fur coat ! The demand for luxury goods in China is growing at an exponential pace. Luxury items makers such as LV, Prada, Gucci, Coach and etc reported more than 100% annual growth for the past few years. It has come to the point where Western products has to customize to suit the Chinese needs and taste like longer leg rooms at the back seat for Rolls Royce coz most of them are chaufered driven so the bosses need extra leg room !! Ha ha!

Another thing to be noted is the amount of research articles published by Chinese scientist. It is reported that China has jumped to number 2 – up from 14th in 1995, in the number of articles publish in the science and technology journals worldwide such as IEEE, Nanotech, Applied Physics and etc. It is an open secret that the majority of the PHD students in the hard sciences enrolled in elite US universities (Ivy League) are Chinese. It is these PHD graduates that will do most of the research. It should be noted that a lot of the Microsoft patents came from its Beijing Labs. By far China’s most successful research institution is the National Institute for Biological Sciences or NBIS which is responsible for half of China’s Scientific publication.. The Institute’s 23 main investigators, director and deputy director are all RETURNEES from the United States. Quote one of its principal investigators : “ If I stayed in America the chances of making a discovery is slimmer, here people take risk, they give you money and you can essentially do whatever you want ” For your information you can check on China’s worldwide patent application fillings on www.economywatch,com . Patents are actually a measure of technological prowness and innovation. Nations that file the largest number of patens are the home to innovatve corporations and Nobel Prize winners. It wont be long you will see Chinese Nobel prize winners. No wonder there are so many first coming out of China nowadays. The fastest Supercompter title belongs to the Chinese (Tianhe-1A) running at the speed of 2.5 petaflops which is equivalent to power of 175,000 high end laptops. The fastest bullet train belongs to the Chinese (CRH360) with a top speed of 262 miles leaving the japs and germans far behind. And these are indigenious technologies locally grown. What happen to our car industry? With all the money throwing into the national car industry after 20 over years we ended up being a ‘BETTER CAR ASSEMBLER’ than our neighbours. It is a case of throwing ‘GOOD MONEY AFTER BAD MONEY’. And with all our governments ridiculous project or so call wealth showing projects like building sky scrapers, NORTH-SOUTH-EAST-WEST corridors ended up in no DOORs how to improve? How can we catch up with others? I just came back from Vietnam last month and let me tell you guys the amount of FDI going into the country is incredible. These are not ‘hot money’ but real economy kind of investment – build factories, infrastructure and things that can create jobs.

The amount of development that is going on there is mind boggling. In HCMC there are no less than 30 high rise cranes working on new buildings and will have its 68 floor bitexco tower opened this month. And Hanoi is building a 104 storey tower reputed to be the second tallest after Burj Khalifa in Dubai.

Another thing is that China hold the whole world at ransom in July this year by banning all its Rare Earth Materials. Rare earth materials are a collection of 17 minerals found at the bottom of the periodic table. China controls 95% of the world supply. These rare earth includes cerium, scandium, yttrium, lanthanum and etc are used in our daily lives such as handphones, laptops,camera lenses, flat screen tv, x-ray machines , guided missiles systems, oil refineries and etc. By banning the exports of these materials China indirectly impede the growth and development of many things. Fortunately there are 2 other companies in the world that will have the capability to produce some to offset the Chinese ban. One is the Lynas Corp from Western Australia which have a mine in KUANTAN MALAYSIA and it will start production by end of next year, while the other is Molycorp from California. How their combine output added up to around 40-50,000 tons which is still way below the global demand of 250,000 tons. Unsurprisingly the shares of both of these companies jump multiple folds since the July ban. Lynas was trading at somewhere 38cents in July and the high of the year was $1.69 (ASX) and shares of Molycorp are more than double now.

It is also a wrong misconception that China’s success is due to its Cheap Labour, yes that was probably 15 years ago. However the next megatrend will be the growth of the Chinese Research & Development. The Chinese will be able to apply the same cost advantage in its manufacturing towards Research & Development in no time. If you notice currently the global telecoms equipment sector is now dominated by 2 chinese companies (about 65% of new installations) notably Huawei . Western countries are buying these Chinese equipment not because its cheap but also it is good !! In a recent electric car trade show in Shenzhen there is this Chinese R&D company that reinvented the battery. Their battery last twice longer, much more power , half the existing battery weight and 100% recycleable. This is going to change the face of the global automobile market. With its low cost R&D, product development and manufacturing, which country can match China? It will continue to dominate the world for decades to come !!! In the End it is the Communist China that won the battle of capitalism.!!

So when will China overtake US as the number one economy in the world? As predicted China will overtake Uncle Sam ‘s economy in two years in terms of PPP (Purchasing Power Parity) It wont be long as China’s opponent is embrace with an insolvent banking system, high unemployment rate , homeless population, high foreclosure rate and with 40 million people on food stamps and its Federal Reserve printing money out of thin air. Over here in China, its economy is growing at a 10% pace annually. Haha !!

And if you think its easy for you to access the Chinese Market. If your company owns certain patents they will demand access to it and furthermore train their people on how to use your technology so that they can reverse engineer it the moment you open shop. Just ask car manufacturer Peugeot on the difficulty and pain in working with the Chinese.

China is also quietly building up its military and I believe it is currently making use of the financial crisis to extend its geopolitical and economic sphere of influence in Asia and beyond.. China is already refurbishing an ex Russian aircraft carrier (Varyag) due to completed in 2012 and building 2 other 50,000 to 60,000 ton carriers due to complete in 2015. When completed China will have what they called a ‘BLUE WATER NAVY’ . This means Chinese navy are capable of operating across deep waters of the oceans and also able to launch a nuclear attack from anywhere in the world. Moreover recent developments in the Chinese missiles technology caught most western powers off guard. For example a few years back China conducted a successful anti satellite missile test. It use a modified DF-21 (Dong Feng) ballistic missile mounted with the kinetic kill vehicle to intercept the satellite.

Another recent development is the Chinese ASBM or anti ship ballistic missile the DF-21A which is designed to launch from land and can penetrate the most advance defence from any MOVING aircraft carriers. The carrier battle group used to be the ‘untouchables’ will no longer hold and it will make the US aircraft carrier battle fleets a sitting duck. When these multiple warhead ballistic missiles homing into these battle groups, there is nothing they can do to stop it. Even if it explode in mid air, imagine a nuclear warhead explode in the vicinity of the fleet, it will just vaporized the entire fleet.

So in the end what can we learn from China? Nation building and how can we harness the power of the people as one so that we can build a solid and sustainable economic development. So how to start nation building when our country’s political and its social is in a mess and biased? It will take many years before we can even talk about sustainable development without first implement a much fairer and equitable racial policies. Who wants to work full-heartedly when you know that the govt policies are biased to a certain group in terms of promotions and opportunities. We have to get our act together and implement meritocracy policies in all govt policies be it education, public procurement, jobs and etc. As for a better education system look no further than New Zealand. Their system is based on meritocracy and survival of the fittest.. Over there schools survived mostly on govt grants. How much grants the school gets depends on its academic performance. The better the school the higher the enrolment and hence more grants. No bloody Maoris, Aborigine, White only kind of bullshit as practice over here. If you are no good then enroll in a not so Ivy League school that require lower application points. The schools that are not doing too well had to manage with what they get from the grants and if enrolment keep droping then they have to lay off teachers. This is what I called ‘survival of the fittest’ as the NZ govt put it clearly that they will not bail out schools that are not performing and they will have to sort out their own mess !!! In Malaysia everybody seems to be spoon fed.. As for myself I have difficulty getting locals to work. Reasons are too long hours, too little money, too boring lah, not my type of work and etc.. With this type of attitude how can we progress? Don’t bloody talk to me about implementing minimum wages with this type of efficiency ..

I am amused at those politicians chanting bullish things about how well their economy is doing and stuff like that. They know nuts about what’s going on in the world economy. I believe now we are in the eye of a mega storm waiting to explode. If you are a student of economics you should heard about the Kondratieff 60 years cycle. It was invented by the Russian economist named Nikolai Kondratieff. It track the long waves of the boom and bust cycle of the world economy. By its calculation we are now already at the truning point of the bust cycle starting from 2008. A normal cycle can last up to 12 years so we still have another 10 years to endure before we see the better of things returning. The crisis we are facing now make the crisis of 2008 like a walk in the park. Bernanke thinks that he can get away by pump priming the economy with more money printing out of thin air through QE2. He belongs to the Keynesian school of economics whereby they believe in expansionary monetary policies to spend your way out of a recession. Bull Shit ! He ain’t going to solve any problems with QE2. QE2 will cause inflation, hot money and currency wars among nations. What is needed is more of a contractionary monetary policy whereby it need to spend less and save more to pay its awful $13 trillion debts. Instead he should pursue the more conservative policies from the Austrian School of Economics. Does this sounds familiar with what our government is doing right now? You cannot put out a fire by pouring more fuel into it !! FULL STOP !! You guys having seen anything yet until the crisis unleash its anger. What I am doing now is getting myself as low a gearing as possible, pay off as much debts as possible…

Now I know why all the Malaysian talents are no returning home to work. Even with the government’s Talent Corp, with the objective to reach out to those talents it will be a failure if there is no meritocracy in government decision making process. Forget about getting them home, you are just buying the person but not their heart and you can't keep them foe long… Learn your lesson from NBIS China and Stem Cell Research Singapore !!!

(Sam Chee Kong is a reader of Malaysia Chronicle)

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