Twofish's Blog

June 26, 2007

Comments on public opinion on Taiwan

Filed under: china, taiwan — twofish @ 1:47 pm 

Actually the polls reveal that public opinion in Taiwan is really quite complex, and the situation is hardly hopeless for Beijing.  The number of people that identify themselves as both Taiwanese and Chinese has remained steady at about 45% since 1990, and the number of people that say that they would consider unification at some point in the future if the Mainland becomes democratic is something like 80%.

There was attrition from the KMT to DPP in the 1990’s, but that trend has ended, and the KMT is today far more “China-oriented” than it was during Lee Teng-Hui’s era.

The situation is hopeless only if you consider a strong Taiwanese identity to be in opposition to a strong Chinese identity, and the thing that both the KMT and CCP figured out is not to try to set the two in opposition.  The other thing that KMT has figured out is that most people in Taiwan are really tired of arguing about the identity issue, and you can most effectively fight the DPP on this issue by not fighting.  If you make people on Taiwan choose between Taiwan and China, they will choose Taiwan, so if you want them to choose China, you must arrange the question so that they are not forced to choose between the two.

Also these junkets aren’t going to change people’s minds immediately, but they may have a lot of long term effects. If nothing else they get people talking to each other and “humanizes” the other side which is good.  

The problem with a lot of these news stories, is that someone goes on these junkets, you ask them if they have changed their minds, and the answer is no, and so they are marked as a failure.  What they don’t look at is the effect that they have on people +10 years +20 years.  I went to a government sponsored junket in the late-1980’s.  It didn’t have any immediate changes in my outlook, but there were huge long term changes, and my views are probably a lot different than had I not gone.

The other thing about public opinion polls is that you have to be careful about how you use them.  If your purpose is to show that Taiwan is permanently lost to Beijing, you can easily do this by asking the right questions.  However, if your purpose is to understand public opinion so that you can come up with a long term strategy to change it, things get more complex.  If group A uses polls to make a point, and group B uses polls to plan strategy, then group B will ultimately win.

I do think that Chen has run out of his bag of tricks.  If Chen plays the “let’s join the UN as Taiwan” and KMT responds by saying “let’s not join the UN or let join as ROC,” Chen will win.  However, if Chen says “let’s talk about the UN” and the KMT responds by saying “let’s talk about the economy” then the KMT will win.  

The other thing that is striking to me is that Chen is talking and not Frank Hsieh, who is the DPP presidential candidate.  This leads me to believe that Chen really isn’t worried about Ma Ying-Jeou, but he is trying to keep Frank Hsieh from going too far.  This could cripple the DPP in the Presidental election.  It’s less than a year, and so far Hsieh has not said what he is planning on doing.

The big question is what Chen will do next.  He has three choices.  1) quietly drop the referendum idea 2) try to get the referendum on the ballot using signatures or 3) get the referendum on the ballot using his presidental authority.  3) is problematic because at this point the KMT can get people to abstain by making this a referendum on Chen.  Chen probably wants 2) because that commits the DPP to a given platform, but 2) may have a lot of resistance from within the DPP.  1) is a possibility, and the fact that 1) is a possibility may be why both the KMT and the CCP are quiet.  If the KMT and CCP start screaming about Chen, then 1) becomes impossible because too much face will be lost.

I should point out that the US saying “we don’t think a referendum is a good idea” changes the political situation considerably since it allows people to be opposed to the referendum on the UN without looking disloyal.

June 20, 2007

Interesting but IMHO wrong

Filed under: china, globalization — twofish @ 1:01 pm

June 6, 2007

An idea about Chinese corporate bond markets

Filed under: china, quantitative finance — twofish @ 4:40 am

Just a thought….

Instead of replicating Western markets in which corporations generally issue bonds directly on the market, it would seem to make sense for mainland China to issue corporate-backed securities which are modelled after mortgage backed securities.  The advantage of issuing corporate-backed securities rather than individual corporate bonds is that then you don’t have to issue credit ratings off of individual corporations but rather can do statistical measures off of baskets of corporations.  You also can start creating mid-risk/mid-return securities with minimal changes to the current banking and finance structure.

Just a thought….

June 4, 2007

Challenging three statements

Filed under: china, economics — twofish @ 6:29 pm

Let me throw out three challenges for statements that need justification:

1) Capital flows *should* flow from capital rich areas to capital poor areas. It’s not obvious that this should be the case. Capital rich areas also have more efficient mechanisms for allocating capital, so it isn’t obvious to me that moving capital from poor areas to rich areas is the optimal allocation of capital.

2) China’s savings rate is unprecedented, and therefore unwise. Just because something has never happened before doesn’t mean that it shouldn’t. Among the differences that China has with other economies is the size of the project and also the age-distribution structure which is very different from previous developments.

3) China’s actions would result in losses and are therefore unwise. The problem with that statement is that an activity that results in losses may be wise if alternate activities result in even greater losses.

From the brilliant planners of the war in Iraq…..

Filed under: china, international law, iraq, taiwan — twofish @ 5:48 pm

This is a scary article about how high level Department of Defense officials were lobbying Taiwan to declare independence. It sounds frighteningly plausible. 

I probably won’t read the original article for a while, since it would be too stressful to think about it. On the other hand, it is interesting that it is coming out a week after the DOD issued its “China plans to take over the world” report.

One of the few good things about the war in Iraq is that it has took up the energy and then totally discredited the people that had in mind a much larger and scarier war.


From a post I made in Tom Barnett’s blog

What is interesting is that China has had several thousand years of experience doing grand strategy, and every Chinese political and economic thinker since the Warring States period has emphasized the importance of 1) a strong economy 2) learning from your mistakes and 3) learning from your enemies.

The thing that I find both sad and distressing about the United States is how many people in the political leadership are just playing the wrong game. I’m just amazed that the DOD would issue a report that says that China’s military strategy is “non-transparent” and it’s “motives are unclear.” This says some really sad things about the people that wrote the report. China’s motives are clear as day (become a rich and powerful great power) and has been the same for the last 150 years. It’s strategy is transparent as day (make people rich). If DOD can’t figure out what China’s goals and strategy is (and they aren’t being secret about it), then we are really hosed against al-Qaeda.

June 3, 2007

Comments on Joseph Wu

Filed under: china, taiwan — twofish @ 4:51 pm

A pretty good interview with Joseph Wu

The interesting thing is that he uses the rhetoric of “misunderstanding” a lot.  The operating theme seems to be that if Taiwan would “explain” itself better that all of the problems would disappear. They won’t. One of the basic problem is that Wu is trying to “explain” that the DPP is trying to exercise restraint, and then Lee Teng-Hui comes and screams for “independence now.”  Joseph Wu tries to “explain” how Taiwan really isn’t trying to change something, and then Chen Shui-Bian does something that people see is pretty clearly rocking the boat.  Joseph Wu talks about how Taiwan is trying to perserve the name “Republic of China” and then Chen talks as if he wants to get rid of the name ASAP.

The basic problem is that Chen has to be lying to someone.  Either he is serious about promoting Taiwan independence or he isn’t.  If he is, then he is lying to the United States and moderates on Taiwan.  If he isn’t, then he is lying to his deep green supporters.  Chen has tried to get around this by being a lawyer and constructing clever explanations and concepts that are technically true, but that doesn’t work because acting like that just gets people to mistrust you.  Logically, he must be lying to someone, and once you get the sense that the person you are talking to has to be lying to someone, then you start worrying that it migh be you.  In any case, Chen has built such a complicated explanation to try to explain himself that it could dangerously fall apart.  The other problem is that Chen then becomes unpredictable, no one knows what he will do in a given situation, or what he really thinks.  The problem with sincerity especially becomes an issue because for a decade, Lee Teng-Hui was actually being very insincere about what he wanted to do.

By contrast, Beijing is clear as day about what its goals are.  You might not like them, but you know what the goals are and how Beijing is likely to behave in a given situation.  Beijing can be “trusted” to do anything that advance its goals of reunification with Taiwan.  By contrast, since no one knows what Chen really wants, how can you “trust” him to do anything.

In any case, I don’t want to spend too much time discussing it.  My big fear is that there would be a war, and that I’d have to go through the same sorts of hellish experiences that my parents went through.  I was seriously worried about this between 2002 and 2005, but the danger seems to have receded.  The role of Chen Shui-Bian is rapidly becoming an issue for historians to talk about, and a new President (whether blue or green) is something that will offer people a chance for a change.  People are obviously having the conversations that they should be having, and so I can spend my time doing other things.

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