Striking while the iron is hot

Just about everyone has something to say about the recent political news out of China. This limerick pretty much sums it up:

I was impressed by this analysis by Jerome Cohen, expert on Chinese law and government, who (rather amazingly) practiced law in Beijing back in 1979:

Xi’s move will have a profound effect on world order. It will enable him to move more boldly and increases the risk of his acting arbitrarily and perhaps mistakenly in international relations. It will surely hinder China’s efforts to be respected for “soft power” as well as military and economic prowess.

Xi decided to strike while the iron is hot rather than wait for later in his new term when increasing problems might have made the change more difficult. His brash step has undoubtedly aroused profound concern among the elite. Many high Party personnel, bureaucrats, judicial officials, lawyers, intellectuals, academics and business people, mindful of the past Maoist dictatorship and the increasingly repressive and arbitrary government under Xi, have seen this coming and now, in social media and other informal ways, are showing their anxieties and opposition.

But not many public signs of protest can be expected, since he has stifled free expression in the past few years.

At least it’s a relief to be able to quit pretending that the spread of liberal democracy has ushered in the end of history. Nope, the party is just getting started… and it’s gonna be lit….

Term limits

Impressive shilling here:

What’s more, America’s belief in the redemptive value of term limits merits further examination. In some political jurisdictions, it has helped bring in new blood; but, in others, it has replaced seasoned leaders with fresh nonsensical amateurs, to the detriment of good governance.

Indeed, in the 20th century, most assessments of presidential performance would place Franklin D. Roosevelt, our 32nd president, at the top of the list. He was elected not just to three terms but four. In 1951, the 22nd amendment to the US Constitution was ratified, which seemed like a good idea at the time; and perhaps even more so now. But there were moments in-between when America had its doubts about the constitutional dogmatism of having to force someone out of office who was doing the job well.

The problem with citing America’s “doubts” about the wisdom of term limits to defend another country’s scrapping of term limits under completely different circumstances is that it’s risibly stupid. With the notable exception of FDR, the consensus in the US has always been that a president should not hold office for more than two terms. What this signifies is not a “belief in the redemptive value of term limits,” which is just a dumb strawman, but a profound unwillingness to be ruled by another monarch.

Formal term limits weren’t needed for most of American history because the informal convention of a two-term limit, established by Washington, prevented nearly all presidents from even seeking a third term until FDR. After FDR was elected for an unprecedented four terms, Congress adopted the 22nd Amendment creating a formal two-term limit in 1951.

The key point here is that Americans decided it was time to slap some term limits on their leaders, and then did so. The 22nd Amendment was enshrined in the Constitution through a lawful, public and consensual process, which required ratification by three-quarters of the states of the Union. And public opinion is strongly against repealing it.

Compare this process to the shady, unilateral power-grab that is the topic of Tom Plate’s article, and laugh.

Sakdina: a prototype social credit system

Reading about the Siamese kingdom of Ayutthaya, which reigned from 1351 to 1767, I was struck by a description of the feudal ranking system called “sakdina” that was put in place by King Trailok in the early 15th century. Here’s the Wiki summary:

Sakdina (Thai: ศักดินา) was a system of social hierarchy in use from the Ayutthaya to early Rattanakosin periods of Thai history. It assigned a numerical rank to each person depending on their status, and served to determine their precedence in society, and especially among the nobility. The numbers represented the number of rai of land a person was entitled to own—sakdina literally translates as “field prestige”—although there is no evidence that it was employed literally. The Three Seals Law, for example, specifies a sakdina of 100,000 for the Maha Uparat, 10,000 for the Chao Phraya Chakri, 600 for learned Buddhist monks, 20 for commoners and 5 for slaves.

China’s rulers may have learned something from Thai history, because they are now rolling out a dynamic, interactive, socially networked sakdina system for their own people. It is called the social credit system.

Whether it can successfully keep 1.4 billion people in line, in an advanced, high-tech and globally connected society, remains to be seen.

Leader for life

“CPC proposes change on Chinese president’s term in Constitution”:

The Communist Party of China Central Committee proposed to remove the expression that the President and Vice-President of the People’s Republic of China “shall serve no more than two consecutive terms” from the country’s Constitution.

Bill Bishop comments:

Xinhua has published some of the State Constitution changes that should be ratified at the National People’s Congress (NPC) that opens March 5. There are several interesting changes, including the standing up of the new National Supervisory Commission system and the addition of the adjectives of “great”, “modern” and “beautiful” to describe “a socialist country”, but the biggest change looks to be the scrapping of the two-term limit for President and Vice President.

This revision is another move in the growing list of norm-busting changes Xi has pushed to allow him to stay in power for life. The most important substantive move towards this end was the inclusion of Xi Thought in the Party Constitution last Fall. […]

Now the NPC will provide the institutional framework of the State to allow Xi, so long as he is alive and the Communist Party is running China, to be the most important and powerful person in China for life.

The New York Times calls this “a dramatic move that would mark the country’s biggest political change in decades.”

All hail the Son of Heaven, Lord of Ten Thousand Years.

Khaosan Road: a mile-long mosh pit

Khaosan Road in Bangkok, aka the “center of the backpacking universe” — actually a quarter of a mile long, though it feels longer — is a fun place to visit, if you enjoy being surrounded by approximately 2 trillion people in a loud, confined space.

A similarly pleasant experience can be had at a Chinese train station during the holiday travel rush, though unfortunately without the tattoo parlors and street hawkers offering you delicious fried scorpions.

Personally, I’d prefer to spend my time reclining:

Reclining Buddha Ayutthaya

Reclining Buddha at Wat Lokayasutharam (Phra Noon), Ayutthaya

Contemplating the Temporality of things:

Wat Yai Chai Mongkhon Ayutthaya

Wat Yai Chai Mongkhon (the Great Monastery of Auspicious Victory), Ayutthaya

Or riding a clickety-clackety old train between Bangkok and the ancient capital of Ayutthaya:

“Enron on steroids”

The collapse of Alibaba, when it happens, is going to be spectacular. From the accounting blog “Deep Throat”:

So here are the metrics we’ve been discussing since the IPO, as described in the 12/31/17 materials/filings.

1.) Fake Revenue: Incredible 56% revenue growth last quarter. Most of this growth is likely just “fake” consolidation revenue masquerading as “organic” growth. (i.e. If Ebay bought Macy’s and consolidated same, Ebay’s revenue would jump 400% YOY in the consolidation quarter.) That’s probably what’s going on here (Intime, Cainiao, SunArt, Hema, Lazada, etc.). The “New Retail” model that management has been referring to (buying up brick and mortar) would have a much lower gross margin, and consequently, a much lower Price/Revenue ratio. Management has also, yet again, increased their “guidance”. It’s presumably much easier to forecast growth when you can go out and “buy” it. Unfortunately, since Revenue is, and has always been, reported as one big “Blob” we have no idea what it’s comprised of. (i.e. “Organic” e-Commerce vs. “Purchased” Brick & Mortar Revenue)

2.) “Questionable Assets”: (Investment Securities, Goodwill, Intangibles, Land Use Rights and Investments in “Investees”) are now a whopping US$56 Billion (51% of the balance sheet), up $9 Billion from $47 Billion in the prior quarter…..compared to roughly US$0.00 (0.00%) prior to the IPO just four short years ago. Alibaba Management continues to create financial vapor at an unprecedented pace.

3.) “Questionable Assets” – Valuation: I’ve long opined that IFRS accounting rules had required Alibaba Management to write down their interest in Alibaba Pictures and Alibaba Health by roughly $3.5 Billion because the publicly traded value simply didn’t support their carrying value. (See: Finding Inner Peace in Dharamsala …..and thoughts on the Alibaba 20-F…. ) Good news! ….this quarter they’ve finally written off $2.8 Billion on Alibaba Pictures!. We’re making progress!……Oh….but wait….when they consolidated the money-losing-dog-turd Cainaio “junk delivery by tuk-tuks & scooters ecosystem” business, they somehow reported a $3.45 Billion gain on the consolidation….more than fully offsetting the Alibaba Pictures write-down!

Etc, etc, etc. From a comment cited in the blog post:

I read your analysis on BABA and on so many different levels this screams “Enron 2.0”. The similarities are uncanny. But it’s actually worse than that. It’s Enron on steroids due to the fact that the Chinese government and regulatory bodies are likely aware of, and support the companies shenanigans, both implicitly and explicitly. If BABA is able to fleece American investors for billions of dollars in exchange for what will ultimately be worthless (or near worthless) equity, all the better. The average analyst/fund manager on Wall St. is likely too young to remember Enron as it happened in real time; even fewer of the older professionals who do remember could explain in depth how the company manufactured their financials and the machinations involved. Once again, history seems doomed to rhyme, if not repeat.

Hundreds of millions of bullet train trips expected during Chinese New Year

China high-speed rail update:

China already has the globe’s longest bullet-train network, but it’s plowing 3.5 trillion yuan ($556 billion) into expanding its railway system by 18 percent over the next two years, to 150,000 kilometers, or more than 93,000 miles.

Ponder this as the US considers a budget plan that includes $200 billion in federal spending on infrastructure over 10 years. (State and local government and private firms are expected to step in, bringing the total to $1.5 trillion.)

Almost 400 million people — that’s more than the U.S. population — will travel by train over the Lunar New Year, also known as Spring Festival. China’s factories and offices shut down for the week-long holiday, which unleashes the largest migration of humans on the planet. Many of the country’s 1.4 billion citizens return to their hometowns for family gatherings, or, increasingly, are taking the chance to be tourists both at home and abroad.

While the advent of cut-price flights has dimmed the appeal of rail travel in other parts of the world, in China it’s on the rise. Last Spring Festival saw a record 10.96 million trips on one day, and for the first time more people took bullet trains than conventional ones, according to official data.

From state media:

About 390 million trips will be made by train, China Railway said in a news release sent to the Global Times.

China Railway said 57.5 percent of rail travelers will take high-speed trains, up 4.8 percent from previous year.

I’ve been caught up in the Spring Festival travel rush on more than one occasion. It’s not pleasant.

If you can’t get your hands on a high-speed train ticket (starting at $42 for the 409-mile journey between Chengdu and Xi’an), may I suggest some alternative methods of travel?

By car:

China Spring Festival travelOn foot:

China Spring Festival travelBy ferry:

China Spring Festival travelIn uniform:

China Spring Festival travelI wrote about my bullet train ride from Guangzhou to Beijing in 2013 here. In that post, I noted:

Infrastructure in China tends to be unsettlingly vast, so I had a familiar feeling when walking around Guangzhou South Station. Designed by a London architecture firm, the mammoth structure sprawls over some 5.2 million sq ft, with multiple floors for arrivals, departures, and metro lines. A beautiful 1,142-ft-long skylight soars over the departures concourse. The enormous size of the station seemed to be justified by the crowds, which even on a Monday afternoon were substantial. During Chinese New Year the place is probably packed, and usage will surely increase over time as the region continues to boom.

At the time, it wasn’t necessarily clear that there was enough demand to justify this vast high-speed rail buildup. I think that question has been settled in the affirmative by now.

Nowhere to hide

1984 China facial recognition

1984: What you thought you were getting vs what you’re actually getting

Must-have gear for the modern “bobby on the beat”:

As China’s annual Spring Festival migration is now under way, Zhengzhou railway police are among the first in the country to wear glasses with a facial recognition system at four entrance gates at the city’s east train station to help them capture fugitives and those traveling using other people’s identities, online official media outlet the Paper reported yesterday.

A pair of such glasses capable of recognizing faces in milliseconds can help reduce stress on railway police as hundreds of millions of people will travel during the holiday period. Zhengzhou police have already caught seven fugitives allegedly involved in major criminal cases such as human trafficking and hit-and-runs and 26 individuals traveling on other people’s identities.

Beijing LLVision Technology Co. developed the glasses. In testing, the spectacles were able to identify a target from among a database of 10,000 people in 100 milliseconds, though this may take a little longer in practice because of environmental interference, said LLVision founder Wu Fei.

What would be really awesome, is if they integrated these glasses with your “social credit score,” so that the wearer would instantly know if you were debt-ridden, irresponsible, unpatriotic, or socially toxic, merely by looking at you. Imagine what would happen if they sold these to the public? All hell would break loose in the West, but in China, I reckon it might actually lead to a weird sort of techno-Confucianism.

China’s adoption of intelligent technologies in the security field in recent years has attracted worldwide attention. Under its Sky Net initiative, China has deployed 170 million surveillance cameras, the majority of which are equipped with facial recognition and real person-identity document matching systems. Late last year, a BBC reporter tested the efficiency of the Sky Net system with the help of Guiyang police. It took just seven minutes from uploading his selfie to the cloud platform to his being ‘arrested’ at a train station.

“Sky Net”… they didn’t, did they?……

Amtrak fail

What is going on with this?

The troubling string of Amtrak crashes

An Amtrak train en route to Miami from New York collided with a freight train early Sunday morning in South Carolina, killing two individuals and adding another tragic entry to the list of recent Amtrak derailments and crashes, per the AP.

The list, per the AP: […]

Summary: 12 accidents since 2011 (including last weekend’s), killing 23 and injuring hundreds.

There was much criticism of China’s lax safety standards and official opacity after a high-speed train collision in the city of Wenzhou killed 40 people in 2011. The fact that the US has suffered more than half that number of casualties in low-speed train accidents since 2011 should occasion a certain amount of concern.

Distinctive national architecture vs the Borg

Before:

After:

What happened?

“100 years ago it was reasonable to talk about national architecture. Today it almost doesn’t make sense, how is it possible that everybody build the same things?” Suggest [Rem] Koolhas. Absorbing Modernity: 1914-2014 is this year main challenge offered to all 65 national pavilions taking part at the Biennale. Each of them has been called to investigate and show how countries have been welcoming (or refusing) contemporary challenges.

Talk amongst yourselves. But I just wanted to point out that I happen to have worked in the China office building pictured above. It was alright, but the elevators needed a serious upgrade.