What's New

Made in China 2025 - Historical backdrop

A Phoenix TV documentary (in putonghua and Cantonese with Chinese subtitles) released on 16 May traces the beginning of China's manufacturing industry where Hong Kong played an initial catalytic role. My interview appearances in the TV clip can be accessed at readings 10:14, 10:47, 13:15, 16:55, 19:26, and 20:34. 

The documentary highlights the first 10-years (up to 2025) of a "Three-Step" manufacturing strategy to building China as a strong manufacturing power.

The focus is on the technological and industrial revolution, founded on China's practical need for economic restructuring. It is driven by innovation, intelligent transformation, reinforced infrastructure, green development and human capital with advanced manufacturing and high-end facilities. 

The documentary emphasizes the strategic importance of accelerating manufacturing transformation and upgrading if China is to advance from a manufacturing big country into a powerful one by 2025. 

中国制造2025”提出了我国制造强国建设三个十年的“三步走”战略，是第一个十年的行动纲领。“中国制造2025”应对新一轮科技革命和产业变革，立足我国转变经济发展方式实际需要，围绕创新驱动、智能转型、强化基础、绿色发展、人才为本等关键环节，以及先进制造、高端装备等重点领域，提出了加快制造业转型升级、提升增效的重大战略任务和重大政策举措，力争到2025年从制造大国迈入制造强国行列

How Hong Kong's Pan Democrats can win both ways

There were no concessions but lectures at the Shenzhen meeting of Beijing officials with Hong Kong’s Pan Democrats. The tough stance served only to stiffen the latter’s resolve to vote down government’s proposals. Beijing’s warning about voters’ reprisal was unconvincing. The Pan Democrats’ voters expected them to oppose, not to support, the current electoral package. Stanford University professor Larry Diamond calls Beijing’s version of universal suffrage an insult to intelligence. Click here

The elephant in the room is lack of mutual trust. But trust cannot be demanded. It can only be built on working relationships. However, if Pan Democrats are forever precluded from taking part in governing, how can any working relationships be established?

Nevertheless, vetoing down Beijing’s endorsed proposals is unlikely to create trust with Beijing, given the latter’s take-it-or-leave-it logic. 

Reality and politics, however, are less straightforward. The Occupy Movement with stirrings of “self-determination” has concentrated Beijing’s mind.  The Basic Law contains provisions designed to ensure that any Chief Executive elected by universal suffrage must be trusted by Beijing not to let Hong Kong drift towards separatism. As the Chief Executive is accountable to Beijing, it is difficult to imagine how One Country Two Systems can work otherwise. This reality cannot be dismissed by any foreign democratic models, however desirable.

Hong Kong now stands at a historic crossroads. The Pan Democrats are privileged to push Hong Kong in one direction or the other. One points to deepening mistrust with Beijing while Hong Kong continues to be torn apart by endless quarrels and confrontations. The other holds out the possibility of building a more trustful relationship with Beijing and a society less embroiled in internal squabbles and more able to focus on the future.

Richard Bush, Senior Fellow at John L Thornton China Centre at the Brookings Institution, Washington DC, recognizes that Hong Kong’s next (Chief Executive) election may offer a “narrow pathway” for improving democratic governance. Click here

All this may sound plausible but rather hopeless. However, politics, as they say, is the art of the possible. There is a real and practical way for the Pan Democrats to win both ways.

The Pan Democrats should continue to hold fast to their democratic principles with their “collective” veto from start to finish. However, notwithstanding any “bundling” of votes, a small but sufficient number of Pan Democrats may eventually contend that while they hate the government’s proposals, securing a quantum jump from 1,200 to five million voters for Chief Executive, in however restricted form, would be a large stepping stone in the march for democracy. So, continuing rhetoric of veto intentions aside, when the voting buttons are finally pushed, they may choose to vote yes, albeit “with tears”.

The government’s proposals would then pass with a small margin. This outcome would have key tactical advantages for Pan Democrats.

First, the political platform of five million voters would be a powerful, fertile ground for Pan Democrats to cultivate. In contrast, voting the government’s proposals down would be a leap in the dark. If trust with Beijing is further broken, the chance of a better deal later would at best be highly elusive. Hong Kong would most certainly be stuck with the same “small circle” of 1,200 authorized voters.

Second, the thin margin of support in the Legislative Council would send a clear signal to Beijing that the current proposals are by no means good enough. This should pave the way for pressing liberalisation in subsequent years in accordance with the principle of “gradual and orderly progress” under Article 45 of the Basic Law.

Third, Beijing officials were reported to have said that the National People’s Congress Standing Committee’s “8.31” framework is meant to last forever. This assertion was, however, in the context of disallowing nomination of candidates with “separatist” leanings. While suggestions for improving the government’s proposals, such as “none-of-the-above” votes, were flatly dismissed, gradual improvements are enshrined under the Basic Law. If greater mutual trust with Beijing is built up over time, one mustn’t assume that things are forever cast in stone. Nothing ever is.

Fourth, One Man, One Vote to elect the Chief Executive in 2017 is what most Hong Kong people want. If the Pan Democrats make this happen, their   candidates may win more votes and seats in the 2016 Legislative Council elections. This will make it possible to get a moderate and popular candidate with democratic background through the nominating committee. Failing this, there would be enough public pressure on nominated candidates to include electoral liberalization into his or her election manifesto. All this will sustain the democratic movement.  

Fifth, by realizing Beijing’s pledge for 2017, the pre-condition will have been fulfilled for pressing ahead with negotiations on introducing universal suffrage to the Legislative Council election in 2020, as Beijing has promised.

Sixth, similarly, the outcome would signal the possibility of better mutual rapport with Beijing. As a test of trustworthiness, Beijing may, over time, increase the number of suitable individuals with democratic credentials as ministers in Hong Kong’s future governing team. Although when appointed, they will have to sever formal party affiliations, this would pave the way for Pan Democrats to play a more prominent role in Hong Kong’s governance. After all, to make Hong Kong’s executive –led government more effective and sustainable in a multi-party political ecology, Beijing must realize that Pan Democrats must in due course be co-opted into Hong Kong’s governing team in one form or another.

Last but certainly not least, with universal suffrage to elect a new Chief Executive in 2017, Hong Kong would become less divisive and more energized to build a brighter future under the blessing of One Country Two Systems.

A new chapter in Hong Kong’s history is shortly to be unveiled. Pan Democrats hold the trump cards in deciding how the page is turned, for better or for worse. They should display insight in seizing the moment. 

An edited version with a less provocative tagline appeared as an Op-ed in the South China Morning Post of 16 June. 

Download South China Morning Post

(A Postscript - Behind the Smoke and Mirrors ) - 

The realities are staring the opposing Pan Democrats in the face -

(a) Voting down the universal suffrage on offer is because it is seen to fail to meet the so-called  "genuine" test. But it is what is promised and can be achieved under the Basic Law with safeguards against "self-determination" or separatism. While not ideal, there is no comparison with the existing "small circle" electorate of only 1,200 members. 

(b) If the proposals are voted down, Beijing is unlikely to improve the package next time around as it won't want to be seen to succumb to coercion. There is also the fear of giving an inch now and eventually going down the slope of losing an ell. On the contrary, rejection this time may well harden Beijing's stand further as its red lines of sovereignty and security cannot be crossed.

(c) If the proposals are allowed to pass, there is every chance that Beijing may see fit to improve the package next time, in the light of experience, in accordance with "gradual and orderly progress" allowed under Article 45 of the Basic Law. 

(d) In case LegCo passes the proposals, many Hong Kong people are likely to become jubilant. The threatened massive protest or social disorder may not stand a better chance of sustaining itself more than the failed Occupy Movement. 

Indeed, the Pan Democrats' rejection of the chance to transform a voting franchise from 1,200 to 5 million in 2017 is so counter-intuitive that one wonders if they wanted the government's package to pass in their heart of hearts. Their hope may be that they would be able to maintain their principles to the very end (by vetoing it) but see a bare (but sufficient) number breaking ranks at the very last moment. That way, they would be able to claim both sides of the democratic argument. In other words, they would be able eat their cake and have it at the same time. 

One Belt, One Road - China's Great Leap Forward

A June 2015 issue of China Analysis, a compendium of analyses by Chinese experts on the Mainland and overseas compiled by the European Council for Foreign Relations, a Brussels-based global think-tank, and Asia Centre, a European research body, focuses on the many challenges and opportunities of China's epic New Silk Road initiative of continental proportions. 

The Silk Road projects are said to connect countries that represent 55% world GNP, 70 % global population, and 75% of global known energy reserves. They call into question China's possible over-reach, her real intentions, their impact on international relations including neighbors, and the shape of the world order in which the United States and its allies have an immense stake. 

The compendium contains various insights on whether, and if so, to what extent, the New Silk Road initiative can be viewed in purely economic and cooperative terms and how China should address a host of practical and geopolitical challenges if the historic project is to realize its full potential as an instrument for global peace and development. 

Download One Belt, One Road - China's Geat Leap Forward - ECFR, June 2015

 

Andrew's Newsletter June 2015

Greetings! My very best wishes to you and your family for an enjoyable and restful summer. 

As we go about our daily life and business, the world is becoming increasingly confrontational. Order and trust seem to be breaking down. 

A rising Islamic State (ISIS) is occupying a large swathe of territory in Iraq and Syria. Important historical artifacts and heritage sites had been vandalized, pilfered or smashed. No superpower seems able or willing to go all the way to stop it in its tracks. 

In the Asia-Pacific, the United States, along with Japan, seems to be intensifying covert or overt tussles with a rising and more assertive China. These manifest themselves in military, trade, economic, and other forms of power rivalry in the South China Sea and beyond. 

In Hong Kong, at the time of writing, the impasse over the shape of universal suffrage for the election of the Chief Executive (top leader) in 2017 is looking increasingly ominous.  Lack of sufficient votes in the Legislature for the government’s proposals to pass seems a certainty. The endgame is up on 17 June when the proposals are widely expected to be voted down, barring last-minute black swans.   

In a rapidly changing world that is becoming more Monet than Caravaggio, you may wish to visit some of the following for perspectives on what is going on in the world beneath the surface. 

Geopolitics and International Relations

Are China’s ambitions in the South China Sea a threat? (A TV panel debate on Inside Story with Aljazeera English during the Asia Security Summit in Singapore, 29-31 May) 

Turkish-China Relations: New Silk Road in a Changing World (PowerPoint presentation at the 2015 Forum Istanbul , Turkey on 28 April and at Tsinghua University on 10 April, 2015) 

US-China 21- The Future of US-China Relations under Xi Jinping ( A Report for the Harvard Kennedy School by the Honourable Kevin Rudd, former Prime Minister of Australia) 

Explaining China's Foreign Policy Reset (A Paper by the European Council on Foreign Relations (ECFR))

Russia-China relations and the changing world order (Radio interview on The World Tonight with BBC World Service) 

Resurgence of Russia and China from an Islamic perspective (2015 Annual Strategic Brief by The Institute for Islamic Strategic Affairs (IISA), a London-based think-tank)

China's Energy Dynamics 2015 (My Paper in Surviving the Storm, The New Geopolitics of Energy published by the Medina Publishing Ltd, United Kingdom) 

US forbids Intel from exporting chips to China for updating world's currently most powerful supercomputer (BBC story and live interview on RT) Click here 

Europe's Shattered Dream of Order (A Foreign Affairs analysis) 

Civil War in Yemen (An ECFR analysis by a seasoned Yemen specialist) 

Socio-Political Development

Warnings of China's imminent collapse are - once again - greatly exaggerated (Op-ed in the South China Morning Post) 

Communist Youth League to recruit over 10 million volunteer netizens by end of June (An overview) 

China unveils roadmap to judicial, social reform (A report in the People’s Daily) 

Is China’s One Party rule about to collapse? (An in-depth analysis 

Economic development  

One Belt, One Road - China's Great Leap Forward  (A compendium  of analyses of practical, geoeconomic and geo-political implications) 

One Belt, One Road – Implications for the European Union (A research note prepared by the EU Academic Programme, Hong Kong) 

China’s Manufacturing Strategy – Made in China 2015 (A synopsis) 

Why China's consumers will continue to surprise the world (A McKinsey analysis ) 

World Economic Conditions Snapshot, March 2015 (2015 McKinsey global survey) 

The Four Global Forces Breaking All the Trends (A Mckinsey report ) 

Finance

Reforming Shadow Banking in China (A Summary of a Brookings Institution Paper) 

Shedding light on China's shadow banking (A collection of in-depth analyses ) 

Environment 

Hard Choices – Towards a Water and Energy Secure China (Report  of China Water Risk, a Hong Kong-based think tank) 

Water Pollution Prevention and Control Action Plan  (“Water Ten Directives”)  (An analysis )   

Defense

China’s Military Strategy 2015 (A White Paper) 

Cheer up and chill out

If the above reading appears too serious, you may wish to relax a bit by checking out my website’s repertoire of inspirational music videos,nature at its best, moving songs, words of wisdom, as well as fun and humour, including a collection in Chinese.

RSS feed and weblinks

This newsletter is uploaded to my web site here so that you may save it for reading at leisure. If you wish to share it with your colleagues and friends, you may use the web link on Facebook, LinkedIn, Whatsapp, Twitter or other social media devices.

My postings are regularly uploaded under the three blogs CHINAwatch, Publications and What is New on my website http://www.andrewleunginternationalconsultants.com If you wish instant access as soon as they appear, just click on “Subscribe to this blog’s feed” under RSS Feed on top of the right-hand column of each blog. Select the appropriate Google feed option. It is absolutely free of charge.   

My web site also includes a collection of mainstream China media and research sites under China Links. You may find it convenient to save my website link on your computer, laptop, tablet, Blackberry, iPhone or iPad as a reference resource.   

Real-time consultation service

If you wish to consult me on strategic issues on China by telephone, Skype or video conferencing, including corporate board meetings, please email me personally at [email protected] 

For speedy response, please text message me at my Hong Kong mobile +852 98198987.  I can also be reached on Skype atandrew.k.p.leung, LinkedIn at andrewleunginternational, Whatsapp at (852) 98198987, WeChat at Andrewkpleung, Facebook atandrewkinpongleung, and Twitter at @Andrewkpleung.

Speaking and lecturing opportunities

Throughout the year, I am open to invitations for speaking engagements, visiting lectures, university summer programs, or tailor-made electives on China as a visiting professor anywhere around the world, using English or Putonghua as a medium of instruction. I am prepared to stay on or near the campus for anything up to several weeks. Please email me with proposals.

A business networking and speaking platform in Hong Kong

As an Advisor to the Denmark-based Executives’ Global Network (EGN) Hong Kong, I wish to extend to you the opportunity of fielding a suitable speaker for an EGN event in Hong Kong. This will be entirely at our own cost with acknowledgement of your support or that of your organization, provided that we are not asked to cover any speaking fee, travel or accommodation expenses. 

For background on EGN, please visit the following links -

Executives’ Global Network Click here
EGN Hong Kong  Click here

Summer sojourns in London and Tuscany

I will be visiting London from end-June to early-September this year. Up to now, I have accepted an invitation to address the Reform Club, the National Liberal Club, and the Cass Business School. If you wish to make use of my summer stay in London, please give me a shout at [email protected] . 

Separately, my family will be enjoying a week’s relaxation at a small garden villa near Florence commencing Saturday 29 August. You are welcome to visit us for tea or stay with us to share the delights of the Tuscan hills.  If you are so inclined, please tell us early so that suitable arrangements can be made. Owing to space limitations, we can take on only up to two couples.

Scam – stolen identity 

My identity was stolen by hackers in the wake of my last e-Newsletter. I have since changed to more robust passwords for all my email accounts. There is, however, an impersonation using a make-believe email address [email protected] If you should come across mail from this address, it’s not yours truly.

Courtesies

I look forward to your guidance, advice, comments, suggestions, and criticisms. Please feel free to share any of my papers, articles, presentations, and TV interviews with your colleagues or friends. You are also welcome to publish any of them with full attribution.

If you think that I may add value to your endeavours in any way, please tell me how I may help. On the other hand, if for any reason you do not wish to receive my emails, just ask me to delete your name from my databank permanently.
 
Best personal regards,

Andrew K.P. Leung, SBS, FRSA
International and Independent China Strategist 
www.andrewleunginternationalconsultants.com 

Positions  

Chairman and CEO, Andrew Leung International Consultants Limited
(Founded in London, now re-incorporated in Hong Kong)
China Futures Fellow, Berkshire Publishing Group, Massachusetts, USA (2011-13)
Brain Trust Member, The Evian Group (global think-tank), Lausanne, Switzerland
Gerson Lehrman Group (Global Experts) Council Member
International Expert, Reuters Insight Community of Experts, Thompson Reuters
Senior Analyst, Wikistrat, a cloud-sourced global strategic consultancy
Senior Consultant, MEC International (a UK-based global strategic energy consultancy)
Distinguished Contributor, Asymmetric Threats Contingency Alliance (ATCA) (global think-tank)
Fellow of the Royal Society for the Encouragement of Arts, Manufactures and Commerce (FRSA)
Elected Member, Royal Society for Asian Affairs
Advisory Board Member, The e-Centre, European Centre for e-Commerce and Internet Law
Advisory Board Member, The Global Analyst, India
Hong Kong Advisory Board Member, Denmark-based Executive Global Network (EGN)
Global Commercial Agent, Changsha City, China
Visiting Professor, London Metropolitan University Business School
(The following until 19 May 2010, on permanent relocation back to Hong Kong)
Governing Council Member, King’s College London, UK (2004-2010)
Advisory Board Member, China Policy Institute, Nottingham University, UK (2005 -2010)
Founding Chairman, China Group, Institute of Directors City Branch, London, UK (2006-2010)
Vice Chairman, 48 Group Club, UK (2008-2010)
Committee Member of RSA, London Region, UK (2006-2010)
Visiting Professor, Sun Yat-sen University Business School, China (2005-10)

Included in UK's Who's Who since 2002
Awarded the Silver Bauhinia Star (SBS) in the July 2005 Hong Kong Honours List 

One Belt, One Road - Implications for the European Union

A research note of the European Union Academic Programme (EUAP), Hong Kong (Issue 15, 2 June, 2015) shows how “China’s One Belt, One Road” (OBOR) initiative is poised to link China’s trajectory to become the world’s largest economy to the heart of Europe.

Download EU Business News & Insights_Issue 15_One Belt One Road implications for the EU

The note, written by a Research Associate (my namesake with no family or other connections) points out that well before the launch of OBOR, direct rail links were rapidly being established between key cities in the heartlands of Europe and China. These include Chongqing to Duisburg, Germany in 2011; Wuhan to Pardubice, Czech Republic in 2012; Chengdu to Lodz, Suzhou to Warsaw, Poland and Zhengzhou to Hamburg in 2013; Yiwu to Madrid in 2014; and Wuhan to Hamburg in 2015.

Most of these routes and new ones through the overland Silk Road Economic Belt go through Central Asia (Kazakhstan),Russia and Belarus. 

These rail links cut transport time from 30-45 days by sea to 12-21 days and are 4-5 times less expensive than air freight. They are also greener in carbon footprints.

 The Maritime Silk Road will connect China’s south eastern and southern coastal cities with Europe (Venice and Athens) via India and Africa.

Through a $50 billion Silk Road Fund and a new Asian Infrastructure Investment Bank (AIIB), China will be investing in strengthening much-needed transport infrastructure, including port facilities, that are set to embed China into Europe and Europe in China towards closer partnership and common destiny.