COMM 102 Major Individual Assignment Fall 2013 3.0 Med.docx

COMM 102 Major Individual Assignment
Fall 2013
3.0 Media Critique: Content Analysis
Critique Exercise using content analysis techniques. This will
be the basis for class discussion during
week 9.
Value: 15%
Due: Week 9
For face-to-face classes, bring a rough draft with APA cover
page to the first class session of
the week. (If your must be absent, this may be emailed to the
instructor by the appropriate
time.)
For on-line classes, post your exercise to the identified
discussion forum by Wednesday noon.
After the class discussion, you may revise your critique based
on the discussion for final turn-in
by 11:59 PM on Sunday night.
3.1 The Articles
In the year 2012 The Economist ran 16 articles that included the
topic of economic development in

China including one cover story. You may find all 16 articles
here by using the Library’s advanced
search engine. Use the following delimiters:
Journal Title/Source: “The Economist”
AND Subject Terms: “economic development”
AND Subject Terms: China
Set the publication date delimiter to 2012 (Left side of page)
Read the cover story, “The Visible Hand.” 21 January 2012, Vol
402, Issue 8768.
Then read “Crony tigers, divided dragons.” 13 October 2012,
Vol 405, Issue 8806.
Then randomly select four more articles from the remaining 14
articles.
You may randomly select by flipping a coin, rolling dice, or
numeric coding and then consulting
a random number table.
3.2 The Analysis
Your task is to perform a content analysis of the six articles in
order to determine the perspective of The
Economist on economic development in China. This perspective
is determined by evaluating what kinds

of slanting or bias might be present in the reporting. Potentially
The Economist is neutral regarding
China’s economic development simply describing
characteristics, but more likely it will raise both the
positives and the negatives of China’s economic development in
relation to other benchmarks such as
human rights, the environment, corruption, civil unrest, human
health and longevity, or other
countries, etc. So the perspective will be determined by
comparison.
Coding
Operational definition of perspective
The perspective of The Economist will be seen as positive,
negative, or neutral by the ratio of
positive to negative points of comparison with other
benchmarks.
Code each article in relation to this operational definition.
Data collection
1. Counting
In your examination of each article count how many times
positive terms or phrases are used to

describe Chinese economic development and how many time
negative terms or phrases are used.
Negative terms include:
Dirty, slow, corrupt, unequal, weak, polluted, risky,
deteriorating, etc.
Positive terms include:
Clean, rapid, honest, egalitarian, strong, prosperous, improving,
growing, etc.
2. Points of comparison/benchmarks
In determining a value, the points of comparison or benchmarks
are essential. Identify the benchmarks
used in the articles, whether they are countries, global indices
of development, emotional descriptors,
or specific points taken from a non-Chinese situation.
3.3 The report you turn in
1. Coding
Explain how you reviewed the articles, what you looked for and
how you counted it.
2. Summaries
Write a one paragraph summary of each article (3-5 sentences).
Following the summary list the following:

Positive descriptors: Number, best example
Negative descriptors: Number, best example
Primary point of comparison/benchmark (this is a judgment call
on your part)
3. Table of results
Then produce a table that summarizes the articles as a whole.
Article title Number of positive
descriptors
Number of negative
descriptors
Primary benchmark
Total
4. Conclusion
Examine your table of results. Do you believe The Economist
has taken a positive, negative, or neutral
position with regard to economic development in China? In 250

words or more, explain what
perspective you think it has. Provide supporting evidence taken
from your table. Explain how the
benchmarks guide your interpretation.
5. List in APA format all the articles with which you worked to
produce your result.
The completed project must be in APA format with a title page.
Please correctly reference any material
you quote or refer to in your report.
Send the final version electronically as an attachment to
[email protected] Name your attached
file using the following format: YOURLASTNAME-
ContentAnalysis. You may use Windows-Word or .rtf
files. Do not uses spaces in your file name. (Do not submit .pdf
files.)
Marks will be deducted for late assignments. No project will be
accepted unless the rough draft was
ready by the start of the class/required initial post time, earlier
in the week.
3.4. Evaluation Rubric:
The assignment will be evaluated on the following criteria:
Submitted on-time and according to instructions (10%)

Uses 6 articles appropriately (10%)
Good summaries & evaluations (30%)
Good table (10%)
Good conclusion (20%)
Accurate APA referencing (5%)
Appropriate English including good grammar, spelling,
sentence structure and style (15%)
Especially poor contributions toward any specific criteria may
receive a negative mark that reduce the
value of the total project mark.
mailto:[email protected]
The visible hand ;
The Economist402.8768 (Jan 21, 2012): 3.
Turn on hit highlighting for speaking browsers
Full Text
· Translate Full text
·
The crisis of Western liberal capitalism has coincided with the
rise of a powerful new form of state capitalism in emerging
markets, says Adrian Wooldridge
BEATRICE WEBB grew up as a fervent believer in free markets
and limited government. Her father was a self-made railway

tycoon and her mother an ardent free-trader. One of her family's
closest friends was Herbert Spencer, the leading philosopher of
Victorian liberalism. Spencer took a shine to young Beatrice
and treated her to lectures on the magic of the market, the
survival of the fittest and the evils of the state. But as Beatrice
grew up she began to have doubts. Why should the state not
intervene in the market to order children out of chimneys and
into schools, or to provide sustenance for the hungry and
unemployed or to rescue failing industries? In due course
Beatrice became one of the leading architects of the welfare
state--and a leading apologist for Soviet communism.
The argument about the relative merits of the state and the
market that preoccupied young Beatrice has been raging ever
since. Between 1900 and 1970 the pro-statists had the wind in
their sails. Governments started off by weaving social safety
nets and ended up by nationalising huge chunks of the economy.
Yet between 1970 and 2000 the free-marketeers made a
comeback. Ronald Reagan and Margaret Thatcher started a
fashion across the West for privatising state-run industries and
pruning the welfare state. The Soviet Union and its outriggers
collapsed in ruins.
The era of free-market triumphalism has come to a juddering
halt, and the crisis that destroyed Lehman Brothers in 2008 is
now engulfing much of the rich world. The weakest countries,
such as Greece, have already been plunged into chaos. Even the
mighty United States has seen the income of the average worker
contract every year for the past three years. The Fraser Institute,
a Canadian think-tank, which has been measuring the progress
of economic freedom for the past four decades, saw its
worldwide "freedom index" rise relentlessly from 5.5 (out of
10) in 1980 to 6.7 in 2007. But then it started to move
backwards.
The crisis of liberal capitalism has been rendered more serious
by the rise of a potent alternative: state capitalism, which tries
to meld the powers of the state with the powers of capitalism. It
depends on government to pick winners and promote economic

growth. But it also uses capitalist tools such as listing state-
owned companies on the stockmarket and embracing
globalisation. Elements of state capitalism have been seen in the
past, for example in the rise of Japan in the 1950s and even of
Germany in the 1870s, but never before has it operated on such
a scale and with such sophisticated tools.
State capitalism can claim the world's most successful big
economy for its camp. Over the past 30 years China's GDP has
grown at an average rate of 9.5% a year and its international
trade by 18% in volume terms. Over the past ten years its GDP
has more than trebled to $11 trillion. China has taken over from
Japan as the world's second-biggest economy, and from America
as the world's biggest market for many consumer goods. The
Chinese state is the biggest shareholder in the country's 150
biggest companies and guides and goads thousands more. It
shapes the overall market by managing its currency, directing
money to favoured industries and working closely with Chinese
companies abroad.
State capitalism can also claim some of the world's most
powerful companies. The 13 biggest oil firms, which between
them have a grip on more than three-quarters of the world's oil
reserves, are all state-backed. So is the world's biggest natural-
gas company, Russia's Gazprom. But successful state firms can
be found in almost any industry. China Mobile is a mobile-
phone goliath with 600m customers. Saudi Basic Industries
Corporation is one of the world's most profitable chemical
companies. Russia's Sberbank is Europe's third-largest bank by
market capitalisation. Dubai Ports is the world's third-largest
ports operator. The airline Emirates is growing at 20% a year.
State capitalism is on the march, overflowing with cash and
emboldened by the crisis in the West. State companies make up
80% of the value of the stockmarket in China, 62% in Russia
and 38% in Brazil (see chart). They accounted for one-third of
the emerging world's foreign direct investment between 2003
and 2010 and an even higher proportion of its most spectacular
acquisitions, as well as a growing proportion of the very largest

firms: three Chinese state-owned companies rank among the
world's ten biggest companies by revenue, against only two
European ones (see chart). Add the exploits of sovereign-wealth
funds to the ledger, and it begins to look as if liberal capitalism
is in wholesale retreat: New York's Chrysler Building (or 90%
of it anyway) has fallen to Abu Dhabi and Manchester City
football club to Qatar. The Chinese have a phrase for it: "The
state advances while the private sector retreats." This is now
happening on a global scale.
This special report will focus on the new state capitalism of the
emerging world rather than the old state capitalism in Europe,
because it reflects the future rather than the past. The report
will look mainly at China, Russia and Brazil. The recent
protests in Russia against the rigging of parliamentary elections
by Vladimir Putin, the prime minister, have raised questions
about the country's political stability and, by implication, the
future of state capitalism there, but for the moment nothing
much seems to have changed. India will not be considered in
detail because, although it has some of the world's biggest state-
owned companies, they are more likely to be leftovers of the
Licence Raj rather than thrusting new national champions.
Today's state capitalism also represents a significant advance on
its predecessors in several respects. First, it is developing on a
much wider scale: China alone accounts for a fifth of the
world's population. Second, it is coming together much more
quickly: China and Russia have developed their formula for
state capitalism only in the past decade. And third, it has far
more sophisticated tools at its disposal. The modern state is
more powerful than anything that has gone before: for example,
the Chinese Communist Party holds files on vast numbers of its
citizens. It is also far better at using capitalist tools to achieve
its desired ends. Instead of handing industries to bureaucrats or
cronies, it turns them into companies run by professional
managers. The return of history
This special report will cast a sceptical eye on state capitalism.
It will raise doubts about the system's ability to capitalise on its

successes when it wants to innovate rather than just catch up,
and to correct itself if it takes a wrong turn. Managing the
system's contradictions when the economy is growing rapidly is
one thing; doing so when it hits a rough patch quite another.
And state capitalism is plagued by cronyism and corruption.
But the report will also argue that state capitalism is the most
formidable foe that liberal capitalism has faced so far. State
capitalists are wrong to claim that they combine the best of both
worlds, but they have learned how to avoid some of the pitfalls
of earlier state-sponsored growth. And they are flourishing in
the dynamic markets of the emerging world, which have been
growing at an average of 5.5% a year against the rich world's
1.6% over the past few years and are likely to account for half
the world's GDP by 2020.
State capitalism increasingly looks like the coming trend. The
Brazilian government has forced the departure of the boss of
Vale, a mining giant, for being too independent-minded. The
French government has set up a sovereign-wealth fund. The
South African government is talking openly about nationalising
companies and creating national champions. And young
economists in the World Bank and other multilateral institutions
have begun to discuss embracing a new industrial policy.
That raises some tricky questions about the global economic
system. How can you ensure a fair trading system if some
companies enjoy the support, overt or covert, of a national
government? How can you prevent governments from using
companies as instruments of military power? And how can you
prevent legitimate worries about fairness from shading into
xenophobia and protectionism? Some of the biggest trade rows
in recent years--for example, over the China National Offshore
Oil Corporation's attempt to buy America's Unocal in 2005, and
over Dubai Ports' purchase of several American ports--have
involved state-owned enterprises. There are likely to be many
more in the future.
The rise of state capitalism is also undoing many of the
assumptions about the effects of globalisation. Kenichi Ohmae

said the nation state was finished. Thomas Friedman argued that
governments had to don the golden straitjacket of market
discipline. Naomi Klein pointed out that the world's biggest
companies were bigger than many countries. And Francis
Fukuyama asserted that history had ended with the triumph of
democratic capitalism. Now across much of the world the state
is trumping the market and autocracy is triumphing over
democracy.
Ian Bremmer, the president of Eurasia Group, a political-risk
consultancy, claims that this is "the end of the free market" in
his excellent book of that title. He exaggerates. But he is right
that a striking number of governments, particularly in the
emerging world, are learning how to use the market to promote
political ends. The invisible hand of the market is giving way to
the visible, and often authoritarian, hand of state capitalism.
Word count: 1591
(Copyright 2012 The Economist Newspaper Ltd. All rights
reserved.)
Slow boats; China's economy
Anonymous. The Economist404.8800 (Sep 1, 2012): 12.
Abstract (summary)
Translate Abstract
The Chinese economy has a habit of beating expectations. For
ten years in a row, from 2001 to 2010, its growth rate exceeded
the IMF's spring forecast, often by a big margin. But this year it
is likely to disappoint. In recent months, industrial output has
slowed sharply; stocks of unsold goods are piling up; and
Shanghai's stockmarket is at a three-year low. For the first time
this century, in 2012 China's growth rate may dip below 8%.
With the world ever more dependent on China's economy, that
is worrying.
Full Text

·
The government has proved uncharacteristically hesitant to
revive growth in China. That's a good sign
THE Chinese economy has a habit of beating expectations. For
ten years in a row, from 2001 to 2010, its growth rate exceeded
the IMF's spring forecast, often by a big margin. But this year it
is likely to disappoint. In recent months, industrial output has
slowed sharply; stocks of unsold goods are piling up; and
Shanghai's stockmarket is at a three-year low. For the first time
this century, in 2012 China's growth rate may dip below 8%.
With the world ever more dependent on China's economy, that
is worrying.
No economy can grow by double digits forever. As China's
economy matures and its labour force peaks, it is only natural
that its pace of expansion eases. But the slowdown of recent
quarters is cyclical, not structural, reflecting a loss of puff,
rather than a shortening stride. China has seen a sharp drop in
demand, as export sales fall and residential investment falters.
Some of the global headwinds buffeting China were foreseeable
. Nonetheless, most economists assumed the country's
policymakers could quickly revive growth if necessary. In
China, in contrast to Japan or America, interest rates (and bank
reserve requirements) have plenty of room to fall. China has an
enviable amount of fiscal leeway. And its property slowdown
largely reflects government curbs on speculative homebuying
that officials could lift, if they so chose.
The government has done some of what was expected of it. It
has cut rates and reserve requirements a bit. Infrastructure
spending has picked up. In replacing business taxes with a
value-added tax, the government has eased the fiscal burden on
small firms. It is also happy to help first-time homebuyers.
But its actions have lacked any of the clarity or urgency of
November 2008, when policymakers rallied the banks, state-
owned enterprises and local officials to fend off the global
financial crisis. That stimulus turned out to be bigger than the
crisis warranted. This year, in the face of a much smaller shock,

the government's response has fallen short.
What explains its hesitation? Some now doubt the central bank's
ability to revive growth. Even if it did ease rates and other
lending restraints, credit would not rebound, they argue,
because the banks cannot find willing borrowers. As with the
proverbial slow boat to China, there is a rip in the country's
monetary sails. Others blame a twist in the rudder: the
policymakers who steer the economy are distracted and divided,
preoccupied with this year's handover of power, which is not
going as smoothly as hoped.
Erring do
There is some truth in these arguments. But they are not the
whole story. China's policymakers are still capable of reviving
growth. But some are no longer willing to do so at any cost. The
divisions at the top are philosophical as well as political.
Economic expansion used to trump almost everything else.
Keeping the growth rate up was second only to keeping the birth
rate down on the list of priorities. But some Chinese
policymakers now worry about China's reliance on investment
and about property speculation, which has priced some middle-
class families out of big-city markets.
In the past, a Chinese government faced with a nasty downturn
would already be repealing property curbs and appealing to
state-owned firms to expand capacity. Such a clumsy,
conventional response would no doubt revive growth, but would
also delay the structural reforms, like financial liberalisation,
that the country requires. Policymakers outside China may long
for more decisive action. But if hesitation enables China to keep
to the path of rebalancing its economy, it will be good news for
everyone.
Word count: 612
reserved.)
Satisfy the people; The National People's Congress

The Economist402.8775 (Mar 10, 2012): 55.
Full Text
·
As he prepares to leave the ruling Politburo, China's prime
minister warns parliament of troubles ahead
CHINA'S prime minister, Wen Jiabao, may be glad he is
entering his final year in office. In a two-hour speech on March
5th at the opening of the annual session of China's parliament,
the National People's Congress (NPC), Mr Wen spoke of "new
problems" besetting China's economy, from high prices to
slowing growth. But his problem might lie in convincing
citizens that his promised efforts to build a "harmonious" China
have made progress.
Mr Wen's state-of-the-nation address was his penultimate as
prime minister, but his last as a member of the ruling Politburo.
He and President Hu Jintao will step down after a five-yearly
Communist Party congress in the autumn. At next year's NPC (a
rubber-stamp affair that usually lasts about ten days), Mr Wen
is expected to hand over to his deputy, Li Keqiang. The
presidency will almost certainly be passed to the current vice-
president, Xi Jinping. In his speech, Mr Wen reminded almost
3,000 hand-picked delegates that this was his last year, and
called for diligent work to "satisfy the people".
This will be a lot tougher than meeting the lower-than-usual
target of 7.5% growth this year that Mr Wen proposed. More
than any other prime minister since Zhou Enlai (who held the
job for 26 years until his death in 1976), Mr Wen has tried hard
to cultivate a man-of-the-people image. At a press conference
after his appointment in 2003, Mr Wen boasted that he had
visited 1,800 of China's 2,000-plus counties, and that this had
helped him understand people's lives. "I know what they
expect...I will live up to their trust," he said. Their
expectations, however, may have exceeded his capacity.
The rest of the world has marvelled at China's double-digit

growth rates for most of the past decade, and millions of people
have become richer. But many grumble that Mr Hu and Mr Wen
have made less progress with their pledges to build a
"harmonious society" in a way that pays more attention to
people's welfare and the natural environment. The gap between
rich and poor has continued to widen. Outbreaks of unrest,
many of them the result of land grabs by local-government
officials, are increasingly frequent. Migrant workers from the
countryside, who fill most blue-collar jobs in urban areas, are
usually denied welfare benefits enjoyed by other city-dwellers.
Polls suggest that many ordinary Chinese are feeling uneasy. In
January a report by the Capital University of Economics and
Business in Beijing found that the city's "happiness index" had
been declining for four years. Worries about income were cited
as the main reason for the drop. A survey published in the same
month by the Chinese Academy of Social Sciences showed that
urban residents felt less confident that they would get richer
than they felt about prospects for the economy generally (see
chart).
Mr Wen highlighted some achievements. Spending on health
care has received a boost since efforts to provide insurance for
all were stepped up in 2009. But the World Bank and the
Development Research Centre (DRC), a Chinese government
think-tank, in a report in February, said that government
spending on health, at around 2.5% of GDP, is still lower than
average among the upper-middle-income countries with which
China is now categorised. In his speech Mr Wen pledged that
government spending on education would reach 4% of GDP for
the first time (up from around 2.5% in 2003). A budget report
submitted to the NPC said that such spending by the central
government had risen by 27.5% last year. Mr Wen did not
remind his audience, however, that China promised in 1993 it
would spend 4% of GDP on education by 2000.
By the end of this year, Mr Wen said, all of rural China would
be covered by a government-funded pension scheme that
officials began rolling out in 2009. Rural pensioners receive a

minimum of 55 yuan ($8.70) a month, which for the poorest
families is a welcome boost. Mr Wen said rural incomes last
year rose faster than those of urban residents for a second year
in a row. They grew by 11.4% in real terms, the fastest rate
since 1985. A considerable proportion of rural income comes
from migrant labour in the cities. An official plan issued last
month calls for increases in the minimum wage of at least 13% a
year to 2015.
Such measures could help to narrow wage differences between
urban and rural areas (as will a diminishing supply of surplus
rural labour). Mr Wen deviated slightly from the wording of last
year's five-year plan, which had called for a "gradual"
narrowing of the income gap. He said the government would
"quickly" reverse the widening trend and ensure that income
distribution is governed by "proper standards". He did not say
how, although growing upward pressure on blue-collar wages
will certainly help.
The rich-poor gap is clearly an embarrassment to Mr Wen's
government (as it was to the preceding one). Caixin, a
magazine, reported in January that this year the government
would again publish no estimate of the Gini coefficient, a
measurement of inequality commonly used around the world.
The last time such a figure was officially released, it said, was
in 2000. The coefficient then was 0.412 (on a scale of 0, where
everyone has the same income, to 1, where one person receives
all of it). America's coefficient at that time was very similar at
0.408, but India's was much lower at 0.32. Some Chinese
scholars believe China's is now higher than 0.5. The World
Bank-DRC report says China is among the most unequal
countries in Asia.
During the NPC Bo Xilai, the party chief of Chongqing, a
region in the south-west, used the issue in an apparent attempt
to revive his tarnished image (a political ally of his had fled to
the American consulate in Chengdu last month, emerging a day
later to be led away by Chinese security officials). Mr Bo
pointedly told a group of delegates that it was possible to have

fair wealth distribution and fast growth at the same time. Alone
among Chinese provincial-level governments, Chongqing has
set a target for reducing its Gini coefficient.
Few Chinese pay attention to the NPC's discussions, despite
efforts by official media to enliven coverage with alluring
pictures (see photo on previous page). Internet users have been
more interested in examining photographs of the wealthiest
delegates, some of whom have flaunted their riches by wearing
expensive clothing to the meetings. Hurun Report, a company
which tracks China's wealthy, said the net worth of the 70
richest NPC delegates--many of whom are also prominent
businesspeople--rose by $11.5 billion in 2011.
Word count: 1120
reserved.)
Crony tigers, divided dragons; Asia
Anonymous. The Economist405.8806 (Oct 13, 2012): SS15-
SS18.
Abstract (summary)
Translate Abstract
The transformation of China's economy over the past 30 years is
the most spectacular growth story in history. Less noticed,
China has also seen the world's biggest and fastest rise in
inequality. China has not officially published a Gini coefficient
since 2000, but a study by the China Development Research
Foundation suggests that it has surged from less than 0.3 in
1978 to more than 0.48. In little more than a generation Mao's
egalitarian dystopia has become a country with an income
distribution more skewed than America's.
Full Text
·

Why Asia, too, is becoming increasingly unequal
THE SUMMIT OF Songshan mountain, some 60 miles (100km)
from China's capital, marks the boundary between Beijing
municipality and the neighbouring province of Hebei. It is also
a study in contrasts. On the Beijing side the mountain road is
wide, freshly surfaced and flanked by a solid safety wall. A
Lycra-clad cyclist sweats his way up on a fancy mountain bike.
A large car park is under construction for visitors to hot springs
in the nearby village of Bangongqu. Enterprising local families
can make 100,000 yuan ($16,000) a year catering to Beijing
tourists, not far off the city's average white-collar wage. The
Beijing provincial government provides pensions and other
social benefits.
Hebei is a much poorer province. On its side of the mountain
the road narrows and the tarmac deteriorates. Half a mile from
the summit is the village of Yanjiaping, where some 50 families
scrape a living growing cabbages. No one has a car, no one gets
a pension, and the nearest primary school is 12 miles away.
Farmers are barred from grazing cows on the mountainside so
that trees can grow to stem sand storms from Inner Mongolia.
Shen Zhiyun, a gnarled man in fake US army fatigues, says a
village family makes 4,000-5,000 yuan a year, nowhere near
Indian levels of poverty, but a far cry from the living standards
only a few miles away. "We live in a different country," he
says.
The transformation of China's economy over the past 30 years is
the most spectacular growth story in history. Less noticed,
China has also seen the world's biggest and fastest rise in
inequality. China has not officially published a Gini coefficient
since 2000, but a study by the China Development Research
Foundation suggests that it has surged from less than 0.3 in
1978 to more than 0.48. In little more than a generation Mao's
egalitarian dystopia has become a country with an income
distribution more skewed than America's. Asia's two other
giants, India and Indonesia, have also seen disparities rise
sharply, though less dramatically than China. Indonesia's Gini is

up by an eighth, to 0.34.
Part of this rise was both inevitable and welcome, a natural
consequence of the end of Maoist communism in China and
Fabian socialism in India. The three economies, particularly
China's, are far richer and more dynamic than they were 30
years ago. Just as Kuznets suggested, urbanisation and
industrialisation have brought widening gaps. As people have
left subsistence agriculture for more productive work in cities,
inequality has risen along with prosperity.
But that cannot be the whole explanation, if only because the
experience of today's Asian tigers is in striking contrast to that
of an earlier pack. In Japan, Hong Kong, South Korea and
Taiwan growth rates soared in the 1960s and 1970s and
prosperity increased rapidly but income gaps shrank. Japan's
Gini coefficient fell from 0.45 in the early 1960s to 0.34 in
1982; Taiwan's from 0.5 in 1961 to below 0.3 by the mid-1970s.
That experience launched the idea of an "Asian growth model",
one that combined prosperity with equity.
Education, again
Today's Asian growth model does the opposite. One explanation
is that the big forces driving modern economies--technological
innovation and globalisation--benefit the skilled and educated in
emerging markets much as they do in the rich world. Narayana
Murthy, the billionaire co-founder of Infosys, an Indian
software giant, or Robin Li, the creator of Baidu, China's most
popular search engine, have harnessed technology much like
Bill Gates has done. Senior lawyers and bankers in Mumbai or
Shanghai are part of a global winner-takes-all market, able to
command salaries similar to those of their colleagues in New
York or London. And as Ravi Kanbur of Cornell University
points out, the offshoring of tasks that has hit mid-level workers
in America and Europe often benefits people higher up the
skills ladder in recipient countries. Call centres in Bangalore
are manned by well-educated Indians.
As in the rich world, these fundamental economic forces are not
the only drivers of income distribution. Government policy has

also played a big role. One problem is cronyism. As in the
Gilded Age in America, capitalism in today's emerging markets
involves close links between politicians and plutocrats. India is
a case in point. From spectrum licences to coal deposits, large
assets have been transferred from the state to favoured insiders
in the past few years. Many politicians have business empires of
one kind or another. Rich businessmen often become politicians,
particularly at the state level. Raghuram Rajan, an Indian-born
economist at the University of Chicago who recently became
chief economic adviser to India's government, has pointed out
that India has the second-largest number of billionaires relative
to the size of its economy after Russia, mainly thanks to insider
access to land, natural resources and government contracts. He
worries that India could be becoming "an unequal oligarchy or
worse".
In China cronyism is even more ingrained. The state still has
huge control over resources, whether directly through state-
owned enterprises, monopoly control of industries from
railways to mining or the distorted financial system, where
interest rates are artificially depressed and access to credit is
influenced by politics. The importance of the state means that
the beneficiaries tend to be close to state power.
Moreover, inequality in China could be higher than the official
statistics suggest because rich people often understate their
income and hide it from the taxman. A lot of money is invested
in property, where soaring prices have reinforced inequality.
Wang Xiaolu, of the China Reform Foundation, caused a stir a
couple of years ago with a study that tried to measure this
"grey" income. His results suggest that the income of the richest
10% of urban Chinese is some 23 times that of the poorest 10%.
Official statistics say the multiple is nine.
Cronyism is the most obvious way in which Asian governments
make inequality worse, but it is not the only one. Broader
government strategies have distorted countries' growth paths in
a manner that increased income gaps. In India a big problem is
the lack of job creation. Unlike China, where the surge in

factories assembling goods for export brought millions of
migrant workers into the formal urban labour force, India's
formal workforce has barely grown since 1991. More than 90%
of Indians are still employed in the informal sector. Even in
manufacturing, most people toil in one-room workshops rather
than big factories. Productivity is lower, workers find it hard to
improve their skills and their incomes rise more slowly.
India's failure to become a powerhouse of labour-intensive
manufacturing owes much to its appalling infrastructure. Just-
in-time delivery is hard to achieve when power supplies are so
precarious. Another reason is the country's rigid labour laws,
which discourage the formation of big firms. Between the
federal government and the states, India has around 200
different laws, all setting detailed rules and making it virtually
impossible to fire people. That deters employers from hiring
workers and widens the gap between the lucky educated few and
the rest.
We know where you live
In China the regulations that contribute most to inequality are
the remnants of the country's hukou system of household
registration. This hails from Mao's era, when China's rural
sector was punitively taxed to finance the development of heavy
industry. To ensure a stable supply of workers in agriculture
despite the appalling conditions, people were barred from
leaving their province of origin. The restrictions on mobility
were dismantled in the 1980s, permitting millions to become
migrant workers. But they still retain the rural hukou of their
birth, as do their children. From housing to schooling, this puts
them at a big disadvantage compared with holders of urban
hukou.
Migrants' children must take the gaokao (the all-important state
college-entrance exam) in their place of origin, not where they
and their parents might be living at the time, so lots of migrants
send their children home for schooling. Since education is
financed largely by local governments, these schools tend to be
less well-funded and of lower quality. Hebei has far worse

schools than Beijing. In Shanghai municipality, spending per
student in rural areas is only 50-60% that of urban areas. As a
result, the education system reinforces income disparities rather
than mitigating them.
Along with disparities in infrastructure, the hukou system is a
big reason for China's vast urban-rural gaps, which explain
about 45% of the country's overall inequality. Other Asian
economies do not suffer from a hukou problem, but there, too,
government social policies have often made inequality worse
because most social spending, from public housing to health
insurance, has traditionally been confined to the formal, urban
workforce. Moreover, many Asian governments spend a lot on
universal subsidies, especially for energy. These are highly
regressive. Indonesia, for instance, lavished 3.4% of GDP on
fuel and electricity subsidies last year, more than it spent on
infrastructure. According to the Asian Development Bank, 40%
of that largesse flowed to the richest 10% of Indonesian
households and as much as 84% to the top half.
Things are beginning to change. Across emerging Asia political
concerns about rising inequality are prompting reform, often in
ways that echo the changes of the Progressive Era a century
ago. In China the "Great Western Development Strategy" has
poured vast sums into infrastructure in the western provinces.
More recently the government has made a big effort to improve
rural social services. Almost 100% of China's rural population
now have basic health insurance (including the villagers of
Yianjiaping), and a majority have basic pensions. Inequality
between urban and rural areas has recently stabilised and that
between regions has begun to fall slightly, but from an
extraordinarily high level.
In the past couple of years several Asian economies, from
Thailand to Vietnam, have introduced, or expanded the reach of,
minimum wages. China's minimum wage, which is set at the
provincial level, rose by an average of 17% last year. Some
countries have introduced public-work schemes for the poorest.
India's NREGA scheme, for instance, guarantees 100 days' work

a year to the country's rural households and now covers 41m
people. Others have experimented with targeted subsidies to the
very poorest that have helped reduce inequality in Latin
America (see next article).
By introducing a more efficient, and progressive, social safety
net, Asia's governments will go some way towards mitigating
their growing income gaps. But there will be no big
breakthroughs until the bigger problems of informality (in
India), discrimination against migrants (China) and cronyism
(everywhere) are dealt with. And the longer that takes, the
greater the danger that today's disparities will become
entrenched.
Thanks to remarkable economic growth, almost all Asians are
rapidly becoming better off. In India, old caste rigidities are
being broken down (see box earlier in this article). But
widening income gaps threaten to harm future social mobility.
Using a methodology developed at the World Bank, a study by
Zhang Yingqiang and Tor Eriksson found that the rise in
China's income inequality is mirrored by a rise in its inequality
of opportunity. Parents' income and their type of employer
explain about two-thirds of China's inequality of opportunity, a
much bigger share than is explained by parental education.
The stakes are high. Yu Jiantuo of the China Development
Research Foundation argues that China's inequality is now
hurting its growth prospects. Sustained cronyism could turn
Asia's big economies into entrenched oligarchies rather than
dynamic meritocracies. Ironically, in that sense they might
become more like Latin America just as that continent appears
to be moving in the opposite direction. "
Across emerging Asia political concerns about rising inequality
are prompting reform "
Word count: 1943
reserved.)

China and the paradox of prosperity ;
The Economist402.8769 (Jan 28, 2012): 9.
Abstract (summary)
Translate Abstract
In this issue we launch a weekly section devoted to China. It is
the first time since we began our detailed coverage of the
United States in 1942 that we have singled out a country in this
way. The principal reason is that China is now an economic
superpower and is fast becoming a military force capable of
unsettling America. But our interest in China lies also in its
politics: it is governed by a system that is out of step with
global norms. In ways that were never true of post-war Japan
and may never be true of India, China will both fascinate and
agitate the rest of the world for a long time to come. Only 20
years ago, China was a long way from being a global
superpower. After the protests in Tiananmen Square led to a
massacre in 1989, its economic reforms were under threat from
conservatives and it faced international isolation. Then in early
1992, like an emperor undertaking a progress, the late Deng
Xiaoping set out on a "southern tour" of the most reform-
minded provinces. An astonishing endorsement of reform, it was
a masterstroke from the man who made modern China. The
economy has barely looked back since. Compared with the rich
world's recent rocky times, China's progress has been relentless.
Yet not far beneath the surface, society is churning.
Full Text
·
For China's rise to continue, the country needs to move away
from the model that has served it so well
IN THIS issue we launch a weekly section devoted to China. It
is the first time since we began our detailed coverage of the
United States in 1942 that we have singled out a country in this
way. The principal reason is that China is now an economic
superpower and is fast becoming a military force capable of

unsettling America. But our interest in China lies also in its
politics: it is governed by a system that is out of step with
global norms. In ways that were never true of post-war Japan
and may never be true of India, China will both fascinate and
agitate the rest of the world for a long time to come.
Only 20 years ago, China was a long way from being a global
superpower. After the protests in Tiananmen Square led to a
massacre in 1989, its economic reforms were under threat from
conservatives and it faced international isolation. Then in early
1992, like an emperor undertaking a progress, the late Deng
Xiaoping set out on a "southern tour" of the most reform-
minded provinces. An astonishing endorsement of reform, it was
a masterstroke from the man who made modern China. The
economy has barely looked back since.
Compared with the rich world's recent rocky times, China's
progress has been relentless. Yet not far beneath the surface,
society is churning. Recent village unrest in Wukan in
Guangdong, one province that Deng toured all those years ago;
ethnic strife this week in Tibetan areas of Sichuan; the gnawing
fear of a house-price crash: all are signs of the centrifugal
forces making the Communist Party's job so hard.
The party's instinct, born out of all those years of success, is to
tighten its grip. So dissidents such as Yu Jie, who alleges he
was tortured by security agents and has just left China for
America, are harassed. Yet that reflex will make the party's job
harder. It needs instead to master the art of letting go. China's
third revolution
The argument goes back to Deng's insight that without
economic growth, the Communist Party would be history, like
its brethren in the Soviet Union and eastern Europe. His reforms
replaced a failing political ideology with a new economic
legitimacy. The party's cadres set about remaking China with an
energy and single-mindedness that have made some Westerners
get in touch with their inner authoritarian. The bureaucrats not
only reformed China's monstrously inefficient state-owned
enterprises, but also introduced some meritocracy to

appointments.
That mix of political control and market reform has yielded
huge benefits. China's rise over the past two decades has been
more impressive than any burst of economic development ever.
Annual economic growth has averaged 10% a year and 440m
Chinese have lifted themselves out of poverty--the biggest
reduction of poverty in history.
Yet for China's rise to continue, the model cannot remain the
same. That's because China, and the world, are changing.
China is weathering the global crisis well. But to sustain a high
growth rate, the economy needs to shift away from investment
and exports towards domestic consumption. That transition
depends on a fairer division of the spoils of growth. At present,
China's banks shovel workers' savings into state-owned
enterprises, depriving workers of spending power and private
companies of capital. As a result, just when some of the other
ingredients of China's boom, such as cheap land and labour, are
becoming scarcer, the government is wasting capital on a vast
scale. Freeing up the financial system would give consumers
more spending power and improve the allocation of capital.
Even today's modest slowdown is causing unrest (see
). Many people feel that too little of the country's spectacular
growth is trickling down to them. Migrant workers who seek
employment in the city are treated as second-class citizens, with
poor access to health care and education. Land grabs by local
officials are a huge source of anger. Unrestrained
industrialisation is poisoning crops and people. Growing
corruption is causing fury. And angry people can talk to each
other, as they never could before, through the internet.
Party officials cite growing unrest as evidence of the dangers of
liberalisation. Migration, they argue, may be a source of
growth, but it is also a cause of instability. Workers' protests
disrupt production and threaten prosperity. The stirrings of civil
society contain the seeds of chaos. Officials are particularly
alive to these dangers in a year in which a new generation of
leaders will take power.

That bias towards control is understandable, and not merely
self-interested. Patriots can plausibly argue that most people
have plenty of space to live as individuals and value stability
more than rights and freedoms: the Arab spring, after all, had
few echoes in China.
Yet there are rights which Chinese people evidently do want.
Migrant workers would like to keep their limited rights to
education, health and pensions as they move around the country.
And freedom to organise can help, not hinder, the country's
economic rise. Labour unions help industrial peace by
discouraging wildcat strikes. Pressure groups can keep a check
on corruption. Temples, monasteries, churches and mosques can
give prosperous Chinese a motive to help provide welfare.
Religious and cultural organisations can offer people meaning
to life beyond the insatiable hunger for rapid economic growth.
Our business now
China's bloody past has taught the Communist Party to fear
chaos above all. But history's other lesson is that those who
cling to absolute power end up with none. The paradox, as some
within the party are coming to realise, is that for China to
succeed it must move away from the formula that has served it
so well.
This is a matter of more than intellectual interest to those
outside China. Whether the country continues as an
authoritarian colossus, stagnates, disintegrates, or, as we would
wish, becomes both freer and more prosperous will not just
determine China's future, but shape the rest of the world's too.
Word count: 1010
reserved.)
Business
The Economist402.8775 (Mar 10, 2012): n/a.
Abstract (summary)

Translate Abstract
Several brief international news items concerning business and
economics are presented.
Full Text
·
China-watchers pored over the government's pronouncement
that it will aim for an economic growth rate of 7.5% this year,
the first time in eight years that the official target has been
under 8%. Some wonder if Beijing's resignation to slower
growth will hurt the region and commodity-rich countries, such
as Australia, that feed China's mighty appetite for raw
materials. But the government's new focus on domestic demand
as a driver of the economy was welcomed by those who think it
should do more to reduce global trade imbalances.
Still too high
Spain's long-term borrowing costs rose above those of Italy for
the first time in eight months, after Mariano Rajoy, the Spanish
prime minister, admitted that Spain's deficit this year would be
above that agreed with the EU. Meanwhile, Greece hastened
efforts to convince more private creditors to sign up to a
restructuring of the Greek sovereign debt they hold, which is a
condition of Greece's recent bail-out package.
Oil prices remained high, despite news of a push by the West to
open fresh talks with Iran over its nuclear programme. Brent
crude fetched more than $125 a barrel; the price has risen by
around 15% since the start of the year.
BP reached a deal with some of the parties bringing a civil suit
against it over the oil spill caused by an explosion at a rig in the
Gulf of Mexico in 2010. The energy giant is to pay out around
$7.8 billion to fishermen and other businesses from a fund
earmarked for those affected by the disaster. A trial that was set
to start on February 27th, but was delayed when negotiators said
they were close to a settlement, will now be put off indefinitely.
BP still has to settle with the federal government, and unless it
does so the trial will go ahead. Either way it faces a big payout.

Not cricket
India imposed an immediate ban on cotton exports for the
second time in two years. Although it is the world's second-
biggest producer of the fibre (after America), the Indian
government wants to increase its domestic supply of the stuff to
help textile companies battling high cotton prices. But its
decision to halt exports did little for its reputation in
international markets.
A jury in Texas found Allen Stanford guilty of operating a $7
billion Ponzi scheme, one of the biggest frauds in history. Mr
Stanford, a former banker who based part of his business in
Antigua and used his riches to sponsor his own cricket
tournament in the West Indies, was arrested in 2009. He will be
sentenced later this year and faces decades in prison.
Lehman Brothers officially emerged from its court-protected
bankruptcy after three-and-a-half years. Lehman exists as a
holding company now, with the sole task of distributing to
creditors the $65 billion in assets they are expecting to get. The
first payments are expected in April.
Meanwhile American International Group, another famous
casualty of the crisis but one partly owned by the Treasury,
raised $5.6 billion by selling half of its remaining stake in AIA,
an Asian insurance business which it listed in Hong Kong in
2010. AIG will use the money from the sale to repay some of
the cash it owes. The Treasury announced that it would sell up
to $6.9 billion of AIG stock it holds.
The European Commission began a consultation period with
companies about appointing more women to the boardroom.
Last year the commission encouraged companies to pledge to
raise the number of women on their boards to 40% by 2020; 24
firms have made that commitment. Businesses are insisting that
any change should be voluntary and not, as has been mooted,
imposed through legislation.
Peugeot-Citroen launched its EUR 1 billion ($1.3 billion) share
issue, through which General Motors is taking a 7% stake in the
company as part of their recently announced alliance. The price

of the shares in the offer were discounted by a hefty 42%. The
debt-laden French carmaker said it might like to buy a
reciprocal stake in GM in the future, but not now.
General Motors suspended production of its Chevrolet Volt
hybrid electric car for five weeks because sales of the vehicle
are below target. The Volt has won some big awards, including
"European Car of the Year" recently and "Green Car of the
Year" in 2011. But only around 7,700 were sold in America last
year and stock has been building up. GM has set itself an
ambitious goal to sell 45,000 Volts in 2012.
The third coming
Apple unveiled its latest iPad tablet computer (which is simply
called "iPad", rather than iPad 3). It has a zippier processor and
a "resolutionary" new screen. Tim Cook, Apple's boss, said the
device would become the "poster child of the post-PC world".
Word count: 802
reserved.)

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