Archive for March, 2010

Google pulls out of Mainland China

Before the departure Google maintained about 35% of search market in China, second after Baidu's 60%+. It's a distant second, but Google.cn is making money and progress on its market share. Therefore it's not hard to come to the conclusion that the decision on leaving Chinese mainland isn't a business-based decision as what Chinese state media is propagating.

Google has been under constant cyber attack from China. Operation Aurora was a large scale one and attracted wide media coverage, but hacking of individual accounts has been going on for quite a while. Many Chinese human right activists and foreign journalists stationed in China have the experience that their gmail account is secretly redirected to another account.

Even worse, Google's four year in China has also been subject to varies accusations made by Chinese state media. China's State Broadcaster, CCTV, once accused Google of "spreading unhealthy information to the country's teenagers", but Chinese netizens have soon discovered that the person ("victim") interviewed in the programme is nothing but a CCTV intern.

I'm not against censorship, but the Chinese authority has a long history of abusing this tool for communist party's own good. In an environment where there is no independent media, Internet neutrality is vital for people to access unbiased and factual information. Not in China. The dispute between Google and Chinese authority has been going on for more than two month now, but even the Chinese authority are unable to specify which Law Google has violated - What they want Google and other Chinese websites to do cannot be put under public eyes.

What Google have done today is nothing more than corrects the mistake it has made 4 years ago, but it has created a far greater impact today than if it had never entered the Chinese market. By taking this simple but definitive act of defiance, Google has told the world that money cannot buy everything, and Chinese government cannot hold its own 1.4 billion people to ransom and use it to ask  the western world to obey.

And for that, I applaud Google's courageous decision.  I also want to see other foreign internet companies in China, especially Microsoft and its search engine bing are reacting to this news. Will they also do the right thing, or continuing act like Marx has described – capitalists will do everything to maximise the profit.

The GST hike

The biggest reverse culture shock I'm experiencing (by reverse I mean NZ is obverse side of my little world) is that this country suddenly seems so hopeless. Everything in China, at least in big cities like Beijing and Shanghai is booming, building projects are happening in a lightning speed. China is also a world's second biggest, or biggest? market for luxury goods. My friends there are speeding their money like burning toilet paper, while I'm still counting every cent of my earnings.

Making my feeling worse is the price hike on almost everything. I only left the country for 3 month but everything seemed to have its price increased for several rounds, and I'm hearing the GST is also on the price hike list.

It's very difficult to avoid paying GST, it exists everywhere in people's daily economic life, making it one of the most effective revenue gathering machines for the government. There are many ways to avoid paying too much personal income tax, and tax on specific goods is more likely to decrease demand rather than increase the taxation revenue.

But of course this isn't all about revenue gathering. This is because Mr Key wants to give people tax cut, more specifically, the high income earners. In his speech made to parliament,  Key states that low income earners will be compensated through a upfront increase on benefits and working for families programme, but the trouble is, there's still very little details to see whether the compensation is enough to offset the GST increase.

Another feature of GST is that it treats every one equally, people all pay for the same rate. Statistics New Zealand says GST increase to 15% is likely to affect the CPI by a 2%+ one off increase, theoretically at least. What would really happen after the increase is still subject of a debate. Many New Zealand businesses advertise goods price ends with .99 just to make the price more appealing.  Many businesses will be facing a not so tough choice - whether to absorb the 2.5% increase themselves, or add it to the current price.

Well one of the phrses or excuses businesses just love to use is " we have to make profits".  So my guess is that the actual increase is likely to be more than 2%. Low margin and low price goods are more likely to get a $1.99 to $2.99 type of price hike as businesses are already sturggling making profit on those goods. Statistically, the overall increase would not be that huge, but the fact that troubles me is that low priced goods are more likely to be daily necessities.

I can't really quite understand the ideology behind this tax structuring apart from making high income earners happy. Yes this does give people more choice, as they got more money in hand - whether by more it means another 50cents or $50 in hand, is another problem. However, there are some choices people just don't have the choice, we all need food survive regardless whether you are high or low income earners.  The idea of removing GST on foods and petrol has been floating around for quite some time, but the government seems to have very little interest in it.

Capital gain tax is another thing government isn't very keen on. Speculating on real estate did make a lot of people rich, but that's at the expense of putting even more people at miseray. And most importantly, a healthy economy needs real economic activities,  new money has to be made - in the form of goods or services.  Prosperous property market sounds good, and looks good on GDP, but that's not real economy. It's unsustainable and who knows if he or she isn't the unlucky one or the greatest fool?

Government's very little action on these area does suggest me something they didn't tell. In his election promise John Key said he wants oversea kiwis back to their country and keep the young ones here. However, as a young adult myself,  the outlook of  me to stay in this country looks fainter every day, stuffs this government is doing, or not doing is making a graduate student  more difficult to make a decent living out of average wage.

And ... I'm back.

I was hoped I could be able to update everything while on the go, but as one of the problems of travelling alone is that I have to plan everything myself, there was very little time for me to actually take care of this blog. So my apology for my laziness and not updating this blog for more than 3 month.

In the past three month I have visited a total of 8 Chinese provinces/multiplicities. My original motive for this travel was to see as much as possible of my home country before I suddenly find myself no longer a student. Unlike many kiwis, I don't like to do OEs as travel isn't really on my favourite list.

However, people, have become another important attraction for me. I was warmly welcomed by my friends online, especially those from twitter in every stage of my travel; some even kindly offered me free accommodations. They come from a variety of background: university students, white-collar workers, social activists whom have spent time in Chinese jails and government officers who are living in a very affluent life.

China is a land full of opportunities. The country is like a giant construction site and everything is played in fast-forward motion - I experienced this in Shanghai, literally. I was circling around Shanghai for about 2 weeks, visiting surrounding cities. Two weeks later, when I get back to Shanghai, I nearly got lost as I was troubling to find the very same accommodation I lived two weeks ago - everything around has changed, business were closed for some kind of redevelopment.

However, this incredible speed comes at a hefty price. Every person I have met, regardless of whether they are pro communist party or not, admit that this country cannot continue on this road forever, both socially and economically. Chinese society has become a kind of jungle, where the strongest survive and become affluent in every way, leaving very little physical and social resources for the poor and less fortunate ones.

This itself isn't wrong, however, relative strength of a person isn't decided he or her ability and skills, but money, power, and guanxi. This left the socially and economically disadvantage group very little opportunity to succeed, making the gaps bigger and bigger as time goes by.

Anyway, enough for the political side.  If you have a few thousand NZ$ floating around, China is a good place to go. It offers you pretty much everything you can imagine at a very modest price. My budget was about #3,000. The only problem is time, China is huge - I was only able to experience a slice of China - Panda, Great Wall, Terracotta Army and Shanghai in three month's time, there are a lot of place I want to go but couldn't find enough time and money.