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China’s digital transformation

July 29, 2014 Comments off

China’s digital transformation
Source: McKinsey & Company

As individual companies adopt web technologies, they gain the ability to streamline everything from product development and supply-chain management to sales, marketing, and customer interactions. For China’s small enterprises, greater digitization provides an opportunity to boost their labor productivity, collaborate in new ways, and expand their reach via e-commerce. In fact, new applications of the Internet could account for up to 22 percent of China’s labor-productivity growth by 2025.

Yet the Internet is not merely a tool for automation and efficiency; it also expands markets rapidly. Greater adoption of web technologies in China could lead to the introduction of entirely new products and services if government and industry take the right steps to maximize the potential (exhibit). A new report from the McKinsey Global Institute (MGI), China’s digital transformation: The Internet’s impact on productivity and growth, projects that new Internet applications could fuel some 7 to 22 percent of China’s incremental GDP growth through 2025, depending on the rate of adoption. That translates into 4 trillion to 14 trillion renminbi in annual GDP in 2025.

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Chinese Military Modernization and Force Development: Chinese and Outside Perspectives

July 22, 2014 Comments off

Chinese Military Modernization and Force Development: Chinese and Outside Perspectives
Source: Center for Strategic & International Studies

The goal behind this report is not to present the authors’ view of the balance, but rather to provide the basis for an unclassified dialogue on the military developments in China, including the size and structure of the country’s current and planned military forces. It draws on official US, Chinese, and other Asian official reporting, as well as the work of other scholars and the data bases developed by the IISS and Jane’s in an effort to compare different views of Chinese strategy and military developments, and is meant to provide US, Chinese, and other analysts with a better basis for understanding Western estimates of the changes in Chinese force strength and force quality.

The United States and the People’s Republic of China (PRC) face a critical need to improve their understanding of how each is developing its military power and how to avoid forms of military competition that could lead to rising tension or conflict between the two states. This report focuses on China’s military developments and modernization and how they are perceived in the UIS, the West, and Asia. It utilizes the unclassified data available in the West on the trends in Chinese military forces. It relies heavily on the data in the US Department of Defense (DoD) Report to Congress on Military and Security Developments Involving the People’s Republic of China, particularly the 2013 and 2014 editions.

It relies heavily on the annual military balances compiled by the International Institute for Strategic Studies (IISS), though a range of sources are included. It should be noted that this report focuses on Chinese forces, and therefore presents only one side of the US and Chinese balance and the security situation in Asia. It also draws upon a Burke Chair report entitled The Evolving Military Balance in the Korean Peninsula and Northeast Asia, looking at the bilateral US-Chinese balance in more detail.

Accordingly, it focuses on the actual changes taking place in Chinese forces, and it provides a detailed analysis detailed analysis of the trends in Chinese military forces since 1985, examining how the often-conflicting trends in outside sources interact with reporting on Chinese military spending and strategy. It also shows that important changes are taking place in US strategy and that these changes must be considered when evaluating Chinese actions.

Global Cybercrime: The Interplay of Politics and Law

July 17, 2014 Comments off

Global Cybercrime: The Interplay of Politics and Law
Source: Centre for International Governance Innovation

Examining global cybercrime as solely a legal issue misses an important facet of the problem. Understanding the applicable legal rules, both domestically and internationally, is important. However, major state actors are using concerted efforts to engage in nefarious cyber activities with the intention of advancing their economic and geostrategic interests. This paper explores the recent unsealing of a 31-count indictment against five Chinese government officials and a significant cyber breach, perpetrated by Chinese actors against Western oil, energy and petrochemical companies. The paper concludes by noting that increased cooperation among governments is necessary, but unlikely to occur as long as the discourse surrounding cybercrime remains so heavily politicized and securitized. If governments coalesced around the notion of trying to prevent the long-term degradation of trust in the online economy, they may profitably advance the dialogue away from mutual suspicion and toward mutual cooperation.

The Future of Driving in Developing Countries

July 17, 2014 Comments off

The Future of Driving in Developing Countries
Source: RAND Corporation

The level of automobility, defined as travel in personal vehicles, is often seen as a function of income: The higher a country’s per capita income, the greater the amount of driving. However, levels of automobility vary quite substantially between countries even at similar levels of economic development. This suggests that countries follow different mobility paths. The research detailed in this report sought to answer three questions: What are the factors besides economic development that affect automobility? What is their influence on automobility? What will happen to automobility in developing countries if they progress along similar paths as developed countries? To answer these questions, the authors developed a methodology to identify these factors, model their impact on developed countries, and forecast automobility (as defined by per capita vehicle-kilometers traveled [VKT]) in four developing countries. This methodology draws on quantitative analysis of historical automobility development in four country case studies (the United States, Australia, Germany, and Japan) that represent very different levels of per capita automobility, in combination with data derived from an expert-based qualitative approach. The authors used the latter to assess how these experiences may affect the future of automobility in the BRIC countries: Brazil, Russia, India, and China. According to this analysis, automobility levels in the four BRIC countries will fall between those of the United States (which has the highest per capita VKT level of the four case studies) and Japan (which has the lowest). Brazil is forecasted to have the highest per capita VKT and India the lowest.

National Funding of Road Infrastructure

July 10, 2014 Comments off

National Funding of Road Infrastructure
Source: Law Library of Congress

This report examines the funding of roads and highways in Australia, Brazil, Canada, China, England and Wales, France, Germany, Israel, Italy, Japan, Mexico, Netherlands, South Africa, and Sweden. It provides a description of the infrastructure in the jurisdiction, information on the ownership and responsibility of the roads, and taxes or other ways of collecting money to fund the nation’s infrastructure. If applicable, a discussion of reforms or new initiatives is examined.

Annual Report to Congress — Military and Security Developments Involving the People’s Republic of China 2014

June 9, 2014 Comments off

Annual Report to Congress — Military and Security Developments Involving the People’s Republic of China 2014
Source: U.S. Department of Defense

The People’s Republic of China (PRC) continues to pursue a long-term, comprehensive military modernization program designed to improve the capacity of its armed forces to fight and win short-duration, high-intensity regional contingencies. Preparing for potential conflict in the Taiwan Strait, which includes deterring or defeating third-party intervention, remains the focus and primary driver of China’s military investment. However, the Chinese People’s Liberation Army (PLA) also is placing emphasis on preparing for contingencies other than Taiwan, including potential contingencies in the South and East China Seas.

CRS — China and the United States — A Comparison of Green Energy Programs and Policies

May 23, 2014 Comments off

China and the United States — A Comparison of Green Energy Programs and Policies (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

China is the world’s most populous country with approximately 1.4 billion people. It has experienced tremendous economic growth over the last three decades with an average annual increase in gross domestic product (GDP) of 9.8% during that period. This has led to an increasing demand for energy, spurring China to more than double its electric power generating capacity in each of the last three decades, growing from 66 GigaWatts (GW) installed in 1980 to 1,100 GW installed as of 2011. Coal currently fuels about 66% of China’s electricity generation. However, the reduction of air pollution (caused in part by the burning of coal for electric power) has become a major public policy focus in China.

The Chinese Digital Consumer in a Multichannel World

May 21, 2014 Comments off

The Chinese Digital Consumer in a Multichannel World
Source: Boston Consulting

China is going digital very quickly. By 2016, the country will have more than 730 million Internet users and more than 380 million online shoppers, up from 460 million and 145 million, respectively, in 2010. Even China’s lower-tier cities are migrating swiftly to digital technologies. More than 16 million netizens from the country’s tier 3 and 4 cities are using mobile Internet, 80 percent of all Chinese netizens accept mobile payments, and 100 percent have used weibo (Twitter-like microblogs). Finally, as each new digital platform has been added, adoption rates have gained momentum, rising with increasing speed.

To capitalize on the opportunities being created by these rapid changes in the digital realm, companies must understand the accompanying changes in consumer behavior. This means knowing where and how to interact with consumers, both online and off. BCG’s Center for Consumer and Customer Insight conducted in-depth and innovative digital “shop-alongs” in China—and supplemented them with more traditional face-to-face interviews and surveys—to learn how, why, and when consumers browse and shop online; the ways their behaviors vary across different shopping categories; and the differing roles of offline and online channels. (To conduct the digital shop-alongs, we analyzed PC-based Internet click streams spanning an entire month for a sample of 100 online shoppers in Shanghai and Chengdu.)

Our approach yields more nuanced insights than that of traditional digital consumer-research methodologies, which focus on easy-to-capture metrics such as page views per website and minutes spent per page. We share our observations and findings here, as they relate to the purchase funnel that moves consumers from learning about products through purchase to product advocacy.

Global Economic Outlook Q2 2014

May 20, 2014 Comments off

Global Economic Outlook Q2 2014
Source: Deloitte

The second quarter edition of the Global Economic Outlook offers timely insights from Deloitte Research economists about the Eurozone, China, the United States, Japan, India, Russia, Brazil, and the United Kingdom. In addition, this issue’s special topic considers the revival in international trade and the resurgence of bilateralism.

U.S. Charges Five Chinese Military Hackers for Cyber Espionage Against U.S. Corporations and a Labor Organization for Commercial Advantage

May 19, 2014 Comments off

U.S. Charges Five Chinese Military Hackers for Cyber Espionage Against U.S. Corporations and a Labor Organization for Commercial Advantage
Source: U.S. Department of Justice

A grand jury in the Western District of Pennsylvania (WDPA) indicted five Chinese military hackers for computer hacking, economic espionage and other offenses directed at six American victims in the U.S. nuclear power, metals and solar products industries.

The indictment alleges that the defendants conspired to hack into American entities, to maintain unauthorized access to their computers and to steal information from those entities that would be useful to their competitors in China, including state-owned enterprises (SOEs). In some cases, it alleges, the conspirators stole trade secrets that would have been particularly beneficial to Chinese companies at the time they were stolen. In other cases, it alleges, the conspirators also stole sensitive, internal communications that would provide a competitor, or an adversary in litigation, with insight into the strategy and vulnerabilities of the American entity.

Upscale Tech-Savvy Millennials: Saving and Investment Strategies Around the World

May 16, 2014 Comments off

Upscale Tech-Savvy Millennials: Saving and Investment Strategies Around the World
Source: Nielsen

Upscale Millennials represent the future of economic growth and prosperity. These consumers are a subset of the Millennial generation with household incomes over the 75th percentile in their countries—that means households earning $30,000 or more in India and above $70,000 in the U.S.

This young segment of the population is actively saving and investing, and these consumers feel confident in their financial futures. In contrast to the global population, the proportion of upscale Millennials actively saving exceeds future savings intentions in areas reflective of their lifestage like higher education and a first-home purchase. And they’re devoting a larger portion of their monthly income to savings than the general Millennial population. Financial institutions should look to consumer sentiment and savings intentions country by country to develop strategies to educate and connect with upscale Millennials. In an effort to better understand this group and its consumer prowess, Nielsen conducted a study across the U.S., China, India and Brazil to learn about their financial plans and aspirations.

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China and International Law in Cyberspace

May 13, 2014 Comments off

China and International Law in Cyberspace (PDF)
Source: U.S.-China Economic and Security Review Commission

The Chinese government states it intends to work with the “international community to promote the building of a peaceful, secure, open, and cooperative cyberspace.” Similarly, U.S. government policy is to “work internationally to promote an open, interoperable, secure, and reliable” cyberspace. While this semantic overlap in officially stated goals suggests strong similarities between China and the United States in their viewpoints on international law and norms in cyberspace, they are more different than similar. China’s participation in a 2013 UN report affirming the applicability of international law to cyberspace is a promising development. The same UN group will gather in 2014 to address some of the more challenging and divisive concepts regarding state responsibility and use of force in cyberspace. Any fractures in the debate at this meeting will likely reflect some of the major differences between the United States and China on cyberspace policy. These differences will likely endure as Beijing is presently unwilling to compromise on issues such as Internet sovereignty and information control, which it judges as critical to the maintenance in power of the Chinese Communist Party (CCP) regime.

Property Taxation in the People’s Republic of China

May 12, 2014 Comments off

Property Taxation in the People’s Republic of China
Source: Asian Development Bank

The property taxation system in the People’s Republic of China (PRC) is still developing and does not include important features that would make it efficient. For instance, residential property is excluded from the tax base. This has contributed to real estate speculation, income disparity, and revenue losses.

A well-functioning local property tax system in the PRC would provide an efficient, equitable and sustainable way to finance local development and government spending. By helping to align expenditure responsibilities with revenue allocations at the local level, property taxation could reduce inequality in the provision of public goods and foster local government ability to provide them. Further, it will reduce the incentive for speculative behavior mitigating housing bubbles.

To further develop property taxation in the PRC it is recommended to gradually strengthen and expand the existing pilots, supported by clear principles on the delegation of taxation responsibilities, the definition of a nationally standardized tax base, an affordable tax rate, and enhanced local government capacity.

This policy note aims at drawing policy recommendations for future developments in property taxation in the People’s Republic of China (PRC) by reviewing best international practices and specific challenges in the PRC.

Asia Pacific Economic Outlook — April 2014

April 29, 2014 Comments off

Asia Pacific Economic Outlook — April 2014
Source: Deloitte

This edition gives a near-term outlook for China, India, Malaysia, and Vietnam. Concerns about the level of debt in China continue, while India’s growth outlook will primarily hinge on the upcoming election’s outcome. Malaysia’s economy faces concerns of high household debt and a potential housing bubble. Investors consider Vietnam’s consumer price index improvement its biggest achievement of 2013.

China’s Hunger for U.S. Planes and Cars: Assessing the Risks

April 8, 2014 Comments off

China’s Hunger for U.S. Planes and Cars: Assessing the Risks (PDF)
Source: U.S.-China Economic and Security Review Commission

The U.S. trade deficit with China continues to grow but at a slower rate. A key reason for this is the boom in U.S. automotive and aerospace shipments to China. As China becomes more affluent and urbanized, ordinary Chinese are driving more cars and traveling more by frequently by air. China’s future demand, however, could be affected by pollution, traffic bottlenecks, and other factors. U.S. companies must also contend with China’s industrial policy, which tilts the playing field toward domestic industry. In the long run, technology transfer and off-shoring could erode U.S. competitiveness and take business away from U.S. plants.

Reforms in Land Use and Local Finances Will Help Make China’s Urbanization More Efficient

March 27, 2014 Comments off

Reforms in Land Use and Local Finances Will Help Make China’s Urbanization More Efficient
Source: World Bank

  • In the last 30 years, urbanization helped lift half a billion people in China out of poverty
  • Urban strains caused by inefficient urban sprawl are showing
  • New report lays out comprehensive reform agenda toward efficient, inclusive and sustainable urbanization

AU — The G20: a quick guide

March 26, 2014 Comments off

The G20: a quick guide
Source: Parliamentary Library of Australia

This is a quick guide to basic information about the G20, as well as links to useful summary resources. The G20 background section includes the G20’s history, its members, the hosting system and G20 meeting processes, as well as a brief discussion of selected policy areas. Material on Australia and the G20 includes Australia’s involvement in the G20, Australia’s G20 goals for 2014 and speeches and press releases on the G20. A short list of links provides access to more resources on the G20.

CRS — Maritime Territorial and Exclusive Economic Zone (EEZ) Disputes Involving China: Issues for Congress

March 26, 2014 Comments off

Maritime Territorial and Exclusive Economic Zone (EEZ) Disputes Involving China: Issues for Congress (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

China’s actions for asserting and defending its maritime territorial and exclusive economic zone (EEZ) claims in the East China (ECS) and South China Sea (SCS), particularly since late 2013, have heightened concerns among observers that ongoing disputes over these waters and some of the islands within them could lead to a crisis or conflict between China and a neighboring country such as Japan, the Philippines, or Vietnam, and that the United States could be drawn into such a crisis or conflict as a result of obligations the United States has under bilateral security treaties with Japan and the Philippines.

More broadly, China’s actions for asserting and defending its maritime territorial and EEZ claims have led to increasing concerns among some observers that China may be seeking to dominate or gain control of its near-seas region, meaning the ECS, the SCS, and the Yellow Sea. Chinese domination over or control of this region, or Chinese actions that are perceived as being aimed at achieving such domination or control, could have major implications for the United States, including implications for U.S.-China relations, for interpreting China’s rise as a major world power, for the security structure of the Asia-Pacific region, for the longstanding U.S. strategic goal of preventing the emergence of a regional hegemon in one part of Eurasia or another, and for two key elements of the U.S.-led international order that has operated since World War II—the non-use of force or coercion as a means of settling disputes between countries, and freedom of the seas.

mHealth in China and the United States: How Mobile Technology is Transforming Health Care in the World’s Two Largest Economies

March 20, 2014 Comments off

mHealth in China and the United States: How Mobile Technology is Transforming Health Care in the World’s Two Largest Economies
Source: Brookings Institution

Health care represents a major challenge for many countries as rising health care costs, aging populations, access disparities and chronic illnesses threaten traditional health care systems. Mobile technology can help address these issues, argue Darrell West, Joshua Bleiberg, and a number of academics with the China Academy of Telecommunication Research of MIIT, by boosting productivity, aiding communications, encouraging better health data collection, and analysis and helping providers improve affordability access and treatment.

In particular, China and the United States provide strong examples of recent developments and emerging opportunities in mobile health, or mHealth. In order to best leverage these advances, China and the United States must change operations and policy practice in order to facilitate the growth of the mHealth sector and ultimately capture the benefits of mobile technology in healthcare, these scholars assert.

The authors suggest four ideas that policymakers can extol and undertake to speed the development and adoption of mHealth:

1. Mobile devices offer the potential to improve affordability of health care by lowering disparities based on geography and income. Policymakers should encourage the use and adoption of cellphones, smartphones, and tablets in medical care;

2. Public officials should reimburse health providers who offer consultations, diagnoses, and treatment through remote monitoring devices and other types of mobile technologies;

3. Mobile phones aid the patient experience by providing a means to deliver medical reminders and diagnostic information to patients and physicians. Reminders via text messages or mobile phones can encourage patients to take medication at the suggested time and dosage, and this will improve the quality of patient care;

4. mHealth helps policymakers by encouraging better health data collection and analysis. Figuring out what works and doesn’t work is one of the biggest challenges in health care.

Chinese Engagement in Africa: Drivers, Reactions, and Implications for U.S. Policy

March 17, 2014 Comments off

Chinese Engagement in Africa: Drivers, Reactions, and Implications for U.S. Policy
Source: RAND Corporation

Most analyses of Chinese engagement in Africa focus either on what China gets out of these partnerships or the impacts that China’s aid and investment have had on African countries. This analysis approaches Sino-African relations as a vibrant, two-way dynamic in which both sides adjust to policy initiatives and popular perceptions emanating from the other. The authors focus on (1) Chinese and African objectives in the political and economic spheres and how they work to achieve them, (2) African perceptions of Chinese engagement, (3) how China has adjusted its policies to accommodate often-hostile African responses, and (4) whether the United States and China are competing for influence, access, and resources in Africa and how they might cooperate in the region.

The authors find that Chinese engagement in the region is primarily concerned with natural resource extraction, infrastructure development, and manufacturing, in contrast to the United States’ focus on higher-technology trade and services as well as aid policies aimed at promoting democracy, good governance, and human development. African governments generally welcome engagement with China, as it brings them political legitimacy and contributes to their economic development. Some segments of African society criticize Chinese enterprises for their poor labor conditions, unsustainable environmental practices, and job displacement, but China has been modifying its approach to the continent to address these concerns. China and the United States are not strategic rivals in Africa, but greater American commercial engagement in African markets could generate competition that would both benefit African countries and advance U.S. interests.

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