Archive for the ‘China’ Category


Trump trade war: May and China fire warning shots
http://www.ibtimes.co.uk/trump-trade-war-may-china-fire-warning-shots-1665117?utm_source=email

 

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I thought Trump just wants to make a deal, not make war!

So what gives?

Methinks, the merchants of death are making Trump do this.

But this is self-defeating and counter-productive!

Since the truckers of death are not necessarily independent of, or far removed from, the merchants of innocuous commodities!

Take McDonell Douglas Corporation, an American company, which later on gobbled by The Boeing Company.

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McDonnell Douglas Corporation | American company | Britannica.com
https://www.britannica.com/to…/McDonnell-Douglas-Corporation

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So McDonnell (as Douglas Aircraft) produced the famous DC series of commercial aviation planes, used its expertise to convert the DC-3, the world’s first commercial airliner, into military use as the C-47.

This should not come as a surprise since Donald W. Douglas (1892-1981), Douglas Aircraft’s founder, designed the Cloudster, the first aerodynamically streamlined plane, and founded his company to fill an order for three of the planes for the U.S. Navy.

During the war Douglas contributed 29,000 warplanes, one-sixth of the U.S. airborne fleet. After the war the company continued to dominate the commercial air routes with its new DC-6 and in 1953 brought out its most advanced piston-engined airliner, the DC-7, whose range made possible nonstop coast-to-coast service. With the development of commercial jets, however, Douglas began to lag behind Boeing. It was because of its deteriorating financial condition in the 1960s that it sought a merger with McDonnell.

Under its founder James S. McDonnell (1899–1980), that company grew up quickly during World War II and became a major defense supplier. It designed the world’s first carrier-based jet fighter and went on to produce such widely used jet fighters as the F-4 Phantom, the A-4 Skyhawk, the F-15 Eagle, and the F-18 Hornet. The company also manufactured launch vehicles and cruise missiles. In 1984 it purchased Hughes Helicopters Inc. from the estate of Howard Hughes. In the 1970s the company began diversifying with the acquisition of companies engaged in data processing, satellite communications, information services, and the manufacture of electronic devices.

The end of the Cold War in the early 1990s resulted in a major contraction of U.S. defense industries. In the wave of business consolidations and mergers that followed, McDonnell Douglas was acquired by The Boeing Company.

And what does The Boeing Company produce?

AeroWeb | Boeing (Rockwell) B-1B Lancer

AeroWeb | Boeing CH–47/MH-47 Chinook

AeroWeb | Boeing P–8A Poseidon

But not only those nasty things that help politicians and military leaders command their underlings to kill people especially from afar and with almost no warning.

What else does The Boeing Company produce and sell?

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https://www.britannica.com/topic/Boeing-Company

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Boeing Company, American aerospace company—the world’s largest—that is the foremost manufacturer of commercial jet transports. It is also a leading producer of military aircraft, helicopters, space vehicles, and missiles, a standing significantly enhanced with the company’s acquisition of the aerospace and defense units of Rockwell International Corporation in 1996 and its merger with McDonnell Douglas Corporation in 1997. Formerly Boeing Airplane Company, the firm assumed its current name in 1961 to reflect its expansion into fields beyond aircraft manufacture. Headquarters were in Seattle until 2001, when Boeing relocated to Chicago.

Boeing Company’s constituent business units are organized around three main groups of products and services—commercial airplanes, military aircraft and missiles, and space and communications.

Boeing manufactures seven distinct families of commercial aircraft, which are assembled in two facilities—Renton and Everett—in Washington state and one facility in California. The Renton plant builds the narrow-body Boeing 737 and formerly built the 757 aircraft (discontinued in 2004), while the wide-body Boeing 767 and 777 aircraft and a limited number of the largely discontinued 747s are assembled at the Everett plant. The 787 aircraft are assembled at the Everett plant and at a facility in North Charleston, South Carolina.

Boeing Business Jets, a joint venture of Boeing and General Electric Co., makes and markets business jets based on the 737-700 airliner as well as VIP versions of the 747, 777, and 787 airliners.

The company’s military-related activities are centred on the design, manufacture, and support of fighter aircraft, bombers, transports, helicopters, and missiles. Its products include, among others, the F-15 Eagle, F/A-18 Hornet and Super Hornet, and AV-8 Harrier fighters; the C-17 Globemaster III airlifter; the AH-64 Apache series of attack helicopters; the CH-47 Chinook transport helicopter; and the AWACS (Airborne Warning and Control System) aircraft, based on the 767. Boeing contributes to the Lockheed Martin F-22 Raptor air-superiority stealth fighter and the Northrop Grumman B-2 Spirit stealth bomber.

In partnership with Bell Helicopter Textron, it builds the V-22 Osprey tilt-rotor aircraft, and, with United Technologies’ Sikorsky division, it made the RAH-66 Comanche armed reconnaissance helicopter.

The company also builds the Harpoon antiship missile, the air-launched Standoff Land Attack Missile (SLAM), and the air-launched cruise missile (ALCM).

In the space and communications sector, Boeing produces the Delta family of launch vehicles; the Inertial Upper Stage (IUS), an in-space solid-rocket booster; and rocket engines for Delta launchers and other vehicles. It participates in processing, ground operation, and training activities for the U.S. space shuttle fleet through United Space Alliance, a joint venture with Lockheed Martin Corporation.

As the National Aeronautics and Space Administration’s (NASA’s) prime contractor for the International Space Station, Boeing leads an industry team comprising most major U.S. aerospace companies and hundreds of smaller suppliers and integrates the work of ISS participants from non-U.S. countries. Its involvement in commercial space development includes partnerships in the multinational Sea Launch Company and in the Teledesic consortium formed to build a satellite-based, Internet-like telecommunications service.

It also makes satellites for the Navstar Global Positioning System (GPS).

In 2016 Boeing employed a workforce of about 150,500 people in 65 countries and 27 U.S. states.

1FireandFury

It seems that many modern-day technologies started as death technologies.

But not so!

The spear, a weapon that kills, is also the javelin thrown by well-contured athletes of the ancient Olympic Games, the Panhellinic Games of Ancient Greece, originally a festival in honor of Zeus.

It appears that human beings have been producing dual purpose tools since then.

What is quite different now is that the weapons of death have been developing across the centuries to enable alleged combatants in the comfort of airconditioned ‘fortresses’ thousands of miles away to kill other people, designated as adversaries or enemies, without warning and without the normal declaration of war.

I admire the bravery and courage of these arm-chair warriors!

But wait, the merchants of death need to wrack up more sales to keep the economy going, to keep people employed, to get representatives of the people elected and re-elected because they keep on bringing home the bacon by way of more defense contracts for the home district.

So why limit warfare against pip-squeak non-state actors like al-Qaeda and IS?

Why not bring the war to the rogue states: Iran, Iraq, Taliban’s Afghanistan, Yemen, North Korea, and the like?

But that still be inadequate for the merchants’ purposes.

So bring the war to the doorsteps of the great powers like China…and the Russian Federation!

Meanwhile, the same merchants of death will continue to produce and improve and innovate on innocuous products like commercial ailiners and GPS.

What else is new then?

What would be new is if the TRUMPy gets his way.

Everybody makes a deal to make money.

Nobody makes war.

I therefore nominate the Orange Clown in the North for the Nobel Peace Prize.

Further on, I propose that the Nobel Committee revoke the same award from former US President Barack Obama, for being a peace hypocrite and a murderous war-monger!

 

Barack Obama


 

 

Unfortunately for assertive rising powers like China, might is not always right.

If too much pressure is applied on smaller powers, defiance rather than acquiescence may result. And these smaller powers may find succor in international courts and with favorable global opinion.

Recently, China got into a nasty scrap with Vietnam as it move a billion-dollar rig into disputed waters off Vietnam’s coast in late May 2014. Later, a Chinese vessel rammed and sank a Vietnamese fishing boat about 17 nautical miles southwest of the oil rig, the state-run Vietnamese television network, VTV1, reported. All 10 crew members were rescued according to the network.

 

For the complete story, please click on the link below:

 

 

 

 

http://www.interaksyon.com/article/89259/love-hate-triangle–what-is-the-result-of-chinas-heavy-handedness-vis-a-vis-vietnam-ph


 

In my previous piece which I wrote in response to my good friend Ramon Casiple’s “China’s Dilemma,” I argued that it is the United States and the Philippines which actually have a dilemma over Ayungin.

I based my argument on the fact that the US Senate has yet to ratify the UN Convention on the Law of the Sea (UNCLOS), upon which the Philippine claim is based. The US does not recognize such concepts and principles as archipelagic state, archipelagic waters, and exclusive economic zone upon which the Philippine claim is based.

Since Ayungin and other disputed islands and features in the Western Philippine Sea (a part of the larger South China Sea) are not part of the metropolitan territory of the Republic, I foresee difficulties in invoking the Mutual Defense Treaty between the US and the Philippines to explain why the US cannot come immediately to our aid.

 

For the complete article, click on the link below:

 

 

http://www.interaksyon.com/article/88634/commentary–being-a-us-protectorate-weakened-ph-position-vis-a-vis-china-in-dispute


Logo of Scuderia Ferrari

You and I know that a Ferrari is not for everybody like say the Volkswagen Beetle.

It is a luxury car line and obviously only those with very fat wallets or bank accounts can purchase a Ferrari.

Ferrari manufactures sports cars and Formula 1 cars in Italy.  It was established as Scuderia Ferrari in 1929 by Enzo Ferrari, himself a motor racing driver, to manufacture racing cars.  It soon started producing road cars or so-called street-legal cars as Ferrari S. p. A. in 1947.

Enzo Ferrari

The Ferrari Enzo with doors open

Enzo died in 1988 and from 2002 to 2004, Ferrari introduced the Enzo.  Produced and named after the company’s founder, the Enzo was Ferrari’s fastest model at the time.

Its most distinctive feature is its gull-wing doors.

So what’s this pedigreed luxury car company got to do with infamy and scandal? According to the news agency Agence France Press (AFP), China said that Ling Jihua, who has close ties to outgoing President Hu Jintao, had been removed as head of the Communist party’s powerful Politburo general office and given a new, less high-profile post.

No explanation was given for the surprise move, but a day later, the Hong Kong-based South China Morning Post, quoting unnamed sources, said Ling’s son had died in a high-speed car crash in Beijing in the early hours of March 18, 2012 that also injured two young women, one of whom was naked.

Naked, injured woman.

The car involved?  A Ferrari. It is not clear though what Ferrari model it was.

AFP continues its report. “Reports of the crash first surfaced in March on China’s popular microblogs, along with speculation that the son of a senior Communist leader had been involved, but were quickly suppressed by the country’s army of online censors.

Photographs of the wreckage were briefly circulated online, sparking questions about how the son of a government official could afford a luxury sports car worth a reported five million yuan (around $800,000).”

For the full story, see http://www.capitalfm.co.ke/news/2012/09/ferrari-crash-reports-bring-fresh-political-scandal-in-china/

In Bangkok, Thailand, the grandson of the wealthy Red Bull creator Chaleo Yoovidhya allegedly slammed his sports car last Monday into a policeman and dragged the officer’s dead body some 200 meters along a Bangkok street before driving away.

The Associated Press (http://www.npr.org/templates/story/story.php?storyId=160531532) reported the police initially attempted to cover up the heir’s involvement by arresting a bogus suspect until Bangkok’s police commissioner Lt. General Comronwit Toopgrajank took charge of the investigation.

I guess Comronwit’s sense of justice and fair play got the better of him.  And there’s this notion developed by Hollywood movies that cop killers should remain unpunished.

The car involved?

Another Ferrari.

Details of the model still to be known although photographs of the car wreck were plastered in today’s issue of Thailand’s newspapers.

The scion’s Ferrari and the police officer’s motorcycle (AP photo)

Voyaruth Yoovidhya

Vorayuth Yoovidhya, the Red Bull scion, was arrested after police traced streaks of engine oil for a number of blocks back to his family’s mansion.

He admitted that he drove the Ferrari but claimed that the police officer’s motorcycle swerved suddenly into his car’s path.  He faces charges of causing death by reckless driving but was released on a 500,000 baht ($15,900) bail.

His grandfather, Red Bull founder Chaleo Yoovidhya, died in March at the age of 88.

The Yoovidhya family was ranked the fourth richest in Thailand this year by Forbes magazine, with a net worth of $5.4 billion. Only a few in Thailand believe that Voyaruth will get anything worse than a slap on the wrist.

This incident follows several highly publicized others where the rich and powerful got away from their responsibilities with impunity.

In jurisdictions with weak institutions and personalistic political cultures, there seems to be two laws–one for the rich and one for the poor.  The rich are above the law while the law is fierce against poor ‘offenders’.

To sum up, Ferraris figures in two car crashes in our part of the world.

In China, the car crash resulted in the death of a son and the demotion of the father from his lofty position in the Chinese Communist Party.  The demotion is part of an effort to expunge forensic evidence of the car crash and to clean up the Party’s image.

The sub-text?  Your children should not engage in the conspicuous consumption of luxury goods; it strongly hints at ill-gotten wealth.  Conspicuous consumption highlights social stratification and the widening gap between rich and poor in contemporary China.  The Party seeks to maintain the fiction that it’s grounded and responsive to the people.  The greater the social distance between Party leaders and the people will mean that the Party is out of touch.

The Bangkok incident is at bottom a contest between unequals in wealth and power.  I guess you will agree with me that the winner is obvious.

We hope though that the Thai justice system will surprise us.

So what’s it with Ferrari?

Nothing,  or at least nothing that could link it organically with scandal.

The problem is with some of the people driving them.

Ferrari 458 Italia (Is this the model of Voyaruth’s Ferrari?)

Even if they are rich and powerful, they just don’t know how to handle a powerful and delicately crafted machine.


In November this year, incumbent US president Barack Obama of the Democratic Party will face off versus the standard-bearer of the Republican Party after the latter goes through its primaries.

Obama (always) on the stump

The front-running Republicans include former Massachusetts Gov. Mitt Romney and former senator from

Mitt Romney

Pennsylvania Rick Santorum.  A distant third is Newt Gingrinch, former Speaker of the House and representative from Georgia.

Obama is running for a second and last term while the Republicans, who have control over Congress, seeks control over the White House.

My students at the University of the Philippines have started asking me how the US elections could possibly affect the Philippines.  I recall being a speaker in a symposium organized to study the impact of the unprecedented election of Obama to the White House in 2008.

My answer then was there will no major changes in US policy vis-a-vis the Philippines  notwithstanding Obama’s election.  For the 2012 elections, my answer is the same.

Democrats and Republicans may have significant differences over domestic policy and this is quite evident as the US tries to recover

Rick Santorum

from the Great Recession.  Republicans insist on cuts in government spending plus cut on taxes on upper income groups.  Democrats may compromise on spending cuts but will not give in on tax cuts for the rich.

However, there is a bipartisan consensus regarding US foreign policy.  And that is to protect American interests and stand by core American allies (such as the North Atlantic Organization) and to prevent the strengthening of rival powers.

John Mearsheimer, an international security expert, argued that no state can attain global hegemon status in the post-Cold War period.  At best, it can be a regional hegemon.  And it could frustrate hegemonic ambitions of another state in another region.  As the US is already hegemonic in the Western hemisphere and its allies are hegemonic in Europe, the most apparent area of contention is Asia and the hegemon to be frustrated is China.  

In this sense, the US has shifted (at the moment) from a war on terror-centered doctrine to an older competition with states doctrine. 

Here, the US has to deal with problems it did not have before.  The Great Recession has reduced the resources available for the US government to achieve its foreign policy and military objectives in the Asia Pacific region.  In addition, it also has to deal with the unique problem of being heavily indebted to its perceived number 1 rival.

Gloria Macapagal-Arroyo

How does the Philippines figure in all these?  President Gloria Macapagal-Arroyo must have been perceived as a not-too-reliable an ally by the US.  First, she withdrew a token Philippine force in Iraq in 2004 for politically expedient reasons at the home front.  Second, she played heavy footsie with the Chinese–entering into many economic and investment agreements and entertaining visits from Chinese military officials.  Her government even entered into joint seismic survey arrangements with China and Vietnam within the disputed Spratly Islands group.

That now seems to be water under the bridge.  If Arroyo tilted towards the Chinese, President Noynoy Aquino is clearly sympathetic to the American cause.  

President Noynoy Aquino

The current cause of worry for the Philippines is the adverse impact of the economic slowdown in the US and Europe on the country’s electronic exports.  Economic experts are of the opinion that our exports will recover to previous levels only if the Western economies.  Others believe that our electronic exports may not the ones needed abroad–like tablet screens?

Officials of the country’s business process outsourcing (BPO) industry pooh-poohed fears raised over proposed  US legislation that will discourage outsourcing and create jobs within the US.  They believed that US multinationals will oppose the proposal since outsourcing is a cost-cutting measure. 

Wells Fargo

Their optimism is justified by the decision of Wells Fargo, the 2nd largest bank in the US, to set up a BPO center in Taguig City.

To sum up, I don’t think the coming US elections will have any significant impact on the Philippines.


Prof. Aileen S.P. Baviera
Asian Center
University of the Philippines

Prof. Aileen Baviera

Philippines-China relations must be at one of its lowest points ever. Even during the height of the Mischief Reef crisis (1995-1997), economic ties were growing and there was minimal effect on warm people-to-people linkages.

Now the value of economic cooperation with China has been questioned due to perceptions that it has been pursued through corrupt practices (e.g. NBN-ZTE, Northrail, Southrail, Transco, etc). People-to-people ties have also been damaged by the Hong Kong hostage crisis and to a lesser extent by Chinese execution of Filipino drug mules. Moreover, the South China Sea territorial dispute remains a flashpoint, with the Chinese side issuing warnings over recent Philippine-sanctioned oil exploration activities by UK-based Forum Energy on the Reed Bank.


At the same time, Chinese ambassador Liu Jianchao persists in describing relations between the two countries as “in very good shape”, and his government has extended an invitation to President Noynoy Aquino to visit China. Indeed, relations continue to be viable because of a number of reasons, not least among them a long tradition of friendship and expanding exchanges. Even the growing number of Philippine missions in China (now including Beijing, Guangzhou, Xiamen, Shanghai, Chongqing, Hong Kong and Macau) is an indication of the importance we attach to China and our commitment to developing mutually beneficial relations.


Both sides realize the importance of cooperation, not only for bilateral advantages but also in contributing to regional prosperity as well as peace and stability. This is especially true today, as there is much uncertainty about how the unfolding rise of China and US’ renewed interest in the Asia Pacific will affect the balance of economic and military power – and ultimately the interests of China’s near neighbours – in East Asia.


Adherents of realist thinking in international relations have a popular saying, quoting Thucydides (5th century BC): “the strong do what they can, the weak suffer what they must”.


It is clear where the Philippines stand in this equation. But there are certain leverages even for the weak, which for us include the country’s strategic location (a happy accident of geography which we have yet to make full use of), good human and natural resources, and perhaps even a reservoir of good will towards our people owing to the fact that we try very hard not to make enemies.


But being weak (economically, technologically, militarily) opens up a lot of vulnerabilities which can only be offset by being discerning, wise, imaginative, but above all else – being ever, ever cautious.


This is where good diplomacy can make a world of difference – diplomacy towards friends and allies, and even more so towards neighbours with whom we have sharp disagreements such as territorial disputes. In this context, a visit by President Noynoy Aquino to China requires solid preparation and a crystal clear understanding of how to approach the issues at hand.


Choosing a proper ambassador to China is a very important element of what will be known for years to come as the (younger) Aquino diplomacy. Among the names that have been mentioned in media reports are Edward Go, Alfonso Uy, and Domingo Lee. While these individuals may have many excellent qualities, and while there may be advantages to appointing persons of ethnic Chinese background for certain specific objectives, the Filipino nation at this time needs a very strong representative in Beijing – one who is knowledgeable on outstanding issues and seasoned enough to face the very tough challenges of helping craft a China policy that will actively promote and defend the economic and security interests of the country and contribute to regional stability.


Of special concern is the report that Domingo Lee is being considered, as he was a former Philippine Representative to Taiwan under President Corazon Aquino. (Because of the Philippines’ one-China policy, we call the heads of our missions in Taipei “representatives” rather than “ambassadors”).


Lee, then one of the leaders of the Chinese community, was also reported in a 2002 book by author Jie Chen (Edward Elgar Publishing) to be a member of Standing Committee of the de facto Philippine branch of the Kuomintang Party, the Chinese Communist Party’s arch-rival!


As much of diplomacy is about communication and signalling messages through statements and actions, we can only wonder what signals our government will be sending to China if indeed Domingo Lee were to be appointed.
Appointing a well-qualified ambassador to Beijing, as has already been called for by former Secretary Roberto Romulo, is only one small step in repairing relations with Beijing.

However small, it can be a critical one.


As the head of our mission in Beijing will be working very closely with the DFA home office, a professional career officer of the country’s foreign service, should be a more logical, wiser choice.

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Note from Bong Mendoza
Aileen Baviera is professor and former dean of the Asian Center, University of the Philippines. She was immediate past president of the Philippine Association for Chinese Studies (PACS), and former head of the Center for International Relations and Strategic Studies, Foreign Service Institute. She was recently Visiting Fellow, Australian Research Council’s Center of Excellence in Policing and Security (based at the Australian National University and Griffith University), and is currently visiting fellow at the S. Rajaratnam School of International Studies in Singapore.


1. 

Why do countries with less checks and balances also experience greater number of project failures?

In the general political science literature, the notion of checks and balances was considered as a powerful antidote to the abuse of power (i.e., monarchical power).  Concentration of governmental power in one person or a single group more often leads to excess and abuse.  John Locke and the American founding fathers counselled the separation of powers to decrease the likelihood of tyranny.

However if power was too dispersed among so many decision makers, it could result in indecisiveness and the lack of public order (Haggard and McCubbins 2001).

Lesser checks and balances leads to arbitrariness given that only one (or a few) make political (or policy) decisions.  Lesser checks and balances mean a lesser number of veto players.  Fewer veto players may produce decisiveness and policy flexibility (at its best) but also policy volatility at its worst (Tsebelis 1995, 1999, 2000).  An empirical study by Henisz (2004) concludes that the notion that political checks and balances that constrain decision makers’ discretion serve to limit policy volatility and thus encourage investment and economic growth.

A fewer number of veto players may lead to a larger number of project approvals.  However, it could also mean relaxation of due diligence.  When these projects are faced with macroeconomic shocks and other sources of project risk, it is again less difficult for a fewer number of decision makers to declare project failure (tariff freezing, contract renegotiation, etc.).

Another point:  Checks and balances enhances the commitment (makes it more credible) of governments (borrowers) to pay their loans and honour contracts.    

2.
Why is China more prone to freeze tariffs than ASEAN countries?

 

It must be pointed out that China is an economy transitioning from central planning to market capitalism under the auspices of an authoritarian political regime.  For this reason, ubiquitous institutions that we may take for granted in jurisdictions with a dissimilar history such as contracts, private property rights, courts, etc. are not as fully developed in China compared to it Southeast Asian neighbours.

 Specialist literature (e.g. Landry 2008) notes that China is an anomaly—it being designated as a ‘decentralized authoritarian’ polity.  Local governments in China enjoy an unprecedented degree of fiscal autonomy and devolved powers (including the power to sign contracts with private firms).  Other scholars (verify citations) suggest this was the result of a log-rolling bargain between central and local elites in the light of the painful experiences of Mao period (especially the Cultural Revolution).   Empirical literature indicates that failure of most infrastructure PPPs can be traced to the imprudent exuberance of local governments (who are apparently in a race with each other in building infrastructure).  Compounding the situation is the apparent lack of a national PPP template that could guide sub-national actors and private partners. (See Adams et al. 2006; Bellier and Zhou 2003;  Zhong et al. 2008).   

 3.

 Why does ASEAN have better project experiences than China?

 The original ASEAN-5 (Malaysia, Indonesia, Thailand, Philippines and Singapore) has a more extensive experience with private sector-led, mixed-economy capitalism and does not have the historical burden of China’s command economy. Consequently, these countries have comparatively better institutions supportive of infrastructure PPPs. 

 What could be investigated further is whether PPPs in the ASEAN-5 needed the imprimatur of central (or federal) authorities.  I suspect that local governments in ASEAN had lesser leeway compared to their Chinese counterparts in contracting big ticket infrastructure PPPs.  Thus, you had a greater number of veto players in ASEAN which could have resulted in greater pre-operational prudence and a more judicious sharing of project risks among central and local governments with their private partners.

 Size is another point of consideration when we try to explaining differing levels of decentralization and devolution in China and ASEAN.  Chinese local governments (esp. provinces) are equivalent to or larger than most ASEAN nations.   There is thus a greater imperative to decentralize in China than in ASEAN given these size disparities. 

4.

Why are countries with lower (higher) levels of corruption less (more) likely to freeze tariffs?

 Jurisdictions with lower levels of corruption are less likely to freeze tariffs while countries with higher levels of corruption will be more likely to freeze tariffs.  The freezing of tariffs is, among others, an opportunity for state agents to extract side payments from private contractors.  More corrupt agents are then most likely to freeze tariffs in expectation of illicit gain that could arise from tariff unfreezing or contract renegotiation.  

 5.

Why are countries with enhanced rule of law more likely to freeze tariffs?

Kaufmann et al (2009) defines ‘Rule of Law (RL)’ as “capturing perceptions of the extent to which agents have confidence in and abide by the rules of society, and in particular the quality of contract enforcement, property rights, the police, and the courts, as well as the likelihood of crime and violence.”  Intuitively, one should expect that countries with enhanced RL will be less likely to freeze tariffs since the quality of contract enforcement would be high.

This empirical result is indeed a puzzler.

Could this be associated with ‘Voice’?  What were the regression results between Voice and tariff freezing?    I expect that countries with greater voice will be more likely to freeze tariffs as governments will be more responsive to noisy electorates demanding tariff freezes.

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Explanatory note: Together with the earlier blog entry on China, this particular entry is a by-product of my collaboration with Dr. Renato Reside of the UP School of Economics on the structural determinants of risks faced by infrastructure PPPs in Asia.