A lousy reporting from IHT -- about the case of Jin Lei and Gensci

This is not to defend Dr. Jin Lei. I am just shocked at the lousiness of the NYT reporting.

IHT and NYT today carried one of the most ignorant and biased articles for such a renowned paper.

Two reporters, David Barboza and Duff Wilson, reported a case against dr. Jin Lei, founder and Chief Executive of Genesci, the market leader of Human Growth Hormone (HGH) and also one of the most successfully biotech companies in China.

A few very important facts seem to have been deliberately missed or mis-directed, which made this reporting look like total trash.

1. Jintropin is no different from any other Human Growth Hormone that is marketed by US companies such as Genetech, Eli Lilly or Swiss biotech company Sereno. However, the articles made it sound like Genesci was the only company in the world that produced such drug, and hence Gensci committed an unforgivable crime by selling this to rouge distributors in USA. The fact is, HGH is an FDA approved drug, its main function is to treat dwarfness and other growth retarded diseases. No quality related complaint about Jintropin was reported, the only difference seems to be the process of physician prescription
   
2. The reality is that Jintropin does not have FDA approval, just like any of the other Chinese drugs, such as another biotech blockbuster, recombinant insulin. When it was produced by a Chinese company, it was not allowed to be imported to USA. It is extremely costly to apply for FDA approval (US$10-100M)
3. This is simply a case of selling a China SFDA approved drug into US where it was not approved by US FDA. Yet the two reporter, whether being ignorant or lazy, or for other reasons, reported it as if it were some novel dopes Jin patented for himself. Jintropin is just a brand for a generic drug that is also sold by US companies.
   
4. In fact, it is unforgivable that these reporters missed a rumour in the past that Genentech had allegedly accused Jin of stealing its technology for manufacturing Jintropin (HGH). Perhaps this will weaken their story of misleading the reader through demonizing HGH
5. Finally, in the last paragraph of the report our 'respectable' reporters inserted an innuendo linking Jin to the executed corruptor Zheng Xiaoyu. Zheng has been the head of SFDA since its foundation. Almost all drug companies in China have photo of his visit. It is commonplace that Chinese companies (this is not unique for China) showing photograph of their bosses with Clinton and Bush, or Zheng Xiaoyu, which often has no correlation to their actual relationship. In reality, this is at best an oversight from Gensci’s web manager, who forgot to distant themselves from a corruptor. Yet the two IHT idiots tried to hint that Jin was linked to the corruptor.

I do not want to defend Dr. Jin and I do not have any knowledge about the case. All I know is that if I were Dr. Jin, the report would suffice a libel suit against IHT and the two reporters. I also believe that sloppy reporting like this will be viewed as part of the coordinated efforts in a malicious attack on anything China, the Mattel-toy mess being the other.

Lessons from the Golden Triangle

The IHT (and the NYT) ran an excellent article of the transformation of the “Notorious” Golden Triangle, around the shared border of Myanmar, Thailand and Laos, where economic opportunity and development has almost eradicated the opium production in the area, of which the diffusion effect of China’s economic growth played a pivoted role.

The story runs in parallel with that of Afghanistan. According to IHT, [the Golden Triangle], “once the epicenter of [opium] trade, has been eclipsed by Afghanistan. Despite the accusation that Al Qaeda has been funded by opium planting and that the American invasion would correct Afghanistan’s agricultural practice, the chart showed that Afghanistan’s opium production tripled under American control, while that of the Golden Triangle reduced by over 80%.

This is another proof of Barnett’s theory of “economic connectedness”. If situation in Iraq persist, and oil price drops, I am not surprised to see Iraqi start growing pop in large scale. On the other hand, if we encourage economic growth and integration of the neighboring country, i.e. Pakistan, UAE, Iran or China, the problem of Afghanistan and Iraq might disappear gradually without external inference. The question is then, of course, whether the power hungry are content to let things develop without interfering them. A good strategy means to achieve one’s objective with minimum cost, this is often in conflict with the lobby groups who wants business by forcing the governments to spend more, and in conflict with the power hungry who has the addiction to do more.

Inflation in China is a very good thing, provided that ...

I was going to write a post about this. But I was glad that Professor Cheung already did this.

若要马儿好，让马儿吃草——从通胀说一篮子物品

Related links:
Commodity Peg
Cheung's interview with Phoenix TV
All essay on the basket peg
Series 1, 2, 3, 4, 5, 6 (or here)

IMHO, The arrogant professor may really be hitting the Nobel jackpot this time.

---
最近北京公布通胀上升加速，是大新闻了。与去年七月相比，物价指数上升了百分之五点六，其中农产品之价上升尤甚，是百分之 十五点四。媒体纷纷求教，只覆一处，说：「我一则以喜，一则以忧，你要先听哪一则？」是女孩子访问的，聪明兼漂亮，难道老人家动了凡心乎？女孩子说要先听 「以喜」的那一则。
　　
　　一时间我有无限感慨：神州大地满是伪君子！又要马儿好，又要马儿不吃草！大家不是抢着说要改善农民的生活吗？ 人均的农地面积那么小，而这些年数之不尽的农作青年随着流动人口流到工业那边去，加上炎黄子孙的袋里多了一点钱，要吃得好一点，农产品之价岂有不升之理？ 我反对福利经济，反对补贴农民，但同意取消农业税，而更喜欢见到的是农产品之价上升了。这是我期待了很久的事，不出现中国农民的生活不会有大好转。三年前 农产品之价明显地上升了，我高兴，这次升得急，大吉大利也。朋友，要协助农民的生活吗？长贫难顾，补贴不是好办法。多花一块几毫购买他们的蔬菜，才是通过 市场来协助农民的妙方。
　　
　　在北京的物价指数内，农产品约占三分之一。算起来，农产品之价升百分之十五点四，非农产品之价的升幅只百 分之零点九，近于零。如果要物价指数整体的升幅是零，即是说毫无通胀，那么非农产品的物价指数要下降百分之七点七。农产品相对非农产品的物价一定要上升， 中国的农民才有希望的。最近的指数，显示这相对物价上升了百分之十七点一，是大好形势，可喜可贺也。
　　
　　转谈「以忧」的一则吧。中国 的物价指数何止上升了百分之五点六？一年来，人民币兑美元上升了百分之七强。一字都冇咁浅的经济逻辑说，币值上升，物价指数理应下降才对。这次币值上升而 物价指数又上升，物价的真实升幅应该是百分之十以上。跟与美元挂勾的港元相比，一年来人民币兑港元上升了百分之七强，国内物价指数上升了百分之五点六，从 香港游客的角度看，以港元兑换人民币到国内消费，国内的物价升幅约百分之十三。不是说百分之十三才是去年中国物价的真正升幅——对香港游客来说当然是—— 但因为国内的对外贸易一般以美元结算，通过外贸与外资的进入，这百分之十三的物价升幅早晚会大约地传达到中国人民的消费那边去。
　　
　　 农产品之价上升了百分之十五点四是佳音，而非农产品之价只升百分之零点九也不是坏消息，然而，因为人民币的币值上升了不少，国内的人从旅游或物品进出口的 物价变动衡量，国内的物价是大幅地上升了。这可能引起国内的人对通胀形成了恶性预期，而这预期一旦形成了，不容易改过来，就算央行能成功地大事收缩人民币 的币量供应，改变通胀预期所需的时日不短。
　　
　　不要误会，我不是说通胀预期已经在中国形成了，也不是说因为最近公布的物价指数与人民币值的上升，这预期早晚会出现。我不知道，也无从知道，只是说，如果有通胀预期这回事，近今的数据变动逻辑上是通胀预期的成因。
　　
　 　老实说，预期这回事或什么理性预期的，只有上苍才知道，我们凡夫俗子无从考究。人的预期是脑中的抽象物，既看不到，也摸不着。「预期」之所以在经济学存 在，是因为在推理时，逻辑上，不用上「预期」好些现象我们无从解释。另一方面，凡是难明的现象，推出「预期」可解，但一般性的解释力，以左预期右预期之法 作解释，不容易避免前后矛盾，低能也。再另一方面，不管预期何物，现象的观察是，预期一旦形成了，要改过来很困难。
　　
　　近今世界大 乱，什么恐怖活动，什么次按风波，而各地股市无不大上大落，到处汇率、利率皆如冇尾飞铊。中国呢？还是尽可能避开外来的波动为上。这不是说中国要独善其 身，只管自扫门前雪，不管他人瓦上霜。地球一体化，可以帮助他家中国要考虑，但如果中国因为外间的影响而自己波动起来，说什么协助他家是不自量力了。
　　
　 　我因此不能不旧话重提，建议北京把一篮子物品的物价指数作为人民币之锚。只要这篮子的物品选得适当，人民币之锚稳守，通胀可以一次过地解决，而通胀预期 必去如黄鹤矣！这个以一篮子为锚的货币制度我解释过多次，这里不重述。以近今公布的物价指数为例，升幅百分之五点六，其中农产品升百分之十五点四，非农产 品升百分之零点九。如果人民币以一篮子物品的物价指数为锚，而该篮子有北京统计物价指数所选的物品有同样的代表性，那么坚守这篮子的指数不变，如果农产品 的物价上升了百分之十五点四，非农产品的物价一定会下降百分之七点七——通胀率是零。为锚的一篮子物价指数既可调高，也可调低。我认为每年调高百分之二， 即让物价上升至百分之二，是可取的。
　　
　　有了一篮子物品的依凭，要纾缓人民币上升的压力，北京大可解除外汇管制，把人民币推出国外。 人民币外放国家有钱可赚，而有了以一篮子物品为锚的维护，通胀无技可施。央行把人民币外放，要放到人民币的上升压力毫不存在为止。每放一元，国家赚一元。 如果人民币的币值因为外放太多而偏高，回头走，国内会有通胀的压力。如果每年的物价调高百分之二不够，或守不住，央行大可把人民币收回来。外汇储备那么 多，兵来将挡，水来土淹，何难之有哉？何况，把人民币大量外放，在强势下外汇进帐如猪笼入水，储备之高天下奇闻矣。
　　
　　有钱可以做很多有意义的事，不单为炎黄子孙，懂得怎样花对地球会有重要的贡献。

Uncritical reporting

I have read so many reporting and 'insider information' from so called China observers and experts, such as those about "all corruptors are caught as a result of Jiang-Hu power struggle". Such nonsense gradually faded when the notorious SFDA head Zheng was executed, as these observers could no longer trace the link to the alleged Jiang-Hu struggle.

A few days ago, there was another about the Minsiter of Treasury, Jin Renqing, alleging his demotion to be related to a careless leak about some casual remark form Wen. This, again, is absolute nonsense to anyone with a critical mind. The "Human Right Information Centre" really needs to be more scrupulous about its sources. Anyone with a sane mind would know the Chinese leadership are not primary school children as those informers to the "HRIC", who are into such kind of game.

Now, as the story unfolds, it confirms my theory of the story.

This is what I have speculated. There was a grace period given by the CCP to the corruptors, to admit their wrong-doing within a certain deadline. In return, they will be demoted or waived of prosecution according to the degree of their crimes. Most likely, Jin was one of those who confessed voluntarily. That was why he was only demoted. (yes, he moved from the head of a major ministry to become the deputy of a secondary ministry, DRC, the think tank. His new position was where the current head of Statistic Bureau Xie Fuzhan sat before he got promoted, and the Statistic Bureau is a less important ministry compared with the Ministry of Treasury)

The fact that he was "detained", was more likely a process for him to coooperate with the anti-corruption department, to provide evidence to prosecute the other corruptors. Chances are that, he would be released soon and be on his new position.

A picture in Beijing

This is a picture from my hotel room in Beijing. The two building in construction next to the tallest one in construction is the (in)famous CCTV Tower. A closer view of which can be seen below (taken at the SE corner of 3rd ring, just outside China World Hotel).



The sky is clear, because it has been raining the previous day.

The green area is the embassy zone in Chaoyang District. The only reason the trees were preserved is because the land belongs to foreign governments. All these friends who recognized China during the early years were rewarded financially (on paper) with the land appreciation. A particular example is the enormous lot comprises of two buildings right in front of the picture. It belongs to one of the former socialist brother countries. Later, after democratization. The two reached a deal for a friendly parting. The big brother was happy to get rid of the poorer pal, while the younger one wanted independence. So a part of the land was split and a new building was built. The enormous lot was split into two, the smaller building to the left of the picture becomes the embassy of the "new" country.

Quiz: (leave answer in the comment field please)
1) which two countries are these?
2) I pass by the German emabassy a few times, I am wondering what happened to the former Democratic Republic of Germany emabssy now. It should have been much larger than the size of the FRG embassy.

中国的绿色GDP

有关中国的绿色GDP，外界一直兴趣颇高。所以到最近统计局确定不会推行绿色GDP时，外界媒体的极度失望是很自然的了。如外界媒体所报道，地方的压力当然是部分的因素。可是，最主要的问题还是绿色GDP计算方法。

先要说明一点，为什么会产生绿色GDP的问题。中国官员（从省到市到县）的考核升迁，其中最主要的因素，就是GDP的增长。中国过去27年GDP的高速成长，跟考核方式脱不了关系。也正正因为如此，世界上只有中国的GDP里水分特多。县虚报一点，到了市级又来个四舍五入或干脆增加几个点，然后是省。到了中央，才可以勉强往下压一点，因为国家级干部考核的指标不完全相同了，不过通常也只是因为GDP增长率高得不可信了。别的国家地区，并没有这种考核制度，因此也没人去花这种心思虚报。谣传上一任的统计局长邱的下台，就与他收受贿赂，窜同虚报GDP有关。上海的陈良宇是其中一个行贿者。由是统计局虽名为局，却是一个部级的机构。因为其责任重大。绿色GDP的用途，就是要在官员考核的方程式里扣减绿色GDP的损失。

GDP的计算，是经济学家的范畴，笔者并不懂。据说绿色GDP本来要采取类似的框架。于是，就产生了每吨煤该扣减多少绿色GDP的难题。如何量化环境污染的难题先按下不表。GDP是每年计算的，单位是“元/年”，环境污染是长期的，单位是“元”。要把两个不同单位的量相比（或相减）在数学上是不可能的。当然我们还是可以研究一个学术上的绿色GDP，不过这参数难以简单地转变为考核指标，因此达不成原先构想的目标。此为中国绿色GDP推行不了的最主要原因。其次，据说统计局参考了北欧国家和各方学者的研究，计划中绿色GDP的统计算法把煤的污染都算到采矿者的头上。实际上，产煤者只该负责生产过程中所产生的污染，而用那种燃煤发电机，如何过滤燃烧产生的废气，该是用煤者的责任。目前国家的统计法和资料收集，没法考虑上述因素，因此也不能支持较真实的计算。这是目前国家统计局暂时停止了绿色GDP项目的最主要原因。

至于环境问题如何解决，且听下回分解。

Shanxi travel notes

I went to Shanxi for a few days recently (the bonus is to cover one more province in my footprint map). For the interest of time, instead of posting a travelogue, I will just list a few notes to share.

The Brick Kilns

1. People talked to me about the slave kiln voluntarily (before I asked). People I talked to confirmed that this has been widespread for some time and the local governments have at least been aware of such things to some degree.
Worse still, there was at least another case of burying a slave alive in Ruicheng County (芮城). I hope if there are journalists who come across this could go there to confirm if this is true. Because if it is indeed the case, that means there have been cover-ups in the investigation. The People (or Mr Wen) will have more ammunition to ask for a thorough review of the accountability of the bad officials

2. Contrary to the sentiment outside, in general, the local people do not feel that the punishment has been too lenient. I even heard of sympathetic comment about a deputy county mayor who was on the job only for 1 year.

3. On the road, one often see some 'wanderers'. the locals who drove with me told me that many of them were "released" from the kilns, and left to survive by themselves. "release" was actually a euphemism, the kiln owners actually drove them to the middle of nowhere and got rid of them. Since many of these ex-slaves are mentally retarded, they have no idea where they want to go. So they just wandered around.

4. Across the border in Sha'anxi province (陜西), I saw many klins by the freeway as well. I do not know if the situation is similar as it is in Shanxi (山西). But I think this worths a good story to cover for the journalists because

• if these kilns do not hire slave labor, it would be interesting to know how they managed to compete with the kilns 50-100 kms away across the provincial border
  
• if there are many kilns in Shaanxi, but there has been no abuse. That means something has really been going wrong in Shanxi. Mostly likely it is the provincial government

Other observations

5. The railway goes South-North along the Fen River (汾河）. The Fen River is polluted and water volume has been depleted (as are many other rivers in north China - over-irrigation). If you open the window, your hair will be stuck full of coal dust in 15 minutes.

6. Many small factories were seen along the coal area (e.g., between Linfen 临汾 and Pingyao 平遥 ). We saw coal everywhere along the river and the rail tracks. Many of these small factories store a lot of coal in their back yard. Apparently, it is cheaper to burn coal for power for them

7. When we passed through Xian 西安，construction was everywhere. It was reminiscent of Pudong in 1996-1997. If you ask me whether China's growth will continue for the next decade, you need to visit these cities. They are undergoing the same dramatic changes as the coastal cities on 10-15 ago. In 10-15 years, Xian will be like Shanghai, Taiyuan will be like Nanjing.

8. We took the cheap cabin train for a large part of our trip, mainly because there is only one cabin class ("Hard seat") available in the schedule. But we also wanted to talk to the average citizens. In a culture where people are shy in talking to strangers the train is perhaps the only exception, this has been so even back in the Mao era (when the society was more close).

On the way, we were inquired twice about the pork price in HK, by two groups of middle age ladies. They said 500g of pork cost 5-7RMB last year and it cost 17.5RMB now. To them pork price is like gasoline price to the American.

I asked my mom when I went back to HK. Apparently she failed to notice the difference. After some questioning, my conclusion is that the price hike was probably less than 50% in HK. It is understandable that the price hike was much more noticeable in Shanxi, because all the cost come from the real cost of "manufacturing" the pork, i.e. rearing. Whereas in HK, or perhaps in coastal province the "value-added" (transportation, middle man, distribution) represent a large portion of the price, which has not changed as dramatically.

(similar observation on the change in gasoline price in US vs HK, while crude oil price hiked in the past few years. The percentage increase in US was much higher than that in HK, as the base in HK was much larger.)