With China emerging as the second largest economy after overtaking Japan, the ruling Chinese Communist Party made a surprise promise to loosen its firm grip on power structure saying that the gains made out of the economic reform would be lost without political reforms.
The promise to expand the process of democratic reform came from Prime Minister Wen Jiabao who holds the rank of number three in the world's most powerful party.
"China should push forward not only economic restructuring but also political restructuring. Without the safeguarding of political restructuring, China may lose what it has already achieved through economic reform the targets of its modernisation drive might not be reached," official media quoted him as saying.
"People's democratic rights and legitimate rights must be guaranteed. People should be mobilised and organised to deal with, in accordance with the law, state, economic, social and cultural affairs," Wen said at Shenzhen, a small fishing village near Hong Kong, where Deng Xiaoping, who broke away from Mao Zedong's hardline Marxian ideology launched economic reform campaign three decades ago.
Apparently referring to criticism over absolute concentration of power in the party, whose power structure is confined to a very small group of people, Wen in his speech said, "The problem of over-concentration of power with ineffective supervision should be solved by improving institutions."
"He demanded the creation of conditions to allow the people to criticise and supervise the government," state run newsagency Xinhua reported, adding that he pledged to build a fair and just Chinese society, in particular, to ensure judicial justice.
"Regression and stagnation will not only end the achievements of the three-decade-old reforms and opening-up drive and the rare opportunity of development, but also suffocate the vitality of China's socialist cause with her own characteristics, and furthermore, doing so is against the will of the people," Wen said. These are rare words to come from a top Chinese leader whose party administers the world's most populous country (over 1.32 billion) periodically cracking down on all dissent.
However, he did not refer to any practical measures that the government plans to implement to open up the country for 'democratic reform'. The thrust of Wen's speech was that the three-decade-old economic reforms, opening the country for billions of dollars of foreign investment has paid off, as the country this month over took Japan's economy, emerging as second only to the United States, even though in terms of per capita income Beijing stood way behind Tokyo.
His comments at Shenzhen came as China began witnessing labour trouble, with workers standing and demanding better wages ending cheap labour regime. Twelve workers committed suicide in Shenzhen at Foxconn factory employing over 400,000 labour, apparently distressed by poor working conditions. Several foreign plants like Honda and Toyota witnessed prolonged labour unrest.
The country too witnessed a host of social revenge attacks on school children apparently by disgruntled individuals. In the aftermath of these attacks, Wen promised to address the growing divide between rich and poor and inability of sections population to catch up with pace of China's economic development.
Waiting for your valuable comments.....
-Champak
Monday, August 23, 2010
How China plans to sustain its economic triumph?
Tuesday, August 3, 2010
Why MBA after Engineering?
Ever wondered why approximately 80% of the students who go to IIMs or even to other management institutes are Engineers? I was also an Engineer and then I went for my MBA. This little story might give you a prospective, why engineers go for an MBA after doing engineering. So, where Engineers can directly relate it with their own experience, even those you simply can recall their School Physics classes can also pull out a leaf or two.
Typically in Engineering, We give exams twice a Year (called Semester Exam). I was given a problem to design a joint (I don’t remember the name of the joint, but for example let’s say a cotter joint) which can buckle a rope at one end and will be bolted to an Iron Frame on the other. I was given the Load to be supported by the Joint would be around 480 Kg wt. The joint will be used in an equipment carrying Human life, which signifies a high factor of safety. As an Engineer I solved the problem like any routine text book problem and came up with numbers like the ideal number of bolts in the joint, what should be the recommended size of the bolts, what will the width and thickness of the joint to support the stress (or load)?
Sounds Geeky right? Boring? Now let me give you a perspective to the same. It was actually a joint which was supposed to be used in an Elevator where on one side it will be the elevator and one the other end would be the rope, it was designed for 6 people each having average weight of 80 Kgs, the factor of safety being 5, meaning Designed for 8 people but can survive weight of 40 people. Now, why was I made to design the joint? Because someone wanted to suspend an elevator. Why you need an elevator? Because someone wanted to create a machine to transport people to higher altitude or floors.
Lets again think the same thing all over again. There was a constructor who made a building which was 5 floors high. The construction was complete, the first three floors were sold at good price but the top two floors won’t sell. An MBA goes to him and asks: What is the problem?
Constructor: The first three floors sold quickly but the top two are not being sold. Buyers are coming enquiring and leaving.
MBA: Hmm, What are they saying?
Constructor: Flats are bought my families and typically all families have some elderly person, who won’t be able to frequently climb up 4 or 5 floors.
MBA: Ok, are there any other buyers?
Constructor: Yes, but they will pay me Rs. 50,000 less for 4th Floor and Rs. 1, 00,000 less for the 5th Floor.
MBA: Ok, so you need a solution which should cost you less than Rs. 1, 50,000 and also helps you sell the flats. How about if we can mechanize the transportation of humans to the above floors?
Constructor: I guess it will serve the purpose, but I can spare only 80 Sq. feet for it.
MBA: But the Mechanization will have a running cost, will the customer bear the running cost?
Constructor: In my last building, Customers were willing to pay Rs. 2,000 as maintenance fee. So I guess we can collect 10,000 from 5 customers per month.
So, Now the MBA calls his friend, an Engineer and says “I need a Transportation Machine which can carry a family of 6 People including Children, Men, Women and Elders from Ground Floor to any floor of the building. The Space required by the machine cannot exceed 80 Sq Ft. of floor area. The Machine should cost less than Rs. 1, 50,000 and should operate within Rs. 10,000 a Month”.
He quickly calculated that the total weight of the family of 6 people will be around 80 Kgs x 6 = 480. He will need to design
1. a Cabin to accommodate the passengers
2. a pulley system to pull the passenger up
3. a motor to automate the process
4. The joint to connect the pulley with the cabin
The purpose of the entire story is to give you the complete picture. Whenever we get a question in our exams or curriculum there are few things so striking? Firstly that we are given all the values/data which are required to solve the problem and secondly, all the data / values which are provided need to be used to solve the problem. If either of the one is not happening, 99% of times you get a zero.
But, who framed the problem? Where did the problem come from? Where did the values come from? Why you need a join to carry 480 kgs of load?
MBAs find a need, and they frame the constraints of the wants to satisfy the need. From these constraints comes a problem statement. Once they can frame a solution to the problem, they fragment it into micro solutions and then get functional experts to solve each fragment. These functional experts can be either people or software or calculators. The point is MBAs need not be able to solve a problem, but be able to break it down to solvable sets of problems and know who within their reach can solve it keeping the solution still cost effective.
Engineering teaches you to solve some given problems. MBA teaches you to find needs, and create a problem out it with the relevant parameters plucked out of the environment which will be relevant to solve the problem and that’s why an MBA after an Engineering helps you to combine both of you skill to come out with the solution.
Hope you all like the story...
-Champak
Typically in Engineering, We give exams twice a Year (called Semester Exam). I was given a problem to design a joint (I don’t remember the name of the joint, but for example let’s say a cotter joint) which can buckle a rope at one end and will be bolted to an Iron Frame on the other. I was given the Load to be supported by the Joint would be around 480 Kg wt. The joint will be used in an equipment carrying Human life, which signifies a high factor of safety. As an Engineer I solved the problem like any routine text book problem and came up with numbers like the ideal number of bolts in the joint, what should be the recommended size of the bolts, what will the width and thickness of the joint to support the stress (or load)?
Sounds Geeky right? Boring? Now let me give you a perspective to the same. It was actually a joint which was supposed to be used in an Elevator where on one side it will be the elevator and one the other end would be the rope, it was designed for 6 people each having average weight of 80 Kgs, the factor of safety being 5, meaning Designed for 8 people but can survive weight of 40 people. Now, why was I made to design the joint? Because someone wanted to suspend an elevator. Why you need an elevator? Because someone wanted to create a machine to transport people to higher altitude or floors.
Lets again think the same thing all over again. There was a constructor who made a building which was 5 floors high. The construction was complete, the first three floors were sold at good price but the top two floors won’t sell. An MBA goes to him and asks: What is the problem?
Constructor: The first three floors sold quickly but the top two are not being sold. Buyers are coming enquiring and leaving.
MBA: Hmm, What are they saying?
Constructor: Flats are bought my families and typically all families have some elderly person, who won’t be able to frequently climb up 4 or 5 floors.
MBA: Ok, are there any other buyers?
Constructor: Yes, but they will pay me Rs. 50,000 less for 4th Floor and Rs. 1, 00,000 less for the 5th Floor.
MBA: Ok, so you need a solution which should cost you less than Rs. 1, 50,000 and also helps you sell the flats. How about if we can mechanize the transportation of humans to the above floors?
Constructor: I guess it will serve the purpose, but I can spare only 80 Sq. feet for it.
MBA: But the Mechanization will have a running cost, will the customer bear the running cost?
Constructor: In my last building, Customers were willing to pay Rs. 2,000 as maintenance fee. So I guess we can collect 10,000 from 5 customers per month.
So, Now the MBA calls his friend, an Engineer and says “I need a Transportation Machine which can carry a family of 6 People including Children, Men, Women and Elders from Ground Floor to any floor of the building. The Space required by the machine cannot exceed 80 Sq Ft. of floor area. The Machine should cost less than Rs. 1, 50,000 and should operate within Rs. 10,000 a Month”.
He quickly calculated that the total weight of the family of 6 people will be around 80 Kgs x 6 = 480. He will need to design
1. a Cabin to accommodate the passengers
2. a pulley system to pull the passenger up
3. a motor to automate the process
4. The joint to connect the pulley with the cabin
The purpose of the entire story is to give you the complete picture. Whenever we get a question in our exams or curriculum there are few things so striking? Firstly that we are given all the values/data which are required to solve the problem and secondly, all the data / values which are provided need to be used to solve the problem. If either of the one is not happening, 99% of times you get a zero.
But, who framed the problem? Where did the problem come from? Where did the values come from? Why you need a join to carry 480 kgs of load?
MBAs find a need, and they frame the constraints of the wants to satisfy the need. From these constraints comes a problem statement. Once they can frame a solution to the problem, they fragment it into micro solutions and then get functional experts to solve each fragment. These functional experts can be either people or software or calculators. The point is MBAs need not be able to solve a problem, but be able to break it down to solvable sets of problems and know who within their reach can solve it keeping the solution still cost effective.
Engineering teaches you to solve some given problems. MBA teaches you to find needs, and create a problem out it with the relevant parameters plucked out of the environment which will be relevant to solve the problem and that’s why an MBA after an Engineering helps you to combine both of you skill to come out with the solution.
Hope you all like the story...
-Champak
The Artificial Economic Recovery
Economic recovery in the U.S. and elsewhere has slowed rapidly and private and some public forecasts are being downgraded accordingly. The Federal Reserve is sounding much more cautious, although they are not yet prepared to talk of further monetary easing. The most optimistic observers are now having to face reality. The massive stimulus packages did the job of stopping a self-feeding downward spiral but they have given us an artificial recovery.
Growth is now gravitating back towards 1% in the U.S. and Europe, close to what final demand has been. In the U.S. the inventory cycle has stopped adding growth, state and local governments are slashing expenditures and jobs, the nascent housing recovery has gone into reverse, and de-leveraging continues. Realistically, it is difficult to picture where any new growth surge may come from.
One of the most important implications of this dampened outlook is that government tax revenues will be disappointing and expenditures will remain elevated. The cyclical component of the deficit will remain high and the structural component will be hard to cut in a weak economic environment with unemployment likely to rise further.
The doomsday government debt dynamics depend crucially on getting economic growth above the rate of interest. That is currently close to 2% in inflation-adjusted terms against the likelihood of 1% real economic growth—a recipe for a continued explosion in the government debt:GDP ratio. It is currently close to 70% on a net basis on its way to over 100% in a few years. To get off that trajectory, the U.S. will have to slash the structural deficit and risk even further damage to economic growth.
Are the politicians up to the job? Not likely, until there is a fiscal crisis. Fortunately or unfortunately, depending on how you look at it, the U.S. does not seem close to such a crisis. With most of the rest of the developed countries and their currencies in bigger trouble, the world’s excess savings will manage to find a home, in good part, in U.S. Treasury securities, allowing the day of reckoning to be postponed by electorally motivated politicians.
Thoughtful people are not suggesting that the authorities slash the structural deficit now and in one shot. and it is seen that after the financial crises, countries experience weak growth for a long period, deficits remain high and debt:GDP ratios continue to rise.
However, that does not mean deficits should be neglected. They must be tackled credibly over time and on a sustained basis. If not, then an eventual crisis will provoke demands for a ferocious up-front slashing, as is the case in Greece and Ireland where GDP has or will drop 15% or more and the risk of social disorder spirals.
Hope you all like this article.
Always open for your valuable comments.....
-Champak
Growth is now gravitating back towards 1% in the U.S. and Europe, close to what final demand has been. In the U.S. the inventory cycle has stopped adding growth, state and local governments are slashing expenditures and jobs, the nascent housing recovery has gone into reverse, and de-leveraging continues. Realistically, it is difficult to picture where any new growth surge may come from.
One of the most important implications of this dampened outlook is that government tax revenues will be disappointing and expenditures will remain elevated. The cyclical component of the deficit will remain high and the structural component will be hard to cut in a weak economic environment with unemployment likely to rise further.
The doomsday government debt dynamics depend crucially on getting economic growth above the rate of interest. That is currently close to 2% in inflation-adjusted terms against the likelihood of 1% real economic growth—a recipe for a continued explosion in the government debt:GDP ratio. It is currently close to 70% on a net basis on its way to over 100% in a few years. To get off that trajectory, the U.S. will have to slash the structural deficit and risk even further damage to economic growth.
Are the politicians up to the job? Not likely, until there is a fiscal crisis. Fortunately or unfortunately, depending on how you look at it, the U.S. does not seem close to such a crisis. With most of the rest of the developed countries and their currencies in bigger trouble, the world’s excess savings will manage to find a home, in good part, in U.S. Treasury securities, allowing the day of reckoning to be postponed by electorally motivated politicians.
Thoughtful people are not suggesting that the authorities slash the structural deficit now and in one shot. and it is seen that after the financial crises, countries experience weak growth for a long period, deficits remain high and debt:GDP ratios continue to rise.
However, that does not mean deficits should be neglected. They must be tackled credibly over time and on a sustained basis. If not, then an eventual crisis will provoke demands for a ferocious up-front slashing, as is the case in Greece and Ireland where GDP has or will drop 15% or more and the risk of social disorder spirals.
Hope you all like this article.
Always open for your valuable comments.....
-Champak
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