China Investment Corp Launched

China announced a government-owned investment fund yesterday. The much-anticipated group will have a US$200 billion to invest. The CIC will be led by a 11-member board of directors, including its chairman Lou Jiwei, and vice chairman and general manager Gao Xiqing. Lou is a former vice finance minister, while Gao is a former deputy chairman of the National Social Security Fund.

CIC's first investment was the purchase of a 10% stake in the private equity firm Blackstone befor its IPO. Many Chinese considered that deal rush and ill-considered. And they were proven right because the stake has already lost 20% of its value. So, chairman Lou is on a tight spot from the very start of his new job.

China Must Lead

China has benefited from keeping a low profile and single-mindedly devoting its energy and resources to economic development. Now it's time for China to lead and be a stakeholder in shaping world events. Instead of continuing to maintain that it's still a developing and poor country, blah blah blah, China has resources and skills to take a leadership role in global issues such as climate change, energy security, and regional stability. The world needs and requires China's active leadership role.

China should promote international and regional initiatives for securing peace and prosperity in East Asia. Its role in coordinating the Six-Party talks in denuclearizing North Korea is a good example. The six-parties are the US, China, South Korea, North Korea, Russia and Japan. Now the monks in Myanmar or Burma are in revolt, China must act, in concert with India, Japan and ASEAN, to find a quick end to the military repression in that country.

China must work with the US to lead the world.

Ang Lee's 'Lust, Caution' Opens

Oscar-winning director Ang Lee's new film "Lust, Caution" opens today in the US and Canada. Lee won an Oscar in 2006 for Best Director for his last film "Brokeback Mountain". His latest film is an espionage thriller set in Second World War-era Shanghai, starring Tony Leung, Joan Chen, and Tang Wei. It won the Golden Lion award for best picture in this year's Venice Film Festival in Italy.

Reform 2.0

The success of China's economic reform is evident and tremendous. But economic reform has reached its limit without political reform. Prosperity and corruption now exist side by side. Although the national government has tried different ways to combat misuse of power and economic corruption, nothing has worked. It is my belief that only the introduction of the rule of law will be able to limit and eliminate the influence of corruption on Chinese politics and economy.

Export Goods, Import Pollution

China's export-driven economy is choking the Chinese. In big cities such as Beijing, Shanghai, and Hong Kong, residents are all feeling the effect of bad air. Being the world's factory is in fact a bad deal for the Chinese because this means China imports energy and raw materials to produce goods, but exports them for others to consume. The pollution is left behind in China.

From the above chart, we see China exports annually 200 billion US dollars more goods than it imports. Furthermore, what China imports are mostly oil, natural gas, coal, and other raw materials for the purpose of manufacturing consumer goods to be exported to other countries. On the other hand, the US imports 800 billion US dollars more goods than it exports. No wonder it has better air and less pollution than China.