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Key take aways from The Governance of China by Xi JinPing

Vision

  • The Chinese dream
    • make country strong and prosperous
    • revitalize the nation
    • make people live better lives
  • 2 centenary dream
    • baseline being the 1840 opium war
    • a moderately prosperous society by 2021
    • fully rejuvenating China to its former glory by 2049

Modus operandi

  • perpetual learning and improvement
  • the path of socialism with Chinese characteristics
  • further develop the theory of socialism
  • system to guarantee outcome
  • holistic view when developing policies
  • “A wise man changes his way as circumstances change; a knowledgeable person alters his means as times evolve“
  • Employ the way of the gentleman
  • Fostering of core values to ensure population knows what the right thing to do
  • “A warlike state, however big it may be, will eventually perish“

Strategic objectives

  • System integrity
    • stem out corruption within the public service
    • safeguarding state sovereignty
    • coordinating national security in the environment of rapid technology innovations
    • staying close to the people in the grassroots
  •  Reform
    • figuring out the relationship between the government and the market
    • Free the mind
    • Develop productive forces
  • Progress
    • Education to cultivate young people to boldly strive forth and including overseas
    • Technological invention and innovation combined with social development
      • internet
      • Bandwidth
      • cyber security
      • AI
      • robotics
    • Management know-how
    • Urbanization of rural areas
    • Military build up
    • Energy sufficiency – one belt one road, climate change
  • Consolidation
    • Hong Kong
    • Macao
    • Taiwan
    • All foreign Chinese nationals

Key challenges

  • Allow market to play decisive role in allocating resources and let government perform its function better
  • imposing order on the markets to prevent people seeking economic benefits through
  • dealing with production lags
  • effective competition to yield superior outputs
  • inconsistent market rules leading to rampant protectionism within local markets
  • fiscal and taxation systems to divide power between national and local government
  • management of technology security risk

foreign relations

  • inclinations
    • averse to hegemony
    • averse to war
    • averse to intervention
  • Mexico, Latin America
  • Russia – trade using local currencies and go off the USD
  • US – on cyber security
  • Asia
    • 67% of world’s population
    • aims to become leader in region
    • increase imports from this region into China
    • improve regional security
  • One belt one road
    • Africa – technology transfer and trade via one belt one raod
    • EU – trade
    • Central Asia and Middle East – invesments, trade and oil for energy needs via one belt one road

Related references

  • Taoism
  • Mohism
  • The Mencius, Meng Zi
  • Strategies of the states, Zhan Guo
  • The Great Learning, Confucianism
  • The book of songs, King Wen
  • The book of rites
  • Advice to my son, Zhuge Liang
  • The methods of Sima, Si Ma Fa
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Key takeaway from Great Again by Donald Trump

Personal mous operandi

  • When you draw a line in the sand if someone else crosses the line enforce repercussions
  • When laws are not enforced them, they don’t exist
  • Plays cards close to vest to keep opponents second guessing
  • Values loyalty highly
  • find the best people to get the job done and then watch over them
  • The side that needs the deal most should walk away with the least

On foreign military

  • Long term rivals: China and Russia
  • Build up strength of US military as a form of deterrence to avoid necessity for deployment
  • Only intervene when US economic interest is served as opposed to a purely ideology driven approach
  • Countries that benefitted from US military aid should pay for service
    • South Korea
    • Germany
    • Saudi Arabi
    • Japan
    • Britain
  • On the middle east
    • Iran should not be trusted
      • their nuclear research program
      • their motivation to take over the entire Middle East
      • their motivation to wipe out Israel
    • See Israel as an ally. Sees the need to ensure balance of power amongst players within the middle east
    • The removal of Iraq has a net destabilizing effect on the region
  • Keep oil prices in check
    • to keep ISIS oil revenue from Iraq and Syria in check
    • To insulate the US economy from OPEC’s price setting ability
    • To become the largest oil producer in the world so as to overtake Saudi Arabia and Russia so as to keep their economic influence in check

On foreign trade

  • Believe in escalating use of sanctions to force other countries to table for negotiations
  • US Trade deficit is concerning
  • On China
    • Have deep respect for the Chinese who are great businessmen
    • largest holder of American debt
    • Chinese stock markets have too much influence on US stock markets
      • 2015 Chinese stock markets collapse caused US Dow Jones to plummet 1,000 points
    • Sees China as more dependent on US than US is on China. To utilize this as a leverage
  • Discourage other countries from devaluing their currencies against the USD
    • Japan
    • China
    • Mexico
  • Rectify faulty trade arrangements
    • China
    • Mexico
    • Russia
    • Iran
    • Saudi Arabia
  • Willing to utilize economic strength (American consumer) to reward countries that cooperate and punish those that don’t

On the economy

  • Believes in a progressive individual taxation system to provide more liquidity for the lower to middle class
  • Encourage companies to bring jobs and manufacturing back to the US
  • Streamline and lower corporate taxation to encourage companies to bring foreign reserves back to the US
  • Reduce corporate taxation to encourage growth of local companies and manufacturing
  • To reduce over-regulations to increase growth rate of corporate activities
  • Build up of military encourages GDP growth
  • Build up of infrastructure encourages GDP growth and facilitates commerce
  • On Oil
    • To build up the US Shale oil industry
    • Create more jobs domestically

On healthcare

  • break up virtual state monopolies by insurance companies
  • allow competition to make insurance companies compete for their customers

On education

  • decentralize control of the educational system to the districts to enforce standards
  • mistrust teacher unions’ ability to make sure only the best teachers get the job

On domestic operators

  • On reporters
    • mistrust political reporters as they generally misrepresent and bias towards sensationalization
    • trust financial reporters because dollars and cents are at stake
    • build relationship with them to generate free publicity for his ideas
  • Views interest of politicians as mis-aligned to interest of people

On immigration

  • Wants to retain the best foreign talents within the country and make it easy for them to contribute
  • To stem out illegal immigration so as to keep out unqualified immigrants
  • To remove the USD1billion/yr cost of keeping foreign criminals in US prison
  • Stop the tide of refugee immigrants to reduce the cost and repercussions of supporting them

On guns rights

  • 2nd Amendment, gun rights needs to stay intact so that citizens can keep the state in check and have a way of protecting their family
  • People with mental health should not be allowed to own guns
  • Over regulation is ineffective, criminals do not get their guns via normal routes

On religion

  • Believes in the freedom of religion
  • Believes Christian ideals is the philosophical foundation of the US
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Macro economic analysis on US/China 2018/2019 Trade war

The 196 pages of Chinese goods to be taxed by the US governments are spread across 6 categories. Where US manufacturers cannot find alternative sources of supplies, price increase of end product will be expected. Based on what was observed in December. The ability of the US government to sustain the trade war is predicated upon the Feds keeping interest rate low.

Taxed categories include

  • agricultural produce
  • textiles
  • chemical compounds
  • hardware parts
  • mechanical parts
  • electronic parts
The December 2018 US market financial meltdown can be attributed to US government tariffs to reduce demand for foreign material supplies from China coupled with Feds interest rate hike to limit capital needed to boost domestic production. The trade war seems to serve three purposes:
  • Drive up demand for domestic supplies
  • To keep inflation in check the economy grows (traditionally a role played by Fed Interest Rates)
  • Keep China in check.

Related references

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Book summary: The Fate of Rome

Climate is both an enabler and disruptor of human endeavors. Nature balances the population it supports. Technology enables increased rate of energy extraction from environment to further human purposes.

Conducive climate results in bountiful yield and has allowed Rome to rise. Land is cleared and trade networks flourish during the rise of the empire. Clearance of wild lands unlocked microbes into the human civilization.

Microbes evolve to utilize humans and other mammals as vectors of infection. Dense population and connected trading network serve as a multiplier. The worst pandemic is the white pestilence (Black Death). This wiped out more than half of human population.

Trading network collapse as a result of the decimated population. Military rank diminishes both as a result of population decimation. Problem is further compounded by collapse of financial system which makes it difficult to sustain an army.

Grounds are fertile for spread of monotheistic dooms day religion like Christianity. Emperor Justinian converts to Christianity. Classical Greek school of thoughts gets displaced.

Climate change for the worse force nomads with superior military power to migrate westwards into Roman territory.

Roman Empire with decimated population gets further crippled.

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Insights from dinner with Yuan

Conversations with Wang Ji Lei (Google)

China’s 996 practice has allowed China to close the 30 years technology gap between China and the US within the past 5 years. Some segments like cashless commerce have already surpassed US. The norm is some labor regulations are considered formalities and adherence is not necessary.

China’s distribution path starts from Beijing, 1st tier cities, 2nd tier cities, 3rd tier cities and finally remote villages. While double digits growth has been the norm over the past five years, market saturation has been achieved within the Chinese digital space and most apps are having problems growing.

Baidu’s Ads revenue model via search is increasingly being disrupted by Tic Toc. They have lost 50% ofvtheir search revenue last year. Similar trend is being observed with Google’s Ad revenue model which is bring increasingly disrupted by Amazon in the below USD75 consumer goods segment, Facebook between the USD75 and USD2000 consumer goods segment.

Tic Toc and WeChat dominate the bulk of the mobile usage bandwidth in China. Tic Toc with string positions within the short video entertainment segment while WeChat in the social conversations segment. Both companies face significant challenges encroaching into the other’s territory.

Tic Toc is the only Chinese mobile entertainment app that has made significant headway out of China. They have a well defined playbook which specialized tiger teams follow to gain traction in new territories. Maintenance is transferred to local team once penetration threshold is achieved. Due to fickle nature of users, retention remains the number 1 challenge. Position can be easily displaced by new entrants. Thebunderlyimg thesis is that city dwellers have lots of fragmented time spread across a day. Each video is restricted to 45secs to reduce anxiety that user has to stop watching between engagements. This also helps induce the habit of chipping in between engagements.

Typical engineer’s salary in Beijing is USD50,000 per year while a house cost around USD2million. While typical engineering salary in Silicon Valley is at least USD100,000 per year while house cost at least USD1 million. Wealth is mainly retained at the upper levels in China. Given the ratio of salary to house price as well as the comparative working hours, there is significant pull of talents to Silicon Valley.

Average green card waiting time for EB1 is now five since it’s been expended to include executives.

Major housing development is occurring in South Bay given huge influx of population and hiring by google (50,000 people) and other giants. Heavy recruitment is happening as Google continues to build out its cloud team.

Google cloud’s market share continues to lag with Amazon leading, Microsoft Azure in Second and AliCloud 3rd. Google cloud organization is facing an inflection point as upper management faces difficulties with zeroing in on a clear strategy. The symptoms are the dilemma between engineering culture (Google Default) versus customer culture (Amazon) and SMB versu Enterprise. Google’s traditional engineering culture has the effect of causing company to drift towards heavy engineering solutions which might be an overkill for SMB needs coupled with a lot of wastage which no one needs. This opens up a gap for customer focused companies.

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Societal comparison between our current day and age versus the era of communism’s rise

In Karl Marx’s Das Kapital, I see huge similarities between the society during his time of writing and our current day. Corporations well optimized for profitability while workers work long hours without making enough to sustain themselves.

Currently, blue collared workers are either unemployed or getting paid close to minimal wage. With the growing prevalence of trend 996, where overworking gets glorified, even knowledge workers are working increasingly long hours while stuck living in areas paying ever increasing rent.

The only distinct between what is observed now and then is the promise of upward mobility through hard work, some call it the “American Dream”. Based on my observation even that is getting slaughtered.

Based on the current trajectory, I foresee a day majority of our population wakes up to realize the dream is in fact just a dream and a set of ideology similar to Karl Marx’s gain widespread popularity amongst the masses.

Related references

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Blitzscaling with Microsoft

  • At scale, making sure everyone knows and adheres to mission, vision and values is very important
  • Handling Technological disruption is easy, handling business model disruptions are hard as it requires slaughtering your current cash cow
  • Need to set some ground rules that are baked into the core to mitigate against negative societal impact when operating at scale.
  • Ask permission from investors to use a different set of leading indicator metric when exploring into new terrain to help show progress every quarter
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Book summary: George Orwell’s 1984

George Orwell

Key take aways

  • To control a population first control the language and supported concepts. This helps frame and thus restrict the thoughts of its users.
  • The further up the hierarchy the increase the need to process contradictory ideas
  • In a totalitarian state, even harboring a thought with no corresponding action is considered a crime
  • The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function, F. Scott Fitzgerald
  • Control over the past allows control of the future. Control of the present allows control of the past
  • Tiers of control and effects
    • Control body without the control mind will lead to martyr – Romans and the Christians
    • Control of body and superficial control of the mind leads to a brittle regime – Soviet Union
    • Control of body and absolute control of mind through history leads a long lasting regime – Missionaries and the catholic church.

Related Readings

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Key take aways from the guide to a good life

A guide to the good life

Overview

The core of Stoicism as a philosophy is to live a good life (where peace of mind is deemed the highest good) by learning how to manage negative thoughts like:

  • anger
  • anxiety
  • fear
  • grief
  • envy

Techniques

This is done through the employment of these two techniques

Negative visualization techniques

  • Managing against hedonic adaptation by learning to desire what we already have. To do so, we must constantly remind ourselves the transient nature of things.

Focus of attention on what is within our loci of control

  • Totally within our control – focus our attention of these things
  • Partially within our control – internalize goals around parts where we have control
  • Totally out of our control – learn to be at peace with whatever outcome

Deliberate self denial

By deliberately depriving self the luxuries, one builds courage and self-control

Manage needs and desires

  • natural and necessary
    • Food and shelter
    • to fulfill
  • natural and unnecessary
    • Fine wine and luxurious food
    • to fulfill if not too much hassle
  • unnatural and unnecessary
    • fame and social status
    • to shun
  • unnatural and necessary
    • nothing exist in this category

Attitude towards time

  • The past and the immediate present is beyond change – be grateful for all that has came to pass and accept it with equanimity
  • The immediate future is where our loci of control falls – this is where we should channel our attention

Eras of stoiscism

  • Greek Stoics
  • Roman Stoics

The roman empire eventually adopted Christian religion as a the philosophical framework for state craft. This eventually displaced stoicism and other greek schools of philosophy.

Prominent stoic practitioners

  • Socrates
  • Marcus Aurelius
  • Xeno
  • Seneca

Related schools of philosophy

  • The Cynics – see Diogenes
  • Enlightened hedonism – see Epicurus

Related references

  • Meditations, Marcus Aurelius
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Key observations of Chinese One Belt Road Initiative in Africa

Territories observed

  • Egypt
  • Sudan
  • Ethiopia
  • Kenya
  • Tanzania
  • South Africa

Similarities observed

  • Heavy Chinese enterprise involvement in the building of roads and houses
  • Shops with Chinese labels observed in operation
  • In areas where there are construction operations, Chinese supervision and management observed aided by local manual labor
  • Ubiquity of mobile internet connection
  • Ubiquity of Samsung, Huawei and Tenco Android mobile phones ranging from USD50 among local adult and adolescent population

Macro trends

With the rise of the Chinese middle class, there is now increasing domestic demand for goods and services within China. This has driven the need to increase the overall throughput volume of such commodities. It can be speculated that the level of consumption is expected to surpass the level of production within China at some point.

Economic growth in China has for now hit a road block due to the following factors:

In light of these, China needs to start shifting its policy from an export focused economy to a domestic focused economy. To do so, it needs to feed and drive domestic demand for goods and services.

Regional trends

The Chinese government has been observed to enter into agreement with local African government to fund the build out of infrastructure, primarily roads and buildings. At the date of writing 85% of roads in Ethiopia has been completed within the country while in Zanzibar, Tanzania, all major roads are under construction and a sports stadium named Mao ZeDong stadium has been observed.

In exchange for the funding, local governments are restricted to engaging the service of Chinese companies. This safeguards the effectiveness of funds deployment for the operations aspects of the agreement while serving to three specific purposes. It minimizes the actual volume of liquidity that is tied up in loans to local government, while boosting demand for construction services within China and increasing maximum possible throughput volume of commodity exports from the region.

What is not obvious during the time of observation is how effective local governments are at managing funds during the stage between its receipt from China to its payment to the engaged Chinese companies. Discounting the inherent effectiveness of the various projects in driving local GDP, differing levels of corruption and maturity of national identify within the region will result in variance between actual ROI versus expected ROI for these projects.

On deciphering Chinese end goal within the region

At the moment of writing, it is yet clear how Chinese African relationship will crystalize for the future. Two key observations need to be made before we can get a glimpse of it.

Key observation #1 would be how China would react when the loans come to maturity and the local government have yet made sufficient returns from the infrastructure investments to pay off the debt.

Key observation #2 would be how Chinese companies would handle the post construction phase of projects that require ongoing maintenance in terms of knowledge transfer.

Related readings