Tag Archives: David Daokui Li

Tang Dynasty Redux

This Bystander’s eye was caught by an assertion that modern-day China aspires to be a latter-day incarnation of the Tang dynasty. It was made by a serious figure. David Daokui Li is a worldly and respected academic economist, well-known in the U.S. and now a professor at Tsinghua University. He is high enough in policy-making circles to be one of an elite group of academic economists advising the central bank on monetary policy. In an article published by Insead, a European business school, and titled How China Is Managing Western Hostility, Li writes:

Our aim is the revival of our great civilisation. We are not looking for retribution against the West and we are certainly not interested in dominating the world. Instead, we would like to see the revival of a peaceful, confident, open-minded civilisation similar to that of the Tang Dynasty.

The Tang dynasty lasted from the seventh to the 10th centuries and is seen as a high water mark of Chinese civilization, especially in its first 200 years and particularly in the arts. It was a period of stability and innovation. It created a powerful, centralized bureaucratic elite, introduced Buddism and woodblock printing. Its capital, modern day Xian, was probably world’s largest and richest city at the time. Yet the political and economic parallels are interesting. It was an empire of protectorates and tributary states that extended southwards into Indochina and westward along the Silk Road into Central Asia in rivalry with the Tibetan empire. It was a maritime power whose giant ocean-going junks traded across the Indian Ocean to Africa and the Middle East. Its trade and commerce thrived even as a declining central government, eclipsed by the rising power of regional military governors, withdrew from managing the economy.

Past is prologue, but only up to a point. And we would not want to overegg this particular pudding, particularly with a selective reading of history. But the issue of how the West sees China’s emergence as a world and economic power and China’s response is an important one. Li lays out a clear and succinct exposition of how to understand China’s motives and objectives. For example:

China’s emergence gives us an alternative model for social and economic institutions, different from that of the U.S and other Western countries. A model where more weight is given to social welfare, well-being, and stability, rather than to pure individual liberties.

Whether you find that threatening or not, the piece is well worth the read.

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One Crop Failure From Catastrophe

A peasant is happily showing her harvested wheat in Ganyu County, east China's Jiangsu Province, Oct. 17, 2011.

China’s farmers have been buying land abroad, from Africa to South America, and they should be buying more, according to the prominent Chinese economist David Daokui Li, to forestall a potentially catastrophic grain shortage that faces the country.

Li suggests that it would only take one bad crop to throw the world into food shortage. “We can imagine that with the frequency and severity of natural disasters in China as well as in other parts of the world, the overall global grain output will be decreased, which will pose a potentially grave threat to grain security, leading to worldwide food shortages and resulting in global inflation in food prices,” he says.

Li comments came in an interview published by Insead, the French management school that has a partnership with Tsinghua University, where Li is Director of the Center for China in the World Economy. He is also a member of the Monetary Policy Committee of the People’s Bank of China.

Buying more farm land overseas, Li says, “will not only work towards China’s self-interest, but will also contribute to helping to solve the wider global grain supply problem.”

China’s leadership has been repeatedly expressing its concern about the future of the country’s grain supplies. Regardless of record harvests being reported year after year for seven years despite a string of natural disasters, there is no hiding  the challenges facing China’s growers of wheat, rice and corn. A richer and growing population, urbanization and natural and man-made water shortages have  left supply struggling to keep up with rising demand.

The vulnerability of the country’s harvest, particularly the wheat harvest, increasingly concentrated on the drought-prone North China Plain, is only too clear to see. China is reaching the the edge of its capacity to keep its grain harvests increasing. Agri-technology is still boosting fruit and vegetable yields, but grain may have reached its limits after decades of seed and fertilizer improvement. In addition, grain farming remains inefficiently small scale and labour intensive, as is suggested by the photo above of a farmer from Ganyu County in Jiangsu. Acreage and younger farmers alike are also being lost to towns, exacerbating the longer-running effects of erosion, desertification and other environmental damage.

Stocks and imports have covered the gap with growing demand, forestalling, so far, the sort of shortages that Li fears. China imports more than 4 million tonnes of corn (mainly for animal feed) and more than 1 million tonnes of both wheat and barley a year. But being subject to world commodity markets pushes up prices, and no country likes to feel it can’t be self-sufficient in food, especially when it has an increasing number of mouths to feed.

The UN’s Food and Agriculture Organization estimates China to have 137 million hectares of arable land. China itself reckons 120 million hectares to be the minimum needed to maintain food security. All agree that the hectarage is moving in the direction of the smaller number, with the shrinkage of the area under grain shrinking causing most concern. Better water management, a national priority under the current five year plan, can reclaim some land for farming, but beyond that, as Li suggests, there is only one place to get any more.

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