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ECONOMIC OBSERVER
The Economic Observer is a weekly Chinese-language newspaper founded in April 2001. It is one of the top business publications in China. The main editorial office is based in Beijing, China. Inspired by the Financial Times of Britain, the newspaper is printed on peach-colored paper.
Photo of a Japanese car manufacturer in Japan assembling parts
Economy
Daisuke Kondo

Why Japan's Auto Industry Can't Keep Pace With The Electric Vehicle Revolution

The "Made in Japan" label used to be a mark of progress, but Japanese manufacturing has declined rapidly. Now, the automobile industry, the last bastion of the country's technology, has fallen behind in the transition to electric vehicles.

TOKYO — From semiconductors, TVs, and computers to mobile phones, Japan was once the world’s leading manufacturer, and it swept the world with all these products. But since entering the twenty-first century, “Made in Japan” has declined so fast that certain Japanese brands have simply disappeared.

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China Can't Just Throw Money At Its Fertility Crisis
Society
Jing Yishan

China Can't Just Throw Money At Its Fertility Crisis

As China grapples with an aging population and falling fertility rate, the government has tried different measures to encourage people to have children. But the suggestion by one of the country's top economists to print money to kickstart a baby boom did not go down well with the Chinese public — raising children isn't just a question of money.

-Analysis-

BEIJING — Earlier this month, Ren Zeping, a Chinese economist, suggested that the country’s central bank should set up a two trillion yuan ($315 billion) maternity benefit fund so to encourage a baby boom of 50 million extra children within the next 10 years.

Zeping reckons that we should seize this opportunity while the generation of women born between 1975 and 1985 are still fertile, and not put too much hope in the generation born after 1990. This is due to the fact that the older generation still have the idea that happiness is to be found in having more children, whereas those born after 1990 often reject the idea of having more than one child and even reject the idea of marriage.

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Photo of new Japanese Prime Minister Fumio Kishidaposing for a portrait in Tokyo on Sept. 29
Geopolitics
Daisuke Kondo

A Dove From Hiroshima: Is Fumio Kishida Tough Enough To Lead Japan?

Japan's new prime minister is facing the twin challenges of COVID-19 and regional tensions, and some wonder whether he can even last as long as his predecessor, who was forced out after barely one year.

-Analysis-

TOKYO — When Fumio Kishida, Japan's new prime minister. introduced himself earlier this month, he announced that the three major projects of his premiership will be the control of the ongoing pandemic; a new type of capitalism; and national security.

Kishida also pledged to deal with China "as its neighbor, biggest trade partner and an important nation which Japan should continue to dialogue with."

Nothing too surprising. Still, it was a rapid turn of events that brought him to the top job, taking over for highly unpopular predecessor, Yoshihide Suga, who had suddenly announced his resignation from office.

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Photo of the 58-meter tall Statue of Guan Yu in Jingzhou Park, China
Society
Chen Zhe

Why Chinese Cities Waste Millions On Vanity Building Projects

The so-called "White Elephants," or massive building projects that go unused, keep going up across China as local officials mix vanity and a misdirected attempt to attract business and tourists. A perfect example the 58-meter, $230 million statue of Guan Yu, a beloved military figure from the Third Century, that nobody seems interested in visiting.

BEIJING — The Chinese Ministry of Housing and Urban-Rural Development recently ordered the relocation of a giant statue in Jingzhou, in the central province of Hubei. The 58-meter, 1,200-ton statue depicts Guan Yu, a widely worshipped military figure from the Eastern Han Dynasty in the Third century A.D.

The government said it ordered the removal because the towering presence "ruins the character and culture of Jingzhou as a historic city," and is "vain and wasteful." The relocation project wound up costing the taxpayers approximately ¥300 million ($46 million).

Huge monuments as "intellectual property" for a city

In recent years local authorities in China have often raced to create what is euphemistically dubbed IP (intellectual property), in the form of a signature building in their city. But by now, we have often seen negative consequences of such projects, which evolved from luxurious government offices to skyscrapers for businesses and residences. And now, it is the construction of cultural landmarks. Some of these "white elephant" projects, even if they reach the scale of the Guan Yu statue, or do not necessarily violate any regulations, are a real problem for society.

It doesn't take much to be able to differentiate between a project constructed to score political points and a project destined for the people's benefit. You can see right away when construction projects neglect the physical conditions of their location. The over the top government buildings, which for numerous years mushroomed in many corners of China, even in the poorest regional cities, are the most obvious examples.

Homebuyers looking at models of apartment buildings in Shanghai, China — Photo: Imaginechina/ZUMA

Guan Yu transformed into White Elephant

A project truly catering to people's benefit would address their most urgent needs and would be systematically conceived of and designed to play a practical role. Unfortunately, due to a dearth of true creativity, too many cities' expression of their rich cultural heritage is reduced to just building peculiar cultural landmarks. The statue of Guan Yu in Jingzhou is a perfect example.

Long ago Jinzhou was a strategic hub linking the North and the South of China. But its development has lagged behind coastal cities since the launch of economic reform a generation ago.

This is why the city's policymakers came up with the idea of using the place's most popular and glorified personality, Guan Yu (who some refer to as Guan Gong). He is portrayed in the 14th-century Chinese classic "The Romance of the Three Kingdoms" as a righteous and loyal warrior. With the aim of luring tourists, the city leaders decided to use him to create the city's core attraction, their own IP.

Opened in June 2016, the park hosting the statue comprises a surface of 228 acres. In total it cost ¥1.5 billion ($232 million) to build; the statue alone was ¥173 million ($27 million). Alas, since the park opened its doors more than four years ago, the revenue to date is a mere ¥13 million ($2 million). This was definitely not a cost-effective investment and obviously functions neither as a city icon nor a cultural tourism brand as the city authorities had hoped.

China's blind pursuit of skyscrapers

Some may point out the many landmarks hyped on social media precisely because they are peculiar, big or even ugly. However, this kind of attention will not last and is definitely not a responsible or sustainable concept. There is surely no lack of local politicians who will contend for attention by coming up with huge, strange constructions. For those who can't find a representative figure, why not build a 40-meter tall potato in Dingxi, Gansu Province, a 50-meter peony in Luoyang, Shanxi Province, and maybe a 60-meter green onion in Zhangqiu, Shandong Province?

It is to stop this blind pursuit of skyscrapers and useless buildings that, early this month, the Ministry of Housing and Urban-Rural Development issued a new regulation to avoid local authorities' deviation from people's real necessities, ridiculous wasted costs and over-consumption of energy.

I hope those responsible for the creation of a city's attractiveness will not simply go for visual impact, but instead create something that inspires people's intelligence, sustains admiration and keeps them coming back for more.

The three-child policy represents a major readjustment of China’s birth control principle.
Geopolitics
Economic Observer Editorial

China: The Public's Right To Speak Up On Family Planning Policy

The CCP is not used to sharing the decision-making role with the public, but that may be exactly what all sides need to try to encourage more Chinese people to have babies.

-Analysis-

BEIJING — On May 31st, China announced its new so-called "three-child policy" that allows couples to have three children. The policy was announced just 20 days after the release of the results of the Seventh National Population Census. They show the country's trend of an aging population is worsening, with only 12 million new births recorded in 2020, the lowest since 1960. This isn't a coincidence.

As the meeting minutes of the Politburo of the Chinese Communist Party (CCP) state, the policy is to further optimize the relevant supporting measures of family planning guidelines, to improve the population structure, and to implement a national strategy by actively respond to the demographic aging, so as to maintain the advantages of the country's human resource endowment.

Even though this still is far from responding to the public's expectation of a full easing of a couples' birth limit, the three-child policy represents nonetheless a major readjustment of China's birth control principle.

It's worth pointing out that not only are couples now allowed to have three children instead of two, the National Health Commission which is in charge of family planning, pointed out that complaints over policy issues such as marriage, child-raising and education should also be addressed. This includes providing young people with guidance on family and marriage values, advocacy to correct bad wedding customs such as the expectation of a very high dowry, a universal childcare system, promotion of educational equity, supply of high-quality educational resources and reduction of education costs.

We believe the public should have a full say.

Indeed, the above-mentioned issues are all well-noted "pain points' that affect young people's willingness to have babies. Therefore, the adjustment in tackling these problems can be regarded as a comprehensive reflection on parenting policies.

The Politburo meeting proposed that by improving maternity leave and the insurance system, by strengthening supporting measures in taxation and housing, and by protecting the legal rights and interests of women in employment, the aim of establishing a more complete maternity protection network can be achieved. And the beneficiaries should include all families from one child to two or three children.

The relevant policy details have not yet been announced, but we believe that the public should have a full say in this. These policies concern all those who are going to be parents and those who will be parents in the future, and will ultimately concern every family. Hence, the government's decision-making agencies ought to listen to the public's expression of their interests. This involves a process of open discussion and full interaction. Unless there exists a positive response and participation from the public, the effectiveness of the policy may be greatly compromised.

Meanwhile, tackling the above issues should be cohesively and organically combined, rather than being advanced individually by each relevant department. The family planning policy's complexity implies taking into consideration the various social and economic aspects, including human resources, social security, finance and taxation, education, and housing.

Only 12 million new births were recorded in 2020, the lowest since 1960 — Photo: Sheldon Cooper/SOPA Images via ZUMA Wire

Any link in the chain which fails to keep up with changes and demand may create loopholes in this birth protection network. In the past, perhaps because family planning is a sensitive and complicated issue, the related governmental departments had not been enthusiastic to hear the public's opinions. Yet, going from allowing couples to have two children if one of the couple is a single child him or herself, to then allowing two children, and then the currently three children, the policy has always provoked lively debates between the authorities and the people. Objectively, it is these discussions that accelerated the announcement of the government's policies.

This is all the more reason that the supporting measures of the three-child policy should absorb past experience, and respond to the public's demands in a realistic manner based on accurate research. This will make up for shortcomings in all these areas linked to reproduction to child-raising, and thus help reduce parenting anxiety. There has been no shortage of experts and scholars with suggestions and policy advice. For example, one expert suggested that a fertility fund should be levied, while another from the entrepreneurial sphere said that "one should complete the most basic reproductive responsibility by giving birth to two children before he or she has the right to use contraceptive products', and so on.

We welcome constructive opinions based on rationality, however, it should be said that some of these suggestions have gone to the opposite pole of a serious marital and childbirth policy.

The basic feature of this rhetoric is that many don't regard child-bearing as a basic right, but more as a tool for achieving economic and social purposes. Based on this, a punishment and reward mechanism is set. We believe that any good family planning policy ought to be based on respecting peoples' fundamental rights so that each family can freely make their own choice.

Protests against the Tokyo Olympics earlier this month
Japan
Daisuke Kondo

Hosting Tokyo Olympics During COVID Is Like Gyokusai Suicide

With infections surging, and only 1% of the population fully vaccinated, many say that devoting so many resources to hosting the Summer Games is a recipe for disaster.

-Analysis-

TOKYO — A doctor friend of mine is a member of the Medical Services team for the Tokyo Olympic Games, but right now his attention if focused on New Delhi. "If the current situation continues, Japan will become like India," he told me last week. "We'll be totally unable to fight against the new Indian variant of Covid-19. When the medical system collapses as we fear, hosting the Olympics will be but a wishful dream."

The Tokyo Olympics is planned to kick off on July 23. In view of the current pandemic situation, the International Olympic Committee (IOC) Chairman Thomas Bach will visit Japan on May 18th to confirm whether the Olympic Games can be held as scheduled. Right now, the number of coronavirus infections is surging, and the vaccination efforts are faltering badly, with just 1% of the population fully vaccinated.

To curb the pandemic, the Japanese government has declared a third state of emergency for major cities and their neighboring prefectures. Some 70% of Japanese companies have been asked to let their staff work from home, universities have switched to online classes, cinemas and tourist parks are closed, restaurants are open until eight o'clock in the evening but no alcohol can be served anytime of the day.

Why is it that Japan has failed to come up with its own vaccine?

Since the outbreak of the pandemic, the unemployment rate and closures of companies have multiplied. Numerous restaurants where I eat regularly sent me messages one by one to apologize that they are shutting down permanently. Some had been around for more than 30 years.

But there are other even more puzzling factors. First, why is it that Japan has failed to come up with its own vaccine? The pharmaceutical companies in the US, China, Russia and Britain have all successfully developed vaccines and have given priority to their residents. Yet, Japan, the country that likes to boast that it's "the only developed country in Asia" has fallen far behind on this front.

After Japanese Prime Minister Yoshihide Suga visited the US in April, he proudly claimed that "During my stay in the US, I had a telephone conversation with the general manager of Pfizer and he promised to provide Japan with the vaccine." I couldn't understand his mentality, as the leader of a country, to be so proud about having to beg for such favors.

Japan_Olympics_2020

The Olympic rings in front of the New National Stadium, in Tokyo. — Photo: Cezary Kowalski/SOPA Images/ZUMA

Secondly, why is it that people over 65 were given priority in receiving the jabs? The need of giving it to the medical corps as a priority is fully understandable, but why isn't it the working-age population instead of the elderly? The elderly can easily stay at home while people who make up the workforce have to get out of the door to earn their bread. In order to increase the herd immunity and to suppress the increase of infections, it is reasonable to give vaccination first to the working-age population.

In Japan, 36 million of the overall population of 126 million are people over 65. And like my parents put it – we all have a retirement pension and have no need to go out and work. Moreover, it's probable that one's health condition worsens after receiving a vaccine so we don't want to be vaccinated. Lots of people our age share the same thinking. Yet Suga's explanation is that it's more likely for an elderly infected by Covid-19 to become seriously ill, and jabs help to reduce the number of deaths and hospitalizations.

To look at the issue deep down, however, one can't help suspecting that the real motivation is just to pave the way for the run up to Japan's general election this coming fall. It is hard to imagine that Suga would disappoint these 36 million potential voters.

More than 65% oppose hosting the Olympic Games as scheduled.

So, the remaining question is – can the Tokyo Olympics and Paralympics be held as planned if the pandemic continues to wreak havoc?

On April 28, the Aichi Prefecture federation of Medical Worker's Unions based in Nagoya protested on Twitter calling "to stop hosting the Tokyo Games'. "Under current circumstances, nurses will be too swamped with the pandemic to attend the games." The message immediately gained thousands of supporters.

And in April, the Jiji Press, a Japanese news agency conducted a survey on the public's opinion of the games. More than 39% of those surveyed thought that "the Olympic Games should be called off"; 29% thought that it should be held as scheduled; and 26% of the respondents thought that it should be rescheduled a second time. In other words, more than 65% of Japanese people oppose hosting the Olympic Games, beginning July 23.

Suga wants to go ahead with the Olympic Games, with his eye squarely on the upcoming elections. In referring to his determination, the press even used the term gyokusai, literally "shattered jade" in Japanese, meaning to fight to the last person without surrendering. With only around two months ahead of the scheduled Tokyo Olympics, are the Japanese people being forced to engage in a COVID "gyokusai"? We'll know soon enough.

Facial recognition payment at a subway station in Zhengzhou, China
China
Wu Chen

Biometric Risk: Why China Should Say No To 'Face Swiping'

Registering facial recognition data with a biometric authentication application is all the rage in China, but it comes with major privacy concerns.

-Analysis-

BEIJING — A friend of mine recently made a business trip to China's southeastern city of Shenzhen. Arriving at an office building, he was not allowed into the elevator until he had registered his facial recognition data with a biometric authentication application. This action is called "face swiping" in China.

After some hesitation, he finally yielded to the request in order to get to his appointment on time. However, the more he thought about this afterwards, the more he regretted that he didn't stick to his principles — even if that meant he would have been letting down his company. He was worried that his biological information could be abused and misappropriated.

Face swiping is increasingly used in security inspection in China. Not only has it become normalized for use as an ID card verification process in airports and railway stations, but more and more places are following suit, including social media platforms and mobile payments among others.

It is most commonly used in office buildings and residential blocks. What is different from airports and stations is that, in order to pass the security check at an office building or a residence, one is obliged to first go through a registration and verification process. This extra step creates the risk of privacy infringement, and personal biological data could be violated and misappropriated with all kinds of consequences.

Under current circumstances of imperfect supervision, legally collected facial data is being misused.

It is worth noting that, according to a recent survey in China, embezzlement of personal information by using AI face-swapping technology is far too commonplace. A CCTV report pointed out that one can purchase as many as 1,000 strangers' photos online for a mere 2 RMB (30 US cents). Chinese media have reported that criminals have used artificial intelligence technologies to alter people's photos that they illegally obtained, and turned these photos into deep fakes for criminal purposes.

Battling against unscrupulous criminals, the eastern city of Hangzhou submitted a revised draft of the city's Property Management Regulations to the standing committee of the National People's Congress of Hangzhou for deliberation in October. The aim of this draft is to prohibit estate management bodies forcing property owners to provide biometric information such as fingerprints and face recognition to enter their community. This is the first time that discussion about the importance of "privacy and data security in relation to convenience" has entered the lexicon of local legislation.

The fact that a local legislature is seriously examining the application of face recognition is a big step forward. Many are hoping that debates about the collection of personal biological information might now be taken up at a higher level in China, with appropriate legislation applied.

Facial recognition payment in Tongxiang, China — Photo: Xinhua/ZUMA

The first step would be to regulate who is authorized to collect biometric data, such as faces and fingerprints. The purpose of collection should be defined clearly while the method of storage and security has to be guaranteed.

Not only should one be allowed an "opt out" choice, but an alternative method for verifying their identity has to be provided for people who are not willing to share this data.

Even if the collection of facial metric information is permitted, further clarification and transparency on the use of this data must be conditional so as to avoid misappropriation. Under current circumstances of imperfect supervision, loopholes and the existence of an illegal photo trading market, legally collected facial data is being misused.

Is your face an account or a password?

An effective check-and-balance system needs to be implemented by tech companies driven by their interest in developing an increasing number of facial recognition applications. One of the reasons why China rapidly advances in artificial intelligence is because it collects far higher amounts of data information than Europe and the United States.

Facial recognition is one of the few areas where artificial intelligence finds a wide range of real application scenarios that can be successfully commercialized. But it's precisely because of this potential that we need to be more vigilant about such "progress."

Neither office buildings nor private residencies has the ability to develop a face-swiping system themselves. They are being driven by high-tech companies trying to promote widespread usage of their applications. Therefore, just by banning the use of face swiping in offices and residences, without allowing system providers to participate in the rulemaking, will reduce the legislation to a cat-and-mouse game.

There's no doubt that improving technologies aid many people. The critical question is, as some experts put it: Is your face an account or a password?

The difference between these is clear: an account doesn't get changed regularly, whereas a password can be altered at will, and should be frequently for security's sake. Everybody has only one face, unless you squander a fortune on plastic surgery in South Korea. Using your face as an unchanging password for authenticating numerous services is at your own peril.