Star-kaapi, anyone?

(This column was published in DNA edition dated January 15, 2011.)

Venky Vembu

The news that international coffee chain Starbucks is brewing plans to enter India through a tie-up with Tata Coffee leaves me, a confirmed caffeine junkie, considerably underwhelmed. That’s only because back where I come from, the sun isn’t deemed to have risen for the day unless a steaming hot tumblerful of frothy filter coffee – or, more appropriately, kaapi – has been ingested in just the right way.

The morning coffee routine is something of a ritual, with a protocol for cooling the coffee to just the right ‘imbibable’ temperature by tossing it around from receptacle to receptacle and then carefully pouring it down the hatch without the tumbler making physical contact with one’s ritually polluting mouth.

Tossing the coffee around in this fashion is a form of high art, and restaurants and coffeehouses in Chennai go the whole nine yards to enrich the coffee-drinking experience with what’s called the ‘metre coffee’. The ‘metre coffee’ derives its name from the fact that the skilled bearer can actually ‘stretch’ the ‘tossed’ coffee up to a metre or two (and even manage a commentary on the DMK’s electoral prospects). It’s sort of like a showman bartender at work, only more flamboyant. More adventurous bearers have been known to toss the coffee behind their back. All this is not just for effect: tossing the coffee around whips up an even mix of frothy coffee at just the right temperature.

According to folklore, the caffeinated pleasures of the coffee were brought unto this world when an Ethiopian goatherd noticed that his herd became extraordinarily frisky after eating a certain berry. Given its roots in Arabic culture, the coffee found itself at the centre of a religious war in the 16^th century: Christian priests wanted the ‘Muslim drink’ banned because it was breeding a curious addiction among their flock. But Pope Clement VIII, after a sip of the “Satan’s drink”, pronounced it so delicious “that it would be a pity to let the infidels have exclusive use of it.” He then ordained that the coffee be “baptised” and made a “truly Christian beverage” so as to “fool Satan”.

In the 17^th century, the coffee, to which Europeans had taken a fondness, was the focus of numerous pseudoscientific studies; some attributed miraculous healing powers to it, while others asserted that it caused paralysis and impotence. One Parisian doctor, who had evidently ingested the coffee through alternative orifices, prescribed “coffee enemas” to “sweeten” the lower bowel and impart a glow to one’s complexion.

 

It’s famously said of Starbucks that it can serve a cup of coffee in more than 19,000 ways using five kinds of milk. As a card-carrying member of the kaapi club, I’m underwhelmed by such statistics. But being fair-minded, I’m willing to make a concession: if they can rebrand themselves, by perhaps offering a Star-kaapi, I just might savour a cuppa…

China’s lack of growth drivers is a bigger risk than inflation: Michael Pettis

(This interview with Michael Pettis, professor at Peking University’s Guanghua School of Management, a specialist in Chinese financial markets, was published in DNA edition dated January 10, 2011.)

China’s headline inflation numbers have had global financial markets bracing for tightening measures in what they consider ‘the engine of global economic growth’. But Michael Pettis, professor at Peking University’s Guanghua School of Management, a specialist in Chinese financial markets and a senior associate at the Carnegie Endowment for International Peace, reasons that, in fact, the bigger risk in China in 2011 is that it lacks adequate growth drivers – beyond investment-led growth. And that investment-driven growth is feeding surpluses into a world that is, in fact, experiencing anaemic demand, while also feeding malinvestment in China. To that extent, China isn’t the “locomotive of global economic growth,” and a ‘new normal’ in GDP growth rates, which is well below trendline, would be good for China and for the world, Pettis argues in an interview to DNA Money’s Venky Vembu. Excerpts:

Let’s talk of China in 2011: is inflation or the lack of growth drivers the bigger risk in China?

 

I would say it’s the lack of growth drivers – or rather that the main growth driver is still going to be growth in investment. I know that there’s a great deal of worry about inflation and if inflation continues rising, it creates real serious problems. But I also believe that in a financially repressed system like China, where interest rates are kept very low, there’s a very weird inflation dynamic. Inflation becomes sort of self-dissipating: as inflation rises and interest rates fail to follow, the real rate declines and the deposit rate is pretty much negative. That has two effects: on the consumption side, it further reduces household income share of GDP because, with such high savings, the return on your savings should be an important part of your total income. But with the return actually negative, it puts significant downward pressure on your total income. I would argue that low household consumption in China is a function of low household income as a share of GDP. Anything that reduces that household income share puts downward pressure on consumption.

Imagine a world with easy visas on arrival…

(This column was published in DNA edition dated January 5, 2011.)

Venky Vembu

The ex-Beatle and irremediable peacenik John Lennon, who was murdered 30 years ago last month, wanted us to imagine a world without countries (or religions or possessions). There’s evidently a big market around the world for syrupy sentimentalism of that sort, which accounts for why Imagine became something of a “global anthem”. Heck, there’s even an ice-cream flavour, complete with chocolate peace symbols, called Imagine Whirled Peace.

When Barkha joins Sun TV, it’s time to eat your noodles

(This column, intended purely in jest as a turn-of-the-year satire, was published in DNA edition dated January 3, 2011.)

Venky Vembu

A year ago, I gave expression to my wish-list of 10 whacky things I’d like to see happen in 2010. It turned out to be quite a madcap year, and a fair bit of my irreverent wishes were granted. Since the God of Whacky Things is in a benevolent mood, I’m offering my wish-list for 2011, in the hope that however low we may be dragged by corruption scandals, we’ll find something quirky to elevate us to a higher state of being…

1. Radia calling Radia
The latest tranche of leaked Niira Radia tapes shows that the corporate lobbyist calls herself and talks to herself. “After my tapped phone conversations were leaked, nobody takes my calls anymore,” Radia tells Radia. “I’m so glad I have you to talk to.” To which Radia responds: “Don’t say anything incriminating. They may be tapping this call too.” CBI officials want to interrogate the ‘other’ Radia as well.

‘Zombie ideas that caused the near-meltdown of financial markets are still driving policy’

(This interview, with John Quiggin, professor of economics at the University of Queensland in St Lucia and author of Zombie Economics: How Dead Ideas Still Walk Among Us, was published in DNA edition dated January 3, 2011.)

The arresting cover of John Quiggin’s recent book on economics looks more like a scene from Michael Jackson’s Thriller: beneath a night sky, zombies crawl out of cracked graves; blood trails trickle down, and a haunted house shimmers in the moonlight. That’s only because the message from Quiggin, professor of economics at the University of Queensland in St Lucia, is very spooky. “The zombie ideas that brought the global financial system to the brink of meltdown… still walk among us,” he says. These ideas – that “the financial markets are efficient” or that “trickle-down economics works” or that “privatisation is good” – that had been killed and laid to rest, most recently following the near-meltdown in global financial markets in 2008, are now “reviving and clawing their way” back to life – and continue to influence policy. In an interview to DNA Money’s Venky Vembu, Quiggin explains why if these zombie ideas aren’t killed once and for all, they will do even more damage next time. Excerpts:

 

What are these “zombie ideas” and how is that even though they’ve been “killed”, they haunt the policy discourse?

 

In the book I look at five different ideas that together form a package that’s often called by names such as ‘neoliberalism’ and the Washington Consensus. I’ve used the phrase ‘market liberalism’ to describe these ideas. There are a bunch of different reasons why they keep coming back. One is that people have academic careers around them and are committed to the ideas; a second is that they benefit the interests of powerful groups, who want the ideas to be sustained.

The limits of Keynesian economics have also been exposed by the financial crisis of 2007-08. Is Keynesian economics also a zombie idea?

In my view, it isn’t. Particularly from an Australian perspective, we adopted Keynesian policies and came out a lot better than countries that were either unwilling or unable to adopt Keynesian stimulus, and so have run into the greatest difficulty, particularly some of the countries where the scale of the banking crisis has been such that they’ve had to move rapidly towards austerity.

‘It’s a myth that Made-in-China goods are of poor quality’

(This interview about the campaign, by an unlikely candidate, to pitch the made-in-China label as measuring up to international quality standards, was published in DNA edition dated January 1, 2011. It offers an interesting counter-narrative to reports about the poor quality of mass-manufactured made-in-China goods, which was reflected in this interview with Paul Midler, author of Poorly Made in China.)

Lionel Derimais: photograph by Jade Charles

China’s reputation as the world’s factory floor has been dented in recent years by horror stories about the poor quality of made-in-China goods. Children’s toys were found to be coated with lead-laced paint, and medicines and pet foods with toxins caused fatalities overseas.  But beyond those aberrations, which perpetuate something of a myth, it is possible today to find many “nicely made-in-China” products, argues Lionel Derimais, a French national who until recently lived in Beijing. Derimais is quite an unlikely authority on Chinese-made merchandise: an itinerant professional photographer – he travelled in the Sunderbans with French writer Dominique Lapierre in 1999 – he came to Beijing in 2005 to document a country in the throes of an Olympics fever. Earlier this year, disquieted by the erroneous image being conveyed about the quality of Chinese merchandise, he started a blog (www.nicelymadeinchina.com) to showcase manufacturers and service providers in China who measure up to international standards. In just eight months, his blog has become a gateway for people looking to source quality goods from China. In an interview to Venky Vembu, Derimais explains his motivation in promoting the made-in-China label. Excerpts:

How did you, a professional photographer, come to write about China merchandise?

Whenever I read reports about the poor quality of made-in-China products, I’ve felt that they don’t reflect the reality of people who live in China, for whom things are improving every day. One evening in November 2009, after one of those ‘bad China’ days, my girlfriend showed me a beautiful bag and said, “See, there are some nicely made-in-China products.” That gave me an idea: I immediately checked if the domain name (nicelymadeinchina.com) was available, and bought it, with no particular idea in mind. In mid 2010, I began to write about people I knew of who made quality stuff to an international standard; my friends and associates referred other products and services. That’s how it all started.

Wen a neighbour comes calling…

(This article, a curtain-raiser to Chinese Premier Wen Jiabao’s upcoming visit to India, was published in DNA edition dated December 12, 2010.)

Venky Vembu

A chill wind is blowing across Beijing, but it isn’t just a momentary meteorological effect that drives down night-time temperatures well below zero. The frostiness in the air in recent times has cast a cold, clammy influence farther afield – on China’s relations with practically all its neighbours. It is reflected in the icy edge to the tone in which Chinese leaders have been hectoring leaders far and near, and in the blustery headlines in the official Chinese media.

On Friday, however, the weather changed momentarily on at least one unlikely front: the official English-language China Daily sought to dispel some of the winter chill with an all-too-rare sunny account of Sino-Indian relations, barely days ahead of Premier Wen Jiabao’s visit to India. A new supplement, ‘Asia Weekly’, bearing a splashy photograph of Wen and Prime Minister Manmohan Singh, framed Sino-Indian relations in the context of the rise of the “two Asian Titans” as growth engines of the global economy at a time when much of the developed economies are down and out.

Stephen Roach takes the ‘baseball bat’ to Paul Krugman

(This article was published in DNA edition dated December 10, 2010.)

Venky Vembu

The intellectual war of words between economists Stephen Roach and Paul Krugman is the stuff of legends. They disagree – vehemently – on the fundamentals underlying the reasons for the US economic affliction: the Nobel Prize winning Krugman argues that China is ‘stealing jobs with an undervalued currency, and uses his platform as a columnist in the New York Times to campaign for tariffs on Chinese imports. Roach, on the other hand, points out that the US has a trade deficit not just with China but with 89 other countries, and traces US’ economic ailments to a poor record of saving.

Earlier this year, when the argument got a little too heated, Roach said, “we need to take the baseball bat” to Krugman’s argument.

Think Asia is out of the woods? Think again

(This article was published in DNA edition dated December 10, 2010.)

Venky Vembu

Ever since Stephen Roach, arguably one of the world’s most influential economists, moved back to the US in July after “three fantastic years” in Hong Kong as Morgan Stanley Asia chairman, he’s been travelling back to Asia practically every month. But today, in Hong Kong, he senses an indescribable lightness of being after the region bounced back from the bruising trauma of the global financial crisis of 2008-09.

“It feels like we’re right back at the peak,” says Roach, who has now taken up a full-time teaching position at Yale, where he is sensitising the next generation of thought leaders to the dramatic changes under way in Asia. “Stock markets are up, property markets are strong, and there’s a deeply held conviction that we’re in the early stages of the Asia century, the China century.”

At the swank Four Seasons hotel where Roach is lodged, the manager told him that occupancy rates were above the peak levels of 2007 and 2008 – and that it felt as if “nothing had ever happened here.”

China’s might versus the power of an empty chair

(This column was published in DNA edition dated December 8, 2010.)

Venky Vembu

At the ceremony in Oslo last year to award the Nobel Peace Prize to US President Barack Obama, China was given a platform to showcase an element of its soft power: the gifted classical pianist Lang Lang was invited to perform at the ceremony to symbolise China’s rise on the world stage.

 

At this year’s ceremony, days from now, the most powerful symbol of China’s further ascendance, and of the long shadow it casts around this world, will be an empty chair. That’s because this year’s winner, Chinese scholar and campaigner for democracy and human rights, Liu Xiaobo, is serving time in a Chinese jail after being pronounced guilty of “inciting subversion of state power”.  A prickly, petulant China has placed even Liu’s wife under house arrest and has disallowed others close to him from travelling abroad to receive the award on his behalf.