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Who Remembers That AI Was Never Meant to Replace People?

THINKVIEWS

Tendenzblick

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November 11, 2024

Who Remembers That AI Was Never Meant to Replace People?

When OpenAI released Sora, a Vincentian video AI tool, on February 15, 2024, its video results amazed many. However, once the novelty wore off, the question arose: who will watch short, emotionless videos that lack a storyline? Similar to the metaverse, technologies that don’t address real-world needs or lack a stable business model eventually fade into hype. Sora, contrary to claims of advancing General AI, is a product of computing driven by heavy capital, lacking true technological innovation.

Technically, Sora’s foundation relies on innovations like the Transformer, Diffusion, and GAN models. But these breakthroughs are not unique to OpenAI. Their success stems from scaling algorithms, data, and computing power, reflecting the political economy effects of Moore’s and Metcalfe’s Laws. Big models rely on massive computing through high-performance GPUs processing massive data sets, with companies like Microsoft investing heavily in supercomputing infrastructure, such as tens of thousands of NVIDIA A100 chips, providing immense computing power for training models like ChatGPT.

The training of big models is energy- and capital-intensive, raising the question: do the benefits outweigh the costs? A cost-benefit analysis should consider overlooked externalities, such as environmental impact and systemic risks, which are borne by the public. While big models can boost productivity by automating tasks like content creation, diagnosis, research, and legal reviews, they also risk replacing human workers, especially when ordinary consumers and content creators lack influence over the technology’s deployment. Thus, AI is not just a technological issue but a public one, shaped by political, economic, and legal forces beyond technology itself.

Human labor is being devalued, reduced to auxiliary services for machines. The AI-generated content from tools like ChatGPT and Sora, which lacks emotion or a storyline, is often praised, while human-created work is criticized or ignored. This shift is influencing education and the future of humanity, with parents questioning the value of traditional education when many future jobs may not require human workers. While experts know this isn’t true, the industry’s promotion of AI as a solution may lead to a self-fulfilling prophecy. Teenagers might increasingly rely on AI, leading to a decline in the quality of human work, which could ultimately justify replacing humans with machines.

To avoid this downward spiral, AI education must include humanistic and social science perspectives, rather than solely following narratives set by industry giants. The public must understand that AI is not a neutral technology; it is embedded within political, economic, and legal structures. While AI can learn and evolve, it remains a tool designed to achieve human-defined goals. We cannot abandon the pursuit of purpose, or our future could be shaped by those who control AI, like Microsoft and OpenAI.

OpenAI, once a non-profit aiming to “create value for everyone,” has shifted toward a for-profit model after its 2019 decision to abandon its non-profit status. Despite its initial promises of openness, OpenAI’s focus on protecting intellectual property grew stronger, particularly after Microsoft’s $1 billion investment. Now, OpenAI is effectively a research division of Microsoft, which strengthens its monopoly in operating systems and productivity tools. Microsoft’s strategy of acquiring platforms like GitHub and integrating AI into its products, such as Office Copilot and Bing, ensures its continued dominance.

Monopolies can lead to arbitrary pricing and decreased service quality, harming consumers. Microsoft’s strategy of subsidizing users and later imposing higher prices and lower quality is a common pattern in digital markets. In such cases, public oversight and regulation are necessary to protect consumer welfare. This includes price regulation, minimum service standards, and data security requirements.

Institutional leadership is essential to ensure AI development aligns with human values. Some argue for abandoning the human-centered approach, envisioning a future where AI surpasses human intelligence. However, this view, akin to extreme ecological beliefs, is not widely accepted. A humanistic stance is necessary, where AI remains a tool that supports human activities and is developed with human needs at the forefront.

In the era of artificial intelligence, machines are increasingly taking over tasks that once required human intellect, leaving humans with work that relies more on instinct. This shift, driven by a blend of technical, political, and economic forces, reflects a desire to reduce labor costs. For example, in industries like takeaway and express delivery, AI-driven algorithms are now performing managerial tasks, optimizing routes and schedules for human laborers. This allows capitalists to replace expensive brain work with cheaper automation.

The true purpose of creating machines is not to replicate human beings, as there are already billions of people on Earth, but to assist in tasks that are repetitive, tiresome, or beyond human capacity. AI’s role is to enhance productivity, not to fulfill emotional or existential needs. Therefore, the goal of AI development should be to create tools that help us perform necessary but monotonous tasks or to do things that are difficult or inefficient without AI.

From a humanistic perspective, the current direction of generative AI, such as OpenAI’s tools, is misguided. Generative AI tools like ChatGPT and Sora replicate what human creators can already do but lack the contextual depth, purpose, and adaptability that human-created content offers. As a result, they often only serve to entertain or confuse, rather than contribute to meaningful, authentic, or rigorous content creation.

There are three primary models of digital economy regulation shaped by distinct political and economic systems: the U.S. market-driven model, which fosters innovation and supports winner-takes-all dynamics; the state-driven model of China, which balances development and stability; and the rights-based model of the European Union, which strives to protect human dignity, privacy, and autonomy. The competition among these digital powers plays out across two dimensions: horizontally, between countries, in terms of technology, business models, and norms; and vertically, between countries and enterprises, particularly concerning foreign versus domestic tech companies.

The global expansion of digital technologies, including AI, has led to the U.S. advocating for the free flow of data and AI deployment across borders, a strategy known as digital imperialism. This allows U.S. companies to dominate the global digital market. On the other hand, countries that lack powerful local digital giants, such as those in the European Union, emphasize data sovereignty and restrict cross-border data flows to protect personal data rights and limit foreign companies’ access to local data.

Meanwhile, China’s approach to AI regulation is walking a tightrope—balancing progress and stability while facing immense pressure. This delicate balance may be essential for AI regulation, as allowing the market to drive AI development could lead to exploitation by digital giants and exacerbate fears of runaway AI, as expressed by figures like Elon Musk.

However, maintaining an individual rights-based approach may stifle AI development, hindering the industry from progressing. In either case, the result could be exploitation, with digital giants like those in the U.S. reaping the benefits of AI without adequate oversight or regulation.

Source: softwarium, tech co, the job blog

Donald Trump Was Elected To Continue His Imaginary Second Revolution

Interview

Tendenzblick

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November 10, 2024

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Donald Trump Was Elected To Continue His Imaginary Second Revolution

Republican candidate Donald Trump declared an early victory on the morning of the 6th. Trump’s previous term was marked by unpredictable and controversial policies, both domestically and internationally. Once he returns to the White House, his brand of governance—dubbed the “Trump revolution”—will likely intensify. This raises questions: Could such a “revolution” reshape the U.S., or deepen its divisions? And how will social and economic powers influence this trajectory?

Zheng Yongnian, a prominent Chinese political economist and professor at the Chinese University of Hong Kong (Shenzhen), shared insights on the potential implications of Trump’s return..

Where does the current American ‘anger’ stem from, and what are the profound changes shaping the U.S. today?

Elections capture the core of U.S. politics, which are now deeply linked with global dynamics. American politics, shaped by decades of globalization, in turn, affects global developments. Today, nations view the U.S. through varied lenses, with reactions split along personal biases—some favoring Trump, others Harris. However, a shared concern is palpable, driven by what some term as the second revolution in the U.S., mirroring the transformative impact of its Independence War.

While Harris symbolizes continuity from an elite political tradition, Trump’s populist approach alarms many, especially given his promise of a Trump Revolution. This potential revolution signifies not violent upheaval, but radical policy shifts reshaping diverse interest groups.

Zheng identifies several groups, both domestic and international, deeply anxious about Trump’s potential return. Domestically, this includes political elites within both parties, marginalized social groups, and corporate leaders wary of his unpredictability. Internationally, close U.S. allies like Japan and South Korea, as well as global powers such as China and Russia, are concerned about possible isolationist policies.

Zheng draws parallels with historical revolutions, noting that unlike the French Revolution, driven by economic stagnation, the U.S. faces a crisis stemming from a thriving economy but misaligned governance structures. Figures like Elon Musk, supporting Trump, illustrate the divide between the economic base and outdated political systems. This “revolution” arises from dissonance between America’s economic forces and its political framework.

In Zheng’s view, the U.S. intelligentsia is largely detached from societal realities, clinging to ideals of democracy as the “end of history” without acknowledging the need for reform. This elite blindness echoes pre-Renaissance clerical defense of tradition. Today’s American revolution is not merely partisan but involves clashes between traditional and tech-driven industries, and between diverse social and racial groups.

So how has such a profound internal revolution for the United States changed its external policy?

As the world’s leading power, U.S. domestic shifts have substantial international effects. Internally, the U.S. has seen a “Trumpification” of its politics, where Trump’s influence permeates both major parties. While initially reshaping the Republican Party, Trump’s approach has gradually pushed the Democrats to adopt similar stances on key issues, such as tariffs and immigration.

In foreign policy, the U.S. prioritizes national interests under both administrations. Trump’s “America First” agenda and Biden’s “middle-class diplomacy” differ little in their focus on protective trade measures like tariffs. Immigration is another area where the Democrats are adjusting, reflecting broader public concerns, though Democrats maintain an emphasis on political correctness, covering issues like minority rights and climate change, where Trump diverges sharply.

On global cooperation, Trump’s exit from climate agreements contrasted with Biden’s re-engagement, but the commitment remains limited, as seen in the U.S.’s reduced climate actions amid the Russia-Ukraine conflict. Despite nuanced differences, the “Trumpification” of U.S. policies highlights a domestic and diplomatic convergence shaped by Trump’s legacy.

What do you make of the phenomenon where Trump is held in similar esteem to Reagan in recent Republican polls, especially considering his opposition to government corruption and alignment with anti-establishment sentiments?

The American spirit, often depicted in Hollywood’s hero narratives, has long celebrated figures who arise to meet societal needs. Figures like Reagan and Trump reflect this archetype, each arriving at critical junctures to appeal to citizens’ desires for decisive change. Reagan embodied a hero who tackled the era’s economic excesses through deregulation and tax cuts, championing globalization. Trump, by contrast, appeals to an anti-establishment, populist sentiment, opposing globalization’s outcomes, such as income inequality, that have alienated middle- and working-class Americans.

The fusion of labor and advanced technology interests in the U.S. today represents a synthesis unprecedented in American history. This restructuring reflects a new era where traditional political alignments of left and right are blurred. Trump’s brand of populism attempts to unify high-tech industry and labor, breaking with past political distinctions. This shift raises critical questions about the future of U.S. politics as AI and automation transform economic power dynamics.

Traditional Marxist ideas—where capital opposes labor—face challenges in explaining this alignment. With technological advances reducing the need for a large workforce, the emergence of a “pastoralist” social structure is possible, where economic elites support a reduced, “managed” labor class. This potential structure suggests that U.S. political reorganization is underpinned by profound economic shifts, where social structure, influenced by the economic base, shapes the political landscape. This reorientation highlights a moment in American society that defies traditional frameworks, suggesting that we are witnessing a unique transformation in U.S. socio-political structures.

Trump attempted to disrupt the U.S. foreign policy establishment during his first term but failed. With another chance at the White House, could he dismantle this establishment in his second term? If so, how would that impact the international order?

We’ve been examining U.S. internal dynamics, but it’s crucial to consider the international ripple effects as well. America’s allies, particularly those closely tied to the U.S., are the most concerned. Trump’s approach, including withdrawing from international treaties and offering limited support to allies, signaled a clear shift. Yet, even under Biden, with his Democratic platform, the dynamics of these alliances are not reverting to previous norms.

Historically, access to U.S. markets was a primary incentive for many allies. However, Biden’s focus on “middle-class diplomacy” does not involve significant market openings, even under initiatives like the Indo-Pacific Economic Framework, which lacks provisions for U.S. market access. This approach reflects a broader trend of economic protectionism and cautious immigration policies that address U.S. domestic priorities.

In the context of the Russia-Ukraine war, the U.S. support has largely translated to indirect costs for the EU, who bears much of the immediate impact, while the U.S. benefits economically, particularly in arms sales. This underscores a strategic shift where the U.S. appears less inclined to shoulder the costs of global leadership, focusing instead on pragmatic economic gains. Regardless of the administration—whether Trump or a future Democratic leader like Harris—the U.S. is likely to continue shrinking its international commitments, albeit with different rhetorical styles. Trump’s diplomacy is blunt, while Biden (or Harris) might maintain a more traditional, yet perhaps less transparent, diplomatic front.

The essence of U.S. foreign policy now seems increasingly rooted in pragmatism, as it balances domestic demands with scaled-back global engagement, leaving allies to recalibrate their expectations of American leadership.

Source: Guancha, CNews

Chinese Scientists Successfully Transform Corn into Clothing in Eight Years, Where Others Have Failed

East Asia

Tendenzblick

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November 9, 2024

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Chinese Scientists Successfully Transform Corn into Clothing in Eight Years, Where Others Have Failed

China is a powerhouse in the global amino acid market, producing approximately 60% of the world’s supply. Despite this significant contribution, the country grappled with challenges related to production efficiency and innovation, primarily stemming from underdeveloped microbial fermentation strains and a limited number of domestic patents.

Wen Tingyi, Principal Investigator at the Institute of Microbiology of the Chinese Academy of Sciences, has been pivotal in addressing these issues since joining the institute in November 2005.

Upon entering the institute, Wen quickly recognized that China was predominantly relying on traditional mutagenesis breeding techniques, which employed ultraviolet rays and chemical agents like diethyl sulfate (DES) to induce genetic mutations in microorganisms. This method was time-consuming and uncertain, requiring extensive screening to identify viable strains.

At the same time, foreign researchers were advancing rapidly with synthetic biology, allowing for precise gene editing at the DNA level. This technological gap motivated Wen to adopt gene editing techniques he learned abroad, aiming to create a platform for personalized strain transformation and innovation in industrial microorganisms.

Wen’s innovative approach involved creating a comprehensive network model of bacterial metabolic pathways by inputting all relevant genes into a computer system. This model enabled predictions about which genes needed transformation. By iteratively applying synthetic biology techniques—designing, building, testing, and learning—Wen and his team managed to increase the yield of production strains while minimizing unwanted byproducts.

In 2007, a company in Ningxia approached Wen, seeking assistance with their lysine production strain, which was yielding unsatisfactory results. The company, then a mid-level player in the domestic amino acid market, was looking to cut costs and boost profits. Utilizing the synthetic biology platform he had developed, Wen meticulously modified the strain through computer simulations, altering a total of 17 genes. This process dramatically improved the sugar-acid conversion rate and output, elevating the company’s production capabilities to international standards.

However, the landscape shifted once again. In 2005, lysine prices were around 30,000 yuan per ton, but by 2020, excess production capacity had surged, driving prices down to as low as 5,400 yuan per ton. This decline significantly impacted profit margins, leaving many companies struggling to remain viable.

Amid these challenges, Wen had a revelation. He discovered that by removing a carboxyl group from lysine, it could be transformed into 1,5-pentanediamine, a key precursor for nylon production, particularly in high-demand markets. The historical context of nylon production is notable; DuPont’s development of nylon involved 5-carbon pentamethylenediamine, later switching to a more cost-effective 6-carbon variant—hexamethylenediamine. This shift underscored the need for an alternative pathway for producing pentamethylenediamine that would not be hindered by foreign monopolies on the essential precursor, adiponitrile.

In 2021, the global nylon market surpassed 10 million tons, valued at approximately 1.5 to 1.8 trillion yuan, yet more than 90% of production was dominated by nylon 6 and nylon 66, with the latter’s precursor being largely controlled by international corporations. This left Chinese manufacturers at a disadvantage, primarily receiving only a fraction of the profits.

To tackle this issue, Wen decided to use E. coli as a production strain due to its rapid reproduction cycle of just 17 minutes, complete genetic information, and established metabolic pathways. However, E. coli inherently lacked the ability to utilize lysine for synthesizing pentamethylenediamine. Therefore, the first step was to genetically modify E. coli to incorporate foreign genes, enabling it to synthesize the desired compound.

The project faced additional challenges when it became apparent that pentamethylenediamine was cytotoxic to E. coli, inhibiting its growth once a certain concentration was reached. To overcome this, the team engineered a transport pump to expel pentamethylenediamine from the cells, allowing E. coli to thrive while continuously producing the compound.

After numerous experiments and refinements, the output of pentamethylenediamine reached world-leading levels, with nearly 100% conversion of lysine to pentamethylenediamine. Purification processes yielded a product with over 99% purity, making it suitable for industrial applications. The successful laboratory results led to plans for pilot production.

Initially, the laboratory utilized a rotary evaporator with a capacity of 5 to 20 liters, correlating to fermentation liquids produced by a 50-liter fermentation tank. However, scaling up to commercial production required significantly larger fermentation systems, presenting challenges in cost and energy efficiency. Over three years of intensive development reduced the pilot production cost of pentamethylenediamine from over 90,000 yuan to about 20,000 yuan.

By August 2020, the project culminated in the establishment of the world’s first 10,000-ton pentamethylenediamine production line in Daqing City, Heilongjiang Province. This facility utilized a distillation tower, drastically lowering production costs and improving efficiency. Following this, the team successfully polymerized pentamethylenediamine into nylon 56, producing both long and short fibers suitable for various textile applications.

Nylon 56 boasts several advantages over nylon 66, including enhanced moisture retention, ease of dyeing, flame resistance, and improved wear resistance. The resulting fabric is soft, cool to wear, and exhibits superior performance, making it ideal for activewear, underwear, and protective clothing. Collaborative ventures with leading brands have further solidified nylon 56’s market position, paving the way for its adoption in high-end products.

As demand for bio-based materials rises, Wen Tingyi’s work exemplifies a significant shift in sustainable manufacturing. The journey from corn to clothing symbolizes a broader movement towards bio-based nylon production, setting China on a path distinct from traditional petroleum-based nylon production. This innovative approach not only addresses local industry challenges but also enhances China’s competitive edge in the global market, positioning the country as a leader in sustainable textile solutions.

Source: zshq, jiemian, biotechnologyforbiofuels

China Proposes 13 Fertility Support Measures

Uncategorized

Tendenzblick

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November 8, 2024

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China Proposes 13 Fertility Support Measures

The results of China’s seventh national census indicate that the total fertility rate (TFR) for women of childbearing age in my country was just 1.3 in 2020, reflecting a concerningly low level.

The TFR represents the average number of children born to each couple, with an international benchmark of 2.1 for generational replacement. This figure accounts for mortality risk, indicating that couples need to have about 2.1 children to maintain population levels.

A TFR of around 1.5 is viewed as a critical threshold; falling below this level raises the risk of entering a low fertility trap. While updated data has yet to be released, experts predict that the TFR may have declined further. This sustained low fertility rate contributes to a declining population and an aging demographic, undermining economic and social development potential.

Du Peng, Dean of School of Population and Health, and Director, Institute of Gerontology of Renmin University of China, emphasizes that recent birth statistics suggest the TFR is now even lower than in 2020, indicating an extreme decline. If this trend persists, it will have long-lasting effects on society, including a reduced birth cohort that exacerbates negative population growth.

The shrinking population will influence future educational needs, labor supply, and the distribution of social resources. Moreover, while the willingness to have children remains higher than the current TFR, many families face challenges related to childbirth, child-rearing, and education, indicating that the TFR does not accurately reflect societal intentions regarding childbearing.

To assist families wishing to have one or two children, it is essential to cultivate a fertility-friendly environment that genuinely reduces the costs of childbirth, child-rearing, and education. This support is vital for stabilizing and potentially increasing the TFR, which is crucial for the social and economic development of the country.

Since implementing the universal two-child policy in 2016, followed by the three-child policy in 2021, the Chinese government has been actively promoting fertility support measures to enhance reproductive health and prenatal care services. A preliminary system of fertility support policies has been established. According to officials from China’s National Health Commission, provinces typically offer over 60 days of extended maternity leave, approximately 15 days of spouse maternity leave, and 5 to 20 days of parental leave, with maternity leave extended to over 158 days in all provinces.

Additionally, the country’s capacity for preventing birth defects has improved significantly. National rates for pre-pregnancy examinations and prenatal screenings now exceed 90%, with screening for neonatal genetic disorders and hearing impairments reaching over 98%. The optimization of fertility policies extends beyond service enhancements to economic support as well.

In January 2022, the government began including care for children under three in personal income tax deductions. In 2023, the deduction standard increased from 1,000 yuan to 2,000 yuan per child per month, benefiting many families with young children.

In August 2022, the National Health Commission, alongside 17 other departments, issued guiding opinions to focus on optimizing the maternity leave system, enhancing hospitalization and delivery conditions, and expanding labor analgesia options.

On October 28, the General Office of the State Council released the Several Measures for Accelerating Improvement of Reproduction Policy Support Systems and Promoting the Establishment of a Reproduction-friendly Society.

These measures propose a comprehensive approach to fertility support through four key areas:

Strengthening Fertility Services: Enhancing maternity insurance coverage to include flexible workers, migrant workers, and new employment forms, ensuring that maternity and paternity leave are fully implemented, and establishing a maternity subsidy system. Local governments are encouraged to improve reproductive health services and include appropriate labor analgesia and assisted reproductive technologies in medical insurance.

Enhancing Childcare Services: Improving children’s medical services and incorporating eligible children’s medications into medical insurance. Increasing the availability of inclusive childcare services and supporting diverse childcare models, while also enhancing policies to provide operational subsidies for inclusive child care institutions.

Supporting Education, Housing, and Employment: Expanding access to quality educational resources, encouraging after-school services and social projects, and implementing policies to support multi-child families in housing and employment, including flexible work arrangements.

Creating a Fertility-Friendly Social Atmosphere: Promoting a new culture of marriage and childbearing that emphasizes positive views on family life, enhancing public awareness of high-quality population development, and integrating education on national population policies into school curricula.

The Measures stress the importance of improving political commitment and responsibility among all stakeholders, including governments, employers, and individuals, to ensure the effective implementation of fertility support policies.

Source: Xinhua, CCTV13, CGTN, guandian

Can trade secrets become an alternative means of intellectual property protection in the AI era?

Uncategorized

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November 7, 2024

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Can trade secrets become an alternative means of intellectual property protection in the AI era?

With generative AI technology advancing, the industry faces new challenges to the intellectual property system, from AI algorithm patentability and copyright implications of AI-assisted creations to AI’s role as a potential patent inventor and the handling of vast commercially valuable data generated by large models.

These developments heavily impact traditional IP protections. Trade secrets, a defensive IP right, bypass statutory authorization and the restrictive requirements of patents and copyrights, potentially offering a natural protection barrier for AI technology and applications.

Unique Trade Secret Challenges of Generative AI

Generative AI learns patterns from data to generate new outputs, using iterative training to improve accuracy. This process relies on algorithms and big data to conduct inductive reasoning, find rules, make predictions, and deliver results.

Data and algorithms are critical for accurate outputs, especially the weights generated during training, but they pose challenges for traditional copyright protection due to disputes over their status as copyrightable expressions. These elements, hidden in the model’s “black box,” align closely with trade secret confidentiality requirements.

In practice, users create new content by inputting prompts, which generative AI uses to predict results. If the input includes trade secrets, AI providers may inadvertently access these secrets. For example, Samsung faced a data breach when an employee used ChatGPT for work purposes, and Cyber Haven found that 11% of employee-pasted data into ChatGPT was confidential. Consequently, companies using generative AI are increasingly focused on protecting their trade secrets.

Given these issues, this article will analyze trade secret protection in AI research, development, and application from the perspectives of both AI technology providers and users.

Protecting Trade Secrets in AI Technology

Trade secrets are defined as technical, business, and commercial information not publicly known, holding commercial value and safeguarded by the right holder. To claim a trade secret, the right holder must show that the information is non-public, commercially valuable, and subject to reasonable confidentiality measures.

Generative AI often relies on data like public works, personal data, and trade secrets, assuming legal acquisition of training data. This article evaluates whether the data created through generative AI development, including model training and algorithm adjustments, qualifies for trade secret protection.

Generative AI development involves raw, labeled, and weighted data, mostly derived from public sources like books, academic papers, and media. While raw data is public and thus non-confidential, processed training data, weights, and other enterprise-handled data may qualify as trade secrets if confidentiality is maintained. However, trade secrets are vulnerable; any leakage undermines their value.

Moreover, right holders face challenges in defining the distinctive and non-public aspects and proving the information’s proprietary nature, particularly for large data sets where comparison is complex. To mitigate these vulnerabilities, data ownership rights may offer alternative protections.

Large AI models often build on open-source projects. Open-source code lacks trade secret protection due to public access, but modifications made by the enterprise may qualify if they remain confidential. However, certain open-source licenses require disclosure of derivative works, potentially complicating a company’s IP strategy. To avoid conflicts, R&D entities should review open-source license obligations carefully before using such models.

Algorithms, defined as rules for transforming input into output, may not qualify for copyright or patent protections, as they fall under intellectual activity methods. However, algorithm trade secrets face a unique challenge: transparency requirements. Regulatory frameworks like China’s Personal Information Protection Law, the EU’s AI Act, and the U.S. NIST’s Four Principles of Explainable AI require AI providers to explain their decision-making logic without full disclosure of proprietary details. China’s first algorithm trade secret case highlighted that even publicly known algorithms may be trade secrets if the enterprise has developed distinctive methods, such as unique settings and weights, that are commercially valuable and not publicly known.

Trade Secret Protection in AI Application Processes

When artificial intelligence processes user input containing trade secrets, it may generate content that builds on this input, potentially embodying trade secrets. Some argue that AI could even create trade secrets independently. Since AI service providers might access input data for model improvements, input content containing trade secrets risks exposure. Likewise, if output content with trade secrets is shared online, network security concerns may also pose a risk.

Despite these risks, AI’s efficiency gains make it essential to enterprise competitiveness, prompting businesses to pursue compliant, secure applications of AI. Enterprises should create comprehensive solutions addressing both input and output content handling, with special attention to personnel and systems involved in data flow. Determining if AI-generated content meets trade secret criteria is crucial.

In line with reasonable measures for trade secret protection, enterprises could adopt several strategies:

1. Using localized or internally deployed AI systems enables control over storage, processing, and generation within a secure, private cloud. Measures like data isolation, permission controls, and download restrictions enhance content confidentiality.

2. Guidance and training on compliant AI use are essential, especially as private deployment can be costly and limit real-time model updates. Training should cover trade secret scope, protection methods, risks, and benefits, detailing work content, desensitization, and storage practices as permitted.

3. Updating confidentiality clauses in procurement contracts ensures AI-specific terms are included. These should clarify input/output information’s confidentiality, ownership, and purpose restrictions, prohibiting use for model training, and define network security measures for storage, processing, and deletion.

4. Other technical measures, such as custom trade secret filtering tools, could be implemented to screen content before AI processing, offering an added layer of protection for enterprises with stringent confidentiality needs.

Source: Linkedin, Medium

Why should ASEAN not become a battlefield between China and the United States?

POLITIK

Tendenzblick

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November 6, 2024

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Why should ASEAN not become a battlefield between China and the United States?

The United States has been actively working to strengthen ties with Southeast Asia, as illustrated by the signing of the US-ASEAN Comprehensive Strategic Partnership. Yet, this move comes amid growing tensions between the U.S. and several Southeast Asian nations. A 2024 survey by Singapore’s ISEAS-Yusof Ishak Institute indicates that, if forced to choose in a potential U.S. conflict, regional political elites may, for the first time, lean narrowly toward supporting China.

What does the United States seek in Southeast Asia?

The United States’ strategic advantage in strengthening ties with Southeast Asia lies in the region’s search for reliable partners, especially in security and economic fields. The Philippines has deepened defense cooperation by expanding U.S. military bases, while Indonesia co-hosts the multinational Exercise Garuda Shield and actively seeks U.S. military hardware. Singapore has intensified collaboration with the U.S. on AI and autonomous systems for defense, and even Cambodia, once a close ally of China, is showing interest in U.S. military education programs, which are highly regarded locally.

On the economic front, the U.S. is also addressing a clear regional need for economic partnership. A recent survey revealed that Southeast Asian elites identify unemployment, economic recession, and widening income inequality as the top challenges for 2024.

Vietnam, despite being classified as a non-market economy by the U.S., welcomes U.S. trade and investment, particularly in infrastructure, healthcare, and small businesses. Thailand, as Southeast Asia’s second-largest economy, is eager to boost cooperation with the U.S. in automotive and energy sectors, and American firms in Malaysia have contributed to 300,000 local jobs and education programs aimed at transforming the economy.

However, the U.S. approach often frames Southeast Asia as a battleground within the U.S.-China competition narrative. Although China’s size, proximity, and historical ties position it as a lasting influence in the region, a zero-sum competition strategy could be counterproductive.

Most Southeast Asian nations seek a balanced approach, welcoming U.S. cooperation as part of a broader strategy that includes other partners like India and Japan. Yet, ASEAN leaders also express concerns about U.S. inconsistency, especially when realpolitik pressures arise, fearing coercion from both the U.S. and China.

The U.S. aspires to more than stable security and economic ties, positioning itself as a counterbalance to China and advocating its human rights and governance model. However, its treatment of Southeast Asia remains largely instrumental, where “partnership” rhetoric does not always translate into respect for the sovereignty and autonomy of “smaller” nations. Despite acknowledging Indonesia’s rising influence in the Indo-Pacific, U.S. engagement often appears superficial, as seen in the brief visits by top U.S. officials and sporadic attention to regional leaders, such as the single state visit to Cambodia during its ASEAN chairmanship.

Additionally, ASEAN members resent perceived double standards. While the U.S. tolerates media restrictions in Vietnam, Cambodia faces U.S. criticism over democracy and freedom, creating skepticism about U.S. commitment to democratic ideals. The selective focus of U.S. policy, like omitting human rights concerns in defense engagements with Cambodia, casts doubt on the sincerity of its democratic advocacy. Abandoning this inconsistent approach could enable the U.S. to support democratic principles more credibly.

Lingering memories of U.S. military involvement in Southeast Asia—particularly in Vietnam, Cambodia, Laos, and Indonesia—are sensitive issues, reinforced in Muslim-majority countries such as Indonesia, Malaysia, and Brunei by U.S. inaction on recent Middle Eastern conflicts. Although Southeast Asian leaders take a pragmatic stance toward U.S. relations, these historical grievances are likely to influence younger generations’ perceptions, potentially shaping U.S.-Southeast Asia relations for decades to come.

What does it mean for the new White House?

ASEAN leaders adopt a pragmatic approach, remaining open to collaboration with the United States and other key partners as part of a balanced diplomatic and strategic stance. The next U.S. president will encounter a region moving in multiple directions under evolving leadership. The Philippines is poised to adopt a stronger stance against China’s actions in the South China Sea, while Malaysia under Prime Minister Anwar Ibrahim and Cambodia under Hun Sen may draw closer to China. Indonesia under Prabowo may pursue a firmer foreign policy toward the West, while leadership changes in Vietnam and Singapore are unlikely to shift their stable foreign policy strategies, which balance relations with major powers.

This adaptability among ASEAN members suggests the U.S. should not interpret closer ties between some countries and China as a loss. China holds comparative advantages in fields like telecommunications and infrastructure investment, while the U.S. can continue investing in areas of established cooperation that align with Southeast Asian priorities.

Economic growth remains Southeast Asia’s top priority. Although the Indo-Pacific Economic Framework (IPEF) marks a U.S. effort to engage economically, it offers limited market access and tariff benefits. This limited engagement has raised doubts about the U.S.’s long-term economic involvement. By addressing Southeast Asian concerns over free trade and expanding opportunities to non-IPEF members like Cambodia, Myanmar, and Laos, the U.S. can help foster sustainable economic growth and lessen regional reliance on China.

In security, the U.S. remains the partner of choice for high-end military exercises essential for humanitarian assistance, disaster relief, and evacuations in the face of climate-driven crises. Additionally, cybersecurity has emerged as a priority for Southeast Asian countries. A recent ransomware attack in Indonesia exposed vulnerabilities across 282 government agencies. While the U.S. and Indonesia already cooperate on cybersecurity through their Comprehensive Strategic Partnership, such incidents underscore the importance of enhancing Southeast Asia’s cyber resilience and public trust in digital services.

The U.S. also has the chance to bolster ASEAN’s food security. By collaborating with Southeast Asia and other partners, such as Australia, the U.S. can support long-term strategies, including development in insect-resistant crops and fortified foods to meet the nutritional needs of the region’s growing population.

However, Southeast Asian nations are wary of escalating U.S.-China tensions that could pressure them into choosing sides, raising concerns about becoming targets if perceived as aligned with either power. Following the election, Southeast Asia’s ideal outcome would be a U.S. president who seeks not only to compete with China but also to deepen relationships with the region. Competition is inevitable, yet it should not become a zero-sum game. U.S. strategy in Southeast Asia must prioritize ASEAN’s interests and aim for mutually beneficial partnerships.

Source: ygadwq, chinaglobalsouth, IFAIR

Warum interessiert sich die ASEAN für die inneren Angelegenheiten Myanmars, schweigt aber weitgehend zum Südchinesischen Meer?

Interview

Tendenzblick

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November 5, 2024

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Warum interessiert sich die ASEAN für die inneren Angelegenheiten Myanmars, schweigt aber weitgehend zum Südchinesischen Meer?

Der 44. und 45. ASEAN-Gipfel und die dazugehörigen Treffen fanden vom 9. bis 11. Oktober in Vientiane, Laos, unter dem Motto „Improving ASEAN Connectivity and Resilience“ (Verbesserung der Konnektivität und Widerstandsfähigkeit der ASEAN) statt. Die Situation sowohl in Myanmar als auch im Südchinesischen Meer erregte große Aufmerksamkeit, wobei einige Länder durchaus konfrontative Ideen vorbrachten. Lei Xiaohua, stellvertretende Direktorin und Forscherin am Institut für Südostasienforschung der Guangxi Akademie für Sozialwissenschaften, teilte ihre Erkenntnisse zu diesen Themen mit.

Was bedeutet das Thema „Verbesserung der Konnektivität und Widerstandsfähigkeit der ASEAN“?

Konnektivität bezieht sich in erster Linie auf die Interkonnektivität der Infrastruktur, während Resilienz die Flexibilität und Sicherheit der Lieferketten innerhalb des wirtschaftlichen Rahmens hervorhebt. Konnektivität wurde aus zwei Hauptgründen als Thema des diesjährigen Gipfels gewählt.

Erstens ist der Integrationsgrad der 2015 gegründeten ASEAN-Gemeinschaft nach wie vor gering, so dass die Infrastrukturkonnektivität für ihre Entwicklung von entscheidender Bedeutung ist. Zweitens stimmt jede ASEAN-Präsidentschaft das Thema des Gipfels auf ihre eigene nationale Entwicklungsstrategie ab.

Konnektivität umfasst sowohl harte als auch weiche Komponenten. Harte Konnektivität bezieht sich auf die Vernetzung der Land-, See- und Luftverkehrsinfrastruktur, wobei die Schienenkonnektivität für die Entwicklung der ASEAN besonders dringlich ist. So strebt Kambodscha die Verlängerung der China-Laos-Eisenbahn auf sein Territorium an. Premierminister Li Qiang traf sich kürzlich mit dem kambodschanischen Premierminister Hun Manet, um die Vorbereitungen für die China-Kambodscha-Eisenbahn voranzutreiben.

Weiche Konnektivität hingegen umfasst die Harmonisierung von Regeln, Vorschriften, Standards und Richtlinien. ASEAN hat in diesem Bereich große Fortschritte erzielt. Seit Januar 2016 haben die zehn Mitgliedsländer wechselseitig die Visumspflicht aufgehoben. In der ersten Hälfte dieses Jahres schlug Thailand ein gemeinsames Visaprogramm für fünf ASEAN-Länder – Vietnam, Kambodscha, Laos, Malaysia und Myanmar – vor, ähnlich dem Schengen-Visum, das internationalen Reisenden mit einer Einreisegenehmigung aus einem Land erlaubt, sich frei zwischen den anderen zu bewegen.

Darüber hinaus ist die Verbesserung der Konnektivität in aufstrebenden Sektoren wie der digitalen Wirtschaft, den Energienetzen und der Kommunikation von entscheidender Bedeutung. So kämpft beispielsweise der Industriesektor in Vietnam mit Energieknappheit, während Laos danach strebt, die „Batterie der ASEAN“ zu werden. Wenn die Stromnetze der zehn ASEAN-Länder miteinander verbunden wären, könnten sie die Energieversorgung ausgleichen und das industrielle Wachstum unterstützen. Neben der Infrastruktur ist auch die wirtschaftliche und handelspolitische Integration für die Vernetzung von entscheidender Bedeutung. Während China nach wie vor der größte Importeur und die USA der größte Exportmarkt der ASEAN sind, nimmt der Handel innerhalb der ASEAN stetig zu, was auf eine stärkere wirtschaftliche Verflechtung innerhalb der Region hindeutet. Die Widerstandsfähigkeit konzentriert sich auf die Sicherheit und Flexibilität der Lieferketten. In der heutigen komplexen internationalen Landschaft greifen viele Länder auf Handelsprotektionismus und Anti-Globalisierungsmaßnahmen zurück, was zu Exportbeschränkungen und Zollerhöhungen führt, insbesondere in Hochtechnologiesektoren. Darüber hinaus verlagern sich die Lieferketten zunehmend auf kürzere, stärker lokalisierte Vereinbarungen wie Onshoring, Nearshoring und Friendshoring.

Die jüngsten Pandemien haben die Schwachstellen in den Lieferketten noch deutlicher gemacht und die Notwendigkeit unterstrichen, Sicherheit und Widerstandsfähigkeit zu verbessern. Um ihre wirtschaftliche Widerstandsfähigkeit zu stärken, müssen die südostasiatischen Länder ihre Rohstoffquellen diversifizieren, ihre internen Unterstützungssysteme stärken und enge Wirtschaftsbeziehungen zu wichtigen Partnern wie China, den USA, Japan und Südkorea aufrechterhalten. Mit anderen Worten: Es ist wichtig, nicht alles auf eine Karte zu setzen.

Welche Spaltungen und Gräben innerhalb der ASEAN hat der malaysische Premierminister Anwar im Zusammenhang mit den wachsenden globalen Spannungen angesprochen?

Erstens haben territoriale Streitigkeiten erhebliche Auswirkungen auf die Einheit und den Zusammenhalt innerhalb der ASEAN. In den letzten Jahren kam es immer wieder zu Zwischenfällen, bei denen Fischer verhaftet wurden, und zu Protesten zwischen Malaysia, Indonesien, Singapur und Vietnam. Darüber hinaus kam es zu Konflikten zwischen Kambodscha und Thailand um den Tempel Preah Vihear. Obwohl solche Territorialstreitigkeiten in den letzten Jahren abgenommen haben, sind ihre Auswirkungen noch immer spürbar. So kündigte Kambodscha am 20. September seinen Rückzug aus der Entwicklungszusammenarbeit im Dreieck zwischen Kambodscha, Laos und Vietnam (CLV-DTA) aufgrund von Grenzstreitigkeiten an, was die geopolitischen Beweggründe für den Bau des Funan-Techo-Kanals verdeutlicht.

Zweitens ist die Frage des Südchinesischen Meeres ein trennender Faktor. Die Philippinen haben sich zunehmend den USA angenähert, sind in tägliche Konfrontationen mit China verwickelt und suchen die Unterstützung anderer ASEAN-Länder. Andere ASEAN-Mitglieder halten die extreme Haltung der Philippinen jedoch für kontraproduktiv und zögern, sie zu unterstützen. Diese Meinungsverschiedenheit kann die Kluft innerhalb der ASEAN weiter vertiefen, insbesondere wenn sie von externen Kräften beeinflusst wird.

Drittens gibt es unterschiedliche Auffassungen über die Art der Zusammenarbeit mit externen Partnern. Während beispielsweise die Philippinen mit den USA ein Bündnis unterhalten, würden andere ASEAN-Staaten eher eine strategische Partnerschaft bevorzugen. Darüber hinaus gibt es unterschiedliche Auffassungen darüber, inwieweit sich die USA in die inneren Angelegenheiten der ASEAN-Staaten einmischen sollen. In Bezug auf die Situation in Myanmar lehnen die meisten Länder eine direkte Intervention der USA ab, aber Länder wie die Philippinen und Singapur könnten sich für ein stärkeres Engagement der USA einsetzen.

Nicht zuletzt sind sich die ASEAN-Mitglieder uneins, wie sie mit der Krise in Myanmar umgehen sollen. Während es einen allgemeinen Konsens über die generelle Haltung zum Bürgerkrieg in Myanmar gibt, gehen die einzelnen Strategien der Mitgliedsstaaten auseinander. Länder wie Thailand und Indonesien haben sich proaktiv für Verhandlungen zwischen dem Militär und lokalen Kräften eingesetzt, während Kambodscha, Laos und andere den „ASEAN-Weg“ der Nichteinmischung in innere Angelegenheiten bevorzugen.

Angesichts der anhaltenden Konzentration auf den Konflikt im Südchinesischen Meer auf dem diesjährigen Gipfeltreffen und des Mangels an substantiellen Fortschritten bei der Lösung dieser Spannungen, welche Rolle kann die ASEAN spielen, insbesondere angesichts des Prinzips der Nichteinmischung, wodurch die Autorität der ASEAN untergraben werden könnte? Und wie kann ASEAN mit den Spannungen zwischen ihren Mitgliedern umgehen, wenn sich die Philippinen unter Marcos Jr. den USA zuwenden?

Es ist höchst unwahrscheinlich, dass ASEAN sein Prinzip der Nichteinmischung in innere Angelegenheiten aufgeben wird. Die Unterschiede zwischen ASEAN und der EU sind beträchtlich. Die EU ist eine hoch integrierte Organisation mit einer robusten Struktur, die über fast alle notwendigen Institutionen verfügt, mit Ausnahme der militärischen Fähigkeiten, die sie durch die NATO ausgleicht. Im Gegensatz dazu agiert ASEAN als loser Staatenbund. Wenn wir von ASEAN sprechen, ist es präziser, von ASEAN-Ländern zu sprechen, um die Unabhängigkeit ihrer Mitglieder zu betonen.

Im Gegensatz zur EU betont ASEAN die Prinzipien des Friedens, der gewaltfreien Konfliktlösung und des Konsenses. Das Konsensprinzip erfordert die Zustimmung aller zehn Mitgliedsstaaten, um eine Resolution zu verabschieden, anstatt ein Mehrheitssystem anzuwenden, was zur Ineffizienz der Organisation beiträgt. Der relativ geringe Integrationsgrad der ASEAN und ihre lockere, unvollständige Struktur sind inhärente Schwächen.

Einer der Hauptgründe, warum die ASEAN-Staaten ihre Prinzipien wahrscheinlich nicht wesentlich ändern werden, ist ihre begrenzte Fähigkeit, effektive Interventionen durchzuführen. Sich auf externe Unterstützung zu verlassen, würde der ursprünglichen Absicht der ASEAN widersprechen. Darüber hinaus liegt die grundlegende Herausforderung für eine Kursänderung der ASEAN in ihrer mangelnden Kapazität, den Erfolg ihrer Einsätze sicherzustellen. Im Falle Myanmars hat die ASEAN beispielsweise aufgrund der damit verbundenen Risiken auf eine Intervention verzichtet. Würde ASEAN die Militärregierung etwa zur Zurückhaltung auffordern, könnten die lokalen Streitkräfte dies zum Anlass nehmen, ihre Angriffe zu intensivieren. Umgekehrt könnte die Militärregierung die Aufforderung der ASEAN an die bewaffneten Gruppen zur Zurückhaltung als grünes Licht für eine Intensivierung ihrer Aktionen interpretieren. Ein verstärktes Eingreifen der ASEAN könnte somit den Konflikt zwischen den beteiligten Parteien noch weiter verschärfen.

Die Frage des Südchinesischen Meeres stellt einen anderen Kontext dar, der das Zögern der ASEAN erklärt, entschlossen zu handeln. ASEAN ist sich seiner Grenzen im Umgang mit einer Großmacht wie China bewusst. Eine öffentliche Stellungnahme zugunsten Chinas könnte sich in der Zukunft auszahlen, während eine negative Haltung unvorhersehbare Folgen haben könnte. Daher könnte es für das Bündnis die klügere Strategie sein, sich zum Südchinesischen Meer nicht zu äußern.

Quelle: Guancha, Main-Spitze

How Has Corn Changed China’s History and Agriculture?

KULTUR

Tendenzblick

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November 4, 2024

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How Has Corn Changed China’s History and Agriculture?

Four years after Columbus discovered the “New World” in 1492, corn made its way to Europe in 1496. The first written record of corn in China appeared in 1551 in Henan during the Jiajing era of the Ming Dynasty. By 1555, corn brought by a chieftain from Yunnan was documented in Henan as it passed through the area on its way to Beijing.

Historians identify three main routes for corn’s introduction to China: the southeast sea route, the southwest land route, and the northwest land route. The earliest records suggest that corn likely entered China through Yunnan, arriving via Myanmar.

Li Shizhen, a prominent scholar traveling from 1552 to 1578, noted corn’s cultivation in the Yangtze River area but remarked that it was “rarely planted” at that time. By 1758, over 200 years after its initial arrival, the prefecture records of Hunan indicated that corn was widely cultivated.

Although corn was introduced early via the southwest and northwest routes, it didn’t spread significantly during the Ming Dynasty. Its real expansion in China began along the southeast sea route through Fujian.

In 1575, missionary Herrera noted corn cultivation in Zhangzhou and Quanzhou. Fujian’s mountainous terrain, which became densely populated by the Song Dynasty, helped corn and sweet potatoes spread to the Jiangxi region.

After the Ming Dynasty’s collapse in 1644, China faced a turbulent period until 1681, when Emperor Kangxi quelled the Three Feudatories Rebellion. This paved the way for corn to flourish across the nation.

In 1661, the Qing Dynasty had a population of only 19.2 million. However, after the Yongzheng period abolished head taxes and implemented land allotments, the population surged: it reached 143 million by 1741 and 296 million by 1795. By 1849, it exploded to 412 million.

To address the population and land pressure, the Qing government began relaxing restrictions in 1742, encouraging farmers to reclaim mountainous areas and exempting these lands from taxes. Residents of these areas were also given quotas for imperial examinations. These measures promoted the reclamation of mountainous regions, allowing drought-resistant corn to flourish.

As early as the late Ming Dynasty, increasing land annexation and frequent natural disasters prompted many farmers to move into mountainous areas. During the late Ming and early Qing dynasties, farmers moving into mountainous areas engaged in various occupations, including farming, iron smelting, charcoal burning, mushroom cultivation, and mining. The chaos of large-scale wars prompted many residents from plains to seek refuge in the mountains.

This influx led to significant gatherings of farmers in border areas, such as Hunan, Jiangxi, Hubei, Anhui, Fujian, Zhejiang, and Guangdong. The demographic boom during the Yongzheng and Qianlong periods intensified this movement, especially after the Qing government lifted restrictions on mountain reclamation in 1742.

Traditional crops like rice, wheat, and millet require specific water and soil conditions, which made drought-resistant crops like corn, sweet potatoes, and potatoes, introduced from the Americas, more suitable for cultivation in these regions. Farmers typically planted sweet potatoes in the lowlands, corn in the higher elevations, and potatoes in colder, high-altitude areas. These American crops thrived in local conditions and were rotated to ensure a steady food supply, supporting both the shed dwellers and the growing population.

In places like Enshi, Hubei, corn became a staple food alongside rice. Local records from the Jiaqing era (1796-1820) noted that farmers burned their homes to cultivate various grains, particularly corn.

As reclamation efforts continued, corn spread throughout the Fujian-Jiangxi-Huguang region, eventually reaching Guizhou and Yunnan. The influx of refugees from Hubei, Hunan, Fujian, and Guangdong during the Jiaqing and Daoguang periods further intensified corn cultivation in Yunnan. Lin Zexu, a prominent Qing official, noted that corn was widely planted in Baoshan County and became a staple in regions like Shunning and Xuanwei Prefecture, where it was used to make sugar, brew wine, and grind flour.

With the end of conflicts in the late Ming and early Qing dynasties, corn’s spread in China accelerated. Following the Qing government’s suppression of the Three Feudatories Rebellion in 1681, Sichuan’s population plummeted from 6 million in 1578 to under 500,000 due to the war’s devastation. In response, the Qing government encouraged mass immigration from Huguang to Sichuan, resulting in over 6 million migrants settling in the province from the Kangxi to the Jiaqing reigns, revitalizing its population and agricultural development.

Reports from the Qianlong period noted that barren areas transformed rapidly into fertile lands, as inhabitants cultivated corn alongside other grains. Corn’s adaptability and high yield were highlighted in local chronicles, indicating a newfound reliance on it as a staple food, which drastically improved food security for many families.

During this time, several counties in Shaanxi depended heavily on corn and coarse grains, with some communities relying on it as their primary sustenance. The introduction of American crops like corn and sweet potatoes initiated a second agricultural revolution, significantly enhancing grain production and contributing to population growth. Historians like Ge Jianxiong and Jiang Tao emphasized the role of these crops in both increasing food availability and fostering demographic changes during the Ming and Qing Dynasties.

However, the surge in corn cultivation had profound environmental implications. The aggressive deforestation and land reclamation efforts by new settlers led to severe soil erosion and ecological degradation, particularly in mountainous regions. By the Daoguang era, the adverse effects of these practices were evident, with reports indicating widespread erosion and loss of fertile soil, exacerbated by heavy rains and floods. As soil fertility diminished, tensions between the indigenous populations and settlers escalated, resulting in derogatory labels for the newcomers and highlighting social strife.

The interplay of environmental degradation and social unrest culminated in events such as the White Lotus Rebellion, which was fueled by the discontent of impoverished settlers struggling to survive in increasingly harsh conditions. This rebellion, along with the subsequent Opium War, further disrupted the Qing Dynasty, leading to significant challenges for rural populations, particularly as ecological disasters became more frequent.

By the late Qing Dynasty and into the Republic of China, the ecological crises—marked by floods, droughts, and locust infestations—significantly impacted agricultural practices. As traditional crops like rice and wheat became less accessible due to rising poverty, farmers increasingly turned to corn and sweet potatoes, which were more productive and affordable. This shift was not just a response to economic necessity but also a reflection of broader social changes.

Source: rmdfsy, South China Morning Post, Nature, National Geographic

Supply Side or Demand Side? Which way should China’s economic reforms go?

THINKVIEWS

Tendenzblick

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November 3, 2024

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Supply Side or Demand Side? Which way should China’s economic reforms go?

On 18 September, the US Federal Reserve announced an interest rate cut, and in the month after that, China’s economic policy underwent a major shift, with new policies being unveiled from the highest decision-making level to various government departments related to the economy.

First, on 24 September, the three major financial authorities held a press conference; followed by the Central Political Bureau meeting on 26 September, and then the State Council executive meeting on 29 September, after which conferences by the NDRC and the Ministry of Finance followed.

CEIBS Professor Sheng Songcheng, Senior Researcher Fellow of the Academic Committee of National Development and Reform Commission (NDRC) Zhang Yansheng, CICC Chief Economist Peng Wensheng, Chief Economist and Director of Market Research at Industrial Bank Lu Zhengwei, Vice Chairman of the China Society of Urban Planning, Zhao Yancheng, focusing on the third-quarter economic data and the recently introduced package of incremental policies, to discuss China’s economic reforms.

The recently launched incremental policy package focuses on five key areas: macro counter-cyclical adjustment, expanding domestic demand, assisting enterprises, boosting the capital market, and stabilizing real estate. Evaluating this package requires reflection on our reform and opening-up experiences. Historically, China assesses economic development primarily through GDP and total factor productivity (TFP). Between 2002 and 2008, China’s GDP grew at an impressive average annual rate of 10.47%, with TFP growing at 4.2%.

This growth period signifies a peak in new quality productivity, characterized by a significant increase in TFP. This era, particularly from 2002 to 2008, represents the best development of new quality productivity in China over the past 45 years.

Two factors contributed to this achievement. First, the policy package implemented from 1998 to 2002 was a timely response to insufficient domestic demand, involving the issuance of 660 billion yuan in long-term construction treasury bonds, which catalyzed 3.2 trillion yuan in investments.

Second, from 1998 to 2002, significant financial reforms occurred, including introducing strategic investors. I see parallels between this historical context and today’s incremental policy packages, which aim to replicate high GDP and TFP growth.

From 2009 to 2022, however, there was the slowest GDP growth in 45 years, averaging just 7% annually, with TFP growth declining to between 1.21% and 1.3% in recent years.

In the medium term, the incremental policy package seeks to address the lack of endogenous momentum, focusing on rebuilding confidence and expectations. The long-term objective involves improving the debt situations of local governments, enterprises, and residents. China must determine how these policies can drive structural adjustments from 2024 to 2027, paving the way for sustainable growth post-2028.

Two perspectives emerged in our earlier discussions: one advocates for long-term stimulus across the stock market, real estate, and local debts, while the other emphasizes solving issues in the short, medium, and long term. Clarifying the problems facing the Chinese economy across these timelines is essential for effective policy implementation.

Now, China’s reform focus should align with the priorities outlined in the Third Plenary Session of the 20th Central Committee, including central-local fiscal relations. It’s time to advance reforms in these crucial areas and re-evaluate China’s relationship with global investments.

At this stage and for the foreseeable future, China’s primary goal should be to improve the TFP indicator. While discussions about supply-side and demand-side reforms are crucial, an emphasis on demand-side reforms may not necessarily elevate TFP, even if GDP growth improves. Selling goods at lower prices can boost GDP without enhancing TFP growth. The challenge lies in reconciling the fluctuations between these two indicators.

As China transitions from a populous nation to a major economy, its global role must shift from tension to harmony. Demand will serve as the foundation for future Chinese-style modernization.

From a technical standpoint, TFP pertains to supply-side analysis, but demand remains critical. Prolonged low economic demand leads to high youth unemployment, adversely impacting human capital accumulation and resulting in diminished TFP. Thus, China cannot afford extended periods of insufficient demand.

Moreover, the demand and supply attributes differ across industries. For instance, while China’s green industry is thriving, the real estate sector’s growth is sluggish. Many investors question whether green industry development can compensate for the real estate sector’s weakness. Comparing the two directly is misleading due to their differing supply and demand characteristics.

Land typically exhibits diseconomies of scale, meaning output per acre cannot be increased through merely scaling up land use. Land ownership has enduring advantages due to its infinite lifespan, unlike labor, which is finite.

Furthermore, export demand enhances TFP, as it primarily stems from the manufacturing sector, where large-scale production fosters efficiency and cost reductions. In contrast, while a real estate boom can temporarily boost demand, it negatively impacts TFP. This is due to the absence of economies of scale in real estate and its monopolistic nature, which stifles production efficiency and technological advancement. Therefore, when discussing demand, it is essential to consider the type of demand involved.

The Chinese economy faces constraints primarily from the production side, highlighting the issue of surplus labor due to insufficient demand. Enhancing labor productivity in this context may hinder employment growth, suggesting that the expansion of the debt side—through capital creation—is essential for addressing labor surpluses and stimulating economic activity. And both the supply and demand sides require improvement for sustained economic growth.

By referring to historical economic divergences and convergences, particularly the importance of innovation capacity and market scale, the U.S. leads in innovation partly due to its large market, which fuels demand and, consequently, encourages innovation.

The participants also highlight the role of government and market synchronization in fostering innovation and productivity. Advancements in military technology, for instance, must be effectively transferred to civilian applications to enhance total factor productivity (TFP).

Source: sina

Implications of Ukraine and Russia Not Renewing Gas Transit Agreement

THINKVIEWS

Tendenzblick

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November 2, 2024

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Implications of Ukraine and Russia Not Renewing Gas Transit Agreement

The agreement between Gazprom and Ukrainian oil and gas companies on the import of Russian gas into Europe via Ukraine will expire on 31 December this year. The agreement allows Russian gas to continue to be transported through Ukrainian territory even after the full escalation of the Ukrainian crisis in February 2022, and it is the only surviving trade agreement between Russia and Ukraine at present. However, the deal is facing an end.

On 27 August, Ukrainian President Zelensky said at a briefing that Ukraine does not intend to extend the gas transit agreement with Russia, and that it is ready to discuss obtaining gas from other suppliers through its gas transport system at the request of Europe. What does it mean that the Ukrainian government has strongly stated at a high level that it will not renew the agreement?

Historical Russian-Ukrainian gas relations

Before the full escalation of the Ukrainian crisis, Russia was the EU’s largest natural gas supplier, accounting for 43% of its imports. Several gas pipelines transport Russian gas to Europe, including the Nord Stream pipeline, which runs through the Gulf of Finland and the Baltic Sea to Greifswald in Germany. Other pipelines transit through third countries, with two passing through Belarus and Poland, and two through Ukraine. Additionally, two pipelines run through Turkey.

After the Soviet Union’s collapse, the energy relationship between Russia, the EU, and Ukraine became a crucial element of European geopolitics. Ukraine, as a key transit country, received high transit fees and favorable gas prices from the Russian-European gas trade. Under a barter agreement, Russia provided Ukraine with 17 billion cubic meters of gas annually in exchange for transit fees, while selling an additional 8 billion cubic meters at a preferential price.

However, the Orange Revolution in Ukraine in 2004 drastically altered the traditional Russian-Ukrainian gas relationship. Ukraine increasingly aligned with the EU in the geopolitical rivalry with Russia, leading to multiple disputes over gas prices and transit fees between 2006 and 2009. Russia sold gas to Ukraine at a market price of $230 per 1,000 cubic meters, compared to the previous subscription price of $50 per cubic meter. These conflicts occasionally disrupted Russian gas supplies to Central and Eastern Europe, causing severe shortages in several Western European countries.

In November 2013, Ukraine’s intent to sign an association agreement with the EU triggered a further escalation in the Russian-Ukrainian gas dispute, culminating in the Ukrainian crisis. Following the Crimean crisis in 2014, Russian gas deliveries to Ukraine reverted to a “political price” of $485 per 1,000 cubic meters, with a mandatory prepayment mechanism introduced.

Ukraine accused Russia of “economic aggression” due to the sharp price increase. In June 2014, Gazprom cut off gas supplies to Ukraine after it failed to meet the advance payment deadline. After nearly six months of interruptions, Ukraine repaid its $3.1 billion gas debt in two installments by the end of 2014, leading to the resumption of gas supplies.

In 2019, Russia and Ukraine signed a gas transit agreement, allowing Gazprom to export gas to the EU through Ukrainian pipelines. However, following the escalation of the Ukrainian crisis in February 2022, the Russian-European energy relationship underwent a dramatic shift. The market share of Russian natural gas in Europe plummeted from over 40% to around 10%. The volume of Russian gas delivered via Ukraine dropped from 40 billion cubic meters in 2019 to 15 billion cubic meters in 2023, as EU countries reduced imports and Ukraine closed one of its two Russian gas import routes.

Since the Crimean crisis, Russia has promoted the Nord Stream-2 pipeline as a complete alternative to Ukrainian gas transit to the EU. Despite being completed under U.S. sanctions and pressure, the Nord Stream-2 pipeline was ultimately put on hold when the German government suspended the inaugural review process.

Impact of ending the transit agreement on the parties

If the U.S. closes the gas pipeline to Russia, it would incur a loss of $800 million in transit revenues, roughly 0.5% of its GDP. Ukraine would then seek alternative gas sources, including reverse imports through the Trans-Balkan Pipeline, to meet its energy needs.

However, Russia stands to lose more significantly. With the U.S. transit channel cut off, the only remaining pipelines to Europe would be the Blue Stream and Turkish Stream, which supply gas from Turkey to the Balkan and Southern Europe regions. This scenario would result in Gazprom, already facing financial difficulties, having its gas exports halved, leading to an estimated loss of $7 billion to $8 billion in export revenue. More critically, Gazprom would struggle to fulfill long-term contracts with EU countries, which are valid until 2040. These contracts allow EU companies to pay for gas through Gazprombank, providing an umbrella of protection against U.S. and Western sanctions.

The European Commission’s REPower EU program aims to eliminate the use of Russian gas by 2027, but this prospect appears bleak. In May, Russian gas accounted for 15% of the EU’s total gas supply, surpassing U.S. gas imports for the first time since the escalation of the Ukraine crisis.

From 2026 onwards, significant volumes of liquefied gas from the U.S. and Qatar are expected to enter the European market. However, earlier this year, the Biden administration suspended authorization for new liquefying natural gas (LNG) projects to export to non-FTA countries, citing climate concerns. This decision could lead European buyers to question the long-term reliability of U.S. LNG supplies.

Among the EU countries most dependent on Ukraine for transit shipments of Russian gas are Austria, Slovakia, Hungary, and Italy. Austria and Italy are the least affected by disruptions in Russian gas supplies due to their diverse domestic pipelines. Italy can import gas from Algeria and Azerbaijan through pipelines and liquefied natural gas terminals, while Hungary can continue receiving Russian gas via the Turkish Stream pipeline. In contrast, Slovakia has limited options due to its location at the end of the supply routes.

Central and Eastern European countries are preparing for the potential termination of the Russian-Ukrainian gas transit agreement by promoting the creation of a ‘vertical gas corridor’ under the Central and South-Eastern European Gas Connectivity (CESEC). This corridor would leverage existing infrastructure in Ukraine and Moldova to enable liquefied gas imports from Greece and Turkey to reach Slovakia and Hungary. It also involves expanding the pipeline network in Southeast Europe, making Bulgaria a hub connecting Greece, Moldova, Turkey, and Ukraine. Europe’s unified energy market is expected to respond to ongoing geopolitical challenges through increased integration and expansion.

Eurasia’s gas trade landscape accelerates

Since the escalation of the crisis in Ukraine, the restructuring of the gas trade landscape in Eurasia has accelerated. Azerbaijan is striving to replace Russian gas supplies to meet EU demand.

As early as 2008, Azerbaijan’s Shah Deniz II gas field was identified as a source for the EU’s Southern Gas Corridor (SGC). The SGC, operational since 2020, is a crucial route transporting gas from the Caspian Sea to European markets, facilitating the delivery of Azerbaijani gas to Europe. Following the escalation of the Ukrainian crisis, the EU has actively collaborated with Azerbaijan, increasing gas deliveries annually. Some gas was partially piped through Ukraine, aiming to sustain Ukraine’s status as an energy transit country while reducing Russian gas imports.

In 2022, Azeri gas exports to Europe surged by 56%, making Azerbaijan one of the top three sources of piped gas imports to the EU in 2023. However, Azerbaijan faces challenges in fulfilling its ambitious export commitments, notably the need to boost production from its main gas field, Shah Deniz, and diversify gas sources, with Turkmenistan being essential for addressing its export challenges.

Turkey has long sought to position itself as an energy hub due to its geographical location, despite not being rich in hydrocarbons. As an EU candidate, establishing itself as a European gas hub would provide Turkey with geopolitical advantages, allowing it to align with European markets and extend its influence in the Black Sea and Mediterranean regions.

The ongoing crisis in Ukraine has expedited Turkey’s development as a gas hub, and following the Nord Stream explosion in October 2022, Turkey emerged as the largest importer of piped gas from Russia. Transitioning from a consumer nation at the edge of the European pipeline network, Turkey has become crucial for Russia to maintain its European market presence.

To secure alternative export routes to Europe, Russia has actively supported the establishment of a gas hub in Turkey and the creation of an electronic trading platform for determining gas prices. This hub-based trading process allows for the purchase of gas through the platform without revealing the exact source, enabling Russia to maintain a level of gas exports to Europe on an ‘anonymous’ basis.

Gazprom has already reached an agreement with Turkey on a roadmap for constructing a Turkish gas hub and has commenced implementation, including expanding traded gas volumes to accelerate the development of the Istanbul Energy Exchange. If Ukraine terminates its transit agreement with Russia by year-end, Russian pipeline gas will primarily reach Europe via Turkey. However, Russia’s capacity to significantly influence the establishment of a gas hub in Turkey is constrained by Europe’s resolve to decouple from Russian energy.

While the EU’s rising gas demand enhances Turkey’s prospects of becoming a gas hub, its success will depend on timely and effective implementation. Europe urgently needs alternative gas sources in the coming years, but overall demand for gas is likely to decline as the continent accelerates its energy transition. Considering this potential, Turkey’s future as a gas hub will likely evolve from a regional trading center in the European market to a global gas trading hub catering to various third parties, including the EU.

Source: ishizhi, Rystad Energy, Reuters, CEPA