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To remember from South Korea’s stellar rise

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The speed and determination with which South Korea rose from war-torn poverty to innovative leadership amazed the world. Sungchul Chung examines the lessons to be learned by others seeking to emulate its success.

South Korea has in just over half a century risen from chronic poverty to be today one of the world’s most dynamic industrial economies. It has positioned itself as a global player in technology in sectors like automobiles, semi-conductors and telecommunications, and its growth was accomplished despite resource constraints and geopolitical uncertainties. South Korea’s stellar performance is widely praised as a model for emulation, yet it is nowadays concerned that its growth will soon plateau unless it can make the transition from being a technological follower to an innovator.

South Korea’s starting point meant that at first it had to be a follower. The country’s very poor industrial base had been almost totally destroyed during the Korean war at the start of the 1950s, heavily handicapping its private sector in the following decade. But although foreign direct investment (FDI) was at that time generally considered as the most effective way for a developing country to acquire production technologies, management skills and a business know how, South Korean’s government chose to restrict foreign ownership and the repatriation by investors of profits along with controls on technology transfers.

“Slower growth, reduced job prospects and the deteriorating performances of South Korean companies, all warn that its past strategy no longer works”

Instead of relying on funding through FDI, the government itself took on large foreign loans and allocated them to strategic industries, which in turn led to a massive influx of foreign capital goods and turnkey plants. Private industries acquired the necessary technologies by reverse engineering the imported machines, or through technical training as part of turnkey projects.

In the case of light industries, like shoes, clothing and textiles, the major sources of technological training and learning were original equipment manufacturing (OEM) production arrangements. South Korean companies benefited hugely from these because they offered opportunities to work with foreign buyers who would provide everything from product designs and materials to quality control. This was the stage of which South Korea pursued industrialisation by imitating and assimilating foreign technologies.

“Without its well-educated, strongly motivated and highly disciplined workforce, South Korea wouldn’t have been able to achieve such success”

The structural changes to the growing South Korean economy were accompanied by increased levels of sophistication that could no longer be met by imported technologies. The Seoul government responded to these changes by shifting the policy focus from learning to development, and in 1982 launched a national R&D programme. This was the first programme specifically designed for industrial technology development, and it was accompanied by tax and fiscal incentives to promote industrial R&D. These actions were further reinforced in the 1990s by large scale mission-oriented programmes aimed at developing strategic technologies. Private industries joined in by switching their strategy from imitating and assimilating mature foreign technologies to in-house R&D, drawing upon emerging new foreign technologies. During the 1980s and up to 2000, R&D spending in South Korea soared from 0.5% of GDP to more than 3%, with the private sector’s share increasing to 80% towards the end of the 1990s. This period witnessed some remarkable achievements, almost all of them resulting from local and international joint R&D efforts drawing on foreign technologies.

Many developing countries have since tried similar strategies, but very few have succeeded. So what was it that made South Korea different? The most important factor has been human resources; without its well-educated, strongly motivated and highly disciplined workforce, South Korea wouldn’t have been able to achieve such success. Another factor was the government’s policy vision of a unified South Korean national goal.

Seoul’s export-based development strategy has also been very effective in stimulating innovation in private industries. To thrive in the global economy, South Korean companies had to invest heavily in technology and innovation, and were able to do so because of Korean’s cultural values emphasising frugality, which in turn explains the high savings and investment rates during that period.

Unfortunately, South Korea now seems to have hit the limit of its “fast follower” strategy. Slower growth, reduced job prospects and the deteriorating performances of South Korean companies, including Samsung, all warn that its past strategy no longer works. South Korea has to change if it is to recover its dynamism. The South Korean government has duly responded with a new development vision labelled the “creative economy.” Despite confusions over what the creative economy actually means, the main idea appears to be that new growth can be generated by facilitating cross-fertilisation of IT and other areas. Some experts agree with this idea, but others are doubtful. Of greater concern is how the policy should be implemented rather than the idea itself. Can South Korea achieve a creative economy under its current innovation system, and can the government lead innovation toward the creative economy in the way it did in the catch-up process?

“To thrive in the global economy, South Korean companies had to invest heavily in technology and innovation, and were able to do so because of Korean’s cultural values emphasising frugality”

Among the key features of South Korea’s innovation system is the role of government, which is rarely matched in terms of its influence over the private sector. It’s a system that has a lot to do with South Korean culture that is deeply rooted in hierarchical collectivism that places a higher value on community than on individuals, and emphasises social order more than interactions between the members of the society while also being strict about ethical norms.

It’s a culture that provides a glimpse into what the relationship is like between the government and the private sector in South Korea’s innovation system. It makes it easier to achieve social cohesion and to mobilise social energy toward a shared goal, and so it is very effective once the goal is clearly defined. The path to the goal was well-known in the case of the “fast follower” strategy, but the other side of the same coin is that Confucian culture tends to suppress new ideas and discourage risk-taking by penalising failures. This suggests that the factors responsible for past successes may now work as barriers to growth.

To sustain future growth, South Korea needs to find a way to reconcile Confucian culture with the culture of innovation based on diversity, openness, trust, social interactions and tolerance. And the government has to redefine its own role in navigating the country’s course toward a creative economy.

South Korea’s experience shows that there’s no such thing as an optimal innovation system. Innovation systems evolve in a national context that is influenced by such factors as culture, history, politics and the natural environment, all of which are subject to change. This means no model exists that transcends time and the cultural space.

 

This article first appeared in the Spring 2015 issue of Europe’s World, reposted per author’s permission.

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East Asia

China’s soft power and its Lunar New Year’s Culture

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Authors: Liu Hui & Humprey A. Russell*

As a common practice, China has celebrated its annual Lunar new year since 1984 when the leaders of the day decided to open mysterious country in a more confident and transparent way. So far, the lunar new year gala has become a part of Chinese cultural life and beyond. The question then arises why China or its people have been so thrilled to exhibit themselves to the world, as its economy has already impressed the world by its rapid pace and tremendous capacity.

As it is well-known, in international relations, peoples from different cultural and ethnical backgrounds need to enhance their understanding which eventually leads to mutual respect and tolerance as the key to the world peace and stability. China is well-aware of this norm. As a rising power with 1.3 billion people, it is necessary for China to introduce its culture and notion of the peaceful rise to the audiences globally. Joseph Nye, Jr., the founder of the concept of the soft power, has argued: “The currency of soft power is culture, political values, and foreign policies. During the information age, credibility is the scarcest resource.”In light of this, China has been steadily involved in cultural promotions abroad.

China is an ancient civilization but diplomatically it is a new global player in terms of its modern involvement into the world affairs, particularly in terms of reform and openness. Yet, since China has aspired to rejuvenate itself as one of the leading powers globally, it is natural for the world en bloc to assume Beijing’s intention and approach to the power transition between the rising power like itself and the ruling powers such as the United States and the G-7 club. Consider this, China has exerted all efforts to project but not propagate its image to the world. Here culture is bound to play the vital role in convincing the countries concerned that “culturally China has no the gene of being a threat to other peoples,” as Chinese President Xi has assured. The annual lunar gala is evidently a useful instrument to demonstrate Chinese people, culture and policies as well.

Culturally speaking, the Chinese New Year celebrations can be seen as follows. In a general sense, similar themes run through all the galas with the local cultural and ethnical ingredients, for instance, Chinese opera, crosstalk and acrobatics, as well as the lion-dancing or the dragon-dancing from time to time. Yes, the galas play the role of promoting the Chinese communities over the world to identify themselves with the Chinese culture which surely strengthen the cultural bonds among the Chinese, in particular the younger generations. Moreover, the dimension of the Chinese culture can be found beyond the country since its neighbors like Japan, Vietnam, South Korea and Malaysia, as well as Chinese communities in many other areas also perform those arts at the holiday seasons. The message here is clear that China, although it is a rising great power, has never abandoned its cultural tradition which has emphasized the harmony among the different races and ethnics.

Recently, the lunar new year celebrations across China have invited professional and amateur artists from all over the world. Those foreign guest artists and many overseas students studying in China have been able to offer their talents in either Chinese or their mother tongues. No doubt, this is a two-way to learn from each other because Chinese performers are benefited from the contacts with their counterparts globally. In terms of public diplomacy, Beijing aims to send a powerful and sincere message to the world: China can’t be in isolation from the world because it has aspired to be a great and inclusive country as well. To that end, the rise of China is not going to challenge the status quo, but will act as one of the stakeholders.

As usual, realists have difficulties and even cultural bias to accept the rhetoric from a country like China since it has been regarded by the ruling powers of the world as an ambitious, assertive and communist-ruled country with its unique culture. To that challenge, the Chinese government and the people have done a great deal of works to successfully illustrate Chinese practice of harmony at the societal level idealized by Confucius’ doctrines. This social harmony is made possible only by the realization of the Taoist ideal of harmony with nature – in this case, harmony between humans and nature. This explains why panda and many other rare animals are now viewed as new national symbol of China. Although they are unnecessarily an indispensable part of the lunar new year gala, the viewpoint is that the rise of China would not be completed at the cost of the ecological environment like many other countries did in history.

Practically speaking, the lunar new year celebrations are being conducted in a rich variety of ways such as concerts, cuisines, folk entertainments and even forums and receptions around the world. Major global commercial centers have also served to create a Chinese holiday atmosphere, adapt to the needs of Chinese tourists, attract active participation from local residents, and provide such diversities of cultural and social events. What is worth mentioning is that some Chinese-North American non-profit, non-partisan organizations are beginning to celebrate Chinese lunar gala in partnership with other local counterparts. For instance, the Chinese Inter-cultural Association based in California, recently hosted a Chinese New Year party in a Persian restaurant in partnership with a local non-profit, non-partisan organization called the Orange County Toastmaster Club, part of Toastmaster International. Also, in another Chinese New Year celebration that was open to people of all races in Pasadena, two Americans played the guitar and sang songs in fluent Chinese! Both galas were attended by people of all racial backgrounds around the world. Given this, it is fair to say that China’s soft power supported by its annual lunar new year festival is on the rise globally with a view to promoting mutual respect and friendship among the peoples of various cultural, ethnical and racial origins.

Yet, though the impressive feats are achieved, it has noted that China still has a long way to go in terms of its twin-centennial dreams. First, as a developing country with its unique culture, it is necessary for China to promote its great ancient culture abroad, but it is also imperative to avoid “introducing” China rashly into the globe. Essentially, soft power is more the ability to attract and co-opt than to use force or give money as a means of persuasion. Thereby, it is the very ability to shape the preferences of others through appeal and attraction. As cross-cultural communication is a long process, Nye admitted a few years ago, in public affairs, “the best propaganda is not propaganda.”

This is the key to all the countries. In 2014,President Xi formally stated, “China should increase its soft power, give a good Chinese narrative, and better communicate its messages to the world.” In light of this, Chinese lunar new year gala surely acts as soft power to project the image of China internationally.

* Humprey A. Russell (Indonesia), PhD candidate in international affairs, SIPA, Jilin University.

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East Asia

China’s step into the maelstrom of the Middle East

Dr. James M. Dorsey

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The Middle East has a knack for sucking external powers into its conflicts. China’s ventures into the region have shown how difficult it is to maintain its principle of non-interference in the internal affairs of other states.

China’s abandonment of non-interference is manifested by its (largely ineffective) efforts to mediate conflicts in South Sudan, Syria and Afghanistan as well as between Israel and Palestine and even between Saudi Arabia and Iran. It is even more evident in China’s trashing of its vow not to establish foreign military bases, which became apparent when it established a naval base in Djibouti and when reports surfaced that it intends to use Pakistan’s deep sea port of Gwadar as a military facility.

This contradiction between China’s policy on the ground and its long-standing non-interventionist foreign policy principles means that Beijing often struggles to meet the expectations of Middle Eastern states. It also means that China risks tying itself up in political knots in countries such as Pakistan, which is home to the crown jewel of its Belt and Road Initiative — the China–Pakistan Economic Corridor (CPEC).

Middle Eastern autocrats have tried to embrace the Chinese model of economic liberalism coupled with tight political control. They see China’s declared principle of non-interference in the affairs of others for what it is: support for authoritarian rule. The principle of this policy is in effect the same as the decades-old US policy of opting for stability over democracy in the Middle East.

It is now a risky policy for the United States and China to engage in given the region’s post-Arab Spring history with brutal and often violent transitions. If anything, instead of having been ‘stabilised’ by US and Chinese policies, the region is still at the beginning of a transition process that could take up to a quarter of a century to resolve. There is no guarantee that autocrats will emerge as the winners.

China currently appears to have the upper hand against the United States for influence across the greater Middle East, but Chinese policies threaten to make that advantage short-term at best.

Belt and Road Initiative-related projects funded by China have proven to be a double-edged sword. Concerns are mounting in countries like Pakistan that massive Chinese investment could prove to be a debt trap similar to Sri Lanka’s experience.

Chinese back-peddling on several Pakistani infrastructure projects suggests that China is tweaking its approach to the US$50 billion China–Pakistan Economic Corridor. The Chinese rethink was sparked by political volatility caused by Pakistan’s self-serving politics and continued political violence — particularly in the Balochistan province, which is at the heart of CPEC.

China decided to redevelop its criteria for the funding of CPEC’s infrastructure projects in November 2017. This move seemingly amounted to an effort to enhance the Pakistani military’s stake in the country’s economy at a time when they were flexing their muscles in response to political volatility. The decision suggests that China is not averse to shaping the political environment of key countries in its own authoritarian mould.

Similarly, China has been willing to manipulate Pakistan against its adversaries for its own gain. China continues to shield Masoud Azhar (who is believed to have close ties to Pakistani intelligence agencies and military forces) from UN designation as a global terrorist. China does so while Pakistan cracks down on militants in response to a US suspension of aid and a UN Security Council monitoring visit.

Pakistan’s use of militants in its dispute with India over Kashmir serves China’s interest in keeping India off balance — a goal which Beijing sees as worthy despite the fact that Chinese personnel and assets have been the targets of a low-level insurgency in Balochistan. Saudi Arabia is also considering the use of Balochistan as a launching pad to destabilise Iran. By stirring ethnic unrest in Iran, Saudi Arabia will inevitably suck China into the Saudi–Iranian rivalry and sharpen its competition with the United States. Washington backs the Indian-supported port of Chabahar in Iran — a mere 70 kilometres from Gwadar.

China is discovering that it will prove impossible to avoid the pitfalls of the greater Middle East. This is despite the fact that US President Donald Trump and Saudi Arabia’s powerful Crown Prince Mohammad bin Salman seem singularly focussed on countering Iran and Islamic militants.

As it navigates the region’s numerous landmines, China is likely to find itself at odds with both the United States and Saudi Arabia. It will at least have a common interest in pursuing political stability at the expense of political change — however much this may violate its stated commitment to non-interference.

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East Asia

Chinese extradition request puts crackdown on Uyghurs in the spotlight

Dr. James M. Dorsey

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A Chinese demand for the extradition of 11 Uyghurs from Malaysia puts the spotlight on China’s roll-out of one of the world’s most intrusive surveillance systems, military moves to prevent Uyghur foreign fighters from returning to Xinjiang, and initial steps to export its security approach to countries like Pakistan.

The 11 were among 25 Uyghurs who escaped from a Thai detention centre in November through a hole in the wall, using blankets to climb to the ground.

The extradition request follows similar deportations of Uyghurs from Thailand and Egypt often with no due process and no immediate evidence that they were militants.

The escapees were among more than 200 Uighurs detained in Thailand in 2014. The Uyghurs claimed they were Turkish nationals and demanded that they be returned to Turkey. Thailand, despite international condemnation, forcibly extradited to China some 100 of the group in July 2015.

Tens of Uyghurs, who were unable to flee to Turkey in time, were detained in Egypt in July and are believed to have also been returned to China. Many of the Uyghurs were students at Al Azhar, one of the foremost institutions of Islamic learning.

China, increasingly concerned that Uyghurs fighters in Syria and Iraq will seek to return to Xinjiang or establish bases across the border in Afghanistan and Tajikistan in the wake of the territorial demise of the Islamic State, has brutally cracked down on the ethnic minority in its strategic north-western province, extended its long arm to the Uyghur Diaspora, and is mulling the establishment of its first land rather than naval foreign military base.

The crackdown appears, at least for now, to put a lid on intermittent attacks in Xinjiang itself. Chinese nationals have instead been targeted in Pakistan, the $50 billion plus crown jewel in China’s Belt and Road initiative that seeks to link Eurasia to the People’s Republic through infrastructure.

The attacks are believed to have been carried out by either Baloch nationalists or militants of the East Turkestan Independence Movement (ETIM), a Uighur separatist group that has aligned itself with the Islamic State.

Various other groups, including the Pakistani Taliban, Al Qaeda and the Islamic State have threatened to attack Chinese nationals in response to the alleged repression of Uyghurs in Xinjiang.

ETIM militants were believed to have been responsible for the bombing in August 2015 of Bangkok’s Erawan shrine that killed 20 people as retaliation for the forced repatriation of Uighurs a month earlier.

The Chinese embassy in Islamabad warned in December of possible attacks targeting “Chinese-invested organizations and Chinese citizens” in Pakistan

China’s ambassador, Yao Jing, advised the Pakistani interior ministry two months earlier that Abdul Wali, an alleged ETIM assassin, had entered the country and was likely to attack Chinese targets

China has refused to recognize ethnic aspirations of Uyghurs, a Turkic group, and approached it as a problem of Islamic militancy. Thousands of Uyghurs are believed to have joined militants in Syria, while hundreds or thousands more have sought to make their way through Southeast Asia to Turkey.

To counter ethnic and religious aspirations, China has introduced what must be the world’s most intrusive surveillance system using algorithms. Streets in Xinjiang’s cities and villages are pockmarked by cameras; police stations every 500 metres dot roads in major cities; public buildings resemble fortresses; and authorities use facial recognition and body scanners at highway checkpoints.

The government, in what has the makings of a re-education program, has opened boarding schools “for local children to spend their entire week in a Chinese-speaking environment, and then only going home to parents on the weekends,” according to China scholar David Brophy. Adult Uyghurs, who have stuck to their Turkic language, have been ordered to study Chinese at night schools.

Nightly television programs feature oath-swearing ceremonies,” in which participants pledge to root out “two-faced people,” the term used for Uyghur Communist Party members who are believed to be not fully devoted to Chinese policy.

The measures in Xinjiang go beyond an Orwellian citizen scoring system that is being introduced that scores a person’s political trustworthiness. The system would determine what benefits a citizen is entitled to, including access to credit, high speed internet service and fast-tracked visas for travel based on data garnered from social media and online shopping data as well as scanning of irises and content on mobile phones at random police checks.

Elements of the system are poised for export. A long-term Chinese plan for China’s investment in Pakistan, dubbed the China Pakistan Economic Corridor (CPEC), envisioned creating a system of monitoring and surveillance in Pakistani cities to ensure law and order.

The system envisions deployment of explosive detectors and scanners to “cover major roads, case-prone areas and crowded places…in urban areas to conduct real-time monitoring and 24-hour video recording.”

A national fibre optic backbone would be built for internet traffic as well as the terrestrial distribution of broadcast media. Pakistani media would cooperate with their Chinese counterparts in the “dissemination of Chinese culture.”

The plan described the backbone as a “cultural transmission carrier” that would serve to “further enhance mutual understanding between the two peoples and the traditional friendship between the two countries.”

The measures were designed to address the risks to CPEC that the plan identified as “Pakistani politics, such as competing parties, religion, tribes, terrorists, and Western intervention” as well as security. “The security situation is the worst in recent years,” the plan said.

At the same time, China, despite official denials, is building, according to Afghan security officials, a military base for the Afghan military that would give the People’s Republic a presence in Badakhshan, the remote panhandle of Afghanistan that borders China and Tajikistan.

Chinese military personnel have reportedly been in the mountainous Wakhan Corridor, a narrow strip of territory in north-eastern Afghanistan that extends to China and separates Tajikistan from Pakistan since March last year.

The importance China attributes to protecting itself against Uyghur militancy and extending its protective shield beyond its borders was reflected in the recent appointment as its ambassador to Afghanistan, Liu Jinsong, who was raised in Xinjiang and served as a director of the Belt and Road initiative’s $15 billion Silk Road Fund.

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