China

Four Battlegrounds

Posted by Peter on May 21, 2023
Posted in: Artificial Intelligence, China, U.S. Politics. Tagged: . Leave a Comment

Book review: Four Battlegrounds: Power in the Age of Artificial Intelligence, by Paul Scharre.

Four Battlegrounds is often a thoughtful, competently written book on an important topic. It is likely the least pleasant, and most frustrating, book fitting that description that I have ever read.

The title’s battlegrounds refer to data, compute, talent, and institutions. Those seem like important resources that will influence military outcomes. But it seems odd to label them as battlegrounds. Wouldn’t resources be a better description?

Scharre knows enough about the US military that I didn’t detect flaws in his expertise there. He has learned enough about AI to avoid embarrassing mistakes. I.e. he managed to avoid claims that have been falsified by an AI during the time it took to publish the book.

Scharre has clear political biases. E.g.:

Conservative politicians have claimed for years – without evidence – that US tech firms have an anti-conservative bias.

(Reminder: The Phrase “No Evidence” Is A Red Flag For Bad Science Communication.) But he keeps those biases separate enough from his military analysis that I don’t find those biases to be a reason for not reading the book.

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Review of AI Alignment Progress

Posted by Peter on February 6, 2023
Posted in: Artificial Intelligence, China. Tagged: , . 5 comments

I’m having trouble keeping track of everything I’ve learned about AI and AI alignment in the past year or so. I’m writing this post in part to organize my thoughts, and to a lesser extent I’m hoping for feedback about what important new developments I’ve been neglecting. I’m sure that I haven’t noticed every development that I would consider important.

I’ve become a bit more optimistic about AI alignment in the past year or so.

I currently estimate a 7% chance AI will kill us all this century. That’s down from estimates that fluctuated from something like 10% to 40% over the past decade. (The extent to which those numbers fluctuate implies enough confusion that it only takes a little bit of evidence to move my estimate a lot.)

I’m also becoming more nervous about how close we are to human level and transformative AGI. Not to mention feeling uncomfortable that I still don’t have a clear understanding of what I mean when I say human level or transformative AGI.

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Cold War II

Posted by Peter on October 13, 2022
Posted in: China, Investing, Politics. 4 comments

A conflict is brewing between China and the West.

Beijing is determined to reassert control over Taiwan. The US, and likely most of NATO, seem likely to respond by, among other things, boycotting China.

We should, of course, worry that this will lead to war between China and the US. I don’t have much insight into that risk. I’ll focus in this post on risks about which I have some insight, without meaning to imply that they’re the most important risks.

Such a boycott would be more costly than the current boycott of Russia, and the benefits would likely be smaller.

How can I predict whether the reaction to China’s action against Taiwan will be a rerun of the response to the recent Russian attack on Ukraine?

I’ll start by trying to guess the main forces that led to the boycott of Russia.

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October Surprises, Part 2

Posted by Peter on July 26, 2020
Posted in: China, U.S. Politics. Tagged: , .

I’ve been brainstorming about what might happen with this year’s election. Here’s one of the more interesting (but not likely) scenarios that I’ve imagined:

Most parts of the US are experiencing their second or third wave of the pandemic. Two of the more heavily funded vaccine trials have just been declared to be failures. No US or European company expects to have a vaccine ready for FDA approval before December. Prediction markets say Trump’s chances of re-election have dropped to 20%.

China announces on October 27 that Sinopharm Group has a COVID-19 vaccine that meets China’s safety and effectiveness standards, and can deliver about 1 million doses by November 2.

China offers to allocate half of this initial batch of vaccines to the US, on the grounds that the US is a relatively needy country, and Donald Trump is currently a close friend of China.

Why, I hear you wonder, would China treat Trump as a friend?

China is strong enough that the government can afford to tolerate Trump’s annoying trade wars, and they maybe even see some benefit from reducing China’s somewhat excessive dependence on the US. It’s important to keep in mind that democracy is one of the larger threats to the Beijing regime (h/t scholars-stage). 2020 has proven to be a good year to mount a campaign to demonstrate that socialism with Chinese characteristics is superior to US-style democracy. I’ll leave as an exercise for my readers to figure out how many ways the idea of democracy could be discredited by a Trump re-election.

Why would a Chinese company be faster than US/European companies at producing a vaccine? My initial guess was differences in regulatory red tape would favor China, but my attempt to find evidence for such a pattern turned up nothing. My current guess is that differences between countries in who volunteers for a vaccine trial will have important effects on how quickly the control groups get infected. Trials in some countries may attract only people who are sufficiently risk-averse that the control groups are slower than expected at getting infected. Please don’t assume that I have any useful expertise here; I’m mostly just guessing.

I also wondered whether willingness to do human challenge trials would determine who verifies their vaccine first. I have vague intuitions that China is more likely than other countries to try that, but I haven’t found evidence to confirm those intuitions.

How would voters react to this scenario? My best guess is that the election would be surprisingly close, but Trump would still lose.

The stock market would rise due to the vaccine benefits. There would be no good way to infer the market’s opinion about the election until the results are announced. I’m still confused as to how this scenario should affect my investment strategies.

P.S. – China and Sinopharm aren’t willing to predict when they’ll able to submit the forms needed for FDA approval, and ask that the US consider the approval of China’s NMPA to be good enough evidence of the vaccine’s safety and effectiveness. How does the FDA react?

State, Economy, and the Great Divergence

Posted by Peter on April 13, 2017
Posted in: Book Reviews, China. Tagged: , , , .

Book review: State, Economy, and the Great Divergence: Great Britain and China, 1680s – 1850s, by Peer Vries.

Yet another book on why Britain and China diverged dramatically starting around 1800. This one focuses on documenting the differences between the regions, with relatively little theorizing.

Some interesting differences of possible relevance to the divergence:

  • British per capita tax collections were 15 times China’s [1]; Vries emphasizes the underlying British bureaucratic competence.
  • Britain changed its tax rules often; China treated tax rules as if set in stone.
  • British tax policy caused it to promote standardization of a wide variety of weights and measures, which helped long-distance trades; China had nothing similar.
  • Britain’s taxation was more egalitarian than China’s (but still much less egalitarian than today).
  • British government debt looked recklessly high; China consistently had a surplus.
  • British elites wanted to keep the masses poor (to make them industrious); China’s elites seemed neutral or had slight preferences for the poor to prosper.
  • Most British workers were nearly slaves – laws restricted their mobility due to the expectation that most who left their area of work were beggars/thieves; China was less restrictive.
  • Britain condoned or supported powerful monopolies; China broke up concentrations of merchant power / capital under the assumption that they came at the expense of ordinary people.
  • Britain had three times as much farm land per capita as China.
  • Britain was more urban, so it had more commercial / monetary activity.
  • China denied that anything outside its borders mattered. Britain had a fairly global worldview.

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How China Became Capitalist

Posted by Peter on November 29, 2014
Posted in: Book Reviews, China, Economics. Tagged: .

Book review: How China Became Capitalist, by Ronald Coase and Ning Wang.

This is my favorite book about China so far, due to a combination of insights and readability.

They emphasize that growth happened rather differently from how China’s leaders planned, and that their encouragement of trial and error was more important than their ability to recognize good plans.

The most surprising features of China’s government after 1978 were a lack of powerful special interests and freedom from ideological rigidity. Mancur Olson’s book The Rise and Decline of Nations suggests how a revolution such as Mao’s might free a nation from special interest power for a good while.

I’m still somewhat puzzled by the rapid and nearly complete switch from a country blinded by ideology to a country pragmatically searching for a good economy. Coase and Wang attribute it to awareness of the harm Maoism caused, but I can easily imagine that such awareness could mainly cause a switch to a new ideology.

It ends with a cautiously optimistic outlook on China’s future, with some doubts about freedom of expression, and some hope that China will contribute to diversity of capitalist cultures.

Awakening Giants

Posted by Peter on June 3, 2010
Posted in: Book Reviews, China, Economics.

Book review: Awakening Giants, Feet of Clay: Assessing the Economic Rise of China and India by Pranab Bardhan.

This short book has a few interesting ideas.

The most surprising ones involve favorable claims about China’s collectivist period (but without any claim that that period was better overall).

China under Mao apparently had a fairly decentralized economic system, with reasonable performance-based incentives for local officials, which meant that switching to functioning capitalism required less change than in Russia.

Chinese health apparently improved under Mao (in spite of famine), possibly more than it has since, at least by important measures such as life expectancy. This is reportedly due to more organized and widespread measures against ordinary communicable diseases under collectivism.

Capitalism with Chinese Characteristics

Posted by Peter on November 11, 2009
Posted in: China, Economics.

Book review: Capitalism with Chinese Characteristics: Entrepreneurship and the State by Yasheng Huang.

This is the most insightful book I’ve read so far on the Chinese economy. Most commentators only look at the most readily available data, but Huang dug through many obscure detailed records that were less likely to be manipulated.

The most important point of the book is to show that the widely held view of China as having gradual, steady improvement since 1978 is wrong. There was a dramatic political change in 1978 that allowed the rural parts of China (which still account for a large part of the economy, and where entrepreneurial culture had not been stamped out by communism) to prosper. Then starting in 1989 urban-focused leaders stifled rural businesses, causing stagnation there until 2002, when leaders more friendly to rural business gained power and allowed fairly healthy growth to resume.

Meanwhile urban areas have been dominated by crony capitalism which produced a good deal of gdp growth through massive state-directed investment in large companies, especially in the 1990s. This growth has produced fewer benefits to the average person than gdp numbers would lead us to expect.

Most of China’s success has been due to private enterprise. Beliefs that state-run businesses have produced growth are partly due to confusing reports about which companies are private.

I’m fairly impressed by the documentation of the changes in the rural political climate, but since the author seems to be the only one reading his sources of data and since it would be very time consuming to check them, it would be easy for errors to go unnoticed. For urban issues, he appears to be overstating the importance of problems that are not unique to China.

He partly clears up the puzzle of China doing better than should be expected for a country whose legal system doesn’t provide much rule of law. He provides evidence that some of the most important successes depend on British law imported via Hong Kong. But he doesn’t provide enough evidence to tell us how important this effect has been.

He leaves unanswered many questions I’d like answered. Why did government policies undergo these changes? Is the surprisingly reported steady gdp growth mostly the result of manipulated statistics? How much of the growth has been an investment bubble, and how much is sustainable? How did entrepreneurial culture survive communism in rural China so much better than in other countries?

Chinese Stock Risks

Posted by Peter on December 11, 2008
Posted in: China, Investing.

There are lots of small Chinese companies trading on U.S. stock exchanges that look at first glance to be ridiculously underpriced. One reason for the low prices are that it’s harder than you might expect to enforce U.S. law on Chinese companies that have few or no assets in the U.S.

The most blatant example I’ve seen is Eternal Technologies Group Inc, which has ignored a judgment in a lawsuit that seems minor compared to the cash the company reports having, with the result that a receiver has been appointed who is likely to collect some money in ways that badly hurt stockholders who bought before the lawsuit.
Another hint at how little the company cares about stockholders (at least those in the U.S.) is the careless way their press releases are written: “5. Radification of the elecrion of the auditors” (they managed to spell election correctly on the prior line, so it’s not simple ignorance).

I’ve noticed problems with other U.S. traded Chinese companies that leave me uncertain which of them can be trusted. I’ve been trading stocks listed on the Hong Kong Stock Exchange a fair amount, and haven’t noticed any similar problems there. I presume the stronger cultural and/or legal ties are more effective than anything that can be accomplished by U.S. law.

Chinese Stock Bubble

Posted by Peter on October 23, 2007
Posted in: China, Investing. Tagged: , , .

Up to two months ago, I was not too excited by the claims of a bubble in the Chinese stock market. Maybe the stocks that trade only in China were at bubble levels, but the ones that trade in the U.S. or Hong Kong still looked like mostly good investments.
Much has changed since then. On October 17, PetroChina rose 14.5%, more than doubling in about two months. That was a one day gain in market capitalization of almost $60 billion, and a two month gain of $247 billion (doubling the market capitalization). I’ve seen similar but less dramatic rises in smaller Chinese stocks that trade in the U.S., but less on the Hong Kong stock exchange.
By comparison, the largest rises in market capitalization that I’ve been able to find in the technology stock bubble of 1999-2000 were a $50 billion one day rise in Microsoft on December 15, 1999, and a $250 billion rise (doubling) in Cisco which took four months.
I’m not saying that Chinese stocks are clearly overvalued yet, and I’m still holding some stocks in smaller Chinese companies that I don’t feel much urgency about selling. But the unusually strong and long lasting Chinese economic expansion, combined with the unusually frothy action in the stock market, are what I’d expect to be causes and symptoms of a bubble.
Bubbles in the U.S. have peaked when real interest rates rise to higher than normal levels. The Chinese government is keeping real interest rates near zero, and seems to think it can keep nominal interest rates stable and reduce inflation. That would be an unusual accomplishment under most circumstances. When combined with a stock market bubble, I suspect it could only be accomplished with drastic restrictions on economic activity, which would involve instabilities that the Chinese government has been trying to avoid by stabilizing things such as interest rates.
Without a rise in interest rates or drastic restrictions of some sort, it’s hard to see what will stop the rise in Chinese stocks. So I’m guessing we’ll see a bigger bubble than the U.S. has experienced. It’s effects will likely extend well beyond China.