“A journey of a thousand miles begins with a single step” - Lao Tzu

Learning Chinese is hard, but not too hard.

Especially if you know the mistakes to avoid.

Seven years after taking my first crack at tones, I’m no closer to mastering Chinese than any serious learner of Chinese.  And I’ve made some pretty stupid mistakes along the way.

Hopefully by reading this you’ll avoid some of them:

8 mistakes to avoid when learning Chinese

Mistake #1: Not mastering tones

If you speak Chinese without proper tones you might as well be half deaf and dumb.

Almost no one is going to understand you.  No one except your friends studying Chinese and your teacher, the same teacher used to students mangling her language.  Once you step outside the warm cocoon of the classroom, everything changes.

But Chinese people can guess what you’re trying to say, right?

Wrong.

The reason why is simple but hard to fathom for people who didn’t grow up speaking a highly tonal language - to a native speaker of Chinese, the difference between tones is just as pronounced as that between consonants - perhaps even greater.

In Chinese, if you get the tones right people can usually understand you.  If you get everything right but the tones, you will be unintelligible to most native speakers of Chinese.

You can save yourself some pain and embarassment by mastering tones early on, and these articles might help speed up the process:  Master the Tones and Mandarin Tone Tricks

Mistake #2: Not learning characters

What about characters - won’t leaping over them help you reach conversational fluency faster?

Sure, in the beginning.

Pinyin is easier, after all, and you’ll free up time to practice conversation.

But characters are nothing if not an aide to your learning at the higher levels.  They help you watch TV, get around town, and do pretty much everything you need to live in China without assistance.

That’s a good feeling.

If your goal is just simple conversations for the heck of it, you don’t need to learn characters.  If you want to get any further, characters will help take you where you want to go.

But characters are a pain in the ass to learn.  Rote memorization is difficult and can take years.  That’s how I learned characters, and looking back it was slow and inefficient.

So what can you do to cut down the learning time?

You’ll find out in a bit, but first I want to share a story:

Mistake #3: Killing yourself learning characters

After what seemed like the tenth tingxie in three days, I threw down my pen and said ’shit!’ loud enough for everyone to hear.

The pen had run out of ink and I had run out patience.  Our teacher was quizzing us in machine gun fashion - shooting out characters way faster than we could react.

That sweltering summer in 2002 we sat through a year of Chinese crammed into eight weeks worth of classes.  Five hours of class plus six to eight hours of homework was the norm - and most of that time was spent learning characters by rote.  It was enough to drive the more diligent among us to the edge of insanity.

There had to be a better way.You see, there’s a way of learning characters, and have them stick with you far longer.

So what’s this better way to learn characters?

About a year ago, John at Sinosplice wrote an article about how he first really learned Japanese Kanji, with a book called Remembering the Kanji.

It’s a system that doesn’t require any knowledge of Japanese to begin.

That’s because each character is first given an English name closest to its core meaning, and then broken up into its component parts using stories and imagery that help you create vivid blueprints in your mind.

Then you’re struggling with a character, the blueprint in your mind shows you how to rebuild it.

Remembering the Kanji helps you make blueprints for the 2000 most common Japanese characters.

Remarkably, it takes a lot less time to come up with a good blueprint than to force the characters into your mind with brute force.  If you read through this dissertation, you’ll understand why.

Luckily for you and me, two new books are about to be released - Remembering Simplified Hanzi and Remembering Traditional Hanzi.

They follow the same process as Remembering the Kanji, and you can read through sample chapters here to see if they’ll work for you.

If you don’t want to throw years of your life away learning characters the old fashioned way, these books are for you.  I’m excited that they’ll be released by the end of the year.

Even if this method cuts down your time spent learning characters, ‘mastering’ Chinese is still a long path to start down.

The path can look daunting when you realize how far it goes - an ever receding point over the horizon.  Which brings us to the next mistake to avoid when learning Chinese:

Mistake #4: Focusing on progress over process

Having goals for learning Chinese is fine, and can take you a long way on the path to fluency.

But you may end up going crazy long before you reach your destination.

That’s because a realistic expectation for learning Mandarin to true fluency might be twenty years - and many people continually delude themselves along the way.

It’s easy to get discouraged when you make mistakes or don’t see rapid progress.

So what can you do to stay sane?

First, accept that you are not Chinese, and even after years of hard work you’re still going to make stupid mistakes.  The more the better, really, as we’ll talk about in a moment.

Second, enjoy the journey - make your goal using Chinese instead of mastering it.  Focus on today, not where you want to be next year.

That doesn’t mean abandoning long term goals or not setting them at all.  It means focusing on the here and now and being happy with your current level of Chinese, and using it.

And you can do that by avoiding a common mistake that Chinese language learners make:

Mistake #5: Not making good Chinese friends

If you’re really going to master the language, you need to get out there.

That’s because language can’t be completely built within the warm confines of a classroom.

You find the missing pieces by getting exposed to real Chinese.  A lot of it.

Making interesting Chinese friends is one way to get this exposure.  If you feel awkward speaking to your Chinese friends in Chinese, you need to make more friends or learn more Chinese.

Or both.

When you find a friend who doesn’t mind speaking Chinese with you, see if you can get them to correct some of your mistakes.This is the advice that Tim Ferris gives best, from Why Language Classes Don’t Work:

Make it your goal to screw up as often as possible in uncontrolled environments. Explicitly ask friends to correct you and reward them with thanks and praise when they catch you spouting nonsense, particularly the small understandable mistakes. I was able to pass the Certificado de Espanol Avanzado, the most difficult Spanish certification test in South America, in eight weeks, which is said to require near-native fluency and years of immersion. How? By following the above fixes and making more mistakes in eight weeks than most make in eight years.

Make as many mistakes as you can, and try to get people to point them out to you.  It may be awkward at first, but it’s the best way to improve your speaking.

But like you wouldn’t jump into the Amazon without learning how to swim, you need to learn the basics before putting yourself out there.

One way to do so better is by avoiding this common mistake:

Mistake #6: Not using the best learning materials available

Most people think that having a great teacher is more important than having a great textbook.

Personally, I agree with Tim Ferris and what he says in the article linked above -> great textbooks + an average teacher > average textbooks + a great teacher.

Whether or not you take formal language classes, the best learning materials will help you learn Chinese better.

Here are two sources I highly recommend:

1. ChinesePod.com - Their podcasts and other audio aides make this the best choice if you can’t attend real classes or get much time with a good tutor / language exchange partner.  Get a free trial by clicking here.
2. Integrated Chinese (Princeton University Press) - This is the most thorough textbook introduction to Chinese I know of.  If you learn everything in the first two year’s worth of books, you’ll have succeeded in building a good foundation for later learning.  Here are links to Amazon for the texts:
   
   Integrated Chinese, Level 1 Part 1
   
   Integrated Chinese, Level 1 Part 2
   
   Integrated Chinese: Level 2

But should you take formal classes?

Sure, if you have the time and money to do so.  Just don’t end up making this common mistake:

Mistake #7: Choosing poor classes

A bad class can sometimes be worse than no class at all - spending time and money on average classes and teachers who force feed you with rote learning is no fun.

So to find out if the course you’ll be taking is good, spend some time figuring out:

• The quality of the textbooks - Don’t settle for poor texts
• The size of classes - The smaller the better
• The levels of classes - The more the better
• If your teachers have experience teaching foreigners - part of the reason we almost went crazy in Shanghai is because our teacher was clueless about teaching foreigners Chinese - make sure this doesn’t happen to you.

Check out this to find other things to be careful about when selecting a Chinese class:
Why Not To Study Chinese at a [Chinese] University

Finally, don’t make this mistake:

Mistake #8: Not using kickass tools for learning Chinese

There are many tools for learning Chinese online.  But these two may be the best:

Google’s character writing software

There is no better character input system than Google’s pinyin input system (or 谷歌拼音输入法)

It responds fast to your typing, guesses what characters you want incredibly well, and allows you to type out strings as long as you want.

All that means a really convenient way of typing Chinese.  If you don’t have it, download it here now.

Chinese Pera-kun

Have you ever wished you could hover your mouse over a character or group of characters and see it’s pinyin and meaning instantly?

Well, a plugin for Firefox, Chinese Pera-kun, can help you do this.  It’s not perfect but it comes close.

To get Chinese Pera-kun, just go to its plugin page, download then install it, and drag its icon onto your navigation bar through View -> Toolbars -> Customize.

That’s it!

I hope this helps, and that you leave more suggestions on what not to do when learning Chinese below.

“A journey of a thousand miles begins with a single step” - Lao Tzu

Learning Chinese is hard, but not too hard.

Especially if you know the mistakes to avoid.

Seven years after taking my first crack at tones, I’m no closer to mastering Chinese than any serious learner of Chinese.  And I’ve made some pretty stupid mistakes along the way.

Hopefully by reading this you’ll avoid some of them:

8 mistakes to avoid when learning Chinese

Mistake #1: Not mastering tones

If you speak Chinese without proper tones you might as well be half deaf and dumb.

Almost no one is going to understand you.  No one except your friends studying Chinese and your teacher, the same teacher used to students mangling her language.  Once you step outside the warm cocoon of the classroom, everything changes.

But Chinese people can guess what you’re trying to say, right?

Wrong.

The reason why is simple but hard to fathom for people who didn’t grow up speaking a highly tonal language - to a native speaker of Chinese, the difference between tones is just as pronounced as that between consonants - perhaps even greater.

In Chinese, if you get the tones right people can usually understand you.  If you get everything right but the tones, you will be unintelligible to most native speakers of Chinese.

You can save yourself some pain and embarassment by mastering tones early on, and these articles might help speed up the process:  Master the Tones and Mandarin Tone Tricks

Mistake #2: Not learning characters

What about characters - won’t leaping over them help you reach conversational fluency faster?

Sure, in the beginning.

Pinyin is easier, after all, and you’ll free up time to practice conversation.

But characters are nothing if not an aide to your learning at the higher levels.  They help you watch TV, get around town, and do pretty much everything you need to live in China without assistance.

That’s a good feeling.

If your goal is just simple conversations for the heck of it, you don’t need to learn characters.  If you want to get any further, characters will help take you where you want to go.

But characters are a pain in the ass to learn.  Rote memorization is difficult and can take years.  That’s how I learned characters, and looking back it was slow and inefficient.

So what can you do to cut down the learning time?

You’ll find out in a bit, but first I want to share a story:

Mistake #3: Killing yourself learning characters

After what seemed like the tenth tingxie in three days, I threw down my pen and said ’shit!’ loud enough for everyone to hear.

The pen had run out of ink and I had run out patience.  Our teacher was quizzing us in machine gun fashion - shooting out characters way faster than we could react.

That sweltering summer in 2002 we sat through a year of Chinese crammed into eight weeks worth of classes.  Five hours of class plus six to eight hours of homework was the norm - and most of that time was spent learning characters by rote.  It was enough to drive the more diligent among us to the edge of insanity.

There had to be a better way.You see, there’s a way of learning characters, and have them stick with you far longer.

So what’s this better way to learn characters?

About a year ago, John at Sinosplice wrote an article about how he first really learned Japanese Kanji, with a book called Remembering the Kanji.

It’s a system that doesn’t require any knowledge of Japanese to begin.

That’s because each character is first given an English name closest to its core meaning, and then broken up into its component parts using stories and imagery that help you create vivid blueprints in your mind.

Then you’re struggling with a character, the blueprint in your mind shows you how to rebuild it.

Remembering the Kanji helps you make blueprints for the 2000 most common Japanese characters.

Remarkably, it takes a lot less time to come up with a good blueprint than to force the characters into your mind with brute force.  If you read through this dissertation, you’ll understand why.

Luckily for you and me, two new books are about to be released - Remembering Simplified Hanzi and Remembering Traditional Hanzi.

They follow the same process as Remembering the Kanji, and you can read through sample chapters here to see if they’ll work for you.

If you don’t want to throw years of your life away learning characters the old fashioned way, these books are for you.  I’m excited that they’ll be released by the end of the year.

Even if this method cuts down your time spent learning characters, ‘mastering’ Chinese is still a long path to start down.

The path can look daunting when you realize how far it goes - an ever receding point over the horizon.  Which brings us to the next mistake to avoid when learning Chinese:

Mistake #4: Focusing on progress over process

Having goals for learning Chinese is fine, and can take you a long way on the path to fluency.

But you may end up going crazy long before you reach your destination.

That’s because a realistic expectation for learning Mandarin to true fluency might be twenty years - and many people continually delude themselves along the way.

It’s easy to get discouraged when you make mistakes or don’t see rapid progress.

So what can you do to stay sane?

First, accept that you are not Chinese, and even after years of hard work you’re still going to make stupid mistakes.  The more the better, really, as we’ll talk about in a moment.

Second, enjoy the journey - make your goal using Chinese instead of mastering it.  Focus on today, not where you want to be next year.

That doesn’t mean abandoning long term goals or not setting them at all.  It means focusing on the here and now and being happy with your current level of Chinese, and using it.

And you can do that by avoiding a common mistake that Chinese language learners make:

Mistake #5: Not making good Chinese friends

If you’re really going to master the language, you need to get out there.

That’s because language can’t be completely built within the warm confines of a classroom.

You find the missing pieces by getting exposed to real Chinese.  A lot of it.

Making interesting Chinese friends is one way to get this exposure.  If you feel awkward speaking to your Chinese friends in Chinese, you need to make more friends or learn more Chinese.

Or both.

When you find a friend who doesn’t mind speaking Chinese with you, see if you can get them to correct some of your mistakes.This is the advice that Tim Ferris gives best, from Why Language Classes Don’t Work:

Make it your goal to screw up as often as possible in uncontrolled environments. Explicitly ask friends to correct you and reward them with thanks and praise when they catch you spouting nonsense, particularly the small understandable mistakes. I was able to pass the Certificado de Espanol Avanzado, the most difficult Spanish certification test in South America, in eight weeks, which is said to require near-native fluency and years of immersion. How? By following the above fixes and making more mistakes in eight weeks than most make in eight years.

Make as many mistakes as you can, and try to get people to point them out to you.  It may be awkward at first, but it’s the best way to improve your speaking.

But like you wouldn’t jump into the Amazon without learning how to swim, you need to learn the basics before putting yourself out there.

One way to do so better is by avoiding this common mistake:

Mistake #6: Not using the best learning materials available

Most people think that having a great teacher is more important than having a great textbook.

Personally, I agree with Tim Ferris and what he says in the article linked above -> great textbooks + an average teacher > average textbooks + a great teacher.

Whether or not you take formal language classes, the best learning materials will help you learn Chinese better.

Here are two sources I highly recommend:

1. ChinesePod.com - Their podcasts and other audio aides make this the best choice if you can’t attend real classes or get much time with a good tutor / language exchange partner.  Get a free trial by clicking here.
2. Integrated Chinese (Princeton University Press) - This is the most thorough textbook introduction to Chinese I know of.  If you learn everything in the first two year’s worth of books, you’ll have succeeded in building a good foundation for later learning.  Here are links to Amazon for the texts:
   
   Integrated Chinese, Level 1 Part 1
   
   Integrated Chinese, Level 1 Part 2
   
   Integrated Chinese: Level 2

But should you take formal classes?

Sure, if you have the time and money to do so.  Just don’t end up making this common mistake:

Mistake #7: Choosing poor classes

A bad class can sometimes be worse than no class at all - spending time and money on average classes and teachers who force feed you with rote learning is no fun.

So to find out if the course you’ll be taking is good, spend some time figuring out:

• The quality of the textbooks - Don’t settle for poor texts
• The size of classes - The smaller the better
• The levels of classes - The more the better
• If your teachers have experience teaching foreigners - part of the reason we almost went crazy in Shanghai is because our teacher was clueless about teaching foreigners Chinese - make sure this doesn’t happen to you.

Check out this to find other things to be careful about when selecting a Chinese class:
Why Not To Study Chinese at a [Chinese] University

Finally, don’t make this mistake:

Mistake #8: Not using kickass tools for learning Chinese

There are many tools for learning Chinese online.  But these two may be the best:

Google’s character writing software

There is no better character input system than Google’s pinyin input system (or 谷歌拼音输入法)

It responds fast to your typing, guesses what characters you want incredibly well, and allows you to type out strings as long as you want.

All that means a really convenient way of typing Chinese.  If you don’t have it, download it here now.

Chinese Pera-kun

Have you ever wished you could hover your mouse over a character or group of characters and see it’s pinyin and meaning instantly?

Well, a plugin for Firefox, Chinese Pera-kun, can help you do this.  It’s not perfect but it comes close.

To get Chinese Pera-kun, just go to its plugin page, download then install it, and drag its icon onto your navigation bar through View -> Toolbars -> Customize.

That’s it!

I hope this helps, and that you leave more suggestions on what not to do when learning Chinese below.

It seems America’s days of free lunches are drawing to a close.

Today the news came out that Chinese banks have been given a directive from the CBRC (China Banking Regulatory Commission) to stop lending to American banks while the crises is still going on.

Also comes news that China may be trying to make a deal where all foreign central bank agree to not dump their US debt.

Maybe the bigger bailout going through congress is making them nervous.

Or it could have been President Bush’s switch from “the economy is strong” to “the entire economy is in [mortal] danger”.

Perhaps it was listening to this guy tell the truth:

Someone important might even have stumbled upon Peter Schiff’s analogy below from Crash Proof and took it to heart:

Let’s suppose six castaways are stranded on a desert island, five Asians and one American. Their problem is hunger.

So they sit down and divide labor as follows: One Asian will do the hunting, another will fish, the third will scrounge for vegetation, the fourth will cook dinner, and the fifth will gather firewood and tend the fire. The sixth, the American, is given the job of eating.

So five Asians work all day to feed one American, who spends his day sunning himself on the beach. The American is employed in the equivalent of the service sector, operating a tanning salon that has one customer: himself. At the end of the day, the five Asians present a painstakingly prepared feast to the American, who sits at the head of a special table built by the Asians specifically for this purpose.

Now the American is practical enough to know that if the Asians are going to continue providing banquets they must also be fed, so he allows them just enough scraps from his table to sustain them for the following day’s labor.
Modern-day economists would have you look at the situation just described and believe that the American is the lone engine of growth driving the island’s economy; that without the American and his ravenous appetite, the Asians on the island would all be unemployed.

The reality, of course, is that the American is not the engine of growth, but the caboose, and the best thing the Asians could do would be to vote the American off the island—decoupling the caboose from the gravy train. Without the American to consume most of their food, they’d have a lot more to eat themselves. Then the Asians could spend less time working on food-related tasks and devote more time to leisure or to satisfying other needs that now go unfulfilled because so many of their scarce resources are devoted to feeding the American.

Ah, you say, but that analogy is flawed because in the real world the United States does pay for its “food” and Asians do receive value in exchange for their effort.

Okay, then let’s assume the American on the island pays for his food the same way real-world Americans pay, by issuing IOUs. At the end of each meal, the Asians present the American with a bill, which he pays by issuing IOUs claiming to represent future payments of food.

The castaways all know that the IOUs can never be collected, since the American not only produces no food to back them up, but also lacks the means and the intention of ever providing any. But the Asians accept them anyway, each day adding to the accumulation of worthless IOUs. Are the Asians any better off as a result of this accumulation? Are they any less hungry? Of course not.

Whatever the reason, China’s going to be eating better than they would if they keep pouring gas into America’s sputtering economy.

If China’s central bank were really smart, they’d be the first to blink.

It seems America’s days of free lunches are drawing to a close.

Today the news came out that Chinese banks have been given a directive from the CBRC (China Banking Regulatory Commission) to stop lending to American banks while the crises is still going on.

Also comes news that China may be trying to make a deal where all foreign central bank agree to not dump their US debt.

Maybe the bigger bailout going through congress is making them nervous.

Or it could have been President Bush’s switch from “the economy is strong” to “the entire economy is in [mortal] danger”.

Perhaps it was listening to this guy tell the truth:

Someone important might even have stumbled upon Peter Schiff’s analogy below from Crash Proof and took it to heart:

Let’s suppose six castaways are stranded on a desert island, five Asians and one American. Their problem is hunger.

So they sit down and divide labor as follows: One Asian will do the hunting, another will fish, the third will scrounge for vegetation, the fourth will cook dinner, and the fifth will gather firewood and tend the fire. The sixth, the American, is given the job of eating.

So five Asians work all day to feed one American, who spends his day sunning himself on the beach. The American is employed in the equivalent of the service sector, operating a tanning salon that has one customer: himself. At the end of the day, the five Asians present a painstakingly prepared feast to the American, who sits at the head of a special table built by the Asians specifically for this purpose.

Now the American is practical enough to know that if the Asians are going to continue providing banquets they must also be fed, so he allows them just enough scraps from his table to sustain them for the following day’s labor.
Modern-day economists would have you look at the situation just described and believe that the American is the lone engine of growth driving the island’s economy; that without the American and his ravenous appetite, the Asians on the island would all be unemployed.

The reality, of course, is that the American is not the engine of growth, but the caboose, and the best thing the Asians could do would be to vote the American off the island—decoupling the caboose from the gravy train. Without the American to consume most of their food, they’d have a lot more to eat themselves. Then the Asians could spend less time working on food-related tasks and devote more time to leisure or to satisfying other needs that now go unfulfilled because so many of their scarce resources are devoted to feeding the American.

Ah, you say, but that analogy is flawed because in the real world the United States does pay for its “food” and Asians do receive value in exchange for their effort.

Okay, then let’s assume the American on the island pays for his food the same way real-world Americans pay, by issuing IOUs. At the end of each meal, the Asians present the American with a bill, which he pays by issuing IOUs claiming to represent future payments of food.

The castaways all know that the IOUs can never be collected, since the American not only produces no food to back them up, but also lacks the means and the intention of ever providing any. But the Asians accept them anyway, each day adding to the accumulation of worthless IOUs. Are the Asians any better off as a result of this accumulation? Are they any less hungry? Of course not.

Whatever the reason, China’s going to be eating better than they would if they keep pouring gas into America’s sputtering economy.

If China’s central bank were really smart, they’d be the first to blink.

China knows where its interests lie.

But could they be with regular Americans?

While many in China praised the bailout of Fannie Mae & Freddie Mac, many others are correctly damning the bigger bailout being passed for Wall Street.

Strangely enough, the interests of China’s government align strongly with the interests of America’s people - both will be harmed irreparably by this massive transfer of real resources and capital from main street to Wall Street.

Before digging into the views of Chinese commentators, let’s see what Ron Paul, one of the strongest advocates against the military-industrial-banking complex, has to say about a bailout for a crises he predicted (along with many others mostly ignored by the media):

Now of course China is not interested in the welfare of Joe 6 Pack.  It just happens that the inflation to fund this massive bailout of reckless financial institutions will harm both China & Joe.

As CEIBS Professor of Economics and Finance Xu Xiaonian quipped yesterday “The fundamental source of Wall Street’s meltdown is caused by Federal Reserve overissuing currency.”

So how could issuing massive amounts of new currency solve the real problems at hand (the solvency of reckless & irresponsible financial institutions unaware and unconcerned about their black swan birthing potential)?

Polls show support for the bailout at 7-28% of America’s population. Given the absolute power embedded in the bailouts (the bill going through congress now gives Paulson & Bernanke virtually unlimited discretion in which assets to buy up with the money being created out of thin air) for banks that just recently paid the largest management bonuses in history, it’s understandable that most people are upset and can see that such a bailout will screw them.

As China Finance, China News, and Chaobao Financial News stated, these actions by the Federal Reserve is only “creating money that does not exist which leads to the inflation of liquidity,” and that by showering the bailout on just a handful of stupid financial companies (my take), the Federal Reserve is “only protecting and encouraging large companies’ wrong doing.”

Absolutely right.

To see why the bailout cannot really save main street, see Can The Rescue Plan Fix the US Economy? or listen to this guy (Peter Schiff):

What do you think of the proposed bailouts by Paulson and Bernanke?

And do you think it is in China’s interest to support or oppose this kind of bailout?

China knows where its interests lie.

But could they be with regular Americans?

While many in China praised the bailout of Fannie Mae & Freddie Mac, many others are correctly damning the bigger bailout being passed for Wall Street.

Strangely enough, the interests of China’s government align strongly with the interests of America’s people - both will be harmed irreparably by this massive transfer of real resources and capital from main street to Wall Street.

Before digging into the views of Chinese commentators, let’s see what Ron Paul, one of the strongest advocates against the military-industrial-banking complex, has to say about a bailout for a crises he predicted (along with many others mostly ignored by the media):

Now of course China is not interested in the welfare of Joe 6 Pack.  It just happens that the inflation to fund this massive bailout of reckless financial institutions will harm both China & Joe.

As CEIBS Professor of Economics and Finance Xu Xiaonian quipped yesterday “The fundamental source of Wall Street’s meltdown is caused by Federal Reserve overissuing currency.”

So how could issuing massive amounts of new currency solve the real problems at hand (the solvency of reckless & irresponsible financial institutions unaware and unconcerned about their black swan birthing potential)?

Polls show support for the bailout at 7-28% of America’s population. Given the absolute power embedded in the bailouts (the bill going through congress now gives Paulson & Bernanke virtually unlimited discretion in which assets to buy up with the money being created out of thin air) for banks that just recently paid the largest management bonuses in history, it’s understandable that most people are upset and can see that such a bailout will screw them.

As China Finance, China News, and Chaobao Financial News stated, these actions by the Federal Reserve is only “creating money that does not exist which leads to the inflation of liquidity,” and that by showering the bailout on just a handful of stupid financial companies (my take), the Federal Reserve is “only protecting and encouraging large companies’ wrong doing.”

Absolutely right.

To see why the bailout cannot really save main street, see Can The Rescue Plan Fix the US Economy? or listen to this guy (Peter Schiff):

What do you think of the proposed bailouts by Paulson and Bernanke?

And do you think it is in China’s interest to support or oppose this kind of bailout?

Melamine has been found in all of the major Chinese milk brands, not just in Sanlu baby milk powder where this crises started.

The question becomes:  Which Chinese milk brand is safest?

The answer might be none for now.

But after a suitable period of time has passed, I’d go with the biggest milk makers, as they have the most to lose by not fixing this problem immediately.

Mengniu is perhaps the most tasty, and the price is quite reasonable.  Per current inspections, it seems to be least cupable in this scandal.

So… are you still drinking milk?

Melamine has been found in all of the major Chinese milk brands, not just in Sanlu baby milk powder where this crises started.

The question becomes:  Which Chinese milk brand is safest?

The answer might be none for now.

But after a suitable period of time has passed, I’d go with the biggest milk makers, as they have the most to lose by not fixing this problem immediately.

Mengniu is perhaps the most tasty, and the price is quite reasonable.  Per current inspections, it seems to be least cupable in this scandal.

So… are you still drinking milk?

Seven years ago today this question would have been ridiculous.

Time has a way of changing things, though, and the day that the answer to this question is ‘yes’ may be closer than anyone would have thought possible.

What kind of freedom?

Freedom is really a whole, as the classical liberals understood, but most people divide it in two parts:

• Political
• Economic

Politically, China is still far from as free as the US.  But the wide gap draws narrower every day.  Especially thanks to reactions to the terrorist attacks seven years ago.

Arbitrary political power in the hands of the executive grows daily in the US - in China, it has stayed the same.

Economically is an entirely different story.

Total taxation as a percentage of GDP is much lower in China than the US (18% China vs 35% America).   While corruption and the remaining state owned enterprises in China still warp China’s economy out of shape,  the toll they take on economic freedom drops by the day.

China has a seemingly enormous grey market economy that operates outside of the reach of government interference and control.

And China hasn’t sold a huge portion of its national debt and mortgage backed securities to the highest sovereign bidders and hasn’t bailed out the holders of the second type of securities like the US did with the Fannie & Freddie bailout.

China has leverage.

Apparently someone was listening when professor Yu from the Institute of World Economics & Politics at the Chinese Academy of Social Sciences in Beijing said this:

If the U.S. government allows Fannie and Freddie to fail and international investors are not compensated adequately, the consequences will be catastrophic, if it is not the end of the world, it is the end of the current international financial system.

So China as a country is not beholden to the interests of other nations who hold its debt, individuals pay lower current taxes and are not on the hook for massive amounts of future taxes or inflation, and has applied financial leverage on the ‘most powerful country in the world’.

The US, on the other hand, has moved ever further toward fascist intervention in the markets - the bailout of Fannie & Freddie being only the most recent and extreme such instance.

The US as a country and hundreds of millions of consumers have piled themselves under an enormous amount of debt.

And as blowups continue to happen in the financial system (and they will, despite the massive intervention on behalf of banks and foreign investors), the Federal Reserve will choose to turn the printing press on full throttle.

Seem likely?  And which is now more free economically - America or China?

Seven years ago today this question would have been ridiculous.

Time has a way of changing things, though, and the day that the answer to this question is ‘yes’ may be closer than anyone would have thought possible.

What kind of freedom?

Freedom is really a whole, as the classical liberals understood, but most people divide it in two parts:

• Political
• Economic

Politically, China is still far from as free as the US.  But the wide gap draws narrower every day.  Especially thanks to reactions to the terrorist attacks seven years ago.

Arbitrary political power in the hands of the executive grows daily in the US - in China, it has stayed the same.

Economically is an entirely different story.

Total taxation as a percentage of GDP is much lower in China than the US (18% China vs 35% America).   While corruption and the remaining state owned enterprises in China still warp China’s economy out of shape,  the toll they take on economic freedom drops by the day.

China has a seemingly enormous grey market economy that operates outside of the reach of government interference and control.

And China hasn’t sold a huge portion of its national debt and mortgage backed securities to the highest sovereign bidders and hasn’t bailed out the holders of the second type of securities like the US did with the Fannie & Freddie bailout.

China has leverage.

Apparently someone was listening when professor Yu from the Institute of World Economics & Politics at the Chinese Academy of Social Sciences in Beijing said this:

If the U.S. government allows Fannie and Freddie to fail and international investors are not compensated adequately, the consequences will be catastrophic, if it is not the end of the world, it is the end of the current international financial system.

So China as a country is not beholden to the interests of other nations who hold its debt, individuals pay lower current taxes and are not on the hook for massive amounts of future taxes or inflation, and has applied financial leverage on the ‘most powerful country in the world’.

The US, on the other hand, has moved ever further toward fascist intervention in the markets - the bailout of Fannie & Freddie being only the most recent and extreme such instance.

The US as a country and hundreds of millions of consumers have piled themselves under an enormous amount of debt.

And as blowups continue to happen in the financial system (and they will, despite the massive intervention on behalf of banks and foreign investors), the Federal Reserve will choose to turn the printing press on full throttle.

Seem likely?  And which is now more free economically - America or China?

What the heck happened in three years?

It’s been that long since I’ve been to Kunming.

The first time was part of a three week journey across Sichuan and Northern Yunnan during my first spring festival in China - as a stopover between Dali and Lijiang, Kunming was great.

At the time downtown Kunming, rather the Green Lake area (翠湖公园), was still mostly rough around the edges.  The famous Wenlin road (文林街) just had a handful of foreign restaurants.

Now the place has gone all yuppy - Wenlin road has expanded and there is one street nearby lined with posh foreign restaurants.  As for the rest of Kunming (you know, the real Kunming), there are now shopping centers and new high rise apartments jutting out from every corner of the city.  The bigger thoroughfares have been repaved and are about as nice as Shenzhen’s.

This sentiment could be used for any major city in China - if you’ve been here and seen the changes you know exactly what I mean - but I didn’t quite expect it here, the staging point for backpackers through Yunnan province.

Somehow, it seemed more likely to change less, to keep its rugged edge.

Do you feel the same about Kunming or any other cities in China?  If so, please leave your thoughts below.

What the heck happened in three years?

It’s been that long since I’ve been to Kunming.

The first time was part of a three week journey across Sichuan and Northern Yunnan during my first spring festival in China - as a stopover between Dali and Lijiang, Kunming was great.

At the time downtown Kunming, rather the Green Lake area (翠湖公园), was still mostly rough around the edges.  The famous Wenlin road (文林街) just had a handful of foreign restaurants.

Now the place has gone all yuppy - Wenlin road has expanded and there is one street nearby lined with posh foreign restaurants.  As for the rest of Kunming (you know, the real Kunming), there are now shopping centers and new high rise apartments jutting out from every corner of the city.  The bigger thoroughfares have been repaved and are about as nice as Shenzhen’s.

This sentiment could be used for any major city in China - if you’ve been here and seen the changes you know exactly what I mean - but I didn’t quite expect it here, the staging point for backpackers through Yunnan province.

Somehow, it seemed more likely to change less, to keep its rugged edge.

Do you feel the same about Kunming or any other cities in China?  If so, please leave your thoughts below.

Has the mainstream media ever been right about China’s future?

For as long as China has piqued my interest, there have been articles prognosticating over China’s coming decline.

You’ve seen the claims that China will slip and fall into a Japanese style bog, perhaps even plunge into chaos and darkness by way of a new revolution.

So why hasn’t it happened yet?

Doomsday in China

Past results are no guarantee of future performance - so all of the things that are supposedly about to push China into the abyss may in fact do just that.

After all, the environment may damage the health of hundreds of millions of Chinese people, the wealth gap may continue to grow, corruption may continue its cancerous growth throughout the country, old people might crush the younger generation under the weight of their future demands, and all of the rotting loans made to state owned enterprises might finally collapse the Chinese banking system from within.

And that might lead to revolution, or at least a painful contraction in China’s economy.

But here’s the thing:  Most articles that are negative about China’s future are confused about what pushed it from one of the most wretchedly poor nations to the number one manufacturing country in the world by sales volume next year.

They give lip service to China’s growing economic freedoms and capitalism with Chinese characteristics, but don’t realize that by the measures that matter most for continued growth, China already ranks well.

So what are those measures that make the most difference in growth?  Savings and taxes.

Savings are the engine of growth for any economy, Keynesian theories be damned.  Without foregoing significant levels of current consumption, it is impossible to develop capital.  The resources, labor, and capital necessary to fuel further capital formation and hence greater future output can only be freed for future consumption by consuming less today.

And taxes destroy capital, period.  Just listen to this guy:

The power to tax is the power to destroy (John Marshall, Chief Justice of the United States Supreme Court from 1801-1835)

Remember that inflation by privately owned central banks is every bit a tax as the money you send to the taxman every year.

America’s shrinking capital base

A prime example is the US, where the real capital base has been shrinking for almost a decade.  This is especially apparent when you use accurate measures of inflation and GDP growth (see below), or try to figure out what growth would have been if Americans had not taken on ever higher levels of housing or credit card debt.

If you combine these real inflation with the false growth from ever escalating debt levels, growth would have been heavily negative for the past eight years.  In other words, America’s capital base has been shrinking even faster than the above chart would indicate, official statistics be damned.

What has caused all of this carnage, though?  Ever higher total tax rates (as a percentage of GDP - and remember to include monetary inflation as part of the tax) and lower savings rates have significantly damaged the US capital base and economy in recent years.  That damage is only now starting coming to light with the blowups in the credit markets.

China’s growing capital base

China has relatively low tax rates as a measure of total GDP - only 15.8% in 2008 versus 26.8% for the US.

But more importantly, China saves:

(From Hu is Saving China? at the Economic Strategy Institute)

Despite assumptions that excess savings in China is a bad thing, the portion that stays within its borders is the primary driver of growth in China.

Sure, part of the reason for such excess savings is fear about a future where one grandchild may have to support four grandparents, and a reaction to a time when China was desperately poor.

But whatever the cause of China’s sky high savings rates, they don’t seem to be coming down anytime soon.  And that will spur more capital accumulation and growth, pushing China past the US or any other country in value added manufacturing in the years to come, likely much faster than anyone could predict.

What if China somehow wises up and stops trading their real goods for slips of paper promises with ever declining value?

That would just mean Chinese consumption and real savings would go up.

But Chinese People Don’t Consume…

There is a common conception that low rates of consumption are somehow holding China back.

This is based on the false idea that it is consumption that drives production, and not the other way around.

Americans are supposedly helping China by sopping up their excess production (savings), and will supposedly hurt China as their ability to consume disappears.

Well… simply put this would only be true if Americans had been trading real goods of equal value for their excess consumption.

But they were trading slips of paper with ever declining value for real goods from China.

When China cuts off Americans from the goods they can’t afford, real consumption of goods and real savings in China will go up.

After all, paper losses at the companies most exposed to exports to America will not reduce the amount of real resources, labor, or capital in China’s economy.   Such losses will just force these factors to flow to companies that can meet the real consumption needs (current and future) of China or trading partners who trade real goods.

That’s not to say that malinvestment has not occurred thanks to false demand from America (or more accurately, false supply from the very non-free market central banks of China and the US - there are very few individual Chinese investors stupid enough to throw a bunch of money into US treasuries).  But this malinvestment only creates the illusion of wealth - an illusion that is now being pierced and would be shattered if China suddenly tried to exchange all of their US IOU’s for real goods.

The moment China gives up this illusion of wealth in the form of paper IOU’s, China will be better off, even if it means a painful restructuring of Chinese industry.

When China does this, they will have even more real savings to plunge back into the Chinese economy.  And that means that China’s days of growth are far from over.

Has the mainstream media ever been right about China’s future?

For as long as China has piqued my interest, there have been articles prognosticating over China’s coming decline.

You’ve seen the claims that China will slip and fall into a Japanese style bog, perhaps even plunge into chaos and darkness by way of a new revolution.

So why hasn’t it happened yet?

Doomsday in China

Past results are no guarantee of future performance - so all of the things that are supposedly about to push China into the abyss may in fact do just that.

After all, the environment may damage the health of hundreds of millions of Chinese people, the wealth gap may continue to grow, corruption may continue its cancerous growth throughout the country, old people might crush the younger generation under the weight of their future demands, and all of the rotting loans made to state owned enterprises might finally collapse the Chinese banking system from within.

And that might lead to revolution, or at least a painful contraction in China’s economy.

But here’s the thing:  Most articles that are negative about China’s future are confused about what pushed it from one of the most wretchedly poor nations to the number one manufacturing country in the world by sales volume next year.

They give lip service to China’s growing economic freedoms and capitalism with Chinese characteristics, but don’t realize that by the measures that matter most for continued growth, China already ranks well.

So what are those measures that make the most difference in growth?  Savings and taxes.

Savings are the engine of growth for any economy, Keynesian theories be damned.  Without foregoing significant levels of current consumption, it is impossible to develop capital.  The resources, labor, and capital necessary to fuel further capital formation and hence greater future output can only be freed for future consumption by consuming less today.

And taxes destroy capital, period.  Just listen to this guy:

The power to tax is the power to destroy (John Marshall, Chief Justice of the United States Supreme Court from 1801-1835)

Remember that inflation by privately owned central banks is every bit a tax as the money you send to the taxman every year.

America’s shrinking capital base

A prime example is the US, where the real capital base has been shrinking for almost a decade.  This is especially apparent when you use accurate measures of inflation and GDP growth (see below), or try to figure out what growth would have been if Americans had not taken on ever higher levels of housing or credit card debt.

If you combine these real inflation with the false growth from ever escalating debt levels, growth would have been heavily negative for the past eight years.  In other words, America’s capital base has been shrinking even faster than the above chart would indicate, official statistics be damned.

What has caused all of this carnage, though?  Ever higher total tax rates (as a percentage of GDP - and remember to include monetary inflation as part of the tax) and lower savings rates have significantly damaged the US capital base and economy in recent years.  That damage is only now starting coming to light with the blowups in the credit markets.

China’s growing capital base

China has relatively low tax rates as a measure of total GDP - only 15.8% in 2008 versus 26.8% for the US.

But more importantly, China saves:

(From Hu is Saving China? at the Economic Strategy Institute)

Despite assumptions that excess savings in China is a bad thing, the portion that stays within its borders is the primary driver of growth in China.

Sure, part of the reason for such excess savings is fear about a future where one grandchild may have to support four grandparents, and a reaction to a time when China was desperately poor.

But whatever the cause of China’s sky high savings rates, they don’t seem to be coming down anytime soon.  And that will spur more capital accumulation and growth, pushing China past the US or any other country in value added manufacturing in the years to come, likely much faster than anyone could predict.

What if China somehow wises up and stops trading their real goods for slips of paper promises with ever declining value?

That would just mean Chinese consumption and real savings would go up.

But Chinese People Don’t Consume…

There is a common conception that low rates of consumption are somehow holding China back.

This is based on the false idea that it is consumption that drives production, and not the other way around.

Americans are supposedly helping China by sopping up their excess production (savings), and will supposedly hurt China as their ability to consume disappears.

Well… simply put this would only be true if Americans had been trading real goods of equal value for their excess consumption.

But they were trading slips of paper with ever declining value for real goods from China.

When China cuts off Americans from the goods they can’t afford, real consumption of goods and real savings in China will go up.

After all, paper losses at the companies most exposed to exports to America will not reduce the amount of real resources, labor, or capital in China’s economy.   Such losses will just force these factors to flow to companies that can meet the real consumption needs (current and future) of China or trading partners who trade real goods.

That’s not to say that malinvestment has not occurred thanks to false demand from America (or more accurately, false supply from the very non-free market central banks of China and the US - there are very few individual Chinese investors stupid enough to throw a bunch of money into US treasuries).  But this malinvestment only creates the illusion of wealth - an illusion that is now being pierced and would be shattered if China suddenly tried to exchange all of their US IOU’s for real goods.

The moment China gives up this illusion of wealth in the form of paper IOU’s, China will be better off, even if it means a painful restructuring of Chinese industry.

When China does this, they will have even more real savings to plunge back into the Chinese economy.  And that means that China’s days of growth are far from over.

Do you remember the Chinese girl with enormous apple cheeks?

Apparently she faked the song she sang, “Ode to the Motherland”:

Personally, I think they made the right decision (note:tongue somewhat in cheek) - the goal was to present a flawless version of China to the world, and they did an outstanding knock-up job.

Political correctness be damned.  Besides, this could make a good movie.

What do you think?

(Thanks to Imagethief and Weird Asia News, full story here)

Update:  Here’s another take on it, which I also agree with.  Guess what I mean is that while this isn’t wrong per se, it does suck that the real singer missed her shot at fifteen seconds of fame (or did she?):

Do you remember the Chinese girl with enormous apple cheeks?

Apparently she faked the song she sang, “Ode to the Motherland”:

Personally, I think they made the right decision (note:tongue somewhat in cheek) - the goal was to present a flawless version of China to the world, and they did an outstanding knock-up job.

Political correctness be damned.  Besides, this could make a good movie.

What do you think?

(Thanks to Imagethief and Weird Asia News, full story here)

Update:  Here’s another take on it, which I also agree with.  Guess what I mean is that while this isn’t wrong per se, it does suck that the real singer missed her shot at fifteen seconds of fame (or did she?):

Back in 2004, I remember very clearly all of the newspapers and news outlets (in China) claiming that China had come in second place in Athens.

This was repeated for months on end, long after the Olympics had ended.

But did China really take second?

Yes, but only if you measure ‘winning’ by gold medals only.   China placed just three gold medals behind the US, but 29 and 40 total medals behind Russia and the US.

You can be sure, however, that if China grabs the most gold that it will be seen and presented as an absolute victory by everyone within China.

2008 Olympic Medals Count - Still Way Too Early To Tell

As I’m writing this, China is ahead in the gold medals standing, with four in comparison to the two won by the US, South Korea, and the Czech Republic.

It’s still extremely early, but it is entirely possible that China racks up the most gold medals in the coming weeks.

That’s a pretty exciting feeling.

What do you think - who will bring home the most gold in 2008?

And if China wins the gold medal count, do you think that means they ‘win’ the Olympics?

Back in 2004, I remember very clearly all of the newspapers and news outlets (in China) claiming that China had come in second place in Athens.

This was repeated for months on end, long after the Olympics had ended.

But did China really take second?

Yes, but only if you measure ‘winning’ by gold medals only.   China placed just three gold medals behind the US, but 29 and 40 total medals behind Russia and the US.

You can be sure, however, that if China grabs the most gold that it will be seen and presented as an absolute victory by everyone within China.

2008 Olympic Medals Count - Still Way Too Early To Tell

As I’m writing this, China is ahead in the gold medals standing, with four in comparison to the two won by the US, South Korea, and the Czech Republic.

It’s still extremely early, but it is entirely possible that China racks up the most gold medals in the coming weeks.

That’s a pretty exciting feeling.

What do you think - who will bring home the most gold in 2008?

And if China wins the gold medal count, do you think that means they ‘win’ the Olympics?

The weather forecast says that it’s going to be 95°F / 35°C on the day the Olympics open.

But something will turn up the heat even more.

While China has managed to screw up the air, the mascots, and the PR swirling around the Olympics, they did seem to get one thing right: The cheerleaders.

Here they are, the cheerleaders for the Beijing Olympics, thanks to Chinesetools and Lost Laowai.

Chinese girls of the 2008 China Olympics

So what do you think?

The weather forecast says that it’s going to be 95°F / 35°C on the day the Olympics open.

But something will turn up the heat even more.

While China has managed to screw up the air, the mascots, and the PR swirling around the Olympics, they did seem to get one thing right: The cheerleaders.

Here they are, the cheerleaders for the Beijing Olympics, thanks to Chinesetools and Lost Laowai.

Chinese girls of the 2008 China Olympics

So what do you think?