I recently met with a finance professor from a major U.S. business school who happens to be a native of China. Reflecting on the two weeks he had already spent getting re-acquainted with his home country, his first comment to me was telling: “This place has bubble written all over it.”

You don’t have to be a finance professor to come to the same conclusion. Signs are everywhere—from an inflated stock market, to growing inflation to ever increasing apartment prices. The questions are: Does China have a hard or soft landing, and what does it feel like? What happens after the Olympics?

I have to keep reminding myself that I have already been through a relatively hard landing in China. In 1994, China’s economy was overheated and inflation peaked at 24.1 percent. Zhu Rongji, China’s then-economic czar, had a simple solution. He immediately clamped down on credit, dramatically slowing the growth in China’s economy.

In 1992, 1993 and 1994, China’s Gross Domestic Product (GDP) grew by 14.2 percent, 14 percent and 13.1 percent, respectively. From this blistering pace, GDP growth slowed to 10 percent by 1996, and fell to a low of 7.6 percent in 1999. Although these growth rates still seem high by global standards, many economists at the time questioned whether they were overstated, with the Chinese government attempting to put a good face on a sluggish economy. In fact, analysts began to track measures such as the growth in electricity demand as proxies for economic growth. These metrics suggested slower growth than advertised by Beijing and appeared to be more reliable indicators as to the overall health of the economy.

The China economy of 2008 is a great deal larger and infinitely more complicated than the one that existed in 1994. It is therefore doubtful that simply restricting credit would ever work today, although this hasn’t stopped China’s government from trying. The general efforts by China to slow down its economy have not brought it to a screeching halt, but there are growing signs that we are on the other side of the high growth cycle.

A good benchmark is the Shanghai stock market, which has essentially done a round trip over this past year. At the beginning of 2007, the Shanghai Composite Index was just above 3,000. By mid-year, it had nearly doubled to 6,000. Last week, it slumped to 3,411, its lowest level since April 9, 2007. The Shanghai Index has fallen 35 percent this year, making it one of the worst performers among Asian markets.

PetroChina, the poster child for the China stock market, made its debut in Shanghai in early November and nearly tripled in price to 43.96 yuan in its first day of trading, giving it a market cap of over $1 trillion. Last week, it fell to 16.99 yuan, barely above its IPO price of 16.70 yuan.

Other signs are less dramatic but nonetheless apparent. Baoshan Iron reported last week that 2007 net profit fell by 2.8 percent on higher ore prices, suggesting a weaker market where higher raw material prices cannot be automatically passed along to customers. Inflation continues to be an issue, increasing to 8.7 percent in February, after a 7.1 percent rise in January, marking its fastest pace in nearly 12 years. Partially to offset higher food prices, China’s main source of inflation, the yuan has been allowed to increase sharply against the dollar, thereby reducing the cost of imported grain.

“I think the People’s Bank of China is worried that food inflation could turn into headlines inflation. Wages are increasing quite strongly….and for this reason they have to control excess liquidity more tightly,” said Sebastien Barbe, an economist at Calyon Credit Agricole CIB.

All of this suggests an economy which will begin to slow, if it has not already. What the rest of 2008 brings, and whether the inevitable emotional letdown after the Olympics has an economic impact, is anyone’s guess. However, it is certain that Beijing is pulling a number of levers to cool an overheated economy and bring it down to a more sustainable level of long-term growth.

On my way back to China last month, I stopped by the news stand at Newark’s Liberty International Airport, as I often do, hoping to find a good read for the flights to Chicago and then Beijing. Always on the lookout for new authors, I spotted The Faithful Spy by Alex Berenson, a book which received the Edgar Award for best first novel. I was so enthralled by the time I landed in Chicago that I didn’t hesitate to buy Alex’s second book, The Ghost War, at the O’Hare bookstore. The Ghost War came out in February and opens with a daring rescue attempt in the waters off North Korea, and ends with a harrowing escape from China by sea. For those of you who regularly take the 13-hour flight to Beijing or Shanghai and want a good book to shorten the trip, I highly recommend both. Read them in order, though, because each features the adventures of CIA agent John Wells.

In the acknowledgments section of The Ghost War, I was impressed that Alex went out of his way to thank his readers. It’s a big undertaking to write a book, he said, but to know that people are reading it, and that some even take the time to pass along their comments, whether positive or negative, makes it all worthwhile. Having just come out with my own book, Alex’s comment struck a responsive chord and motivated me to do something I have never done before. I e-mailed him, even though we had never met, to tell him how much I enjoyed his writing.

Managing the Dragon has been out one week now. The book has been well received, and I am fortunate that all of the initial reviews, from both individuals and the media, have been positive. The Economist led off with a very positive review several weeks ago, followed by excellent reviews from Booklist and The Financial Times. In this first week of the launch, several more reviews came out.

Aaron Brown, an accomplished author, investment professional and educator in his own right, was the first to post on Amazon. Here is what he said:

This is a book about a life and business adventure. I’m not particularly interested in how to do business in China, but I was fascinated by the decisions the author made. This is a wonderful book for anyone considering innovation. It describes how a successful 40-year-old decided to take his life in an entirely new direction, building on what he knew, but also taking chances on things he knew little about. It’s people like this who change the world, learning how along the way. He has the insight and writing talent to relate his journey to his roots in impoverished coal country, as well as lessons learned playing football at Yale and working on Wall Street.

The title of Daniel Harris’ post on China Law Blog, “Managing the Dragon, The Best, Jerry. The best.” says it all. Dan went on:

This book is the best book I have read on how to do business in China. The best, Jerry! Businesspeople often ask me what book they should read to learn about China. From now on, I will tell them, Managing the Dragon. It is that good.

One of the reasons I liked it so much is because I agreed with just about every word of advice in there on how to conduct business in China. The book helped me to hone my speech, because my speech was pretty much tracking the book’s advice before I had even read it.

In addition to being a great primer on how to conduct business in China, parts of it were simply riveting. My favorite chapters were on how Perkowski managed to extricate his company from a couple of joint ventures, once peacefully and once by having to engage in “guerrilla warfare.” I absolutely loved the warfare chapter both because it was so exciting and because I went through pretty much the exact same thing (just add threatened violence and vodka) on behalf of a client in Russia.

Dan also took the time to post a review on Amazon, for which I am most grateful.

Alan Wheatley, the China economics editor for Reuters, wrote a review (as edited by Eddie Evans) which was picked up by guardian.co.uk and The Boston Globe over the weekend.

Alan made my day with his opening sentences:

“Per Ardua ad Astra” — “Through Struggle to the Stars” — is the motto of Britain’s Royal Air Force, but it could have been coined for Jack Perkowski’s car-parts company.

In “Managing the Dragon: How I’m Building a Billion-Dollar Business in China” (Crown Business, $27.50), Perkowski recounts his many setbacks as he developed his firm, ASIMCO Technologies, into a major player in China’s cut-throat automotive industry.

That the former Yale football scholar succeeded in the face of rampant fraud, obstructionism and incompetence entitles him to be heard.

Alan went on to summarize many of the points that I made about China and doing business in the country, accurately reflecting all that I wrote.

Finally, Christopher Gait, Oracle Infogram editor, topped off the week on Sunday with the following:

Business in China: The Art of Dragon Management

Jack Perkowski, a Wall Street wunderkind who started a Chinese company in 1990 (not an American company in China, mind you, a Chinese company in China), has come out with a book: Managing the Dragon. It’s already collected a rave review from the China Law Blog, one of the best authorities on Chinese business out there.

I am thankful to all who have read and enjoyed the book, but realize that all of the reviews may not be as positive as the ones I have received so far. There will be those who may take exception to what I say in the book and disagree with my observations and conclusions. On this one, I am with Alex Berenson. Knowing that Managing the Dragon is being read, and that readers are taking the time to comment on it, is its own reward.

With the United States battling the sub-prime crisis, and the economy slipping into recession, analysts are busy trying to figure out how this will impact China. On the one hand, falling U.S. demand may hurt China’s export machine. On the other, U.S. companies may become even more cost-conscious and seek to further reduce costs through China sourcing. Dell Inc., the world’s second largest PC maker, made some announcements last week which begin to provide answers to these questions and others.

It could not be more simple in Dell’s case. “China is critical to Dell’s global supply chain,” founder and Chief Executive Michael Dell told reporters last Thursday. Dell will purchase “$70 billion of computer-related supplies and equipment from China,” he said, referring to total purchases over the 2007-2009 period. The company plans to buy $23 billion of components from China this year and $29 billion in 2009, helping it reduce costs while the company’s main market, the United States, is facing recession.

Dell’s statement also demonstrates that, despite higher wage costs and increasing inflation, China’s role as a manufacturing center is only increasing, not diminishing. China is moving up the value chain. For every textile job that goes to Vietnam, two more come to China to make more sophisticated products like electronics. Dell estimates it will contribute more than $50 billion to China’s gross domestic product this year and “support” more than 2 million jobs, according to a statement from the company. In addition to reducing costs, Dell is also looking to sales in China to help it remain a global leader. Dell’s CEO predicted that the U.S. market “will be OK, but not the fastest-growing. We expect more growth in Asia.”While it ranks second behind Hewlett-Packard globally, Dell is only in fourth place in China with a 7.9 percent market share. At the end of last year, Lenovo had a 28.8 percent share of the China market and was the market leader, followed by Hewlett-Packard, Founder Technology, and Dell, according to IDC.

For Dell, like so many other companies, China has become the final battleground for global leadership. Dell lost its top position to HP in 2006, and must now gain share in China to have any hope of retaking it. Fortunately, after changing its approach, China sales are increasing. Dell’s consumer sales in China grew by 54 percent last year, more than three times the industry average of 17 percent, the computer maker said. Dell, which focused on an online and phone sales model, started to sell products in retail stores last year, in cooperation with Best Buy and Wal-Mart. In China, Dell sells products in 500 Gome stores after announcing a cooperation agreement with the country’s No. 1 home appliance chain store five months ago.

From a product point of view, Dell is targeting the large, relatively untapped rural and downscale markets by developing products that are more affordable. “Dell is developing new models aimed at Chinese and Indian consumers to drive sales in fast-growing Asian markets,” according to CEO Michael Dell. He said that the “new models are meant to meet ’specifically the requirements that we see in countries like China and India.” Personal computer makers increasingly are designing products with Chinese buyers in mind. Both Dell and China’s Lenovo Group unveiled low-cost PCs last year for rural and novice users.

Dell’s announcements last week come at a time when the company’s profits are falling and sales to its core market, the United States, are sluggish. Nonetheless, they illustrate four key points:

1. China’s role as a manufacturing center for the world is becoming even larger as it moves up-market in the manufacture of more sophisticated products.
2. The China market for just about any product is already big, and is among the fastest-growing in the world. If a company cannot succeed in
   China, it is doubtful that it can remain a global leader.
3. A company may need to change its business model to succeed in
   China. Dell switched from an Internet sales model to one with which sales are made through retail outlets. Result: sales went up by 54 percent.
4. The key to the vast China market is to develop products specifically for
   China which meet the unique requirements of the Chinese consumer, one of the most important of which is affordability.

Long after the last athlete leaves Beijing, the legacy of the 2008 Olympics will be seen for many years. Terminal 3, the airport train, new subways, roads and stadium venues, a refurbished Forbidden City and countless landscaping projects are all part of the $40 billion makeover that Beijing is receiving in preparation for August. Most, if not all, of these projects would have been done anyway as part of Beijing’s ongoing development. The effect of the Olympics has been to pull them forward in time. When my oldest daughter told me several years ago that she wanted to have a wedding reception at our farm in New Jersey, her upcoming marriage had the same effect on me. All of those projects on my “to do” list immediately became high priorities that now had a hard deadline.

Apart from the physical infrastructure, though, the most lasting legacy of the 2008 Olympics may be a China which has at least begun to walk down the long road to becoming “greener.” I don’t want to overstate the case, because anyone who has traveled here can easily see that cleaning up the environment is one of the country’s biggest challenges. However, it is increasingly clear that environmental issues are coming front and center with business leaders and government officials alike. Whereas the word “environment” had never been part of any discussions I had during my earlier days in China, it comes up in almost every one today.

Evidence of an emphasis on going green is growing. Several major Chinese companies were forced to delay initial public offerings last year to comply with environmental rules. Ten domestic IPO’s—including one by China Coal Energy Co., China’s second largest coal producer by output—were held back in the second half of 2007, after the government began vetting such deals for environmental factors. Environmental issues are now taken into consideration in the annual evaluation of local government officials. Banks are restricting loans to companies that aren’t dealing properly with the environment.

It’s also no accident that Chang’an Auto Corp, China’s fourth largest automaker, has developed a hybrid that will be mass-marketed this year. Or that Chery, China’s largest local car maker, has had an R&D team of 100 engineers working on hybrid projects for the past seven years. Chery is now testing a hybrid model in the Wuhan taxi market and expects to hit the market in the second half of this year. Even the newcomers are getting into the act.  BYD, a cellphone battery company that began developing an auto business in 2005, displayed a plug-in hybrid model at the Detroit Auto Show that it said will be available later in 2008.

I believe that the mindset in China regarding the environment began to change when it was announced seven years ago that Beijing would host the 2008 Olympics. (That might explain why companies like Chery began working on hybrid projects in that timeframe.) At once, the prospect of millions of new visitors coming to China for the first time, as well as daily TV broadcasts that are part and parcel of such a large, global event, made it painfully obvious that environmental conditions in Beijing and China would be brought into sharp focus in 2008. I imagine that the worst nightmare of every Beijing official is to have NBC open its broadcast every night with a picture of a grey, smoggy Beijing, followed by a five-minute discussion about the sad state of China’s air quality.

To prevent that from happening, a number of temporary measures will be taken. Factories in and around Beijing will be closed for business ahead of the games; construction activity will stop well before the start of the Olympics, and at least one-half of the vehicles will be taken off Beijing’s streets in August. We are hearing that transportation may begin to be affected as early as this June, and I wouldn’t be surprised if curbs on the use of autos are even more severe than the odd/even system that has been announced. We have two factories near the Fourth Ring Road (neither of which creates pollution) and are being told that transportation in and out of those factories will be nearly impossible during the period of the games.

In addition to these temporary measures, China is taking even more drastic steps that will have a longer term impact on a large part of China. As reported in the Wall Street Journal:

Six provinces and municipalities—Hebei, Inner Mongolia, Shandong, Shanxi, Tianjin and Beijing—have already started shutting down polluting factories and curbing power-plant production in an ambitious attempt to cut down on air pollution. Collectively, these provinces represent an area larger than France, Germany and Italy combined, but pollutants from factories far from Beijing are believed to be partially responsible for the capital’s often smoggy air.

The worst polluting factories will not only be closed during the Games, but will be shut down for good. While these factories are already in violation of China’s environmental standards, it has been difficult to overcome the strong vested interests of local officials who have every incentive to keep them open. We know this from personal experience, because we happen to have a factory in the area discussed that, unfortunately, has been dealing with a particularly dirty neighbor. A nearby steel factory spews out clouds of orange smoke that make it nearly impossible for our workers to breathe when it is running. Repeated efforts to convince the local officials to force the factory to clean up its act have fallen on deaf ears.

If the pressure to clean up the air in Beijing for the Olympics provides the extra push needed to close or clean up factories like this in a large part of China, the impact will be positive and long term, and the Olympic legacy may be a greener China.

There is an old Chinese proverb that says: “Before a man dies, he should have a child, plant a tree, and write a book.” I am very fortunate to have three wonderful children (and two grandchildren); I have planted countless trees on my farm in New Jersey; and as of today, March 18, I am officially an author.

I wasn’t sure this day would ever come, but my new book, Managing the Dragon, is now available. (Please click on “About the Book” for an overview.) When I delivered the complete manuscript to my editor at Crown Publishing in early 2007 and was told that the launch had been set for March 18, 2008, it seemed so far off into the future. The reality that it is finally here began to set in over this past day or so, as friends and relatives called or e-mailed to say that they had just received a shipping notice from Amazon. I have also learned that copies are now front and center at Garden Books in Shanghai. A Chinese version of Managing the Dragon, published by China Youth Press, will be available beginning May 16.

When I mention that I have written a book, I am always asked how long it took and how the process went. Before I went through it myself, the Chevy Chase movie, Funny Farm, always came to mind when I thought of what it might be like. Missed deadlines, a frustrated book agent chasing an author with writer’s block to all corners of the globe, trying to get at least one more chapter to appease the angry publisher. I was very fortunate. For me, the process was nothing like that.

From the moment Tom Friedman suggested that I write a book, everything seemed to fall easily into place. I had gotten to know Tom as he was writing The World is Flat, and we were both speaking at the Allen & Company Sun Valley Conference in July, 2004. As we walked to a reception after spending an hour or so going over his notes from our last conversation, Tom turned to me and said, “You know Jack, there is a book in you.” While many people over the years had made a similar suggestion, I never took it seriously until then.

It took me about a year to get my thoughts together, but in late 2005, I began the serious search for an agent. Fortunately, the head of the William Morris Agency, whom I had also met at that same Allen & Company Conference, introduced me to Grace Chen, head of the firm’s newly opened Shanghai office. (Like so many companies in industry after industry, William Morris understands how important the China market has become to its business.) Through Grace’s good efforts, and the support of the New York office, I had the honor of becoming William Morris’ second client in China. After completing the obligatory book proposal in July, 2006, William Morris approached several publishers and we selected Crown. By March, 2007, Crown had a complete draft of the manuscript which, after a relatively painless editing process, was finalized on June 30. I have been reviewing copy edits, correcting typos and waiting ever since.

Now the fun part begins. Before I left Beijing for the U.S. at the end of last week, I had an opportunity to discuss the book as the keynote speaker at The Economist Automotive Conference in Shanghai and to address the Rutgers EMBA Program and the Beijing Rotary Club. Over the next two weeks, I will be speaking at Columbia Business School, Yale, Duke, University of Pittsburgh, Carnegie Mellon and Eastern Michigan, among others, as well as at the Council on Foreign Relations in New York, the U.S. China Business Council, and the Philadelphia World Affairs Council. When I return to China, events have already been scheduled with AMCHAM, the Yale Club of Beijing, Tsinghua University and CKGSB (Cheung Kong Graduate School of Business). Other events will be added, particularly with the Olympics coming to Beijing in several months and interest in China at an all-time high.

I hope you will have a chance to read Managing the Dragon. If you do and have the time, please write a short review on Amazon. As you might suspect, Amazon has become a powerful force in the book industry, and reviews by readers are particularly important in this democratic, worldwide marketplace for ideas that has been created by the Internet. tragaperra internetcasinos descargas internetpremios pagina internetnet casinosvideo poker webcasino costa bravaruleta europea paginas internetla ruleta rusaapuestas onlinejuego online ruletafruit slotscasino slots downloadonline gewinn spielcasino net pokercasino spiele kostenlos spielen,casino spiele spielen,casino spielenroulette gewinnecasino no deposit bonusechtes kasinospielerfolgreich roulette spielen,roulette online spielen,roulette spielenbeste casino onlinenew casino onlineonline casino playinternet spielbankcasino club netdeutsche online casinoadvanced video pokeronline slots,eve online rig slots,online video slotseve online rig slotskeno downloadrealistisches internet casinoswiss casino onlineunbegrenztes freispielslotmaschine online spielenblack jack online spielencasino bonus codecasino on linebestes online casinoparty casino bonusfunny games roulette,games roulette,games roulette online spielenkasino spiele mit echtem geldspiel rauminternet roulettevirtual casinolasseters online casinofaires spielenroulette gamegames roulette spielestrip roulettecasino online texasbeste online kasinos

Where the National Football League failed, Major League Baseball has succeeded in playing its first game in China. I was very excited to learn last year that the NFL had decided to bring its 300-pound-plus linemen to China for the first time in August, 2007, and would play a game in Workers Stadium, just blocks from my apartment in Beijing. That never happened, apparently amid concerns about the readiness of the Worker Stadium venue. But, on Saturday afternoon, March 15, the Los Angeles Dodgers and the San Diego Padres played to a 3-3 tie on a near-perfect Saturday in Beijing, with clear blue skies replacing the city’s usual smog, and 50-degree temperatures, making it a glorious debut for baseball. (Perhaps a good omen for August?)

The crowd of 12,224, although small by U.S. standards, was reportedly a near-sellout. The game was played at Wukesong Baseball Field, a new Olympic venue, and all of the sights, sounds and smells of baseball in the U.S.– vendors selling peanuts, soft drinks, beer and hot dogs and periodic blasts of organ music to pump up the fans–were present. Except for the lower prices for food and drink and the fact that the game didn’t go into extra innings to break the tie, it was just like watching baseball in the United States by all accounts.

Thanks to George Steinbrenner, Beijing’s fans also got to see something that New York fans will be deprived of this year–Joe Torre, the new Dodgers manager. I’m sure that the Yankee fans in the crowd were happy to see Joe, who was clearly impressed with baseball in China. “With all the attention, all the media I thought it felt a bit more like a regular-season game than a spring training game,” he said.

Major League Baseball can hardly be blamed for trying to build an audience in China. Every one of Jim McGregor’s one billion customers is a potential baseball fan. Of the major professional sports, basketball has had a headstart in this regard. When first visiting Chinese factories in 1993, I was surprised to see a basketball court somewhere on the property at nearly every one.

With the emergence of Chinese stars like Yao Ming, basketball is now reaping the rewards. A match between Yao’s Houston Rockets and the Milwaukee Bucks, which last year drafted rising Chinese star Yi Jianlian, was one of the most watched TV events in China in 2007, drawing an audience of between 100-200 million. When you consider that this year’s exciting Super Bowl between the New England Patriots and the New York Giants was one of the most watched ever, yet drew an audience of merely 97.5 million, you can begin to appreciate the lure of the vast China market. Play ball!

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Consumer prices in China surged to an 8.7 percent annual rate in February from a 7.1 percent rate in January, the fastest pace of increase in more than 11 years. Food prices were the biggest contributor, up 23.3 percent from February 2007. Snowstorms in China damaged harvests and interfered with food deliveries to cities, while rising global commodity prices made imports more expensive. With China’s inflation rate increasing month by month since January 2007, numerous articles now decry China’s newest export—inflation—as Chinese manufacturers are forced to push up the price of their goods on global markets.

Clearly, demand in a rapidly industrializing China has played an important role in rising raw material and commodity prices, and the devastating storms in early February caused supply disruptions. However, for as long as most people can remember, food has been getting cheaper. In 1974-2005 food prices on world markets fell by three-quarters in real terms. The Economist’s food-price index is higher today than at any time since it was created in 1845. Even in real terms, prices have jumped by 75% since 2005. Something besides rising demand in China is obviously at work, and a big part of the answer lies in the United States.

“The road to hell is paved with good intentions,” one of my teachers at North Catholic High School in Pittsburgh used to tell my classmates and me when one of our seemingly noble acts went badly. The same may be said for U.S. energy policy, which subsidizes the production of ethanol from corn. While the intention is good—to reduce America’s dependence on imported oil–the result has been to dramatically raise food prices in the U.S. and around the world. In the United States, the price of a loaf of whole wheat bread was 12 percent higher in late 2007 than a year earlier, milk was up 29 percent, and eggs were up 36 percent.

Rather than leaving the search for alternative sources of energy to the marketplace, the U.S. is subsidizing the production of ethanol through tax credits and tariffs. Corn ethanol subsidies totaled $7 billion in 2006 for 4.9 billion gallons of ethanol. That’s $1.45 per gallon of ethanol. It’s estimated that these incentives for ethanol will cost American taxpayers $6.3 billion to $8.7 billion annually through 2012, on top of the higher costs for food that these incentives are encouraging.

Incentives for ethanol in the U.S. include a federal 51 cent-per-gallon tax credit that refiners receive. In addition, imported ethanol is prevented from entering the U.S. through a 54 cent-per-gallon tariff. This does not make sense economically because U.S. ethanol from corn costs $1.05 per gallon to produce, while Brazilian ethanol made from sugar costs 81 cents. Productivity of Brazilian ethanol is also higher. U.S. ethanol production from corn nets 400 gallons per acre, while Brazilian production from sugar cane yields 590 gallons per acre.

Combined with the rising price of oil, the result of these subsidies and tariffs is an explosion in the construction of ethanol distilleries in the United States, along with substantially higher costs for grain and rapidly increasing food prices globally. Wheat trading on the Chicago Board of Trade on December 17 breached the $10 per bushel level for the first time ever. In mid-January, corn was trading over $5 per bushel, close to its historic high. And on January 11, soybeans traded at $13.42 per bushel, the highest price ever recorded. All these prices are double those of a year or two ago. If 80 percent of the 62 distilleries now under construction are completed by late 2008, grain used to produce fuel for cars will climb to 114 million tons, or 28 percent of the projected 2008 U.S. grain harvest.

If ethanol made from corn is truly an attractive economic alternative to imported oil, then subsidies aren’t needed to promote its production, and tariffs aren’t needed to protect it. Continuing these subsidies and tariffs is only distorting world markets. While there may be little sympathy in the United States for higher food prices in China, despite the fact that hundreds of millions of Chinese still live on only $500 per year, higher food prices are having a severe impact on the world’s poor. The World Bank reports that for each 1 percent rise in food prices, caloric intake among the poor drops 0.5 percent.

Four years ago, projections by Professors C. Ford Runge and Benjamin Senauer of the University of Minnesota showed the number of hungry and malnourished people decreasing from over 800 million to 625 million by 2025. But in early 2007, their update of these projections, taking into account the bio-fuel effect on world food prices, showed the number of hungry people climbing to 1.2 billion by 2025.

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