As reported by the Wall Street Journal's Loretta Chao, one of the speakers on the e-commerce panel at "China 2.0: The Rise of a Digital Superpower," Deutsche Bank analyst Alan Hellawell gave his firm's predictions on how e-commerice in China is going to shape up. By 2013, according to Hellawell, the percentage of online transactions in the retail space will go up to 7.2%, higher than the percentage of U.S. online retail commerce. Furthermore, Hellawell noted that companies wanting a piece of this business will have to meet high service standards that Chinese consumers have grown accustomed to in a short time.

The Wall Street Journal's Loretta Chao, one of the participants at SPRIE's "China 2.0" conference in Beijing, covered the event's panel on social media for the Journal's "China Realtime Report." Panelists at the conference covered the problem of censorship and its effect on social networking, the opportunities or lack of for foreign companies wishing to compete in this space, and the possibility of Chinese homegrown innovation in social media.

Youku CEO Victor Koo, in a "China 2.0" keynote, spoke on his company's place among Internet video services competing in China, China's increasing competitive prowess and how the rapid sharing of information is changing the development of business models in China.

Occupying the greater part of the United States Pacific coastline, California has long shared a relationship with Asia. Today, trade with China, Japan, and Korea accounts for nearly one-fourth of the state's overall $120 billion in exported goods, and an estimated one in seven California jobs is related to trade. In recognition of the crucial importance of this trade for the state's economic vitality, Governor Arnold Schwarzenegger and 100 business and government leaders embarked on September 9, 2010 for a six-day trade mission to Asia.

Forty representatives from the Bay Area, 40 from southern California, and 20 top government officials traveled with the mission, including leaders from California's agriculture, green technology (green tech), finance, and healthcare industries. Although intended to benefit the State of California, the trade mission also sought to leverage complimentary resources that would help nurture China's ever-growing innovation economy and to facilitate the continued exchange of people, technology, and capital. Marguerite Gong Hancock, associate director of the Stanford Program on Regions of Innovation and Entrepreneurship (SPRIE), represented Stanford University and SPRIE on the delegation's visits to the cities of Shanghai and Hangzhou in China. This was the second and final Asia trade mission led by Governor Schwarzenegger during his tenure.

While in Shanghai and Hanghzou, Hancock engaged with policymakers, university officials, and private-sector business leaders. She took part in visits to several major companies, including the Hangzhou headquarters of Alibaba, China's e-commerce giant, during its "Alibaba Fest," an annual innovation conference. While there, Hancock and fellow mission members met with the company's president and learned about recent goods and services innovations, and about its global expansion strategies. In Shanghai, she visited the home of Zap-Jonway, the recently merged California electric vehicle manufacturer Zap and Shanghai electric motorcycle company Jonway. Zap-Jonway's CEO Steve Schneider plans for the company to develop electric vehicles for commercial fleets, such as taxicabs and trucks. "It is a really interesting example of California and Shanghai coming together, bringing technologies from both sides and then positioning themselves for market growth both in China and here in the United States," says Hancock.

SPRIE is at the forefront of research about factors that nurture innovation and entrepreneurship, and has engaged in the last two years in significant research about green tech. Hancock was frequently asked about how to build policies and industry strategies that foster the economic growth of green tech and about the possible implications for China, both in terms of collaboration and competition, in the shift in Silicon Valley's economy toward green tech.

During the Asia trade mission, Governor Schwarzenegger also made several important public announcements, including the news that California is going to formally bid to hold the 2020 World Expo at Moffett Field in Mountain View, which would be a major opportunity to showcase the best of the region's innovation and entrepreneurship to the world.

For more details about Governor Schwarzenegger's Asia trade mission, please visit the State of California's website.

 

The North Korean leader Kim Jong-il and his youngest son and presumed successor, Kim Jong-un, jointly attended military maneuvers on an unspecified date. This was the first official outing of the 27-year-old youngest son of the "Dear Leader." These maneuvers were held just before the Sunday celebration of the 65th anniversary of the founding of the Workers Party of Korea. David Straub, associate director of the Korean Studies Program at Stanford University, discussed the informal transfer of power that took place last week.

What was learned last week about the succession to Kim Jong-il in North Korea?

The maneuvers confirmed with near certainty the past few years of speculation that the third son of Kim Jong-il has been informally designated as his successor. This process is now public. This is the first time that the name of Kim Jong-un has been published in North Korea. However, as long as his father is alive and can govern, he will remain in power. But, clearly, his health is not good. This official outing of the son seems in preparation for the possibility that Kim Jong-il may die suddenly. Kim Jong-il suffered a stroke in 2008, after which he disappeared for several months. Upon his return, he had lost weight and appeared stiff and impaired on his left side.

Was Kim Jong-un touted as the successor?

There were no signs until a few years ago. First, it was Kim Jong-nam, the eldest son, who was favored. Officially, he fell out of the race when he was caught entering Japan with a forged passport. At the time, he told Japanese officials he wanted to take his son to Tokyo Disneyland [the target of an attempted contract killing by Kim Jong-un in 2008, the eldest now lives happily in Macao, ed.]. It is then the second son, Kim Jong-chol, who was poised to be the successor. But in Pyongyang, it was thought that he was not sufficiently ambitious and aggressive. Then, all eyes turned to Kim Jong-un, who has the personality of his father: ambitious, aggressive, and ruthless.

The main question then was how Kim Jong-un would be promoted. Most observers were betting on a gradual process. In this sense, it is not really surprising. He was appointed as a four-star general, which is a mostly symbolic distinction. He was also made vice-president of the Central Military Party. This underscores how strong the military is in North Korea. What surprised me most is that the younger sister of Kim Jong-il was also appointed as a four-star general. In line with the predictions of observers, Kim Jong-il has mobilized his immediate family to create a sort of regency capable of supporting his son in the event of his sudden death.

What is known about Kim Jong-un?

He was probably born in 1983 or 1984. However, the regime may try to say he was born in 1982. In Chinese culture-and also in North Korea-numbers are significant. Kim Il-sung, his grandfather, was born in 1912. Kim Jong-il was born in 1942. That would put Kim Jong-un in a kind of celestial lineage. It is almost certain that he attended school in Switzerland, where he was a quiet student. He had a false name, Pak-un, and one or two close friends. He also liked basketball. He then returned to Pyongyang. Some unconfirmed reports say he studied at a military university. A few years ago, it was said he had been appointed to the office of the Workers Party and the office of National Defense Committee, which is the highest organ of power in North Korea.

Who now heads North Korea? What is the power structure like?

The general view is that Kim Jong-il is the supreme leader-an absolute dictator-and he has tremendous latitude. He bases his legitimacy on the fact that he is the son of the founder of the regime. But nobody can run a country alone. He must therefore take into account various factors. In North Korea in recent decades, the military has played a growing role and seems to occupy a dominant place today.

A university professor based in South Korea believes that the regime in Pyongyang has greatly copied Japanese pre-war fascism, even though Korea fought against imperialism. The scheme is based on a totalitarian structure, relying in particular upon the military. Information is very strictly controlled and the population is monitored, as in East Germany. The structure remains very closed, and the leadership is afraid to open up to the outside world and receive investment or foreign aid. Finally, family occupies an important place. North Korea is part of China's cultural sphere, with a strong presence of Confucianism. The notion of the state is close to the family structure model. The king is seen as the head of the family.

Does a period of transition put the regime in danger? What took place before?

It is inevitable that one day a regime that is so rigid and incapable of transformation will suffer major changes. However, we cannot say when or what form this will take. But it is clear that unusual things can happen during a period of change like this. The last transition was very similar to the current process. The difference is that Kim Jong-il had been clearly designated as the successor by his father and he had decades to gradually gain experience and consolidate his power within the system. Kim Jong-il managed most affairs of state since 1980, when the last Workers Party meeting was held. He was the de facto leader for 14 years. When his father died in 1994, however, he took three years to formally become established as the leader. The difference today is that Kim Jong-il suffered a stroke in 2008. Some people in North Korea are afraid that his son had not had enough time to prepare for power. Kim Jong-un must particularly ensure that the military is loyal to him. That is why he was made a general.

What legacy does he leave his son Kim Jong-un?

Although North Korea has said for decades that it follows the principles of juche or self-sufficiency, it largely sustained itself during the Cold War by trade with the USSR and its satellite states, and China. It received much help. Now that the USSR has collapsed and China has turned to a market economy, the economic situation in North Korea has become untenable. The country suffered a terrible famine in the mid-1990s. Nobody knows for sure how many people died, but it was certainly several hundred thousand. Some say that there were more than one million deaths, out of a total population of 22-23 million people. The government then had to loosen its grip on the system. This has helped the country recover. Today, access to basic resources is much better in North Korea than it was fifteen years ago.

The country was also helped by foreign aid from Japan, South Korea, the United States, and China. Now, because of the crisis over its nuclear program, the only foreign aid that comes into Pyongyang is from China. The North Korean regime faces a dilemma: its only resource is its workers. It fears opening up to accept foreign capital and technology, which would expose the people to outside reports that fundamentally contradict the regime's decades-old claims. That is why the few commercial contacts are with ideologically similar countries, like Syria or Iran. As for the industrial project in Kaesong near the border between North and South, it is very closely monitored by the authorities.

What is the situation at the diplomatic level?

North Korea has no close allies in the world. It cooperates with Cuba, Syria, or Iran, but these countries are isolated. Their relationship is either rhetorical or in connection with the nuclear program. As for its neighbors, North Korea does not like them. The South is seen as an existential threat; it is another Korean state, comprising two-thirds of the Korean nation, and has been a phenomenal success. The situation is different with China. Officially, both countries are driven by an eternal friendship, but this is based primarily on strategic considerations. Nevertheless, China provides a lifeline to North Korea.

Finally, I think in the last two decades, Pyongyang has toyed with the idea of a strategic alliance with the United States to counterbalance Chinese influence. But for domestic political reasons and because of the situation of human rights in North Korea, the Americans have never pushed this idea further. The North Koreans have realized that this strategic relationship was probably a dream.

The fundamental problem behind all of this is due to an accident of history. After the liberation of the peninsula from Japanese occupation in 1945, the division between the Soviets and Americans-for practical reasons-was not intended to be permanent. Today, there are two states, each of which thinks that it best represents the Korean nation and that  it should be in charge of the affairs of the peninsula in its entirety. It is a zero-sum game. All issues about the current succession flow from this.

Seventeen years ago, the first public internet connection was established between computer scientists at the Stanford Linear Accelerator Center (SLAC) and Beijing's Institute of High-Energy Physics (IHEP). China now has 400 million online and 750 million mobile consumers and recruits web talent from Silicon Valley for its growing number of innovative web-based technology companies.

The two SLAC and IHEP computer scientists who helped to set in motion China's rise as an online power will be reconnected at the commencement of the China 2.0: The Rise of a Digital Superpower conference to be held October 18-19, 2010 in Beijing. Organized by the Stanford Program on Regions of Innovation and Entrepreneurship (SPRIE), China 2.0-Beijing is the second part of a conference held May 24-25, 2010 at Stanford University. 

Companies thriving in China will increasingly shape the global digital economy, either by their sheer scale at home or through investments and acquisitions in the United States and other developed economies. The conference will address the key questions: What are the drivers of innovation in China's web-based industries? For China 2.0, what are the patterns for flows of people, ideas, technology and capital across the Pacific?  How can we assess the likely future shape and implications of China's rise for consumers, industry players, investors, researchers and policy makers?  To answer these questions, SPRIE's forum will feature presentations by 35 business leaders from China's web-based technology industry, including such fields as gaming, mobile 2.0, and e-commerce.

Several U.S., China, and other international media outlets will cover the event and China 2.0 iPhone and iPad applications are now available. Video from the conference will follow on the SPRIE website and a book and documentary film based on China 2.0 are forthcoming.

For the China 2.0-Beijing agenda, a video interview with the SLAC and IHEP computer scientists, and video overviews of the conference, visit the China 2.0 website.

In the wake of the global financial crisis, some have dubbed China and the United States the G2, signifying their centrality in global economics and politics. Even so, the relationship between China and the United States is rife with new tensions. Trade and currency challenges persist, complicated by domestic politics and differing approaches to security issues.

In its annual conference to honor the memory of eminent China scholar Michel Oksenberg, Stanford's Shorenstein Asia-Pacific Research Center gathered distinguished policymakers and analysts to examine colliding—and overlapping—interests in U.S.-China relations.

The conference was kicked off by Jeffrey Bader, special assistant to the president and senior director for East Asian Affairs at the National Security Council, who began by exploring the possibility of productive, stable relations amid values that appear to differ vastly. In support of this idea, Bader pointed to successive American presidents, going back to Richard Nixon, who found points of commonality with China. China poses a different challenge today, he argued, than even a decade ago, as its influence has grown alongside its commercial and economic presence. The Obama administration, Bader explained, has sought China's support on key issues and pursued partnership within the context of a broader Asian policy. He concluded by saying that China's rise is not intrinsically incompatible with American interest, but that does not preclude ongoing competition.

A panel chaired by Jean C. Oi, director of the Stanford China Program, next looked at competition and cooperation in the U.S.-China economic relationship. Despite the dangers of speculative bubbles and weakened export markets, the prospects for sustained economic growth in China remain very good, argued Nicholas Lardy, senior fellow at the Peterson Institute for International Economics. Robert Kapp, former president of the U.S.-China Business Council, explored growing challenges facing American business in China, exemplified by recent clashes over Internet censorship. Despite the U.S.-China clash at the Copenhagen global climate conference, Stanford Law Professor Thomas Heller contended that behind the scenes global consensus on this issue has advanced.

Points of tension in the security relationship were the focus of a panel chaired by Amb. Michael H. Armacost, the Shorenstein Distinguished Fellow. China-Taiwan tensions have improved, but Smith College's Steve Goldstein cautioned that Taiwan's policies could shift again, particularly if the promised economic benefits of improved ties do not materialize. China and the United States must likewise manage challenging allies in North Korea and Japan respectively, said Alan Romberg, director of the East Asia Program at the Henry L. Stimson Center. Finally, the United States and China have both congruent and conflicting interests at stake in dealing with the situations in Iran and Pakistan, Stanford's Thomas Fingar, the Oksenberg/Rohlen Distinguished Fellow at FSI, told the gathering.