In front of a packed audience at the Stanford Center at Peking University, Victor Koo, Chairman and CEO of Youku Tudou Inc., described the convergence of China and Silicon Valley in terms of innovation. "Success in China is a matter of localization," Koo commented in his keynote address at the 2014 China 2.0 Forum, because many industries remain fragmented at the local level. This fragmentation has necessitated the transformation of China's internet ecosystem into a hotbed of innovation, going a long way to catch up with Silicon Valley.

The convergence described by Koo also means that China's internet space and its players are increasingly globalized. WeChat, for instance, recently made headlines for its new partnership with LinkedIn in China. Hugo Barra, Vice President of Xiaomi, a Chinese smartphone maker, shared the company's international expansion strategy. With its international headquarters in Singapore, Xiaomi is expanding into Singapore and plans for many more countries by the end of the year, the compant aspires to become a truly global company. Vaughan Smith, Vice President of Special Projects at Facebook, shared with the Forum audience how Facebook represents an opportunity for thousands of developers in China to reach a worldwide audience, citing the success of the game Family Farm, which was developed by Beijing-headquartered FunPlus and "has the highest retention rate" of any game on Facebook worldwide.

Shift to mobile

Arguably one of the most disruptive forces in the internet industry today, Koo explained how the shift to mobile is even more drastic in China, where hundreds of millions of people in rural areas and small cities have little access to personal computers and rely on smartphones to access the internet. In addition, the widespread use of public transportation in China, in contrast with America's car-centric culture, means that Chinese commuters spend much more time on their mobile phones.

Koo noted that various internet companies have struggled to adapt to mobile, while others such as Tencent's WeChat, have prospered. Valued at $30 billion, China's popular social media and messaging app counts around 300 million users and an expected revenue of $1.1 billion in 2014.

Yongfu Yu, CEO of UCWeb Inc., discussed how disruptive the shift to mobile could be in the near future, predicting that the surge in apps that has followed the shift to mobile will lead to the emergence of an "app browser," enabling the integration of all apps on a unified platform. In such a scenario, this 'mega app' would challenge traditional web browsers such as Firefox or Google Chrome.

The multi-screen internet

The ubiquity of mobile phones does not put an expiration date on the use of computers and TVs, according to Koo. Instead, it has led to the emergence of the multi-screen internet. This phenomenon is particularly visible in China, where users continuously switch from their mobile phones to computers and TVs, and vice versa. Think about this: these users watch a show on their smartphones or tablets in the subway as they commute to work, then resume the same show once at home on their TVs or computers. According to Koo, the multi-screen internet unequivocally represents one of the major changes that content strategists and marketers have to deal with.

The integration of offline and online

O2O (Online-to-Offline) is another key trend that is dramatically reshaping many industries and the internet industry worldwide, Koo said. For example, Captain America 2's promotion in China took place offline and online with a premiere in Beijing and content broadcast simultaneously on Youku Tudou.

The convergence of online and offline spaces is probably faster in China than anywhere else, noted Koo, due to the large number of sectors highly regulated by the government. The central role of the state in entire industries has left a void for private companies to fill since they don't have to compete with an incumbent offline company also competing in the online space. For this reason, Koo argued that "offline industries in China are changing much faster and in a more fundamental way than in developed countries like the United States."

The Obama administration’s policy of “re-balance” toward Asia, that began as early as 2009, is now increasingly under stress, as those in the region question American staying power and China emerges as a challenger to U.S. dominance. As the territorial disputes in the East and South China Seas in recent months have demonstrated, China’s relations with the region and the United States have become visibly strained, bringing the U.S. re-balance policy into question and raising concerns about security tensions and the danger of conflict. 

U.S.-China relations are heading, for the foreseeable future, into “a very scratchy time,” predicted Kenneth Lieberthal, a respected senior China scholar at The Brookings Institution, in his keynote speech delivered at the annual Oksenberg Lecture on June 3 at the Shorenstein Asia-Pacific Research Center.

Lieberthal told a standing room audience in Encina Hall that while the U.S. attempt to temper its relations with China and others has “worked quite well over time,” now, “at a geostrategic level, we seem to be sliding with increasing speed toward an inflection point in U.S.-China relations.”

Lieberthal was joined by a panel of China experts, including Cui Liru of the China Institutes of Contemporary International Relations (CICIR), and Stanford’s Karl Eikenberry and Thomas Fingar, distinguished fellows at the Freeman Spogli Institute for International Studies, and Jean C. Oi, director of the Stanford China Program.

The discussion was part of the Oksenberg Lecture, an annual dialogue that functions as a policy workshop on U.S.-Asia relations, named in honor of late professor and senior fellow Michel Oksenberg (1938–2001). Oksenberg was a noted China specialist, who served as a senior member of the National Security Council and is credited as the architect of the normalization of relations with China under the Carter administration in the late 1970s.

Points of tension in the U.S.-China relationship have been increasingly visible. Senior American officials have assailed China for its aggressive actions toward its neighbors over the Diaoyu/Senkaku Islands and in South China Sea, including its latest altercations with Vietnam and the Philippines. The United States recently indicted five members of China’s People’s Liberation Army for carrying out cyber espionage against U.S. technology companies.

Incidents like these have prompted both countries to throw harsh words at each other, leading to a situation of brinkmanship. However, Lieberthal pointed out that tense relations between the United States and China are certainly not new. Most notably, relations took a nosedive in 1989 when China cracked down on democratization protests at Tiananmen Square, in 1999 after the accidental bombing of the Chinese Embassy in Serbia, and in 2008, in response to the global financial crisis.

The U.S.-China relationship has been riddled with periods of distrust in the past. But now, “the speed and scale of China’s economic growth, especially over the last two decades, has also increased concerns, on all sides, that the evolving distribution of power may create new frictions and suspicions,” Lieberthal said.

Yet, refusing to work with each other is not an option, the senior scholar, who also served in the Clinton administration, told the audience. Without the United States and China in conversation, progress in multilateral areas such as climate change and trade would falter, he argued. Given the two countries’ position as the world’s largest economies, the international system would effectively be constrained if the two were entrenched in long-term bitterness.

Lieberthal recognized the common admonition, “if we treat China as an enemy, it will surely become one,” saying this warning could be applied to both sides. China and the United States must make greater efforts to manage and mitigate tensions.

“The question is whether we can prevent bad things, not only specific conflicts, but the political tensions and politics that make cooperation on major issues very, very difficult at best.”

He then outlined a few steps that could help China and the United States sort out their disputes. His recommendations began with the need for strong determination on the part of top political leaders to move things forward and the importance of clear, consistent use of vocabulary when discussing issues.

As a final point, but one that was offered as a contingent factor to success, Lieberthal said U.S.-China relations and both countries’ roles in greater Asia will depend on “how effective each of us is in dealing with domestic reforms,” because, “that will determine how dynamic, how vibrant, how innovative, and how secure we feel.”

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During the lecture, Ret. Lt. Gen. Karl Eikenberry shared his observations from the Shangri-La Dialogue, an inter-governmental security forum held from May 30 – June 1 in Singapore. The Dialogue has in recent years become a gathering of premiere defense ministers to discuss security issues in Track I and “quasi-track” meetings.

Afterward, Eikenberry talked with Shorenstein APARC about key highlights and implications that emerged from the Dialogue:

 

Photo credit: Flickr/The International Institute for Strategic Studies 

Media reported a tense environment overlaid the Dialogue. What was the general atmosphere there?

The remarks at the Shangri-La Dialogue by Japanese Prime Minister Abe and U.S. Defense Secretary Hagel on the one hand, and Chinese General Wang Guanzhong, made clear very different views on the causes for tension surrounding various maritime sovereignty claims in the East and South China Seas. Still, if you read the full text of all three speeches and the Q&As that followed, there is still great emphasis placed on dialogue and common interests. And in the many meetings that took place between national delegations on the margins of the conference events, the emphasis was on cooperation. 

What revelations at the Dialogue were surprising?

I think the degree to which dissatisfaction with China’s assertive behavior in pursuing its maritime claims was expressed by many of the participants – not just the United States and Japan. Vietnam, the Philippines and India were explicit. Analysts have said the only China (through threatening behavior) could contain China by catalyzing a counterbalancing response. From the results of the Dialogue, I think this is correct.   

Japanese Prime Minister Shinzo Abe emphasized values and international law throughout his keynote speech. What is your take on this?

The Prime Minister did emphasize both democracy and rule of law during his prepared remarks and answers to questions from conference participants. He was drawing an obvious distinction between Japan’s and China’s political systems and commitment to approaches to resolving territorial disputes. I think the Prime Minister is trying to establish Japan as a leader in East and Southeast Asia, and wanted to make clear what he views as important differences between the Japanese and Chinese “models.” 

U.S. Defense Secretary Chuck Hagel referenced China’s suspension of the U.S.-China Cyber Working Group. What direction do you think the cybersecurity dialogue will go now?

It was unfortunate that China suspended its participation in the U.S.-China Cyber Working Group after the U.S. Government’s indictment of five People’s Liberation Army officers for alleged cyber theft. The U.S. Government has been providing the PRC Government with evidence of cyber theft being conducted by entities in China and has failed to receive any meaningful response so the indictments seem warranted. It would seem that the Cyber Working Group is precisely the forum to discuss this matter and the many related to managing the cyber domain with agreed rules and procedures. Working Groups provide a forum to address disagreement and disputes. I think China’s response was counterproductive and hope the government will indicate a willingness to resume the dialogues in the near future.

Where do you see the regional security conversation heading next?

The risk is that security dialogues will be divided into two camps – one led by the United States and its close allies and partners, and the other by China – somewhat isolated at this time but seeking to entice Asian nations to bandwagon to its side. Perhaps further regional economic integration can facilitate a more common approach to security, but this year’s Shangri-La Dialogue is perhaps a warning that trends, for now, are not heading in a positive direction.

Nearly forty-four percent of Indonesia’s population is living on less than $2 a day, making it near impossible for some to seek proper health treatment. One way to improve this situation is through Indonesia’s conditional cash transfer (CCT) programs, Margaret Triyana says.

The CCT program, first piloted by the World Bank in 2007 and expanded from 2009–10, encourages Indonesia’s most destitute to pursue health-seeking behaviors by reducing barriers to health care through cash incentives. Payment is given for receiving treatments at a local clinic. Essentially, the poor are reimbursed simply for “showing up” for health services.

Triyana, a Jakarta native and postdoctoral fellow in the Asia Health Policy Program, has been in residence at the Shorenstein Asia-Pacific Research Center in the Freeman Spogli Institute for International Studies studying the effects of the CCT program on Indonesia’s poor. She has been evaluating the household CCT program’s two-year implementation, focusing on the maternal and child health initiatives.

She plans to produce multiple papers that focus on issues related to CCT interventions and its impact on mothers and children. Triyana will continue this research after leaving Shorenstein APARC this July, accepting an academic teaching position at Nanyang Technological University in Singapore. 

Recently, Triyana discussed her research with Shorenstein APARC. 

What types of health initiatives does the CCT program sponsor, and for whom?

The CCT program targets Indonesia’s most poverty-stricken by selecting approximately the bottom 30 percent of the poorest households, with preference toward households with pregnant women or school-aged children. Eligibility depends on socioeconomic factors per district such as expenditure, education and asset ownership. The program stretches the rural-urban divide, covering people in and off Java (this is the main island where 60 percent of the population resides). Many initiatives in the household CCT program are focused on child and maternal health. For mothers, they include a series of prenatal care visits, an iron tablet prescription, childbirth assistance and postnatal care. For children, they cover vaccinations, monthly height and weight measurements at the clinic and vitamin A pills. Overall the CCT program is a combination of poverty reduction and human capital investments, attempting to induce good behavior that instills long-term health in low resource settings.

Who is the typical primary care provider in Indonesia?

The primary care provider is often a midwife. This is because Indonesia doesn’t have enough trained doctors to support the growing demand. Clinics operate at the sub-district level, which comprise of 10-15 villages each. Every village is assigned one midwife. Midwives can perform most procedures just short of surgery. For example, midwives offer typical delivery services but refer patients to a district-level hospital for a Caesarean section. This system, for the most part, functions well, but midwives do have an expanded scope of care that can be unsettling. Children have their cuts taken care of by midwives; adults can get antibiotics through them. This diffused system is perhaps more efficient, but it can call into question the legitimacy of their authority. Midwives receive only three years of training for their certification. This is something the Indonesian government intends to inspect and will likely restructure.

What behavior changes do you see as a result of the CCT program?

My initial findings show there is increased utilization of health care programs. The CCT program incentivizes certain behaviors – attending the clinic for a test or retrieving medication – which then, in theory, leads to better health. “Showing up” doesn’t automatically correlate with improved health, but if we think about the population at hand, it would in most cases. People who weren’t using health services before now are. Everyone that was offered the program signed up. Monthly attendance to CCT-linked programs is reported at a rate of 85 percent. In particular to maternal health, I noted a 10 percent increase in delivery fees. This trend follows what we would expect to see – because of increased utilization, there is a natural rise in price for the service. On the demand-side, I found a 40 percent increase in the use of midwives, and a rise in fees paid to providers for maternal and child services. These factors indicate with a high level of certainty that the CCT program lowers barriers to health care. 

Since health is effectively its own market, will increased demand for services cause a rise in price?

Yes, health care is its own market so the supply-demand relationship is relevant. My research looks at the local market because it depends upon the price being offered at the local clinic. Indonesia’s health care system is a public-private mixture, therefore public fees are regulated while private fees are less so. Indonesia now offers universal care, but people can pay a few for services beyond basic coverage. I saw a change in the private domain in terms of demand for services. The “demand shock” caused a bit of a higher price for services. It costs about $80 to meet all of the program requirements. Payment to midwives increased, while a slight decrease occurred for traditional birth attendants. I find no significant change in birth outcomes, and the quality provided by midwives does not appear to be affected by the program. These outcomes are exactly what we’d expect to see; it is consistent with the puzzle in the literature and economics, showing more women and children in the CCT program are seeking care from health care providers, but no change in health outcomes.

Can we expect increased utilization of health services in the long-run?

I anticipate there will be long-term increased utilization. The CCT program seeks to create habit formation by focusing on youth and pregnant mothers. For example, we can see this when expectant mothers attended the clinic for prenatal care, delivery assistance and postnatal care. With cost and travel barriers eliminated or reduced, participants should find it easier to initially come and then return. I did see repeat visits in my research as a positive outcome of the CCT program. A technique used to encourage commitment is a public education program as part of the program. Participants get a group briefing on how the program works, so that they are fully introduced to the incentives and guarantees of the program. 

Does Indonesia plan to extend this into a national program?

Yes, the CCT program is planned to go national later this year. The research shows that the benchmark of high attendance was met, program participants did “show up.” Next steps are to analyze health outcomes in maternal and child health, and then look at policy implications. Indeed, the Indonesian government is seeking ways to better target and deliver health services; it will be interesting to see the long-term effects of this program.

Shorenstein Asia-Pacific Research Center faculty and scholars have published a variety of publications in early 2014, covering topics from the Japanese fiscal condition to disability policy in North Korea. 

Publications are often products of long-standing research projects led by Center affiliates. New Challenges for Maturing Democracies in Korea and Taiwan, coedited by Shorenstein APARC Director Gi-Wook Shin and Center on Democracy, Development and Rule of Law Director Larry Diamond, emerged from the Stanford Korea Democracy Project, which seeks to understand social movements in South Korea.

Postdoctoral fellows who reside at Shorenstein APARC for a year of vigorous study and engagement in Center activities also support research publications. Former visiting scholar Dominik Müller, now at Goethe-University Frankfurt, published Islam, Politics and Youth in Malaysia: The Pop-Islamist Reinvention of PAS. Müller examined the religious bureaucracy of Malaysia at Shorenstein APARC in 2013.

Shorenstein APARC manages an active publishing program with Stanford University Press and the Brookings Institution Press. Center affiliates also publish extensively in external peer-reviewed academic journals and books, as well as in a working paper series led by the Asia Health Policy Program.

Publications released in recent months include: 

Comparative Institutional Analysis: Theory, Corporations and East Asia. Selected Papers of Masahiko Aoki, Masahiko Aoki, Edward Elgar Publishing, 2014

The volume is a collection of 22 articles that span the course of Aoki’s 45-year academic career. The essays cover a wide range of topics from the comparative perspective including corporate governance, institutional change and mechanism design in Japan, China and South Korea. The articles suggest policy responses for industry and governments.

 

Confronting Memories of World War II: European and Asian Legacies, Eds. Daniel Chirot, Gi-Wook Shin, Daniel C. Sneider, University of Washington Press, 2014

Comparing the European and Asian legacies, the book provides insight into the influence that World War II continues to have on contemporary politics and attitudes. The collection gathers a variety of perspectives that compare how Europe and Asia handle memories and reflections of guilt, and how wartime experiences are reinterpreted and used for domestic and international purposes.

 

“Defying Gravity: How Long Will Japanese Government Bond Prices Remain High?” Takeo Hoshi, Takatoshi Ito, Economic Policy, January 2014

The article examines the fiscal regime of Japan and considers if the country can withstand its high debt to GDP ratio. The paper shows that Japan’s fiscal situation is unsustainable through various simulations, and suggests that sufficiently large tax increases and/or expenditure cuts would put government debt on a sustainable path.

 

“Facts, Minds, and Formats: Scholarship and Political Change in Indonesia,” Donald K. Emmerson, Cornell University Press, March 2014

Indonesia has changed dramatically in recent decades, and a wealth of literature highlights divergent interpretations and perspectives surrounding those dynamics. The article considers the demise of liberal democracy, the rise of President Sukarno in 1959, and the latter’s replacement by General Suharto in 1965. The essay is part of the larger volume, Producing Indonesia: The State of the Field of Indonesian Studies.

 

“The Fukushima Nuclear Disaster and the DPJ: Leadership, Structures, and Information Challenges During the Crisis,” Kenji E. Kushida, Japanese Political Economy, Spring 2014

The Fukushima nuclear disaster was a critical event that shook Japan’s political economy, society and national psyche, as well as the world’s perspectives on nuclear energy policy. The article examines how the nuclear disaster unfolded and analyzes the response undertaken by the Democratic Party of Japan under Prime Minister Naoto Kan. Kushida is the Takahashi Research Associate at Shorenstein APARC.

  

“Japan-Korea Relations: Time for U.S. Intervention?” Daniel C. Sneider, National Bureau of Asian Research, January 2014

The paper describes current relations between South Korea and Japan, recognizing that their relationship has noticeably deteriorated in recent months. While the United States has attempted to promote dialogue, its hesitant intervention is unlikely to change the overall dynamic of the Japan-Korea relationship. Sneider suggests that a more active U.S. mediation role could encourage reconciliation and normalization of relations.

 

“People with Disabilities in a Changing North Korea,” Katharina Zellweger, Shorenstein APARC, 2014 

The working paper details the environment that people with disabilities face in the Democratic People’s Republic of North Korea. Despite its reputation as a repressive, closed society where human rights are routinely abused, there are in fact a number of institutions that work to address the needs of the disabled. Zellweger writes from a perspective of a senior aid worker with over thirty years of experience in Asia; she was the Pantech Fellow at Shorenstein APARC from 2011­–13.

 

To view the full listing of publications, as well as reviews and purchasing information, please consult the Publications page on Shorenstein APARC's website.

Early vaccination could save both lives and money during the next flu pandemic, according to a study led by Stanford medical researchers.

Using lessons learned from the 2009 H1N1 flu pandemic, researchers calculated the costs of waiting to vaccinate, looking at both the price tag to treat sick patients and the number of lives lost. Generally, a new flu vaccine takes at least six months to develop and distribute, but a vaccination campaign at four months after the start of an outbreak would save thousands more lives and millions of dollars in a large metropolitan area, according to the study published in Annals of Internal Medicine.

Additional measures, such as wearing face masks, using cough etiquette, washing hands or closing schools, can limit the virus' spread while a vaccine is in production.

Seasonal flu viruses sicken and kill large numbers of people each year, but the flu becomes a pandemic when it fulfills three criteria: It must be unusually infectious and deadly, it must be a new strain to which humans do not have immunity and it must spread worldwide. The H1N1 strain was a new virus that traveled around the globe at the end of the last decade, but it killed a small percentage of the people infected - less than 0.3 percent. In comparison, the deadly 1918 Spanish flu pandemic killed 2.5 percent of people it infected.

"We had a test run of our preparedness in 2009," said Nayer Khazeni, the study’s lead author. Khazeni, an assistant professor of medicine, is also an associate at the Center for Health Policy/Center for Primary Care Outcomes Research (CHP/PCOR) at Stanford’s Freeman Spogli Institute for International Studies (FSI).

"It's great that it happened under a very mild pandemic situation, and I think that's given us a lot of opportunity to learn and revise,” she said. “I hope that recommendations based on our study findings will help make us even more prepared."

Though the World Health Organization declared the H1N1 virus a pandemic in June 2009, large-scale vaccination did not occur until January 2010. By then, many people had already contracted the virus, recovered and developed immunity. The delay spurred the researchers to ask when would be the best time to vaccinate, and how many people should receive the vaccine.

The new study also looked at the economic impacts of the flu, which previous models had not quantified.

The model simulates how a more severe flu virus would spread through a densely populated metropolitan area such as New York City. It considered the deadliness of the virus, whether the population had immunity from a similar strain and how easily the virus spreads between people.

By adding a vaccination campaign into the model at different times, the researchers could predict the best time to vaccinate for a future pandemic. Vaccinating at six months after the start of the outbreak instead of nine (the timing of vaccination for the 2009 H1N1 pandemic) would prevent more than 230,000 infections and almost 6,000 additional deaths in a city of 8.3 million people. The city would also save $51 million in medical bills.

The bottleneck that slows vaccination is the production process. Most doses of flu vaccine are grown in chicken eggs. And when companies must adapt the process to a novel virus, it cuts into the production time for the seasonal flu vaccine. Six months is the least amount of time in which these companies can produce and distribute a sufficient number of doses.

Newer technologies that use cell cultures and DNA manipulation to create vaccines may one day cut down on vaccine-development time. If these technologies could yield enough doses within four months, then a metropolis like New York could save almost twice as many lives and save another $50 million.

"Timing is crucial," said Douglas K. Owens, professor of medicine at Stanford and director of CHP/PCOR. Owens is the senior author on the paper and is a senior investigator at the Veterans Affairs Palo Alto Health Care System.

"Delays of a few weeks or months can make an enormous difference in the number of people who are infected,” he said. “If you had a bad pandemic flu, it can have an enormous impact on the number of people who die."

Before the vaccine becomes available, other strategies can limit the virus' spread. Nonpharmaceutical interventions include hand washing, wearing a face mask, coughing into one's elbow and staying home while sick. In a severe pandemic, schools, businesses and public transit systems could be closed down to reduce exposure, the researchers said.

"I think the most encouraging finding of our study is that nonpharmaceutical interventions can really serve as a bridge to mass-vaccine creation and delivery," said Khazeni. The researchers found that even if a city did not vaccinate until nine months after an outbreak began, by instituting these measures, they could see the same positive effects as if they had vaccinated at four months.

In future studies, the researchers will add more complexity to their model by including additional consideration for young children, who tend to spread flu germs more widely than adults, and people with underlying medical conditions, who are more susceptible to serious illness and death.

Though it's impossible to predict which flu virus will become the next deadly pandemic - and when it will strike - two specific viruses are on epidemiologists' radars: H5N1, a virus in Southeast Asia contracted from birds, and H7N9, a new flu virus strain to which humans have no natural immunity. Both strains have a high mortality rate but cannot yet spread from human to human.

"I don't know that we can predict what the virus is going to be, but I do think it's possible to say that there might be a pandemic," Khazeni said. "There are some similarities in the viruses and the way we prepare that are generalizable. It doesn't actually matter what virus it is."

Researchers from the University of Michigan, Community Health Councils and Harvard University co-authored the study.

The work was supported by the Agency for Healthcare Research, National Institutes of Health, the Veterans Affairs Palo Alto Health Care System, and Stanford’s Department of Medicine. 

Patricia Waldron is a science-writing intern for the Stanford School of Medicine's Office of Communication & Public Affairs. 

 

Southeast Asia Forum Director Donald K. Emmerson talks with media about the recent confrontations between Vietnam and China in the South China Sea, and what role ASEAN may play in managing the issues.