Remembering a plague fighter from Penang, Dr Wu Lien-Teh

A DELEGATION of 18 people from Penang will be heading to China to attend a commemorative symposium on legendary plague fighter Dr Wu Lien-Teh who was born in Penang.

Distinguished scientist: Dr Wu, aged 77, in a photo taken in Cambridge, England, in 1956

Led by Datuk Dr Lee Kah Choon, the delegates will comprise members from the state government, investPenang, Penang Global Tourism, Penang Medical College and the newly formed Dr Wu Lien-Teh Society of Penang.

The symposium will be held from Jan 18 to Jan 20 and it will be hosted by The First Hospital of Harbin Medical University in Heilongjiang, China, along with the third Boreal Congress of Cardiology.

The event will also see participants from various organisations, medical professionals, private individuals and also members of the Old Frees’ Association.

Medical reformer: Dr Wu (fourth left, front row) working with the Russians during an epidemic in 1921

 

“The conference will focus on Dr Wu’s great sacrifices as well as his principles and philosophies that have survived until the present day,’’ said Dr Wu Lien-Teh Society of Penang president Datuk Dr Anwar Fazal.

He said they would also promote the state in multiple ways during the visit including tourism, medical health and educational opportunities.

“We will also propose Penang as the next venue for the Dr Wu Lien-Teh and Global Health Symposium in 2014,’’ he added.

Born on March 10, 1879, Dr Wu was one of the few recipients of the prestigious Queen Victoria’s scholarship in Malaya at Emmanuel College.

Among his awards were the Cheadle gold medal for clinical medicine and the Kerslake scholarship in pathology.

After furthering his studies at the School of Tropical Medicine in Germany and the Pasteur Institute in France, he returned to Malaya in 1903 to take up a post at the new Institute of Medical Research in Kuala Lumpur.

Dr Wu was very outspoken in his opposition to gambling and opium trade back then and served as the president of the Penang Anti-Opium Association.

His academic achievements and reputation caught the eye of Yuan Shih-kai of the Chinese Government in Beijing who offered him a post as the deputy director of the Imperial Army Medical College in Tientsin in 1907.

Dr Wu received recognition as a plague fighter who saved thousands of lives in north-east China in the early 1910s after an outbreak.

His new scientific approach prevented the killer disease from spreading.

In 1937, his villa in Shanghai, China, was bombed by the Japanese.

He then moved to Ipoh to resume his medical work.

Dr Wu was the first ethnic Chinese nominated for the Nobel Prize in Medicine in 1935.

He died aged 81 after a stroke on Jan 21, 1960.

His death came barely a week after he moved into his new house in Penang for his retirement.

Until today, Dr Wu’s accomplishment is still recognised at the Penang Free School which named one of its school houses after him, bearing the green colour.

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Dispute with China takes toll on Japan

The last time a dispute between Japanand China blew up in 2010 over eight uninhabited islands, the economic fallout lasted less than a month. This time, the spat is prolonging a recession in the world’s third-largest economy.

Chinese activists carrying Chinese and Taiwanese national flags walk on Diaoyu Islands

Four months after Chinese consumers staged a boycott of Japanese products over the islands in the East China Sea, sales of Japanese autos in China have yet to recover, Chinese factories began to favor South Korean component suppliers, and the U.S. has displaced China as Japan’s largest export market.

“The spats have become increasingly costly as Japan’s dependence on China as an export market has risen,” said Tony Nash, a Singapore-based managing director at IHS Inc., which provides research and analytics for industries including financial companies. “Nationalism around the issue has resulted in lower demand for Japanese products in China and even Chinese firms sourcing products from Korean suppliers.”

As China’s confidence in asserting its territorial claims has grown, and trade between the two nations has tripled since 2000 to more than $300 billion, the commercial cost of failing to resolve the dispute keeps rising. The latest flare-up came after property developer Kunioki Kurihara sold three of the islands to the Japanese government for 2.05 billion yen ($23 million) in September, a transaction Xi Jinping, the new head of the Chinese Communist Party, called “a farce.”

Growth Cut

The fallout from the sale may have cut Japan’s growth in the latest quarter by about one percentage point, JPMorgan Chase & Co. estimated. That would be enough to keep the economy in recession after two quarters of contraction up to Sept. 30. Gross domestic product may have shrunk an annualized 0.5 percent in the final three months of 2012, according to the median forecast in a Bloomberg News survey.

The standoff over the islands known as Senkaku in Japan and Diaoyu in China contributed to declines in Japan’s shipments to China for six months through November. Japan’s industrial output fell 1.7 percent in November, to the lowest level since the aftermath of the 2011 earthquake.

With each round of political disputes, the economic effect has grown. When then-Japanese Prime Minister Junichiro Koizumi visited a Tokyo shrine where war criminals are among those honored in 2005, Chinese people and politicians protested. Yet trade between the two rose more than 12 percent that year.

Things got worse in 2010, when a Chinese fishing boat and a Japanese Coast Guard vessel collided in contested waters. China stopped granting export licenses to Japan for rare earth metals, necessary for automobile and electronics industries. The licenses were resumed about a week later after Japan released the detained captain of the vessel.

Biggest Effect

This year’s row has had the biggest effect so far, said Professor June Teufel Dreyer, a specialist in Chinese politics at the University of Miami in Florida. After the Japanese government bought the three islands, angry Chinese boycotted Japanese products and smashed Japanese shops in China.

“This has really changed things, unquestionably; it is not a blip,” said Dreyer. “China will continue to push its claims to sovereignty until Beijing gets what it wants.”

The islands offer the prospect of rich fishing grounds, potential oil reserves and a strategic military outpost in the sea between China, Japan and Taiwan. That’s overshadowed economic ties that Jesper Koll, head of equity research at JPMorgan in Tokyo, called “a match made in heaven.”

“Japan has intellectual property, brands and capital, while China has people, markets and purchasing power,” said Koll, in an interview.

Ishihara’s Offer

The latest spat began in April when then-Tokyo Governor Shintaro Ishihara said he planned to use public money to purchase Kurihara’s islands. Ishihara, 80, is a longstanding critic of China, so the national government stepped in to buy the islands instead, in a failed attempt to defuse Chinese anger.

China’s official Xinhua news agency on Dec. 2 criticized the U.S. Senate’s approval of an amendment to show the islands fall under a U.S.-Japan defense treaty, calling it a “disturbing message” to the world that the Senate is seeking an escalation of tensions between China and Japan.

“The row has changed the landscape of China-Japan relations,” said Taylor Fravel, a professor at Massachusetts Institute of Technology who specializes in Chinese politics. “As a territory dispute, it’s prone to spirals of escalation.”

Election Win

The election victory of Shinzo Abe’s Liberal Democratic Party, which returned to power in a landslide victory in December, has further stoked the conflict. In its manifesto, the LDP proposed strengthening the nation’s military and said it would consider stationing officials on the islands, prompting an editorial in the China Daily newspaper on Nov. 26 that described the manifesto as “dangerous.”

Two days before the election, China sent an 11-page report to the United Nations arguing that the geology of the continental shelf makes the islands a natural part of China.

Japan yesterday said the government summoned the Chinese ambassador to protest the presence of four surveillance ships near the islands. China responded that the ships were conducting normal duties around Chinese territory, Foreign Ministry spokesman Hong Lei said at a briefing in Beijing.

Japan’s Defense Ministry made a budget request Jan. 7 for extra PAC-3 missile interceptors and upgrades for F-15 fighter planes, and will seek to raise next fiscal year’s defense budget by about 120 billion yen, reversing the downward trend of the last decade.

Economies Lose

“As Japan’s politics turn decisively to the right, more and frequent spats between Japan and China are expected,” said Liu Li-Gang, chief economist for Greater China at Australia and New Zealand Banking Group Ltd. who used to work for the World Bank. “Both economies will lose in the end. Japan will lose a big market, and China will not be able to leverage on Japan’s technology and investment for growth.”

Japanese automakers’ share of the Chinese market slumped to 14 percent in November from about 23 percent before September, Xu Changming, a director at China’s State Information Center, said on Nov. 29. Toyota Motor Corp. (7203), Japan’s biggest carmaker, said in November that output in China fell the most in at least a decade, while Nissan Motor Co. (7201) reported the biggest output decline since at least 2009.

All Nippon Airways Co. (9202), Japan’s largest airline, had 46,000 seat cancellations on flights between September and November because of the dispute, spokesman Ryosei Nomura said. The carrier forecast the row will cut sales by about 10 billion yen.

Uniqlo Stores

Fearing attacks from anti-Japan protesters, Fast Retailing Co. (9983), seller of the Uniqlo casual wear brand, temporarily shut 60 of its 169 stores in China from Sept. 14-24, according to spokeswoman Yukie Sakaguchi.

“We closed stores in areas that could have been dangerous, such as near the Japanese embassy in Beijing,” she said.

Anti-Japan protesters attacked three department stores in Hunan province run by Heiwado Co. (8276), a supermarket operator based in Shiga prefecture, central Japan, forcing the company to close its stores there for more than a month and incur losses of around 500 million yen, according to spokesman Tomoharu Tsuda.
“They smashed windows, broke shutters and wrecked products in the stores,” Tsuda said. “This could well happen again.”

Oil Resources

While Japan has administrative control over the islands, they were largely ignored from the end of World War II until 1969, when a United Nations commission said the surrounding seabed may be “extremely rich” in oil. That brought sovereignty claims in the following years by China, Japan and Taiwan.

“As existing resources are exhausted, the importance of oil and gas resources in the South China Sea will increase and that’s one of the key reasons why this issue is not going away,” said Hao Hong, managing director of research at Bank of Communications Co., China’s fifth-largest lender by assets. China is “stronger than Japan militarily and economically.”

Underlying the border dispute is a history of strained diplomatic ties between the two countries dating back to the Japanese invasion of China in 1937 and atrocities carried out in the country by some Japanese troops.

With political capital to be gained by both sides from courting nationalist fervor -- Abe visited the same shrine as Koizumi in October -- lawmakers may manipulate the row to fit their agendas despite the economic costs, said Ding Xueliang, a professor at Hong Kong University of Science and Technology, who teaches contemporary Chinese politics.

Chinese Anger

“Japan is always a convenient target for the Chinese government to use to divert domestic anger,” Ding said. “Compared to the political values, the trade values with Japan are secondary.”

China would be willing to accept a 30 percent reduction in trade with Japan before it would back down, whereas Japan’s pain threshold is about 20 percent, Ding estimated.

One possible course follows the policy proposed by the late Chinese leader Deng Xiaoping, said Martin Schulz, a senior economist at Fujitsu Research Institute in Tokyo.

“China knows it will never get the islands, and Japan knows that China will never let go,” said Schulz, who has done research for the Bank of Japan. “Deng Xiaoping’s stance from the 1970s, to keep it quiet until joint economic cooperation in the area becomes possible, remains the only solution.”

U.S. Relations

As the current stand-off pushes Japan and China to reduce reliance on each other, U.S. relations with both sides could benefit, according to Liu at ANZ Bank.

“The U.S. will become more important to both China and Japan and will play a big balancing role between Japan and China,” Liu said. “Japan may increase its investment in Vietnam and other economies” in the Association of Southeast Asian Nations.

Exports from Japan to 10-member Asean grew nearly 50 percent in the decade through 2011, according to finance ministry data.

“Japanese investors will accelerate their strategy of diversifying investments to the rest of Asia,” said Tao Dong, head of Asia economics excluding Japan at Credit Suisse Group AG in Hong Kong. “We see increased cases of Japanese investment in Vietnam and the Philippines and there’s lots more to come.”

Acquisition Spending

Japanese companies have spent or plan to spend more than $10 billion since January 2011 on acquisitions in the Asean bloc, data compiled by Bloomberg show. In November, Kirin Holdings Co. bid $2.2 billion for Singapore-based Fraser & Neave Ltd.’s food and beverages unit.

China, which also has disagreements with Asean nations over islands in the South China Sea, was warned last month by Vietnam not to apply economic force to settle disputes.

“Japanese business influence in China will start to decline” as China invites more European and U.S. investment, ANZ’s Liu said in an interview in Tokyo. “Japanese firms’ space in China could be limited in the future.”

Still, the legacy of decades of investment in China make it unlikely that Japanese companies will withdraw, said Nash at IHS.

“This is not an either-or issue,” Nash wrote in an e- mail. “Firms will stay in China and they will invest in Southeast Asia and other places. It’s hard for Japanese exports to move totally away from China and it’s hard for Chinese OEMs to move totally away from Japanese components.”

Japanese companies such as Nissan employed 1.6 million people at subsidiaries in China in the fiscal year ended March 2011, according to the Japanese trade ministry.

As Richard Koo, chief economist at Nomura Research Institute Ltd., wrote in a Dec. 11 report: “No matter how unpardonable China’s behavior over the issue of Senkaku Islands may be, as a practical matter Japan needs to proceed carefully given the magnitude of its Japanese investments in the country.”

Bloomberg

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Japan compensated RM207 billion to Malaysia?

PETALING JAYA: Japan never paid RM207bil to the Malaysian Government as compensation for victims of the Death Railway project in the 1940s, according to the Japanese Embassy.

Its Second Secretary Takaharu Suegami, responding to PAS working committee member Datuk Seri Nizar Jamaluddin who was reported to have said so, said the latter's claim was “outside the involvement and knowledge of the Government of Japan”.

“All questions arising out of the unhappy events with regard to Malaysia have been fully and finally settled under the San Francisco Treaty which entered into force in 1952,” he said in a statement yesterday. Nizar was quoted by Harakah Daily as saying that the embassy had confirmed that the money was handed to the Malaysian Government in 2004.

The report stated that the money had yet to be distributed to families of the estimated 30,000 Malaysians who were forced labourers of the project between 1942 and 1946.

Suegami said both countries had also signed an agreement on Sept 21, 1967, whereby Japan agreed to supply services and products to Malaysia totalling RM25mil.

The grants, he said, had been used to build two ships, among other projects, but there was no transfer of an undisclosed amount of money.

“Malaysia agreed that any question from the events of the Second World War that might affect our good bilateral relations would be fully and finally settled with the agreement.

“All the supply in accordance with the agreement was completed by May 6, 1972,” he said.

- The Star/Asian News Network

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Britain ready for war over Falkland Islands

Prime Minister David Cameron said Sunday Britain was prepared to fight militarily to keep the Falkland Islands if necessary, in the face of renewed Argentinian rhetoric over their future.

Cameron said Britain had "strong defences" in place on the islands and fast jets and troops were stationed there -- comments Buenos Aires rejected as "militaristic threats."

President Cristina Kirchner said this week that Argentina was forcibly stripped of the Falklands by Britain in "a blatant exercise of 19th-century colonialism" and demanded they be handed over to Argentina.

Cameron insisted he was "absolutely clear" that Britain would defend the islands with military force.

In an interview on BBC TV, he said: "I get regular reports on this entire issue because I want to know that our defences are strong, our resolve is extremely strong."

Asked whether Britain would fight to keep the islands, he replied: "Of course we would, and we have strong defences in place on the Falkland Islands, that is absolutely key, that we have fast jets stationed there, we have troops stationed on the Falklands."

In Argentina, the foreign ministry issued a strong rebuttal following Cameron's comments.

It hit out at what it called "the aggressiveness of the British prime minister's words" and reiterated its demand that London honour a UN General Assembly resolution that invites the two sides to hold talks on the dispute.

Cameron said this week that the 3,000 residents of the Falklands had a strong desire to remain British and would have a chance to express their views in a referendum on their political status to be held in March.

The islanders are expected to vote strongly in favour of continued union with Britain.

Census data released in September showed that 95 percent of residents considered themselves to be either Falkland islanders, British, or from Saint Helena, another British overseas territory in the South Atlantic.

Argentina invaded the Falklands in 1982, prompting Britain's then prime minister Margaret Thatcher to send a naval taskforce to successfully reclaim the islands in a war that claimed the lives of 255 British and 649 Argentinian soldiers. - AFP

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MERITOCRACY is about more than just academic grades

MERITOCRACY in Singapore is about more than just academic grades, said Prime Minister Lee Hsien Loong as he stressed that everyone here has a shot at success.

“When we say ‘merit’, we are not just talking about grades or scores, but also character, leadership and a broad range of talents,” said Lee said in a speech to more than 1,500 students and their parents at a bursary and Edusave award ceremony in his Teck Ghee ward.

He said: “We make sure that whatever your family background, whatever your circumstances, you may be poor, you may be from a single-parent family, you may be having some learning disabilities, but if you work hard, you can succeed.

“It does not matter what your background is. We make sure we identify you, we give you the opportunities and also the resources and the support so that if you succeed, you can do well for Singapore.”

Yesterday was the second time in just over a month that PM Lee stressed that meritocracy cannot be narrowly defined as being just about grades. He also spoke on the topic at a PAP conference on Dec 2 last year.

In that speech, the Prime Minister said he was worried when Singaporeans reject meritocracy and asked what could replace merit as the basis for decisions on jobs or school places.

The principle has come under considerable scrutiny in recent months, especially in the field of education.

While the Prime Minister repeated the same call on broadening the definition of meritocracy, yesterday he focused on what roles parents and students can play in it.

He urged parents to set an example: “Guide your children, set good examples and instil good moral values in them.”

Turning to students, Lee urged them not to neglect their studies even though there would be more focus on character, leadership and service.

“Results and grades are not the only measure of success or the only things that matter in life,” Lee said, adding: “It is important that you learn and study to give you a good foundation for what you can do in life.”

He pledged that the Governm­ent will continue to help all students achieve their potential. — The Straits Times / Asia News Network

Market closes mixed, lower liners likely to hog the limelight

Regional bourses remained on a mixed trend with Japan's Nikkei 225 surging 292.93 points to 10,688.11 while Hong Kong's Hang Seng dropped 67.51 points to 23,331.09. Singapore's Straits Times eased one point to 3,223.80.

On the local front, the Industrial Index rose 19.44 points to 2,814.34, the Plantation Index improved 23.44 points to 8,255.19 and the Finance Index edged up 5.56 points to 15,341.36.

The FBM Emas Index increased 5.78 points to 11,485.90, the FBMT100 rose 2.71 points to 11,340.65, the FBM Mid 70 Index improved 17.33 points to 12,439.6 and the FBM Ace Index advanced 33.06 points to 4,259.77.

Total volume increased to 1.256 billion units valued at RM1.688bil compared with Thursday's close of 1.128 billion shares worth RM1.825bil. - Bernama

Lower liners likely to hog the limelight

REVIEW: Bursa Malaysia kicked off the last day of 2012 on the negative side, with the FBM Kuala Lumpur Composite Index (FBM KLCI) shedding 2.93 points to 1,678.40, as profit-taking activity set in following a series of uptrend.

The overall market sentiment was pretty cautious, depressed by an extended fall in Wall Street overnight, as the White House and US lawmakers closed in on the “fiscal cliff” deadline with no deal in sight.

A pullback in most major Asian markets on profit-taking activity during the holiday season lull added to the downbeat note.

Given the dearth of fresh market-stimulating leads on the horizon, the local bourse succumbed to light liquidation to flirt in the red zones, but within a narrow range.

And that was the trend from the opening bell until the last minute, where buying in select heavyweights emerged suddenly to help the market reversed early weaknesses to end 2012 at a new record of 1,688.95, up 7.62 points on Monday.

World markets including Bursa Malaysia were shut on Tuesday for the New Year. While all of us were enjoying the holiday, optimism about the immediate direction of risky assets grew stronger, because a settlement in the “fiscal cliff” crisis in the US fuelled bullish sentiment across markets.

As expected, stocks in the region resumed business on solid grounds, with major Hang Seng Index leading the way, up nearly 3%.

Usually, the local bourse would mirror the offshore pattern, but in an unprecedented move, blue-chip counters reversed trend, as local institutional players opted to book profit from recent spikes.

Unlike the quality issues, non index-linked companies were mostly steady on greater retail participation and the two-tier market was clearly shown on the score card.

In spite of the FBM KLCI dropping 14.23 points to 1,673.72, winners beat decliners by 373 to 335 in mid-week.

Come Thursday, global equities sustained the upward thrust and the bulls on the domestic front took the opportunity to strike back.

Blue chips topped the gainers list while second and lower liners dominated the active page.

On the back of the better sentiment, the key index hit a new all-time high of 1,692.25, up 17.93 points that day.

It scaled another new peak of 1,699.68 in early session yesterday before retreating to close down 0.07 point to 1,692.58 owing to an apparent profit-taking activity.

Statistics: Week-on-week, the key index rose 11.25 points, or 0.7% to 1,692.58 yesterday, against 1,681.33 on Dec 28.

Total turnover for week ballooned to 4.093 billion units valued at RM6.020bil, compared with 2.920 billion shares worth RM3.941bil done previously.

Technical indicators: After triggering a sell at the overbought area in mid-week, the oscillator per cent K and the oscillator per cent D of the daily slow-stochastic momentum index weakened further to finish at the 66% and 73% respectively.

Likewise, the 14-day relative strength index retraced slightly from the top to end at the 69 points level.

In stark contrast, the daily moving average convergence/divergence (MACD) histogram continued to surge steadily, in tandem with the daily trigger line to keep the bullish signal.

Weekly indicators remained positive, with the weekly MACD and the weekly slow-stochastic momentum index keeping the buy call.

Outlook: Bursa Malaysia extended the upward momentum for the fifth consecutive week, largely due to “window-dressing” activity and funds taking fresh positions, as well as re-balancing their portfolios, with gains in the quality issues propelling the FBM KLCI higher to set a new record almost on a daily basis. The “fiscal cliff” resolution in the United States also aided local sentiment to some extent.

Based on the daily chart, the local bourse is bullish and it will remain so, as long as the key index continues to flirt inside the newly-established upward channel and supported by the rising 14-day and 21-day simple moving averages.

However, investors should take note that the local market has chalked up a total of 109.01 points, or 6.9% over the past five weeks and the bulls are starting to look tired. The next logical move would be to pause for air before resuming their rally later.

While we expect blue chips to correct in the short-term to avoid overheating, second and lower liners, a favourite for retail investors, are showing signs that they are ripe for a rally.

Technically, the daily and weekly MACDs are promising, but given the overbought condition, the local market is likely to consolidate, probably within a tight range this week.

Resistance is expected at every 20- or 30-point intervals above the 1,700-point psychological barrier.

Important support is pegged at the 1,680 points, followed by the 1,670 points and the next, at the 1,660-point mark.

MARKET TREND By K.M. LEE

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Understanding the Chinese mind

BROWSING through my library during the holidays, I came across a book on comparative Western and Chinese philosophy that had an old saying: “Every Chinese person is a Confucian when everything is going well; he is a Taoist when things are falling apart; and he is a Buddhist as he approaches death.”

 Chinese culture is like ancient pyramids of different worldviews built over one another. The earliest was animism, where one believed different gods; the Book of Changes taught two sides to every story; Confucianism was about knowledge of self; Taoism about following the natural Way; Legalism about ruthless pragmatism and order; Buddhism about letting it go. In the 20th century, China imported Western influences from Marxism to science and technology.

It is commonly believed that the Chinese think very differently from Westerners. Western minds are considered logical and scientific, whereas the Chinese mind is supposed to be elliptical, contextual and therefore relational. One possible reason is the ideogramatic nature of the Chinese language, based on pictures rather than alphabets, which positions everything in relation to everything else.

The Chinese word for crisis is both risk and opportunity; for contradiction an impenetrable shield facing an unstoppable spear. Chinese thinking tends to sees things within systemic context and history, probably because the fount of Chinese philosophy is the I Ching or the Book of Changes, circa 1049 BC, which is essentially dialectic in tradition, seeing the world as emerging from the conflict, synthesis and evolution from contradictory opposites.

Western science and intellectual tradition stems primarily from Greek Aristotlean logic, which is reductionist and linear, reducing complex ideas into simple theories and principles that could deduce, explain and predict the future. Aristotlean logic prevailed in the West, until the German philosopher Hegel (1770-1831) developed dialectics based upon the concept that everything is composed of contradictions, with gradual changes becoming crises. Karl Marx (1818-1883) built on Hegelian dialectics into historical change through class struggle and dialectic materialism, whereas Mao Zedong fused Marxism into Chinese agrarian reality to form a theory of revolutionary knowledge through practice.

In the 20th century, natural science, such as physics, mathematics and biology began to evolve away from the social sciences, particularly economics. The Anglo-Saxon tradition of linear, logical thinking continued to dominate in social science, through philosophers such as Karl Popper, who rejected the vagueness of dialectics. On the other hand, quantum physics, quantum mathematics, biology and information theory began to evolve into binary worldviews whereby change in nature evolved through the synthesis or erosion of opposites. This is much closer to ancient Chinese and Indian views that saw the world in constant change.

What has been missing so far has been a synthesis of the two divergent worldviews.

In his new book Antifragility: How to live in a world we do not understand, Black Swan author Nassim Taleb introduced option theory as a general tool to bridge dialectic thinking with mainstream bell curve statistics. The normal “bell curve” distribution is a widely used statistical tool for decision making in mainstream social science. Social scientists look for statistical significance in the high probability (95%) or “robust” zone of the bell curve, tending to ignore low probability events (2.5% each) in the long tails.

By ignoring the long tail events that occur rarely but have large impact when they occur, mainstream thinking like the economic profession missed systemic events like that 2008 financial crisis. There are of course two long tails, one being the “bad” Black Swan events that create systemic damage when they occur.

The other is the upside or “good” long tail events. Nassim calls “anti-fragility” as good actions that compensate for “fragility”, the bad events.

Intuitively, Taleb has reframed Chinese philosophy in modern mathematics with a scientific explanation. What he calls the central Triad of exposures Fragile, Robustness and Antifragile has the analogy in the Chinese trinity of female (ying), Golden Mean and male (yang).

The Confucian concept of Golden Mean seeks to avoid extremes and take the safe middle path. But Taleb's insight shows why the Golden Mean gets into trouble, because playing safe and mainstream ignores the uncertainty of Black Swan events that could eventually damage the system as a whole. Prudence and conservatism through adopting the Golden Mean prevents the practitioner from adopting “antifragile or (good) high risk-high payoff” strategies that would compensate for the uncertain unknown bad Black Swan events.

A Buddhist would immediately recognise the need to build up good deeds to compensate for the bad deeds that may befall oneself.

By not taking risks, Chinese dynasties that adopted Golden Mean strategies became closed societies that eventually imploded when disaster struck. On the other hand, in the run up to the Industrial Revolution, Western societies took large risks with high payoffs, in science, technology and even colonialism. Western society compensated for fragility by taking anti-fragile measures. No risk, no gain.

The easiest way to think about options and antifragile strategies is in stock market investment. Suppose you adopt a conservative strategy that follows what the market does on average (follow the index). If however the market suddenly drops by 30%, and your portfolio declines by 30%, you will never recover your capital if you continue to adopt market following Golden Mean strategy. To recover or do better, you have to take small bets on risky shares that are “anti-fragile”, meaning that if they win, they win big.

Antifragility loves volatility. Making small mistakes will avoid large mistakes. The more you try to be stable, the more unstable you become, which Keynesian disciple Hyman Minsky rediscovered as “stability creating instability.”。

Taking non-linear options on high risk-high return ventures was exactly what Deng Xiaoping did in his opening up strategy. He knew that the risks of failure were high (and unknown) but taking options by opening up new development zones and new policies created new payoffs and growth areas that were not imagined by the critics.

In 2013, Deng's successors may be making new, anti-fragile options.

THINK ASIAN By ANDREW SHENG

Andrew Sheng is president of the Fung Global Institute.