The Chairman of Morgan Stanley Asia, Stephen Roach, said on Bloomberg TV on Dec. 2 (clip below added by EconMatters, Chano's section at about 2:30 mark) that well-known China short seller Jim Chanos “is a lot more negative on China than I am, and I hope one of these days he can actually go to China and see it himself.”
Roach isn’t the first to use the fact that Chanos has never been to China to shoot down the latter’s doom and gloom prognostications. It’s a cute line that sounds eminently reasonable, unless you actually think about it for a minute or two. It’s actually a cheap shot that seeks to attack Chanos personally as opposed to be arguing against him on the substance of his analysis.
This kind of thing drives me crazy. It reminds me of similar “conventional wisdom” that is used to criticize China analysts, consultants, bloggers, and journalists:
1. Don’t listen to him, he doesn’t live in China.
2. He doesn’t know what he’s talking about, he can’t speak Chinese.
3. That guy is hopeless, he’s a foreigner.
You’ve probably heard these before. I’ve been tagged with #3 on occasion. Ironically, the criticism is often leveled by overseas Chinese who don’t live here and whose experience with China over the past decade or so is limited to coming home once a year for the holidays.
A phrase commonly used in the law biz is “totality of the circumstances.” This usually refers to some sort of legal test (e.g. on personal jurisdiction), for which there is no “bright line test.” It means that the trier of fact (a judge or jury, depending on the issue) will examine all the relevant evidence in order to make a determination.
In the case of analysts, bloggers and journalists, no matter what it is they opine about, the only fair way to judge them is on the totality of the circumstances. First and foremost, you have to look at what it is they say over time.
A good analyst tells you things that are accurate and useful. Full stop. If critics of a particular analyst cannot find something inaccurate to point to, they probably need to find another target.
But wait, you say, if all else is equal, wouldn’t you be more likely to trust or listen to someone who is living in China/knows the language/is Chinese?
If all else is equal, perhaps those factors would be determinative. But it rarely works that way. The problem is that there are other factors that are much more important when it comes to judging an analyst. For me, I’m always more interested in whether the analyst is: 1) intelligent; 2) not biased; 3) thoughtful/open-minded; 4) has studied the issues; and 5) is experienced.
Chanos, by the way, fails my test because of #2, long before I think about whether his lack of China travel has had a negative effect on his opinions.
I think we should all stop pretending that living someplace makes you an expert about anything. I’ve known many functional retards (sorry, that is not the current acceptable nomenclature for a mentally challenged individual) who have lived in China for decades who don’t know dick about business here. I’ve also known folks who live in other countries who are so inundated with China information (from online and personal sources) that they are bona fide experts on this country.
Most of the things I know I’ve learned from work, academia, reading things online, and talking to people. To be honest, none of these things really requires me to be physically present in Beijing. The Internet and the telephone are amazing inventions. One doesn’t need to be living in Beijing, for example, to know that today’s atmospheric conditions (“fog”) are just short of lethal. Scientific data, commentary and photographs are all available free online no matter where you are.
Before I sign off, let me point out that of course, most of the best China analysts and bloggers actually do live in China. Of course that adds to their breadth of knowledge, and that is valuable. It’s just not the only determinative factor on whether they know what the hell they are talking about.
And yes, there are a lot (a whole hell of a lot) more folks who don’t live here who say stupid, ignorant things about China. That goes without saying; these are people who decided that even know they don’t live here and have never actually researched the topic, they will talk about it anyway. Although it’s just anecdotal evidence, I will admit that every time a clueless foreigner spends a week here and writes an insipid and uninformed Op/Ed like this recent laughable one in the New York Times, it serves to weaken my above argument.
About The Author - Stan Abrams is a Beijing-based IP/IT lawyer and law professor. Stan has an M.A. from Johns Hopkins in International Relations, a J.D. from Boston College Law School, and a B.A. from Pomona College. Stan maintains a blog at China Hearsay. (EconMatters author archive here)
The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.
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