Note to Summers and Donilon: Dig into China’s Mooncake Vouchers


france mooncake.jpgPresident Obama’s National Economic Adviser Lawrence Summers has just landed in Beijing along with Deputy National Security Adviser Tom Donilon, Asia Desk NSC senior director Jeff Bader, and National Security Council Spokesman Michael Hammer. The China Daily reports this morning:

The arrival of two high-ranking US officials in Beijing [it’s really four] on Sunday signals the willingness of the two countries to push for more positive development in bilateral ties. . .A timely exchange of views on core issues of mutual concern is conducive to effective cooperation as well as to ironing out differences and hurdles standing in the way of ties between the two big towers. The talks between the US officials and their Chinese hosts are widely expected to address bilateral trade as well as global and regional security.

All good. It’s important for US officials to get over to breathe the air, meet the people, and see the furious digging and construction going on all over China. While Summers has been to China, I think [and could be wrong] that this is Tom Donilon’s first trip. He needs more than four days — but he’s an intense workaholic, so four is more like ten.
One of the things that I’d be worried about if I were them is that the Chinese are learning the American secret of reserve currency magic in their management of the mooncake market.
Like the U.S. dollar — which despite the global frustration with American economic policy, over-consumption and under-investment — Chinese mooncakes, or the idea of them, are in huge demand.
When the season hits, everyone in China — which is a fifth of the world’s population — wants their slice of the mooncake racket.
Not to eat, mind you, but to give and get and re-gift and re-gift and to pretend to want.
The French have a “French national mooncake” (pictured on bus above) to build on the popularity of the France Pavilion and Moet Hennesy Restaurant at the Shanghai World Expo. The French Pavilion is France’s most visited tour attraction in the world — more than the Louvre and Eiffel Tower. France’s mooncake has the three colors of the flag, but their are a couple of Chinese blogger sites warning “not to eat” it. Well, from my discussions, it seems that most mooncakes are more seen than eaten anyway.
starbucks-mooncake.jpgHaagen-Dazs has a mooncake — and Starbucks. And of course, just about every Chinese establishment has some version of a mooncake for purchase, for gifting, for shipping with notes of congratulations for making it to another mooncake season.
But like any currency that takes the place of gold or silver or other commodities that used to underlie the solvency of national legal tender, the mooncake business has generated a currency of vouchers — where instead of just giving and getting mooncakes, families can give and get “mooncake vouchers.” Paper. . .for mooncakes.
The notable phenom, however, is that some Chinese government officials and senior Party leaders have observed that there are many more mooncake vouchers floating around then there are mooncakes connected to them — and yet the voucher business is thriving, trading is going on. In fact, it’s reaching such a frenzy that some are wondering whether or not that many mooncakes even really need to be cooked up.
Production seems unrelated to demand.
Mooncake vouchers are beginning to develop all of the characteristics of a new reserve currency, not yet globalized, but perhaps on its way — given that mooncakes are big in Southeast Asia and possibly now in France.
There is an illogical trust in mooncake vouchers which seem to defy economic gravity and have great value despite their inflation far beyond the underlying dessert.
Chinese economic Mandarins are reportedly fed up with the dollar even though options out of the dollar are limited. Behind the scenes frustration with being trapped in the US dollar which is still buoyant but unpredictable led to rumors that the Chief of China’s central bank was trying to escape the country and defect to Canada. These rumors proved to be untrue — but many folks in Beijing and elsewhere wondered.
So, perhaps mooncake vouchers are a trial balloon — part real bubble and part experiment — in creating an institution with reverse currency power.
Everyone has to buy in to mooncake vouchers even though many folks don’t really want the mooncakes themselves — and for a few decades at least, one can continue to inflate and inflate further the number of vouchers without every having to pay the piper.
Larry Summers and Tom Donilon should be worried that the Chinese are going to make a play sooner than later to challenge the dollar’s reserve currency status with their own home grown mooncake vouchers.
(Smile. I’m sure that there are many logical fallacies in what is above — offered in fun.)
But still, Summers should investigate.
Leaving Beijing today and back in DC on Monday. Hope you enjoyed the fun. And if you didn’t — eat some mooncake.
— Steve Clemons


19 comments on “Note to Summers and Donilon: Dig into China’s Mooncake Vouchers

  1. Don Bacon says:

    Real Chinamen use ivory. Just ask Steve. He’s been there, like, forever.


  2. PissedOffAmerican says:

    You want a real eye opener, google up the controversy about disposable wooden chopsticks,
    Think about it. Can you even begin to imagine the amount of wood thrown away daily by the billions of Chinese, and the astounding amounts of Spruce trees it takes to supply the demand?
    Next time you’re trying to look cool eating Chinese, ya might wanna give a fork about it.


  3. Don Bacon says:

    Obama who is in deep dem doo-doo tells the unemployed middle class to take their jackets and ties off, he’s got a great opportunity for them working on road crews in a Wisconsin speech that progressive Senator Russ Feingold (D-WI) has found it inconvenient to attend, and questions goes apeshit. So why be surprised?


  4. nadine says:

    “Til then, I remain quite hopey changey with a sense that indeed we’ll get a little more legislation through, a ME peace document, the oil spill is dealt with, there will be some positive news on housing, jobs, health care, Iraq. Something good will be generated for Afghanistan.”
    That is seriously hopey changey, questions. Can I have some of what you are smoking? It sounds like damn fine stuff.


  5. questions says:

    We’ll find out in Nov. I guess.
    Til then, I remain quite hopey changey with a sense that indeed we’ll get a little more legislation through, a ME peace document, the oil spill is dealt with, there will be some positive news on housing, jobs, health care, Iraq. Something good will be generated for Afghanistan.
    And hopey changey will beat out SoSec cuts, and the rest of the stuff that the right spews.
    The Tea Party will melt down. Angle and Paul and Rubio and Miller and McMahon and co. will be what they are. It’s enough.
    The party of no will keep saying no.
    And I will continue my hopey changey ways!
    And Arne Duncan will find a new job before he drives away all the teachers from the dem party. what a dilp.


  6. nadine says:

    I’m glad you liked that driving analogy, questions. Obama obviously does. This is like the 10th time he has used it. Obama is good at making partisan speeches to the base. But I fear the thrill is gone for the independent voters.


  7. questions says:

    Found it!
    “The findings can help anyone, from a fourth grader doing long division to a retiree taking on a new language. But they directly contradict much of the common wisdom about good study habits, and they have not caught on.
    For instance, instead of sticking to one study location, simply alternating the room where a person studies improves retention. So does studying distinct but related skills or concepts in one sitting, rather than focusing intensely on a single thing.


  8. questions says:

    nadine, you should know me by now!
    I’m being quite serious. It was a great speech, there was a great driving analogy, the passion is there, the legislative proposals are there, the dissing of the right and Boehner are there, and Foxinabox got its comeuppance as well.
    kos has a link up in blackwaterdog’s diary on the top of the rec list. Give it a listen. 39 minutes or so.
    The main issue is whether or not phloxTV will drive the meme or if the dems can get their fucking act together and start demanding the infrastructure bank, the car in drive not in reverse, and yes yes yes….
    Good memes if they can be made to stick.
    And if Arne Duncan can find a new day job instead of pushing the value-added-assessment as if kids were commodities in production in Europe… life would be glorious indeed.
    Busy, beavers, building…. Ok, so I’m not a speech writer!


  9. nadine says:

    Poetry in Drive: Satire or Serious?
    Who can tell?


  10. questions says:

    Poetry in drive!
    Obama’s Wisconsin speech today was the opening pitch of the political season. And what a speech.
    Sorry for the mixed metaphors, by the way, but if Steve can have cutting edges of waves, I figure opening pitches of drives are ok, too….
    There’s a beautiful car analogy with D and R and forward and reverse and a ditch to boot!
    There’s a lot of “no” and “yes we can,” a lot of “union and united”, a lot of admission of suffering and a realization that the pubs have had their chance and they blew it. The amnesia line is good and we need to remember what a change of party will mean. A warning about the man who would be speaker.
    And the infrastructure bank, if set up with the equivalent of US war bonds or some other kind of fund, and perhaps some kind of tax-reduced gains for investing could grab a big chunk of that frozen money. Perhaps there’s some deal that could be struck with this and repatriation of money locked up in islands around the world.
    What we need is to get money flowing again, and that takes both a destination (this infrastructure bank) and some kind of decent rate of return.
    Obama knows, as well, that there’s money in smaller chunks that can be put to good use as well. So perhaps they’ll come up with a variety of clean financial products that put America back to work building all the stuff that got us the last big booms.
    Tech, green, transit, education, entertainment, parks and river fronts, water resources, city services, connections, the electric grid that distributes electricity more efficiently and with less risk of massive black outs, better mouse traps, better farm techniques, more places for more people to fulfill more dreams, arts and expression…..
    There’s a lot that people can do when they feel resourced.
    I’m so freakin’ hopey changey!
    And maybe just maybe Arne Duncan will volunteer to give up his job and spend a day reading the article I saw earlier that knocks all of the techniques for studying that have been advocated for forever and a day…. We don’t entirely know what makes people learn things, so Duncan should rethink all the testing he has a test-crush on. And no, not even his most recent “higher order thinking” test regime is any good either….. Ugh.
    (Article in WaPo? NYT?? LAT???)


  11. WarrenMetzler says:

    I was not sure, and still am not sure, it this is some sort of April fools joke. But I sense it is real. And want to present something to percolate inside of people. When two humans interact, the benefit from that interaction is 100% dependent on whether they are honest with each other, open to reveal all that is within each (regarding each issue they discuss, or activity they do in common), and mutually empower each other (repeatedly over time; by their behaviors far more than the words they communicate to each other; teach each other valuable ways to life).
    If two people attempt to have a relationship, but both are actually going in different directions in life, it is impossible for the above to occur.
    China is headed for a major disaster, given its continued allegiance to the insane idea of a communistic party. It is only a matter of time before the inherent contradiction between the political system and the economic system reaches a blow up, and after whatever form in which that blow up appears, there will unavoidably be a period of decline; as occurred in Japan in the 1990’s (and continuing to this day), when the contradictions between attempting to maintain the traditional Japanese mind-set collided with the mind-set necessary to have an advanced economy.
    I believe that the longer the US government continued to have a foreign policy with China that is based on lies, (lies that ignore that China’s political system is totally anti giving all its citizens the inalienable human rights they possess), we will become more and more in bed with that country, thereby sharing much of their pain when that inevitable collapse arrives.


  12. Steve Clemons says:

    jollyroger — lol. well, with good folks like you this blog can stay on the cutting edge of which waves are rolling. thanks much for the petromooncake info. all best, steve


  13. jollyroger says:

    Steve is uncharacteristically behind the curve–this morning El Cabillito (Chavez) phoned Iran to confirm the move from the (sadly transient) petroeuro to the petromooncake (Pooncake in the vulgar vernacular…)


  14. Don Bacon says:

    Actually eat mooncakes? They’re made with tons of sugar and fat, plus 20 yolks from salted duck eggs. Talk about a bubble, you’ll look like one if you many mooncakes.


  15. nadine says:

    I think the point is that if you trade the vouchers, there is no danger anyone will expect you to eat any mooncakes. Does anyone ever eat any mooncakes?


  16. Don Bacon says:

    Finally, a currency we can eat. I’m going to stop hoarding clam shells and go long in mooncakes, although I would have preferred eggrolls.


  17. JohnH says:

    What about the fortune cookie futures market? Shouldn’t Summers advising the Chinese on how to set that up?


  18. Andy says:

    Steve, so happy to know you have a good time in Beijing. I just came back from Shelly’s Summer Symposium in D.C. last month. It’s a pity that you were not there, but it’s so nice that we had Shane Harris with us, he is amazing!!! Hope we can meet and talk to each other in China or US some time in the futrue. Good Luke, maybe you should bring some mooncakes back to D.C. Haha, I like it so much.(without the starbuck mooncake).


  19. jon says:

    You beat me to it. I was going to suggest the same thing, only with
    tulip bulbs.
    I worry that our strategic mooncake reserves might come under
    sustained attack by hungry foreign nationals. Perhaps its time to
    retool our once-vaunted fruitcake capacity and regain its traditional


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