The Real China?

“Where is the real China?”

Since I’ve been here, I’ve been asked variations on this question from the American teachers at our school for which this stint in Shenzhen is their first time in China.  I struggle to come up with a good answer because I am not sure I actually know the answer.  Depending on the day and my mood, I recommend checking out Beijing for a good contrast between the old and new China with a bunch of government formality thrown in for good measure.  Or maybe I extol the history in Xian with its terra cotta warriors and ancient city walls still standing.  Or even Yangshuo (阳朔) for its beautiful scenery and Yongding (永定) with its tulou (土楼).

Maybe Shenzhen is actually the best representation of the real China. 30 or so years ago it was nothing more than a 50,000 person market town through which the Guangzhou – Hong Kong through-train passed.  Now it’s a metropolis of over 15 million people, depending on how many of the surrounding towns you include in that count, and home to an endless supply of high-end malls, one of China’s two stock exchanges, and extreme wealth on display throughout the city.   This dramatic transformation, which at this point has been noted by anyone who has spent time here or in any number of China’s other Tier One and Tier Two cities, is almost a given when speaking about China. However, the teachers for whom Shenzhen represents their introduction to China, something rings hollow about the city and the experience.  It’s not that it’s not pleasant or convenient, but it almost feels too easy and not what they expected of China.  But I have to wonder what they expected China to be if not a temple of consumerism and capitalism with very little in the way of apparent angst about the country’s problems and where it’s going.

Just an aside to note that I must give props to my dad for bringing to my attention Andrew Jacobs’ “Notes on the China I’m Leaving Behind“, which was published in this past Sunday’s New York Times.  In short, it’s his take on where China is at after spending almost eight years on the ground.  It means more to me that my dad brought it to my attention because I’d like to think that it’s my being here on the ground that caused him to stop and read it whereas if I wasn’t here, there might have been the chance that he would have skipped over Jacobs’ piece.   Thanks, dad.

Jacobs notes this disconnect between the shiny veneer of consumerism and deeper problems that lurk beneath this surface.  He writes, “[T]he Communist Party, largely through fear and intimidation, seems to have trained much of the population to channel their energies into the pursuit of consumerism.”  This sentence gets to the heart of what is so strange about China, especially to Americans who are so used to the constant bombardment of negative news that makes it hard to enjoy Black Friday or Cyber Monday.  Most Chinese people seem rather oblivious to the problems around them, including a slowing economy, rapidly degrading environment, disadvantageous demographics, and the detention of anyone who dare challenge the regime.

Shenzhen is even more of a conundrum because it should embody the idea that the further one is from Beijing, the less reverence they have for the government and its policies.  That actually may be true to an extent in Shenzhen, which is richer and freer than most other parts of China, but the vacuum that exists from seemingly not caring about social and political matters is what makes the city feel so strange.  Its proximity to Hong Kong and relatively porous border only heightens the strangeness. Shenzheners cross quite regularly between the two cities, but it’s mainly to shop in Hong Kong because of its better selection of Western good and lower prices.  Yet, Shenzheners bring little else back with them except bags and suitcases full of purchases.

To an American like myself who goes back and forth quite frequently and have been doing so for over a decade, I still marvel at the feeling of how different Hong Kong is from the moment I step off a plane, train, or boat. I don’t know for certain, but would guess that most Chinese people crossing the border just see the city as a giant shopping mall.

Foreign Policy is running a special series on education and the relationship between the U.S. and China.  Zara Zhang, a Chinese student at Harvard, writes about her experience there and acting as a bridge between the U.S. and China.  Her experience at Harvard is a fascinating read, especially as someone who has taught top university students in China.  Among her many observations, one stood out for me at the end of her piece, “If China will one day become a more democratic and open society, it will probably be a result of the effort of this large group of culturally hybrid individuals whose heads are now used to Western thinking — but whose hearts are unchangeably Chinese.”

I have thought about this point a lot and I think it’s what any Western country that hosts a large number of Chinese students at its high schools and universities thinks, too – that by welcoming Chinese students into the halls of Western education, they’ll be imbued with ideas of freedom and democracy and bring those ideas back home to clamor for change.  The question that is not answered is whether those ideas will be subsumed upon returning home once those same students start working and realize that the current system is better set up to reward those with degrees from top universities.   Another way of thinking about it is this – will coming home and joining the existing system prevent these idealistic students from carrying out the reforms they may have been so excited to see through when sitting in a classroom in New Haven, Melbourne, or Oxford?  I don’t know the answer, but I would like to see where the Zara Zhang’s of China are in ten years’ time.

Jacobs’ point that the government has so successfully turned people’s frustrations and desires for change into a force for consumerism could mean that even successive generations with more exposure to people and ideas from outside China might not be enough to correct the social and political problems that China faces if it’s to make that jump from purely an economic juggernaut to a true global power.  For those who wonder if Chinese people actually care about these social and political problems, Jacobs makes it clear that there are people who are disgruntled, but they’re powerless against the huge tide of people who would rather shop than think about what ails their country, especially since there are a lot fewer restrictions on spending money than doing other things.

And for those looking for the real China, if you’re in a city like Shenzhen, you’re probably experiencing it every day.  Just walk to any one of the many malls on a Saturday afternoon and wander around taking in the people milling about and there you have it.  Happy shopping.

 

Houses of Cards

A short while ago, an email came in with a link to an article that is an interview with Chen Guangcheng on the New York Review of Books’ blog.  Chen is the blind dissident who left China recently to study at NYU Law School in New York and is actually from Linyi.  To be more accurate he is from Dongshigu, one of the villages that is overseen by the Linyi city government.  When I write about all of these new high-rise towers that keep sprouting up further and further from the center of the city, the land for the towers were formerly villages annexed and cleared by the city government to continue the city’s growth.  Before Linyi grew into the city that it is today, it was really a collection of small villages with the town of Linyi at the center.  To fuel economic growth and boost the profile of local leaders, villages began being annexed and the high rises you see in my pictures are the result of the city’s growth.

There were some things that really stood out in the interview because of the fact that I am sitting here writing from a hotel that was probably built on part of a village that no longer exists.  The massive Linyi University campus was probably also one or more farming villages at some point in time, but are not part of the city proper.  The interviewer asks Chen if he thinks urbanization is beneficial because then people can move off the land to get jobs in the city and earn more money.  This was his response:

No, I don’t think it’s beneficial. Right now it’s a blind urbanization. Cities grow up naturally over time. Now they’re trying to do it all at once. The main thing about urbanization now is to make the economic statistics look good—to build and pump up economic activity.

Chen basically backs up a lot of what I have been thinking and writing about when I look at Linyi’s development, especially versus cities like Shanghai or Beijing that have a more solid economic foundation because they are home to headquarters of large companies, the creative classes, or are seats of government power.  He continues on saying that many times when these villages develop into towns and cities, the people who resorted to more traditional ways of making a living are often left out in the cold as the real estate developers, banks, and government officials profit:

I think for those who go to the city and work there’s a benefit. But the current way of villages being turned into towns—I don’t think there’s an advantage to that. People in the village often rely on ordinary kinds of labor to earn a living, like working in the fields, or raising geese or fish and things like that. So now what happens? They turn a village into one high-rise apartment building and that’s all that’s left of the village. Then the land is used for real estate projects controlled by the officials. Where are the people supposed to work? How is that supposed to function?

I often wonder what people do in a city like Linyi.  Aside from the typical service jobs that exist in any city – salespeople, waiters and waitresses, tellers, barbers, etc. – there are only so many people who work in offices who would earn enough money to be able to afford the thousands of new apartments being built.  Others I have spoken to here say that businessmen who travel to Linyi for work will purchase an apartment to stay in rather than stay in a hotel and those people with enough money will buy two or three apartments as investments.  Fine.  Even with those people purchasing apartments, the fact remains that such housing remains out of reach for many who used to live in a village and are now having urbanization shoved down their throats.  I think of the manager in the Binhe Hotel, where I stayed last time I was in Linyi and his tale of how he works multiple jobs and still did not have enough money to buy an apartment.  There must be many more like him than the people who can afford two or three apartments or the businessmen who fly in from Shanghai or Beijing and would rather stay in an apartment than hotel.  I read Chen’s words as a warning that this haphazard urbanization without the necessary jobs to support it could be a disaster as people become increasing disgruntled about being shut out of life in the place where they are supposed to be living.  

The corollary to this point is the number of shopping malls being built.  If people cannot afford apartments, how are they going to shop in all of these luxury malls that are springing up all over the city.  Just coming off a weekend in Shanghai, my mind is boggled by the amount of conspicuous consumption in that city, but at least the jobs are there to support that consumption to some extent.  I am not saying that there is not money in Linyi, just not the type of money to sustain the level of future development envisioned for this city.  I even wonder if Shanghai can support all the new malls that are going to come into existence in the coming years.  As my friend Paul put it, part of the gamble as a retailer is picking the mall that is going to be a success.  With more and more malls that increasingly look alike, we begin talking about high-stakes Vegas odds because the development is not being carried out with any thought to the local population and what the people may want.  It’s still very much a “build it and hopefully they will come” mentality.  

The building of malls divorced from what makes business or economic sense is a problem in the Chinese economy at large and something I’ve thought about since college.  Many economic decisions made at the top are divorced from what may be good for the macro-economy.  Rather these decisions are made because of political forces that trump the economic, thus there is a heightened likelihood of a degree of failure.  At the most basic level, the need to maintain a certain level of economic growth to ensure that the population remains happy, the implicit social contract that drives China’s economy, is a policy for political survival that does not always jive with economic realities.  How many new airports, coal mines, highways, and train stations does this country need?  The Linyi airport is lovely, but barely has any flights to justify what I am sure was a hefty price tag.  However, the airport is a fixed asset investment and can be counted in the GDP numbers reported by local officials, which in turn get reported up the chain to Beijing and make the economy look like it is humming along.  We were actually joking at dinner last night that the speed and quality with which these projects are constructed ensures that they will have to be rebuilt in a few years so then the government can just count the project again.  That statement was made slightly tongue-in-cheek, but it’s kind of true.  It may take ten years or more for a new airport to be built in the States, but at least when that airport is up and running, it is built to last 50-75 years or longer.  In China, so many new buildings begin to look like they should be condemned only a few years after going up.  I think of the campus of the university here.  It was only a built a few years ago and already the fixtures outside the buildings are rusting, the doors inside are warped, and there are cracks in the walls all over the place.  I can only imagine what a lot of these new apartment towers look like, especially those that are half empty.

Economic policy divorced from economic reality is not sustainable.  It’s easy when you have money to pump into capital improvement projects, but it’s much harder when you need to affect rational human beings.  It’s why the authorities in Beijing have been more successful at building high-speed trains (success in building them, but not necessarily in operating them safely) than getting consumers to open their pocketbooks and re-orient the economy towards more domestic consumption and away from export-led growth.  Having the government build an airport or train line that is eventually going to be run by the government does not require rational policies because all the players’ interests are aligned by the desire to make money, which travels in a vicious circle and rarely trickles down to the average person.  However, getting people to change their shopping behavior requires rational thought because for all of the government’s attempts to control the people, some things are so intrinsic that they cannot be controlled by a higher power.  A person worried about having enough money for health care, retirement, education of their children, and to put a roof over their head and food on the table is not going to automatically start buying more discretionary items just because the government tells them to do so.  For that to happen, rational policies are necessary like state-subsidized health care, better education at a lower cost, safeguards for retirement, and the like.  While the government talks about such social safety nets and academics write papers urging the government to begin using some of its largess to build such programs, they are still not being being created.  Why?  Because such programs will not bear dividends until much later in time and the government thrives on short-term gain in the form of easily obtainable economic growth to justify its existence.

Chen is spot on when he points out that the development path China is currently on is not sustainable because for all the wealth sloshing around in Beijing, Shanghai, Guangzhou, and other large cities, there are huge swathes of the population unable to partake in this life and the government is not taking the necessary steps to bring them into the fold because they are blinded by their own desire to protect their positions of power.

Half-Assed Expat

Made it to Shanghai in one piece. The actual flight from Linyi to Shanghai is less than an hour, so really easy to get here. In some ways it feels like being released out into civilization. It has been four years since I was last here and the city is even more refined and polished than it was the last time I was here.

This is what I woke up to when I walked into my hotel bathroom this morning.

The city is definitely China’s best foot forward on the world stage with the potential to rival any other great world city. I don’t think I can use enough superlatives to describe the city. Suffice it to say it’s definitely the center of creativity, commerce, and class in China. Part of it definitely has something to do with the sheer number of expats here.

I’m sitting in a cafe called Sunflour on Anfu Road (安福路) that could be in London, Sydney, or San Francisco and it’s filled with a mix of expats and locals. The menu is salads, sandwiches, and lots of fresh baked goods. I’m listening to two foreign girls talk about their trips to Urumqi and marathons in Thailand, as well as their plans for the night. I forgot how everyone of a certain set knows each other when you live overseas. It was the same thing when I lived in Hong Kong, so it’s nice to know there is some continuity to this whole lifestyle.

But Shanghai is unreal. I’m not sure if it is what the rest of China aspires to, especially given the central governments own bias against Shanghai due to it’s long history of foreign influence. Just to recap – when China was forcibly opened up by the Europeans and Americans in the mid 1800s, Shanghai was carved up among the French, Germans, Americans, and British. The city developed a reputation as the Paris of the East and as a den of sin and iniquity. When the Communists came to power, they sought to stamp out all traces of the old Shanghai. When China opened up on its own terms in the 90s, Jiang Zemin and Zhu Rongji, who were the president and premier, respectively, hailed from Shanghai and strongly promoted the city’s development. When Hu Jintao and Wen Jiabo came to power in the 2000s, the so called “Shanghai Faction” fell out of favor and the leaders in Beijing sought to promote harmony, not the decadence a city like Shanghai represents. That’s not to say that Shanghai stopped developing and changing, but the city did not receive the same support from Beijing. Having spent time in places like Linyi, I don’t think Shanghai is what these cities want to be. Whether that’s because of government influence or the fact that many Chinese people have at most spent a few days here, I don’t think this is the way forward for the rest of China.

There is something very comfortable and familiar about the city. It’s what happens when the iPhone class infiltrates a place and starts to remake it in its image. The nationality of the iPhone owner does not matter. It’s a mindset. Without being too glib, the iPhone class likes cute boutiques, gourmet coffee, trendy restaurants and bars, and whatever else may be on trend at that moment. These predilections begin to influence the communities in which they live and dictate the patterns of development. I could really be anywhere in the world right now, which is both comforting and unsettling at the same time. When I am in places like Shanghai, I am reminded of being 22 and an expat banker in Hong Kong. Listening to these foreigners who have made their home in Shanghai, it strikes me as part escapist (whether escaping an identity and life or a dire economic climate back home) and this desire to sound worldly. It’s easy to sound worldly when you’re jetting off to Shanghai for the weekend or running a marathon in Thailand. I’m guilty of this, too to some degree, but I’m kind of a half-assed expat. I like to flit into countries like China for a few weeks or a city like London for a long weekend and then flit right back home.

Okay, enough musing for one afternoon. It’s almost time to move on from this cafe and find a place to get my hair cut and then move hotels and meet my friend, Amy.

Aspirational

Week two has come to a close.  It’s a national holiday tomorrow to celebrate the Dragon Boat Festival (端午节).  The festival only became a national holiday in on the mainland in 2008, having not been celebrated since the 1940s.  Since it’s a three-day weekend, I am off to Shanghai to meet up with a friend and check out the changes that the city has undergone since I was last there in October 2008.  It should definitely be insightful to check out China’s largest and most outward looking city.

I’ve been thinking a lot about Western companies trying to crack the Chinese market.  As growth slows down in many companies’ home markets, China and it’s potentially massive market looks more and more attractive.  Some Western brands have been here for decades and for some companies, China is an important driver of revenue.  However, for every company that is profitable in China, there are many more that have not figured out the market.  The New York Times may have been reading my mind when the published an article yesterday about how more companies are moving executives to China.  It used to be that companies had a branch office or subsidiary in the region, but the top executives remained in the company’s home country.  The article describes how that is changing as companies move some of their top-level executives to the region with the belief that being on the ground may make it easier to crack the China market.

Having sent a few days in Beijing before arriving here in Linyi, I was able to see first-hand how foreign companies have tried to crack the China market.  Retailers that would not be out of place on any London High Street or in Soho abound in Beijing.  The stores are not overrun with only expats, but Chinese consumers who have embraced these brands.  There are also many Chinese brands that one can find in cities all around China, brands that one has never encountered in the U.S. such as Meters//bonwe (casual clothing), Li-Ning (athletic wear), Septwolves (clothing), SPR Coffee (like Starbucks), and Dicos (Chinese fast-food akin to McDonalds and KFC).  Will these brands move beyond their national borders to open flagships on Fifth Avenue in New York and Harajuku in Tokyo or will they remain exclusively Chinese brands.  Will foreign brands such as Uniqlo, GAP, H&M, Zara and Starbucks overrun the country because they are seen as more aspirational than local brands?  It’s this idea of aspirational buying that I find most interesting.

Take Apple.  The first Apple Store opened in Beijing in Sanlitun to coincide with the 2008 Olympics.  Walking by the Apple Store when I was there a few weeks ago, the store looked like an other Apple Store – thronging with people checking out and playing with the company’s latest offerings, taking advantage of the store’s free WiFi, and just hanging out.  Once again, it was mostly locals in the store even though it is located in one of the city’s expat havens.  

Apple Store in Beijing, complete with live music

Apple fascinates me because it is a company that does very little advertising and relies almost exclusively on word of mouth and it’s iconic stores to generate traffic.  There is no Apple Store in Linyi, but the distinctive Apple logo is everywhere.  Every China Unicom and China Telecom shop has it prominently displayed in their windows indicating that they sell the iPhone.  There are also numerous licensed sellers of Apply goods that were not here two weeks ago.  One of the retailers is located in a mall by People’s Square.  I pass by the store whenever I head to the supermarket down there and it’s amazing to watch people playing with the iPhones, iPads, iPods, and Macs as if they were in a real Apple Store.  Apple has managed to penetrate a fifth-tier city like Linyi without even opening a store.  I can only imagine what it would be like if one day Apple does open a store here.  I must say that Apple goods are priced on par with what they cost in the States and it’s not like their products are cheap in the States, so you can imagine that for a lot of Chinese people, their items are still considered aspirational.  

So I go back to this idea of an aspirational good.  What makes an aspirational good and how does a foreign company go about positioning their goods in such a way?  Starbucks, which has huge growth plans for China and is a brand that I would consider aspirational since their drinks are so darn expensive here, even more so than in the States, is trying to prime the Chinese market beyond the first and second-tier cities where it was stores.  How?  Their VIA instant coffee and pre-packaged Frappuccino drinks are going to be their calling card in markets where they do not have a physical presence.  Chinese people do drink instant coffee and like sweet coffee flavored beverages, and it costs less to take up shelf space in a supermarket than it does to open a full-fledged Starbucks.  So Starbucks is planning on introducing these products to smaller cities and whet their appetite for a free-standing Starbucks sometime in the future.  It’s a smart idea and saves Starbucks a lot of logistical headaches in the process.  

Perhaps other Western brands can go the pop-up route much as they have done in new markets elsewhere in the world?  I must get ready for Shanghai, but I think another market that has proven hard to crack for foreign companies is in the services sector, which is something I will blog more about in the future.

For now I leave you with a picture I snapped on my walk home from the gym.

As I have mentioned before, Linyi has some nice river walks akin to the Hudson River Park in New York.  However, right off one of the paths was this random toilet that someone had just left there.  It would be like finding a toilet bowl on the side of the path while going for a run on the West Side Highway in New York.  Imagine.  Till later . . . 

Two Steps Forward, One Step Back

I arrived in Linyi last night after a flight that was surprisingly on time.  Speaking this morning with the other two University of New Haven instructors arrived a few weeks ago, they informed me that their flights from Beijing were also delayed.  Their experiences combined with mine Saturday night and from two years ago just leads me to believe that the Beijing-Linyi corridor is conducive to delays.

It’s strange being back.  I just returned from the supermarket down by Renmin Guangcheng (人民广成) or People’s Square in the center of Linyi, which is the commercial hub of the city.  As I was in the taxi getting there, I was speaking with the cab driver about different places in the city and he remarked that I knew a lot about the place and asked how long I had been here.  I told him that I arrived yesterday and prior to that had only stayed here for three weeks.  Jiangjie, the head of the international program at Linyi University (oh yes, the name of the school changed), who picked me up last night also remarked that I knew a lot about the place. I guess I got around last time I was here.  Anyway, as I was driving I noticed that half of the new construction going up when I was last here was still unfinished.  The unfinished construction combined with the half empty luxury apartment blocks brought home the point made in the media that China’s growth is slowing.  However, Linyi appears to continue marching forward in other important ways that were not evident two years ago.  The city has not one, but two Suning (苏宁) stores, which are like Best Buys in the States.  There are multiple new malls.  Down by People’s Square, there are now a Dairy Queen and Subway, which probably means that Starbucks is not too far behind.  There is also a Watsons, which is a Hong Kong-based drug store chain akin to Duane Reade or CVS in the States or Boot’s in the UK.  I was also able to buy imported milk in the supermarket, which was not possible last time I was here.  There is something comforting about these things because they remind me of home, but that is not my reason for noting these marks of progress.  Generally when foreign chains come to China, they target cities based on their designation by the central government in terms of tiers – first, second, third-tier and so on.  Beijing, Shanghai, Guangzhou have been designated first-tier cities and as a result these locales were usually first targeted by foreign chains because the designation usually corresponds with the city’s level of development.  As time went on, foreign chains began targeting second and third-tier cities and continue to move down the chain as they seek out new markets,  Linyi is probably a fifth or sixth-tier city, so it has taken longer for foreign chains to arrive.  When I was here last time, the only foreign chains were McDonald’s, KFC, and Pizza Hut.  The growing number is indicative of the city’s continued development.

So I did some shopping for basic provisions – milk, yogurt, soda water, beer, apples, and hand soap, among other things.  Then I wandered around the square before heading back to the hotel in a cab.  I have my first class this afternoon, so I am trying to prepare.  There is a chance that my students may be rising sophomores, which means they are going to be even more shy and less proficient in oral English than my students last year who were rising juniors.  I am wrestling with how to approach the class since the material is so dense and I want to make sure they get something out of these next three weeks.  I will have to go in this afternoon and take the lay of the land.  Oh yeah, I was driving past the other campus south of the river and noticed that rather than Linyi Normal University, the school is now simply called Linyi University.  “Normal” in a university name implied that the school was supposed to train teachers in various subjects, but as the number of people going after a university education grew in China, many “Normal” universities became full-blown universities teaching a wide variety of subjects.  When I was last hear, the university was in the middle of a massive build-out to add new departments, so I am assuming with the name change that the transformation is nearly complete.  That would also explain why the taxi driver kept referring to the school as Linyi Daxue (临沂大学) rather than Linyi Shifan Xueyuan (临沂师范学院).

I’m off to finish preparing for my first class, but will continue later.  I’ll leave you with some more fun China packaging from my supermarket excursion this morning.

The iPhone Class

Last day in Beijing before heading to Linyi this evening. I’m sitting in the window at the Starbucks in Sanlitun (三里屯) and feel a bit like a zoo animal as people pass by. However, this being Beijing no one is really looking twice at me because it’s hard to go more than two feet without running into foreigners in this part of town. I had bit of anxiety this morning about leaving the relative comfort of Beijing for Linyi, which was probably exacerbated by the four hours of sleep I got. On a side note, I guess I did not kick my jet lag as I had thought. Or it could have been that given I slept an uncharacteristically long 12 hours the previous night, my body only thought I needed four to balance it all out. Regardless, I was frustrated this morning and I think that fed the anxiety about moving to a city that is kind of in the middle of nowhere and does not really have any spaces in which to sit and wile away an afternoon. But I will be really busy with teaching and staying on top of my job and planning for my Hong Kong trip, so it will all be okay.

Switching gears – the iPhone is everywhere here, or so it seems. I wonder if it will be as ubiquitous in a fifth-tier city like Linyi. It’s quite amazing how this city has embraced the phone, but then again I have only really been spending my time in enclaves like Sanlitun, so the phone probably goes part and parcel with being part of a mobile, educated, and global group of people. I wonder if one can measure development by the number of iPhones in the general population. The device must correlate with a certain outlook or set of beliefs about how the user wants to be perceived – it’s trendy and cool, so by possessing one, these attributes are automatically imputed to the user or so the user thinks.

Speaking of mobile, global, and educated, I had dinner last night with another lawyer friend of mine here at a Spanish restaurant in the same complex as Mosto. I know. I know. I should have seen more of Beijing, but it was convenient for both me and my friend and I want to gorge on Western food before Linyi where the only deviations from Chinese food are Pizza Hut and Korean food. Dinner was good, but after we went to the restaurant’s rooftop bar, which was quite the scene. It was the iPhone crowd and people were clamoring to get in. Because we had dinner at the restaurant, we avoided the line to get in. The crowd reminded me of why I do not want to be an expat again. It all felt so unreal, yet this place was the reality for the people who live here, expat or local (definitely more expat at this bar, which actually was more like a club). I also noticed how many Europeans are around, which makes some sense given what’s going on back home for them. I would think about escaping if my country’s currency union was on the verge of imploding.

It’s a funny notion to think of people escaping to China, but the lure of opportunity still seems to abound or at least the illusion of opportunity. Talking to my lawyer friends and remembering what it was like when I was a banker out here, the “white guy” in the bank or law firm is becoming an increasingly endangered species. I guess in a meritocracy, it should be who does the best job, but law firms and banks are not run as meritocracies, so what happens to these white men? I’m a version of one myself. If you have a skill worth transferring or teaching, do you still have a place here. Will Chinese business practices converge with Western practices? Probably not as long as SOEs (state-owned enterprises) dominate the economic landscape. I’ve heard too many stories of meeting after meeting to get a deal done, but nothing is accomplished in these meetings and finally the quiet old guy in the corner who has been idly sitting there smoking speaks and the deal is done. The takeaway – lots of inefficiencies and one ultimate decision maker. A terrible combination for the long-term, especially as no one is appearing to be trained to think like a business man. And private companies are virtually shut out from getting access to bank loans or other forms of domestic capital. As long as this model persists, the white guy’s place will become even more precarious.

I leave this rambling post with one final thought that I will probably be writing about a lot during this trip – it’s been argued that Communist rule in China is merely an extension of the dynastic system that existed for thousands of years, thus it’s engrained in the minds of Chinese people and there will never be any push for widespread political change because the people only know this system. While I would agree that the Communists are effectively extension of the dynastic system, for most of the time China was ruled by emperors, the country was pretty much closed off to the rest of the world. It was really only in the 1600s that foreigners began arriving in China and culminated with the end of World War II. Even as foreigners came to China, they were relatively restricted in both their activities and movement and were forced to keep most of their culture to themselves, save for really the Christian missionaries. Only in the last 30 or so years with Deng’s opening up and the ensuing economic reforms paved the way for a China that is increasingly connected to the outside world, in spite of the government’s efforts to control such connections through censorship and restrictions on travel. But as Chinese become wealthier, these connections will only increase and those ties or connections taken together in their various forms are a force that no previous dynasty had to contend with. Whether it’s welding iPhones or returning from a trip to New York or London, more and more Chinese are being plugged into the global community. Perhaps this force is what may become the wave that engulfs the party? How and when? No idea, but it’s something worth exploring. Exposure to new ideas and ways of doing things can only be ignored or blocked out for so long.

And now it’s on to Linyi, so until then I live you with a picture of a giant video screen covering a mall called The Place in Beijing. Last night it was an aquarium, but apparently it changes all the time to include outer space and nature scenes just because they can and want to.

Back to China (Again)

As I sit on the plane heading back to China, I keep thinking back to the first time I made the trip in the summer of 1998. It’s not necessary to go on and on about how the world was a different place with the U.S. as the world’s lone superpower and China still more potential than actual rising power. Fast forward 14 years and the optimism of the late ’90s seems quaint. It’s hard to find many bright spots in the world these days. Even China, which was supposed the be the world’s economic engine during these dark times, is slowing down.

Since I was last in China two years ago, I have gone from being a lawyer to counseling lawyers on their career options. Part of my job is speaking to lawyers on the ground in China and lately the word there has turned decidedly pessimistic. When I was in Linyi in 2010, the city embodied much of the excess of China’s fixed asset investment-led growth. Block after block of empty luxury apartment towers, building a new downtown just because, and unveiling a new international airport to handle its 10-20 daily domestic flights. I’m very curious to go back and see what has changed. Will there be a palpable change in sentiment? My students at Zhongda in 2008-2009 were so smug about China’s rise relative to the U.S.’ decline and probably rightly so at that time in the aftermath of Lehman. This year in China is also when the big transfer of power takes place at the top, so the government is extra-nervous about everything going smoothly. Some of the casualties along the road to a smooth transition have been Bo Xilai and Chen Guangcheng. Coincidentally, Chen is from Linyi, too. He hails from one of the many villages that ring the urban area, so now when I speak of Linyi to people in the States, they have some context as to where I am going.

Before going to Linyi, I’m stopping in Beijing for two nights to re-acclimate myself to China and try to take in the changes to the city that I’m sure have taken place since I was there three years ago. Then after Linyi, I’m spending a week in Hong Kong to catch up with people. I’m excited to be going back to China after a two-year hiatus. The country still fascinates me and any opportunity to spend time on the ground is always welcomed. However, it’s always hard being away from friends and family, even for four weeks. And it seems to get harder the older I get. But the opportunity come back here to teach and meet people is too good to pass up.

The flight has been relatively uneventful, save for the girl next to me who is sitting with her back against the armrest and one of those neck pillows that keeps bumping into me as I try to nap. There are also the passengers who really enjoy opening the shades and flooding the cabin with light – definitely not conducive for sleeping. Oh well. Minor inconveniences. One personal change is that I am typing this entry on my iPhone. I went from being staunchly pro-PC to traveling with an iPhone and iPad, as well as my PC laptop. Though my next one will probably be a Mac. I still marvel at how versatile my phone is that I can be listening to music whole blogging, switch to a book or take a picture with just a few taps. I also know I’m barely scratching the service of this phone’s functionality. Anyway, in a few hours I’ll be in Beijing, so until then
sit tight until I’m back.

PS – Have to log into VPN on phone to post to my blog and update my Facebook status. Oh how I’ve missed China.

Irrelevance

Linyi is the logistics center for all of northern China.  I had no idea that this was the case, but it explains the many Mercedes and BMWs I see in the streets and perhaps why they’re building so many new luxury buildings.  Yet, the city remains what my new Brazilian friend calls “a country city”.  It’s also a city where I can walk from my hotel to the gym across the bridge and make traffic slow down as people turn to look at me.  Today, a kid on a bike passed by saying hello and then came back with his notebook in hand and wanted me to write my name down in English.  As soon as I did, he hopped on his bike and rode away.

During that same walk home from the gym, I decided to count the cranes I could see on the skyline.  I came up with 45, but that did not count those hidden behind other buildings and those that I could not see through the haze.  Cranes might be a barometer for prosperity or the hope of prosperity. Cranes can also be a marker of irrational exuberance or a coming bubble if the number of cranes nearly equal the number of empty buildings.

After a fun lunch yesterday with my assistant Karen, whom one of my friends has taken to calling the “Young Commie or YC for short”, and a Brazilian professor, I met up with the Brazilian professor and his roommate, who is also from Brazil, for dinner this evening at Pizza Hut.  I know, I know.  Those of you who know me are probably wondering what I am doing in a Pizza Hut, but in China it’s an upmarket endeavor that is frequented by people who aspire to the upper classes of society and the Pizza Hut of Linyi was no different.  The Brazilians also do not care much for Chinese food, so this was a good compromise and provided a nice atmosphere for some good conversation.  After dinner, we went to McDonald’s for their soft-serve ice cream cones and a middle-aged Chinese woman approached us asking to take pictures of each one of us with her camera phone.  Oh China.

Between talking yesterday and today, I kept getting this feeling that America is becoming irrelevant in the new world order.  Apparently the university is trying to increase its ties with Latin America, both by building connections with institutions like the Universities of Sao Paolo and Buenos Aires and increasing their offerings of Spanish and Portuguese to their students.  Joe, the Brazilian professor, was telling me how many young Brazilians would rather get their PhDs in Europe than in the U.S. because of the onerous publishing requirements in American academia.  His friend Tom, who works in the department of Oriental languages at the University of Sao Paolo, was telling me that English is the fourth most popular language after French, Chinese, and Spanish (in that order).  Heck, I was hanging out with a Brazilian in China, all I needed was someone from Russia and India and I would have all of the BRICs represented.  Apparently, there are quite a few Russian and Indian students also here in Linyi studying Chinese.  America seems to be lost here.  The Brazilian innocently added insult to injury by informing me that Friends, Sex and the City, and Will and Grace were three of the most popular American television shows in Brazil, thus most Brazilians think Americans are lazy, superficial, and stupid.  After spending a week here and now hanging out with these Brazilians teaching and studying Chinese, I keep having this nagging feeling that unless America figures out how to play in a multi-polar world, it’s going to continue sliding towards irrelevance.

I’m off to Qingdao for the weekend to meet up with my friend Michael.  Excited about seeing the home of Qingdao beer and what is supposed to be one of the nicest cities in China.

The Chinese housing bubble, Linyi style

It’s the night before my first class and the weirdness that is China continued to confront me.  I was approached by a guy asking me if I spoke English because he was looking for a foreign manager for his new club.  I am trying to imagine what this club is like and who they would be trying to target with a foreign manager since there are so few foreigners in this city.  On two separate occasions, I had taxi drivers ask me what I was getting paid as an instructor at the university and whether I had a girlfriend.  I had forgotten about the girlfriend question and as soon as I said no, he asked me whether I was going to find one here in Linyi. 

However, the most interesting moment came this afternoon when I was speaking with Yao, the daytime manager behind the front desk at the hotel.  Yao speaks pretty good English and was really helpful by providing restaurant recommendations yesterday.  Today, he asked me what I thought of the restaurant he suggested I eat dinner at last night.  After telling him about how great the dumplings were, he asked me where I was from and after I told him New York, he said he loved that city, but had only seen it in the movies.  I tried to tell him that the New York of the movies is not like the real New York.  He then asked me if any Chinese cities were like New York and I said Shanghai, but he shook his head and said that most Chinese people do not think Shanghai is anything like New York.  He couldn’t pinpoint exactly what it was that differentiated the two cities, but he was so certain in his belief that they were different.  He also purported to speak on behalf of “most Chinese” when he gave me this response, which took me back to the days when my students would make sweeping generalizations about “all Chinese people”.  I then proceeded to ask him about all of the new construction and seemingly empty apartments that abound in Linyi, including right across the street from the hotel.  Yao told me flat out that 90% of the people cannot afford them and that the buildings were constructed so that the government could make money.  He told me developers got loans from the banks, the government skimmed 20% or some amount like that off of what the developers received as payment for the right to build on the land.  Then the developers hope to sell their apartments to repay the banks.  Yet, if the developers cannot raise enough money to pay back the banks, there is really no such thing as recourse for the banks to avail themselves of.  Thus, the loan does not get repaid, the banks lose money, and there are a lot of empty buildings dotting the Linyi skyline.  It’s actually staggering the number of new buildings around the city that are eerily empty.  Only in China could the local government decide that they want to build the equivalent of a new city on the north side of the river because that is what they are doing here in Linyi.  Keep in mind that the “old” city has its fair share of new construction.  Below are two pictures taking from the bridge crossing the Benghe River by my hotel.

One of the many new towers going up around People's Square in the center of town

View of Northeast Bank of Benghe River

The number of new buildings being constructed and lying empty is not a problem unique to Linyi.  Google “China real estate bubble” and you are inundated with links to articles, blogs, and other resources about an impending real estate bubble in China.  Seeing it first-hand drives the point home.  Hearing about it first-hand from Yao drives it home a little harder.  He told me that he makes  40 yuan per day for eight hours of work behind the desk at the hotel.  That is a little more than five US dollars.  He said he would have to work like this for 20 years before being able to hope to afford a new apartment and he said he makes more than a lot of the other workers in the city.  Based on that nugget of information, one wonders who is buying all of the apartments in Linyi.  What will happen to them?  Will they just remain vacant and decay as time goes by and they are not maintained?  Will developers have to drop prices and take a hit like the many foreclosure sales occurring in the States?  It’s hard to know when there is no moral hazard since the developers do not really have to pay back the loans since the banks can’t go after them for the money.  There is simply no legal mechanism to make that possible and if the government is receiving kickbacks, it’s not going to be fixed by administrative fiat, either. 

Where does that leave China?  Yao also pointed out how everything is becoming more expensive and that it is harder and harder for him and other young people to gain a foothold anywhere, including carrying out the Chinese tradition where a man provides his wife with a new home when they get married.  Was Yao angry about the state of things?  It was hard to tell.  He was implicitly railing against the government when he discussed the kickbacks, but like Americans, he also emanated a sense of resignation that this is the way things are and that there is nothing he can do about it  At least in America, for better or worse, we get to go to the polls and vote out our leaders who we feel are not competently doing their jobs.  There is no such mechanism in China.  Will the government’s calls for harmony be overwhelmed by the rise of a new working class that cannot afford the same basics as the rich?

Oh, and just for kicks since I saw this on the shelf of the grocery store and I still cannot figure out what it is supposed to really be because one cannot package “jew’s ear” in a can.

How's they get a jew's ear into that can?